Benefits of IFRS Essay Example for Free

Benefits of IFRS EssayIFRS go forth enable US bank to compete globally more than than one hundred countries in the world ar already using IFRS. This is because more than sixty percent of investors in US operate foreign stocks with foreign banks and other(a) companies which use IFRS. Therefore, if US bank fail to switch to IFRS, transparency and comparability willing reduce for US issuers and investors (Silver, 2009). Furthermore, US exchanges such as the NYSE have been gradually losing their position as the place where world-wide companies list their shares. This being the case, the US bank has been affected since foreign investors now prefer investing their wealthiness in other banks where the accounting standards are not as strict is in the US. To avoid losing enthronement opportunities and lagging behind the current developments in the field of accounting, US bank does have to switch to IFRS. compare the one-year report of Rabobank with that of Wells Fargo bank shows how IFRS reduces financial reporting into smaller and less complicated documents.The 2009 annual report of Rabobank were complied in a 61 (Rabobank, 2010) pages document era that of Wells Fargo were documented in 196 pages (Wells Fargo, 2010). This implies that IFRS summarizes financial reporting more than thrice of the generally accepted accounting principles accounting standards. It is also evident from the annual reports of the two banks that IFRS provides more comprehensive historical information regarding the performance of the bank over the past five years(the case of Rabobank) patch GAAP only gives the present and previous years figures.This makes IFRS more effective since the stakeholders, management and investors arse be able to track the financial position of the bank at a glance so that which is very important for future palming (IASCF, 2009). Adopting IFRS will make reporting for most banks in US easier since it will reduce the complexities of comparing financial s tatements from different subsidiaries across the globe.It will also facilitate internal torso and streamline all operations, auditing, reporting standards, training and company standards (Articles Base, 2009). For instance, Rabobank applies IFRS on its financial reporting. This has greatly improved the faculty of the bank since it operates in more than forty countries around the world. Following the banks annual reports since 2004, the derive net profit calculated using IFRS was higher by 15 million Euros as compared to the uniform when calculated with GAAP (Rabobank Nederland, 2005).This difference was majorly due to the benefits of reclassifications of interest income under IFRS. This is because under the IFRS accounting standards, several interests are no longer amalgamated and this results to lesser third-party interests (Rabobank Nederland, 2005) Disincentives of adopting IFRS IFRS accounting standards are less detailed as compared to GAAP GAAP is more complex and based on rules while IFRS is based on principles.Adoption of IFRS will reduce the quality of financial reporting because most of the rules applied for GAAP have been let-out in IFRSwhile IFRS principles fit in a single two-inch quilted book, GAAP standards fit in a nine-inch thick bookthis indicates that the details and reporting requirements of IFRS are fewer and compressed (IASCF, 2009). Adoption of IFRS implies that banks will incur supererogatory costs training staff on IFRS standards and also initial conversion costs which will be paid to advisors and auditors (Articles Base, 2009).Considering the format of the annual reports of the two banks, it is evident that IFRS eliminates many items from the annual report and presents only the consolidated financial position of the bank. Information eliminated from Rabobanks 2009 financial reports include the vision, mission and goals of the organization, financial reviews, the report from item-by-item registered public accounting firm and rep orts on stock performances however this information is provided in Wells Fargo 2009 annual report.