DipIFR Syllabus A. International sources of authority - Why regulation is needed - Notes ^{1 / 8}

A regulatory framework regulates the behaviour of companies towards their investors

They increase users’ understanding of, and their confidence, in financial statements

Benefits of adopting IFRS

• They are high-quality and transparent global standards that are intended to achieve consistency and comparability

• Companies that use IFRS and have their financial statements audited in accordance with International Standards on Auditing (ISA) will have an enhanced status and reputation

• The International Organisation of Securities Commissions (IOSCO) recognise IFRS for listing purposes

  Thus companies that use IFRS need produce only one set of financial statements for any securities listing for countries that are members of IOSCO.

• Companies that own foreign subsidiaries will find the process of consolidation simplified if all their subsidiaries use IFRS

• Companies that use IFRS will find their results are more easily compared with those of other companies that use IFRS

  This would help the company to better assess and rank prospective investments in its foreign trading partners

What are the challenges of adopting IFRS to national standards?

1. Laws and regulations

2. IFRS training to finance staff and regulators

3. Greater complexity in the financial reporting process