Adoption of IFRS -A Critical Review

Running head: ADOPTION OF IFRS- A CRITICAL REVIEW
Adoption of IFRS- A critical review
Name of the Student
Name of the University
Author Note

ADOPTION OF IFRS- A CRITICAL REVIEW
Abstract:
The paper presents a critical examination of the importance of the regulatory
framework to the financial reporting. Implementation of the accounting standard
IFRS by the company Australia and Italy has been discussed by evaluating the
challenges faced in the adoption and other transition issues encountered by the
reporting entities of the countries. Adoption of IFRS results in generating benefits
which has been discussed. In addition to this, similarities and differences in the
adoption of the standard by these countries have been outlined. The adoption of the
standard has been critically evaluated in terms of success by generating benefits to
the reporting entities.

ADOPTION OF IFRS- A CRITICAL REVIEW
Table of Contents
Introduction:..................................................................................................................2
Discussion:...................................................................................................................2
Evaluating the relevance of (PAT) positive accounting theory for financial reporting:.2
Comparing the implementation of IFRS in Australia and Italy:....................................4
Reasons of IFRS adoption by two countries:...............................................................4
Outlining transitional issues faced by two countries:....................................................5
Evaluating challenges faced by reporting entities in adopting IFRS:...........................6
Evaluating benefits of adopting IFRS by reporting entities:.........................................7
Evaluating the differences and similarities in IFRS adoption by Australia and Italy:. . .9
Evaluating success of adoption of IFRS in Italy and Australia:..................................10
Recommendation to the accounting setting bodies:..................................................10

ADOPTION OF IFRS- A CRITICAL REVIEW
Introduction:
The paper intends to critically evaluate the usefulness of the regulations of
financial reporting to the listed entities and the contribution of positive accounting
theory in the financial reporting. In this regard, a detailed research by reviewing the
literature has been conducted on the adoption of IFRS (International financial
reporting standard) by Australia and other chosen country Italy for the past five
years. In addition to this, the key issues faced by the country along with the
transitional issues are critically evaluated. The benefits encountered by the reporting
entities of these countries are outlined by providing description of the factors bringing
such ò (Dayanandan et al. 2016).
Discussion:
Evaluating the relevance of (PAT) positive accounting theory for financial
reporting:
In this section, the importance of the positive accounting theory to the
financial reporting of the reporting entities have been evaluated. The research on
accounting has been influenced to a significant degree by the rapid growth in the
development of positive accounting theory. Investigation and extensive research on
PAT has been done for evaluating the impact on the accounting policies and
explaining the opportunistic attitude and behaviour of managers. It is hold by this
particular theory that the firms tends to report their profit upward by manipulating it if
there is a limit on the imposed dividend payout ratio by the lenders on the firm and if
the major part in the pay package of directors is bonus as a loan condition. It is
claimed by the positive accounting theory that the aspects of actual accounting
behavior is explained in a neutral manner and which is value free. Firm’s