The Future Of Financial Reporting

1121 words - 5 pages

Over the past decade, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working together to form a set of global standards. They are trying to make the International Financial Reporting Standards the globally accepted financial reporting principles.
1. As an international manager or investor, what benefits do you see from the growing adoption of IFRS across countries?
Growing the adoption of IFRS across countries will allow for more comparable financial statements and disclosures globally. Investors and other financial statement users will be able to see how international companies compare to one another. Currently, U.S. ...view middle of the document...

Lastly, overcoming the disagreement with the EU on IAS 39 is going to be a challenge. With so many countries being a part of the EU, a change will need to be made to IAS 39 to get the countries to be fully on board with IFRS.
3. How would you propose that the IASB and its key constituents address these challenges?
To address the substantial challenges to the growth and development of IFRS in the coming years, the IASB and its key constituents have to take action. They must encourage and enforce the IFRS standards and not allow for partial adoption or modified IFRS. They must communicate with the countries and discuss the reason they are not fully adopting IFRS and compromise if necessary. Getting feedback from companies, investors, and accounting professionals would help significantly. Putting a plan in place to help reduce the costs of implementing the change to IFRS would also help the challenges facing the IASB. They can offer to help implement the change for free or help create funds to pay for it. The final challenge will likely be the hardest. Since the EU is so stern against fully adopting IAS 39, getting them to fully adopt IFRS without modifications will be tough. Due to the size of the EU, IFRS may need to adopt the EU’s modification to satisfy them. Overall, getting all countries to fully adopt IFRS is a great idea; however doing so is going to be tough.
4. How would you apply this to GE who has operations globally?
a. Summarize the P&L and Balance Sheet impact of IAS 21.
IAS 21 is the IFRS standard, The Effects of Changes in Foreign Exchange Rates. This standard covers consolidation of foreign entities and translation of financial statements to a presentation currency. The resulting exchange differences are recognized in other comprehensive income. In the event of disposing of a subsidiary the cumulative amount of exchange differences that was recognized in equity is reclassified to profit and loss. The exception to this would be where a gain or loss on a non-monetary item is recognized in equity, the foreign exchange gain or loss is also recognized in equity. 
b. Versus FASB 52.
FASB 52 is the FASB standard for Foreign Currency Translations. The economic effects of an exchange rate change on an operation that is self-contained and integrated within a foreign country relate to net...

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