Benefits of IFRS
The International Financial Reporting Standards are rules and guidelines that are set by the ISAB which refers to International Accounting Standards Board that organizations and companies follow when filling financial statements. The formation of international standards enables investors, government and organizations to compare various financial statements supported by IFRS with greater ease. This is because there are many countries nowadays that permit or require organizations to comply with the set IFRS standards. The following are some key benefits of IFRS.
1. Unifies business transactions
One of the major aims of the International Financial Reporting Standards is simply to place each person in the whole world on one level when it comes to making financial statements. This enables domestic firms to display their financials on similar levels as their foreign competitors. In addition to that, organizations with various subsidiaries in other continents are also going to be able to prepare their financial statements in a universal accounting language that is understood by everyone.
2. Saves cost
Because many different companies are now adopting IFRS, this is going to be a great advantage for companies with foreign operations. IFRS enables internal consistency with regards to preparing financial reports. This means that the cost will be reduced since all the reports are going to be done in a uniform manner in all the different branches of the company.
3. Provides consistency
The best thing about IFRS is the fact that it allows companies having different subsidiaries to streamline their training, auditing, reporting standards and operation standards as well as development standards. Whether global or domestic, their offices could possibly adapt the same reporting techniques and standards providing consistent and precise reporting and company records.
Nevertheless, there are some drawbacks of IFRS. One of the main drawbacks is that it is quite expensive to implement these standards. This is because you have to train your employees regarding the practical implication of these standards to their work.