Although there are some shareholders who would be more inclined to support foreign businesses if we adopt IFRS, there is no guarantee that this would happen throughout every demographic. Other than the legal ramifications of not keeping good books, there are many other benefits of financial reporting that financial statements provide to … Estimating Financial Requirements. 6000 [Reserved]; 6100 Definitions and Basic Rules; 6110 Definitions; 6120 Basic Rules; 6200 General Financial Statement Requirements for Foreign Private Issuers; 6210 Periods for which Financial Statements are Required; 6220 Age of Financial Statements in a Registration Statement; 6230 Updating of Financial Statements … If the United States decides to adopt IFRS, then there would still be other holdouts around the world that would choose to use their preferred domestic standard. If a company goes public, its primary benefit is that it gains access to additional capital (more cash), which can be critical if it’s a high-growth business that needs money to take advantage of its growth … all of the above. 1. By using these statements, stakeholders could understand and assesses the entity’s financial performance and positions and especially clearly knows each element such as revenues, expenses, assets, liabilities, and equity. Under the current system in the United States, agencies and their subsidiaries must create parallel reports using GAAP and IFRS, which means there is an increased risk of error and additional auditing requirements necessary to ensure compliance. Although a number of countries have made the move to adopt IFRS, the United States is not one of them. We’ve already mentioned the obligatory reasons that companies schedule audits or reviews. October 11, 2010, Harri Daniel, 1 Comment. Since the primary benefit with this effort would be to achieve additional comparability, the system may not be worth the expense. In help and organization to comply with various statues and regulatory requirements. Creditors would no longer face this issue when comparing or evaluating the creditworthiness of agencies operating abroad. Kara Stein, who serves as an SEC member, describes the situation in this way. 3. Public officials attempt to set sound procedures to monitor, measure and disclose economic information. 5. There would be fewer costs associated with this work as well since there would no longer be multiple standards and regulations to follow based on where the company is doing business each year. The accuracy of financial statements helps formulate tax obligations, illustrate that all GAAP (generally accepted accounting principles) are followed, and support investor’s decision making. When we adopt IFRS, then there will no longer be a home-bias in place for shareholders to prefer domestic firms over international ones. International Financial Reporting Standards (IFRS) are the common accounting rules which define how a transaction should be reported. It allows for investor analysis. Other countries could evaluate the pros and cons of joining the U.S. GAAP accounting practices instead to make it easier to do business in North America. Instead of using multiple accounting standards based on the preference of each country where an organization does business, adopting the International Financial Reporting Standards would enable agencies from different segments of the globe to apply the same standards in every transaction. Organizations can choose to use only the methods that they wish to incorporate in their reporting, allowing their financial statements to show the results they desire. The right reporting, analytics and information delivery strategy can have a significant impact on an organization, fundamentally changing the way people perform their jobs and how decisions are made. Automated reports also save employees countless hours of sifting through mounds of paperwork in search for data and results.