Advanced Financial Accounting: IFRS, Theories, FASB Statement, and Effects on Shareholders

Advanced Financial Accounting 1
ADVANCED FINANCIAL ACCOUNTING
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Advanced Financial Accounting 2
ADVANCED FINANCIAL ACCOUNTING
PART A
The International Financial Reporting Standards (IFRS) are standards that have been set
by the Financial Accounting Standards Board (FASB) and the International Accounting
Standards Board (IASB) to ensure that industries in the global market can have one standard in
financial reporting. The Boards came up with the Conceptual Framework that is aimed at
ensuring the differences that exist in financial reporting can be eliminated or reduced (Carmona
& Trombetta, 2008).
This Conceptual framework has two qualitative characteristics that are aimed at ensuring
financial reporting can be efficient and effective. The qualitative characteristics are fundamental
characteristics and enhanced qualitative characteristics.
The fundamental characteristics entail of two main components these are relevance and
faithful representation. In relevance, the revised framework aims at ensuring that financial
reports only contain useful information that industries can use in making decisions. However the
CFO's believe that the information is useless. This means that it is not relevant and the CFO's
have no use for it. Faithful representation, on the other hand, aims at ensuring that the
information is complete, neutral and free from errors by it being reliable. The CFO's believe that
the information has gone to unmanageable levels. Therefore it is not reliable. They cannot
depend on the information if they are not able to manage it in the first place. Thus it is highly
unreliable. The information also at most times according to the CFO's is not reliable because it is
incomplete had has errors (Li & Sougiannis, 2017).
The enhancing qualitative characteristics entails of four main components. These are
comparability, verifiability, timeliness and understandability. The revised framework aims at

Advanced Financial Accounting 3
comparability in that institutions can compare financial records. However the CFO's say that they
are useless meaning they cannot do any comparisons between their financial records because
they cannot use the disclosures.
The revised framework has also failed to achieve understandability. This is seen in the
article where the analysts cannot be able to read the IFRS accounts because they will
misinterpret them. Therefore the financial statements cannot be understood easily and
misinterpretation can also lead to errors when making financial decisions. The statements
according to the article can only be read by trained professionals (Haslam et al., 2016). This goes
against the characteristic of timeliness because a lot of time will be spent by the institution
outsourcing for professionals.
Lastly, the investors are unable to reach a main conclusion because the financial
statements cannot be interpreted and if they are, they are misinterpreted. This shows that the
statements are not verifiable.
The views expressed in the article are not consistent with those of corporate financial
reporting because of the following reasons. First the CFO's are unable to make comparisons
between financial statements because the information is useless. Therefore it is not consistent
with that of corporate financial reporting that achieves comparability.
Second the financial information is often misinterpreted by analysts meaning that they are
not easy to comprehend or understand. They can only be read by professionals that are trained.
Third the information is not manageable therefore cannot be relied on for making informed
decisions.
PART B
Public interest theory