Accounting Theory And Current Issues Reports

Running head: ACCOUNTING THEORIES AND CURRENT ISSUES
Accounting Theory and Current Issues
Name of the Student
Name of the University
Author Note

ACCOUNTING THEORY AND CURRENT ISSUES1
Abstract
The following report contains a comparative analysis of the adoption of IFRS between Australia
and Denmark. It begins with an introduction of the concepts discussed in the report like Positive
Accounting Theory, IFRS and financial reporting. After which, it proceeds to suggest the
importance of Positive Accounting Theory. It then moves on to conduct a comparative analysis
between Australia and Denmark. Various aspects like the history, reasons for adoption,
transitional issues and the challenges faced in adopting IFRS are all discussed. After which, the
report ends with an overview and recommendations made to the accounting bodies of both the
countries.

ACCOUNTING THEORY AND CURRENT ISSUES2
Table of Contents
Abstract........................................................................................................................................1
Introduction..................................................................................................................................3
Relevance of Positive Accounting Theory for Financial Reporting............................................3
Comparison between Australia and Denmark in implementing IFRS............................................4
Reasons for Adoption...................................................................................................................4
Transitional issues faced by the countries....................................................................................5
Challenges faced after adopting IFRS.........................................................................................6
Benefits of Adopting IFRS by entities.........................................................................................7
Similarities and Differences in adopting IFRS............................................................................8
Success in Adopting IFRS...........................................................................................................8
Recommendations and Conclusion..............................................................................................9
References..................................................................................................................................10

ACCOUNTING THEORY AND CURRENT ISSUES3
Introduction
Positive Accounting Theory is a field of accounting which deals with the prediction of
the choices that will be made by the firms like new accounting policies and the impact of new
accounting standards on a firm. The major relevance of this theory is in predicting the activities
of a firm as it recognises that economic consequences exist in relation to the activities of a firm.
International Financial Reporting Standards (IFRS) are the accounting standards issued by the
International Accounting Standards Board (IASB) in collaboration with the IFRS foundation. It
also deals with the preparation of the conceptual framework for accounting necessary for
financial reporting. One of the earliest adopters of the IFRS framework is the European Union.
Denmark is one of the countries adopting IFRS as a part of its reporting standards. This is also
the case with Australia, which is trying to adopt IFRS as a part of its business reporting
framework. The core benefit of this framework is that it allows the nations to converge their
reporting standards with the Global Reporting Standards and improves the comparability of
financial statements. The common problems faced by the countries in the implementation of
IFRS can be classified as transitional problems and the challenges faced after adopting the
standards. The success of the level of implementation can be determined on the basis of the
extent to which IFRS has become a part of the reporting standards of the entities. However,
there is scope for improvement in making IFRS more pertinent to all the users of the financial
statements.
Relevance of Positive Accounting Theory for Financial Reporting
Financial Statements are one of the major aspects of the modern day business in terms of
vitality. This is because they communicate information related to the financial health of an
organisation and its performance over a specified time period. These statements are the only
means through which a business can communicate the necessary financial information in a
comprehensive manner. However, there are certain choices to be made in the preparing the
financial statements. One of them is the selection of the accounting policies that will be used by
the entity. The option of selecting different accounting policies arises because of the
contradictions which exist in some of the financial concepts. Positive accounting theory helps
understand the choices made by the companies in selecting the accounting policies, the reaction
of the investors to the change in these accounting policies and the changes in the financial results