1.

Critically discuss the advantages of global harmonization of accounting standards as well

as the difficulties in IASB's efforts.

IFRS are accounting procedures and strategies governing the reporting of different types of
accounting transactions and events in the financial statements. Financial standards such as
IFRS are important because they provide the backbone for the integrity and trust in the
financial markets. Generally Accepted Accounting Principle (GAAP) used by the United
States is issued by the US based Financial Accounting Standards Board (FASB). Most of the
countries follow IFRS. The International Accounting Standards Board (IASB) sets IFRS and
they are trying to achieve their goal by implementing one set of accounting standards
globally. This goal is especially important due to the increasing globalisation and the growing
number of multinational organisations (Samir, M.S, 2003). Suitable and adequate safeguards
and safety nets need to be built into national accounting systems to achieve the objectives of
harmonization.

Advantages

I.

Presentation of Financial Statements

On the off chance that IFRS is adopted, then it would give reliable presentation of financial
statements alongside uniform measures for acknowledgment, estimation and exposure of any
transactions. It will bring down complexity of worldwide income taxation, as they are on the
aggregate wage of the organizations, and the organization alongside its other foreign
company take after comparable bookkeeping rule and practice. At the point when all
enterprises are required to hold fast to one arrangement of accounting standards, speculators
can be sure that the financial data they utilize is exact and can be contrasted and between all
organizations and over all the business sector areas.

II.

Resolving Sovereignty issues

Falling in accordance with IAS/IFRS would mean changing or giving up national accounting
standards. There can be instances of uncertain issues that are particular to a specific nation
and the way of business in that that requires a specific rule that should be embraced. It
empowers an efficient audit and assessment of the execution of a multinational organization
having auxiliaries and partners in different nations wherein every nation has its own
particular arrangement of accounting standards.

III.

Listing on Foreign Stock Exchange

The Companies taking after local bookkeeping standard are confronting issues in getting its
stock recorded on cross-boundary stock trade. With implementation of IFRS, the
organizations will never again be require to set up its financial statement under various
accounting standards and make the undertaking of posting shares on foreign stock exchange
easier.

IV.

Comparison:

Following different set of accounting standards, comparing financial statements of companies

operating in same industry and in different countries are difficult, as the same transaction may
be treated in different ways. Multinational organizations and analysts would encounter ease in
looking at financial statements of organizations found and working in various locations.

V.

Transition Cost

The organizations need to bring about one time move cost towards changing its accounting
frameworks, overhauling control system and archiving it. Further, IFRS oblige organizations
to give financial statements to no less than one earlier year or might be up to three years for
SEC listed organizations. Also, the organizations need to contract external consultant to
prepare their workers and explain experts and financial analysts with IFRS.

Disadvantage

I.

Amendments to the existing Law

It is detected that execution of IFRS might bring about various irregularities with the current.
Presently, the reporting requirements are administered by different controllers and their
procurements override different laws. IFRS does not perceive such overriding laws. Despite
the fact that progressions to revise these laws will be started if IFRS is embraced, the powers
need to guarantee that the laws are corrected well in time.

II.

Taxation

IFRS implementation would influence the majority of the things in the financial statements
and hence the tax liabilities would likewise experience a change. Hence the tax assessment
laws ought to address the treatment of duty liabilities emerging on execution from GAAP to
IFRS. It is critical that the tax collection laws perceive IFRS agreeable to the financial
statement or else it would copy authoritative work for the associations.

III.

Reporting Systems

Disclosure and reporting necessities under IFRS are totally not the same as the Indian
reporting prerequisites. Organizations would need to guarantee that the current business
reporting show should be corrected to suit the reporting necessities of IFRS. The data
frameworks ought to be intended to catch new necessities identified with altered resources,
section exposures, related party transactions. Presence of legitimate control and minimizing
the risk of business interruption ought to be dealt with while altering or changing the data
frameworks.

IV.

Fair value

IFRS utilizes fair value as an estimation base for esteeming the majority of the transaction of
financial statement. The utilization of fair value accounting can bring a considerable measure
of unpredictability and subjectivity to the financial statements. It likewise includes a
considerable measure of diligent work in touching base at the reasonable quality and
valuation specialists must be utilized. In addition, changes in accordance with reasonable
worth result in increases or misfortunes which are reflected in the pay proclamations.
Whether this can be incorporated into figuring distributable benefit is additionally faced off
regarding (Srkant, S, 2005).

2. Describe the importance of having an optimal level of disclosures and critically discuss the
challenges that may be faced by IASB is reducing the amount of disclosures in financial
statements in view of making financial statements more understandable

It is said that enhancing correspondence between the clients and preparers of financial
statements has been an anticipated objective to be accomplished by every stakeholder.
Partners are stating that the data in the disclosures are helpful and could yield better choice
makings, more organized information and less repetitive. Yet, the FASB is tending to that
there are a lot of data which is prompting too much disclosure. This questions the
effectiveness of the disclosures.
It is essential to have ideal level of disclosures in the financial statement. Disclosures ought to
strengthen the financial statements and give clients important data to evaluate execution and
prospects. Preparers can start today to ensure they are formulating clear and justifiable
disclosures. Preparers can work to guarantee that reference disclosures plainly impart
important strategies, give clarity about huge exchanges, offer unmistakable quality to critical
things, dispose of duplication, and give significant, organization particular data. Utilization of
legitimate association and organizing, cross-referencing, and even presentations can upgrade
route inside of the financial statements. Other capital business sector members play a part too.
At the point when revising financial information, evaluators and securities' attorneys ought to
keep up a continuous mindfulness that utilizing an agenda or risk based attitude might prompt
incorporation of irrelevant or generally not-valuable disclosure. Standard setters and
controllers can stress preparers' capacity in the set up principles, to utilize adaptability and all
around contemplated judgment to decide their disclosures and support disclosure of data that
is applicable and imperative for clients to get it. Standardization of disclosure practices as
prescriptive administrative professions can be evaluated on a few grounds. By driving
organizations to unveil particular data about specific things, it can block their capacity to
depict those components that make them one of a kind, running the danger that broad
disclosure around insignificant things will cloud the pursuer judgment of what is vital to the
organization.
Point by point disclosure may not be suitable for an organization with minimal spread-based
business. Yet, they do show the culmination of disclosure that can be furnished as for risk
when sought. This sort of disclosure is obviously esteemed by the investor and analyst.
Specifically, organizations should consider uncovering sensitivities to every key driver of
income.

It is a disadvantage to the organization if the disclosure includes complete and quantitative

disclosure of confidential information which could benefit the competitor to hurt the
organization's position in suit cases. Under this method of reasoning, organizations are
willing to persevere through the dismay of analysts and different group of people of financial
statement with a specific goal to secure the competitive advantage (Buzzichelli, F & Pietra,
R. D., 2013).
The capital markets like disclosure because it gives a clearer view of risks, so more disclosure
should reduce the companys cost of raising cash. Academic research has also noted that
greater disclosure reduces the individual investors cost of research, making investing keener
to invest in a company. Disclosure gives a clearer perspective of risk, so more disclosure
ought to decrease the organization's expense of raising money. Scholarly research has
additionally noticed that more prominent revelation diminishes the individual financial
specialist's expense of research, making contributing more proficient and drawing investors.
What's more, more prominent disclosure enhances value productivity. As it were, narrowing
the swings in cost ordinarily seen when financial specialists, questionable about what's truly
going on, flipping in the middle of excitement and misery. More prominent disclosure, in this
way, causes share price to precisely mirror an organisations actual quality, and that exact
estimating urges administrators to contribute their very own greater amount riches, giving
them a more grounded motivating force to perform well.

Reference

Buzzichelli, F., & Pietra, R. D. (2013). Risk profile disclosure requirements for Italian
insurance companies: Differences in the financial statement preparation. Financial
Reporting, (1), 43-79.
'Optimal Disclosure': Why Firms Need to Balance 'Hard' and 'Soft' Information Knowledge@Wharton. (2014, May 28). Retrieved from
http://knowledge.wharton.upenn.edu/article/optimal-disclosure-firms-need-balance-hard-softinformation/
Disclosure overload and complexity: Hidden in plain sight. (n.d.). Retrieved from
https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/disclosure
-overload-complexity.pdf
Financial statement disclosures Enhancing their clarity and understandability. (2014, April).
Retrieved from https://www.pwc.com/us/en/cfodirect/assets/pdf/point-of-view-financialstatement-disclosures
Samir, M. S. (2003). Harmonization of Accounting Standards. Chartered
Accountant, ICAI, January 2003.
Srkant, S. (2005). Accounting Standards will the World be talking same
language? Chartered Accountant, ICAI, February 2005.