Critique Paper on the Discussion of the Determinants and Consequences of Heterogeneous IFRS Compliance Levels Following Mandatory IFRS Adoption: Evidence from a Developing Country
The Philippines known as one of the developing countries in Southeast Asia has also become one of the countries supporting the shift and full compliance with the International Financial Reporting Standards (IFRS). The change from following the U.S GAAP or the localized version of the U.S GAAP to the International Financial Reporting Standards has become one of the main priorities in the accounting system of the country. However, there is a need to fully understand whether or not there really is an ...view middle of the document...
This proved to be a relatively difficult task because of the lack of data in the information needed for empirical information on the topic. Using information and data from a developed country in Africa, Kenya to be specific, and the article aimed to find an answer as to whether the economic benefits of country will greatly be affected by the compliance with the IFRS. It is said in the article that there were or are many difficulties in finding a sound conclusion because of three main reasons. One is that in the article, it is stated that it may be unclear as to whether or not full compliance will even have an effect on the information provided by DLDC. Another is that little data can be seen on whether the improvement and accuracy in the accounting information will affect how globally competitive entities may be in terms of their foreign investors. It is also unclear as to whether full compliance with the IFRS would have an economically positive effect despite the IFRS being a principle based set of standards in countries where there may be a lack of law enforcement.
The article sets out to tackle answers as to whether there is truly benefits arising from the compliance with the IFRS. In the article, it discusses the potential economic benefits the compliance with IFRS would have on developing and less developed countries would and it also discusses the challenges that may arise for accounting research because of the developing and less developed countries.
Focusing on the potential economic benefits that the compliance with the International Financial Reporting Standards could have on developing and less developed countries, the article discusses that by compliance with the IFRS DLDC would be able to provide a clearer and more improved accounting information. The improvement in accounting information may also increase the interest of foreign investors and create a larger capital for DLDC. It is also stated that the compliance with the IFRS may lead to better comparability of financial statements with different countries.
Focusing on the challenges that may be faced in discovering whether there is economic benefits for DLDC, the article discusses that there is difficulty in research mainly because of the lack of data available in the topic. The challenges may also be due to the fact that the effects of compliance with the IFRS may differ from country to country depending on the extent that they may have with it. It was discussed that challenges may arise due to the fact that the form of compliance may be followed however the substance may not be and this kind of compliance will not provide a sound conclusion as to whether or not there is economic benefits available for DLDC.
In conclusion, the article discusses the possible benefits that the developing or less developed countries may have from complying at different levels with the International Financial Reporting Standards and the challenges that may...