Contemporary Issues in Accounting: IFRS Diffusion Dimensions

This assignment analyzes the social and political dimensions that drive the development and diffusion of International Financial Reporting Standards (IFRS), focusing on the arguments presented by Chua and Taylor. The analysis highlights the improved quality of financial reporting, increased compara...Read More

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Advanced Financial Accounting
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Summary of the Perceived social and political Dimensions argued by
Chua and Taylor as the reasons for the development and diffusion
of IRFS.
 Improved quality of the financial reporting. According to reading 1.1,
page 467-468 Chua and Taylors’ argue that for the last two decades,
the adoption of IFRS has characterize the increased in globalization
and integration of business and capital markets. This has led to
increased globality demands global governance so that to achieve a
socially desirable level of disclosure. This shows that the use of IFRS
is social. Because of increased globality enterprises and governing
activities the government collaborate on localized regions basis and
larger basis. This is a clear evidence that the use of IFRS is political.
 Increased comparability of financial statements in different countries.
According to reading 1.1, page 470 Chua and Taylors’ argue that it
was the finance minister and central bank governors of the G7
countries who pushed for the development of international accounting
standards and also, they are the one who gave directives to other
countries to follow them. This is so political and social since once
powerful first movers adopt then it will be a norm and others follow.
(Chua, 2008)
 Removing barriers to international capital flows. The political
influence of this point is clearly evidence on reading 1.1 page 469-470,
the diffusion of IFRS is a mixture of politics and economics. Chua and

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Taylor’s argue that for over a past decade, major crisis on the face of
currency and in the absence of suggestion to the reality, the functional
political response was generally to act as if substantial financial crisis
could manage in a more satisfactory way through the construction of
the so-called international accounting practice. (Chua, 2008)
 Reducing Financial reporting cost. This is so political according to
reading 1.1 page 470, after the first movers adopt particular types then
other countries will just follow theories because of political influence.
(Chua, 2008)

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References
Chua, W. F. (2008). The rise and rise of IFRS: An examination of IFRS diffusion. Journal of
Accounting and Public Policy.
Deegan, G. &. (2013). New Zealand financial accounting (6th ed.). North Ryde, Australia:
McGraw-Hill.