Pros and Cons of IFRS

IFRS – International Financial Reporting Standards is a set of standards that are created by the IASB. Previously these standards were known as International Accounting Standards and were used from 1973 to 2001. Later IAS became IASB and the new system was created.

IFRSBased on IFRS, a complete financial statement should contain a balance sheet and other statements that reflect the company’s cash flow and income. It should contain all the changes in the company’s equity. These data are vital in the decision making process of the management as well as investors. This financial statement is the key for future investors to take decision whether a certain company is worthy investment or not. Policies of the company also play an important role in the accounting statement.

Pros of IFRS:

It provides more detailed information compared to GAAP. It is simple and easy to use and provides a more detailed reporting. IFRS is a principle based system. It is flexible and allows choosing a course of conduct and offers to give a fair view of a company’s financial position.

IFRS allows the company to better adapt to the changes in the business environments they have not many guidelines. This aspect encourages the use of professional judgment and in the end discourages financial engineer in. Thus, more transparent financial statements with straightforward thinking and flexible interpreting of accounting and reporting standards are expected to be produced.

As per IFRS supporters, business decisions rely only on professional judgments and not on rules. If a company fails to disclose the professional judgment within its financial statement, then it could mislead investors. Companies can get the help of accounting software such as which is an award winning accounting solutions for users.

Cons of IRFS:

Despite IRFS has many benefits concerning internal accounting comparability, there are a number of legitimate concerns. IFRS is easier to commit accounting fraud. This method is more lenient in recording financial information. The guidelines are indistinct and provide room for changing the revenue numbers easily.

Overall, since IFRS accounting is less complicated, international and local investors prefer this accounting system and the conversion of U.S GAAP to IFRS is need of the hour.Good IFRS training is essential for financial professionals and promising certified public accounts as this will let them learn the standards of business transactions.