Communication – not a word that you would normally associate with financial reporting. But financial reporting is a practical exercise in communication, not a theoretical or academic construct.
It’s imperative not to lose sight of the importance of financial statements as a tool for communication. In 2001 this led to the development of International Financial Reporting Standards (IFRS) by International Accounting Standards Board (IASB) and further the development of FRS 102 in more recent times. These standards are based on sound and clearly stated principles that benefit all stakeholders in the years to come, together with improved corporate governance and increased free flow of capital across the globe.
Benefits of IFRS:
The advantages of achieving convergence with IFRS are numerous. Here are 5 of the key benefits:
1. It benefits the economy by increasing the growth of its international business.
2. By encouraging the international investors to invest, it leads to more foreign capital flows to the country.
3. Financial statements prepared using a common set of accounting standards help investors better understand investment opportunities as opposed to financial statements prepared using a different set of national accounting standards.
4. The industry is able to raise capital from foreign markets at a lower cost if it can create confidence in the minds of foreign investors that their financial statements comply with globally accepted accounting standards.
5. It offers accounting professionals more opportunities in any part of the world where the same accounting practices.