Uneven Implementation of International Financial Reporting Standards (IFRS)

1
Running head: ASSIGNMENT
Assignment
Name
Institution

ASSIGNMENT 2
Assignment
Different political and economic reasons warrant International Financial Reporting
Standards (IFRS) to be uneven globally (Ball, 2006). In practice, having differences in
international financial reporting activities as well as the quality of financial reports is
inevitable. Having uneven implementation of IFRS has different effects on investors
(Damant, 2006). The purpose of this paper is to articulate the reasons surrounding the uneven
implementation of IFRS and what potential effects they might have on investors.
One of the reasons that lead to the uneven implementation of IFRS is political and
economic contributions to financial reporting (Ball et al., 2006). Despite the increased levels
of globalization, the extent to which political and economic factors influence financial
reporting remain local. Having uniform implementation of IFRS is difficult is because
incentives for enforcers and preparers of financial reports are purely local. There is a lot of
political and economic influence on how managers, courts, auditors and other practitioners
implement IFRS. Although the recent integration of global markets calls for uniformity in
accounting standards, the issue of differences among nations should be critically considered
(Jermakowicz, 2004). Having uniform international standards will, ensure easy comparison
of financial information, limit costs of compliance, and improve the quality of audit activities
(Li, 2010), but countries are continually demonstrating how their market structures and
politics are inversely aligned and based on domestic systems. Hence, increased globalization
and market integration cannot achieve uniformity in IFRS among different nations. It is also
important to understand that, monitoring systems among nations operate differently in
different countries.