IFRS Adoption as a Driver of Quality in Corporate Reporting

This report examines the adoption of International Financial Reporting Standards (IFRS) to enhance the quality of financial reporting globally. It highlights the role of the International Accounting Standards Board (IASB) in promoting IFRS adoption to standardize accounting practices and reduce financial reporting costs. The report emphasizes that IFRS compliance increases the comparability and transparency of financial information, boosting investor confidence and facilitating international capital flows. By adopting IFRS, companies can benefit from a clear framework, reduce complexity in financial reporting, and improve the quality of disclosures through adherence to the IASB's conceptual framework. This framework focuses on relevance, faithful presentation, comparability, verifiability, understandability, and timeliness, all of which contribute to better decision-making by stakeholders and promote sustainable growth. The report also notes that IFRS promotes the use of fair value accounting, providing investors with up-to-date information for their decisions. Ultimately, the adoption of IFRS enhances investor trust and confidence, fostering economic development and globalization.

Corporate Reporting

Answer 1
Introduction
The present report is developed in order to provide an understanding of adopting a
uniform set of accounting standards of IFRS to improve the quality of financial reporting.
International accounting Standard Board (IASB) is emphasizing on the adoption of IFRS across
all the countries at a global level to promote accounting standardization. IFRS compliance by all
the companies globally will lead to convergence of financial reporting and also makes reduces
the cost involved in development of financial reports (Ramanna and Sletten, 2009). In this
context, this report is developed for analyzing the adoption of IFRS fro development of global
accounting standards to reduce the information costs to an economy and improving the trade
globalization.
IFRS Adoption as Global Accounting Standards
Different accounting setting bodies and policy makers places special emphasis on impact
of financial reporting on economic development. This is because the financial information
disclosed by the business entities has a large impact on the investor’s trust and confident. The
increased reliability and transparency in the financial reporting process will promote the investor
confidence level to invest in the business entities and thus promoting the economic growth and
development. As such, IASB is emphasizing on adoption of IFRS standards to be used by
business organizations at a global level to promote standardization of accounting methods and
procedures used in developing the financial reports. This will increase the comparability of the
financial information across the world and thereby making easy for the investors to take
investment decisions by comparing the financial condition. This cause increased capital flows
across the different markets and reduces the information costs to an economy. The markets
efficiency improves with greater capital allocation and impacting the securities price and
improves the sources of entities to gain additional financing (Turki, 2016).
The globalization of accounting standards promotes the openness of securities markets
and as such improves trade flows across the countries. The high quality disclosure caused by the
adoption of IFRS standards reduces investors concerns regarding the quality of information. This
promotes the interest of stakeholders regarding investment in global economies and improves the

global competitiveness of business entities. The increased investor confidence promotes growth
and development of companies at a global level and by causing large capital flows. Thus, high
quality information disclosures will increase the share prices of the company at lower cost of
capital acquired by developing long-term relation with investors. IFRS adoption also provides
clear direction to the business entities regarding the accounting standards and methods to be
applied at the time of preparation of their general purpose financial statements. This reduces the
complexity faced by business entities worldwide to develop their financial reports and also
reduces the time involved in their preparation. The decreased utilization of resource such as time
and money required fro developing financial reports by the adoption of IFRS further reduces
information costs for the economy (Palea, 2013).
IFRS adoption is essential s per IASB to improve the quality of financial reporting. This
is largely possible due to adoption of a standard framework of accounting that business entities
complying with IFRS need to adopt. This is known as conceptual framework of accounting
developed by IASB to be adopted by business entities complying with IFRS. The conceptual
accounting framework has proposed fundamental and enhancing qualitative characteristics of
financial information. The fundamental characteristics of financial information are relevance and
faithful presentation. Relevance indicates that financial information should be capable to assist
the decision-making process of end-users and faithful presentation indicates the information to
be complete, neutral and error-free. In addition to this, the enhancing characteristics of
framework proposed by IASB are comparability, verifiability, understandability and timeliness.
The business entities need to disclose the information in an easy manner that can be compared by
the investors. The information can also be verified and should be disclosed on an annual basis
(Ramanna and Sletten, 2009).
The business entities by adopting with IFRS standards need to develop their financial
reports in a way that they meet all the characteristics of conceptual accounting framework. This
tends to improve the quality of their disclosure and seeks to promote their sustainable growth and
development. The main objective of developing the general purpose financial reports as stated in
the conceptual framework is to provide assistance to the stakeholders in making investment,
credit and other resource allocation cessions. International openness is the main idea behind the
emphasis placed by IASB to adopt IFRS standards. The uniformity across the financial reporting

will help in reducing the information asymmetry and thus making it relatively easy for the end-
users to compare and interpret the information presented by various entities (Leuz, 2003).
It can be said that the presence of a regulatory framework at an international level is
essential for assisting the decision-making of end-uses. This can be achieved largely by the
adoption of IFRS by the business entities in developing their financial reports. IFRS
implementation will promote the adoption of fair value accounting by business entities in
comparison to the traditional historical method of accounting. The befit of adoption of fair value
cost accounting method will be largely helpful for the investor to acquire latest information for
decision-making. This is because fair value represents the latest value of a financial set or
liability based on the market conditions. Therefore, the adoption of IFRS will be largely
beneficial to the investors to gain reliable and timely information about the value of financial
assets or liabilities. This in turn will promote their trust and confidence level to invest in the
business entities and meet their needs of financing adequately (Barth, 2008).
Conclusion
The report concludes that IFRS adoption will improve the quality of financial reporting
through improved disclosure and use of better accounting methods in developing financial
reports. Also, the adoption of conceptual framework and reduced informational asymmetry will
further benefit the companies to achieve investor trust and confidence.

References
Barth, M. E. 2008. Global financial reporting: Implications for U.S. Academics. The Accounting
Review 83, pp. 1159-1179.
Leuz, C. 2003. IAS versus U.S. GAAP: Information asymmetry-based evidence from Germany’s
new market. Journal of Accounting Research 41, pp.445–472.
Palea, V. 2013. IAS/IFRS and financial reporting quality: Lessons from the European
experience. China Journal of Accounting research 6(4), pp. 247-263.
Ramanna, K and Sletten, E. 2009. Why do countries adopt International Financial Reporting
Standards?, Harvard Business School Accounting & Management Unit. Working Paper No. 09-
102.
Turki, H. 2016. The effect of IFRS mandatory adoption on the information asymmetry. Cognet
Business & Management 3(1).