How International Financial Reporting Standards Affect The Quality Of Canadian Accounting Information

1846 words - 7 pages

How would International Financial Reporting Standards affect the quality of Canadian accounting information?

Globalization has a great impact on today’s economy. The differences of accounting regulations and practices in various countries have become a noteworthy obstacle to globalization and economic development. International Financial Reporting Standards (IFRS) mitigates global business barriers. In order to adapt to the increasingly global business environment, public companies in Canada will move to IFRS by 2011. This movement will have a significant influence on Canadian business such as capital markets, financial statement preparers, the accounting profession, and even accounting students. Investors are eager to understand the differences between IFRS and Canadian GAAP. The public companies should be ready to follow IFRS in January, 2011. Even private companies should fit their businesses into the new environment. Therefore, most Canadian companies care about what issues IFRS deals with.
In our report, we will only focus on how IFRS affects the four qualitative characteristics of Canadian accounting information—relevance, reliability, comparability and consistency. The discussion will help investors to better understand accounting information. Generally, IFRS and Canadian GAAP have the same objective: providing useful information for decision making. Both of them are principles based and have the same conceptual frameworks. However, there are still some significant changes from Canadian GAAP to IFRS: the implementation of fair value, going concern exposure, revenue recognition, disclosure of “extraordinary items”, costing techniques, and segment reporting. (See Appendix)
This change from IFRS to Canadian GAAP will benefit investors because increasing relevance allows them to better evaluate the firm’s future prospects. On the other hand, it may bring disadvantages to the management since decreasing reliability may make income statement more volatile.

1.1 Definition of comparability
According to Canadian GAAP, the definition of comparability is “Financial information measured and reported in a similar manner among different companies. Comparability allows analysts to identify real economic similarities and differences among companies, because those differences and similarities are not obscured by changes in accounting methods or disclosure practices.”
In September 2007, the IASB issued a revised IAS 1 “Presentation of Financial Statements”, in which the definition of comparability was expanded to include consistency with regard of the definition of Canadian GAAP. The definition of comparability in IAS 1 is “Users need to be able to identify differences between the accounting policies for like transactions and other events used by the same entity from period to period and by different entities.” In this paper, we focus on the real economic similarities and differences among companies with...

Find Another Essay On How International Financial Reporting Standards Affect The Quality Of Canadian Accounting Information

The World Needs International Accounting Standards

769 words - 3 pages reporting for an overview of a business entity, but also the performance trends, industry data and risk factors. In response to the financial crisis, the Boards have been advised to emphasise to business entities how crucial it is that the quality of the data recorded for financial reporting should be to a high standard. A global convergence of accounting standards is more imperative than ever, as financial markets are now global markets. A

FASB Financial Accounting Standards Board Essay

646 words - 3 pages , and Construction and Not-For-Profit firms (Financial Accounting Standards Board, 2009).In conclusion, The FASB Codification System has a vast amount of information that can help finance; accounting and management professionals stay within the US GAAP guidelines. In addition they can feel confidante that their firm's financial statements are presented fairly and accurately.ReferencesFinancial Accounting Standards Board. (2009). FASB. Retrieved on 7:51:22 PM from

The Conceptual Framework for Financial Reporting: Bega´s Current Accounting Practice of Property, Plant and Equipment

2182 words - 9 pages Overview of the report This report analyses the disclosures of objective of general purpose financial reporting and the qualitative characteristics of useful financial information according to The Conceptual Framework for Financial Reporting. It investigates Bega’s current accounting practice of Property, Plant and Equipment in accordance with AASB 116 Property, Plant and Equipment, and how it satisfies the objective of general purpose financial

Discussion into the impact of adoption of International Accounting Standards to the UK

1530 words - 6 pages Accounting with Finance (Hons)Advanced Financial Accounting Coursework'Discuss the impact of the adoption of international accounting standards in the UK'Most companies in today's world have to prepare some form of detailed record of its activities during the year. There are several users who require such detailed information, and therefore companies produce yearly accounts, showing items such as incomes, cash flows, and asset measurement. These

Government Accounting Standards Board versus Financial Accounting Standards Board

1295 words - 6 pages improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision useful information to investors and other users of financial reports (FASB 2014).” The FASB is also an independent organization that is different from any other business and professional organization. The FASB has seven members, and they serve full time. They are appointed for five year terms, and are eligible

uniform accounting standard produce uniform financial reporting

741 words - 3 pages together towards convergence. (1) Why did they take this approach? Why is it important to practise the same standard across firms and countries? It is said that uniform accounting standard produces uniform financial reporting. Hence, all financial information will be treated and presented in the same manner globally. The first advantage from this would be enhancing the comparability of high quality statements. For example, company A wishes to

Financial Reporting in an Accounting Environmnent

927 words - 4 pages challenges and benefits of financial reporting on the internet. These 3 weeks studies put together has captured important areas of financial reporting that are of practical use in modern accounting environment. This paper therefore ride on these to examine the article by Larson & Street (2004) on the progress and impediment identified by top accounting firms’ survey during International Financial Reporting standard( IFRS) convergence process in

New Zealand International Financial Reporting Standard

1122 words - 5 pages New Zealand International Financial Reporting Standard 8 (NZ IFRS 8) Operating Segments replaced New Zealand International Accounting Standard 14 (NZ IAS 14) Segments Reporting. Since 2009 NZ IFRS 8 has been compulsory. This essay will be covering the definition of an Operating Segment and the major changes that have occurred. It will also include summary of number and type of operating segments of the five listed companies in Part A and

International Business Financial & Management Accounting

6097 words - 24 pages 2001; Renshaw 2000; Chan et al. 1997; Chaudhury and Lee 1997).Coercive PressuresCoercive pressures reflect the enforcing regulative aspects of certain institutions. One essential institutional pressure emanates from the international harmonization of financial accounting legislation. For instance, international Finnish firms tend to apply internationally accepted accounting principles (such as IASC's standards or U.S. GAAP), while also the Finnish

Enron's Fraudulent Accounting and Financial Information

1013 words - 4 pages ? There are many different types of safety measures in place to protect the investors and the public as a whole. These include Generally Accepted Accounting Principles (GAAP), Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) and all professional ethics. The GAAP is a specific set of guide lines that companies follow when measuring and reporting information on their financial statements. During audits of any

How does the quality of water affect human health?

766 words - 4 pages mixture that is not safe for drinking use. Second, people drink the water as a last resort, and the particles hit their immune systems, causing them to become weak and groggy. Water in Africa primarily comes from swampland and bits of deserts. This shows how sand particles easily mix with the water resulting in dirty drinking water. Finally, there are many other factors that will affect water and its cleanliness. Unfortunately, even the smallest of

Similar Essays

International Financial Reporting Standards

1653 words - 7 pages The globalization of the world’s capital markets has created an increasing need for comparable, detailed and transparent system of financial reporting making it imperative to establish one set of high quality global accounting standards (Gornick-Tomaszewski, S., & Showerman, S.2010). Currently, there are two sets of accounting standards that are generally accepted for international financial reporting- The U.S. GAAP ( Generally Accepted

Chapter 1 Financial Reporting And Accounting Standards

7652 words - 31 pages financial reporting is primarily to provide information to investors interested in assessing the company's ability to generate net cash inflows and management's ability to protect and enhance the capital providers' investments. Financial reporting should help investors assess the amounts, timing and uncertainty of prospective cash inflows. 10. A single set of high quality accounting standards ensures adequate comparability. Investors are able to

A Report On The International Financial Accounting Standards

1112 words - 5 pages highlight the current developments in the relationship between these major players in International Financial Reporting Standards. Many other major capital market standard settlers have since co-existed and cooperated with the stated goal of issuing converged standards. In conclusion this report will outline possible implications that may be taken into account when improving developments for the future of International Financial Accounting Standards

Adapting International Accounting Standards Essay

1430 words - 6 pages accounting standards, the latter will provide universal accountability and will add international credibility to entities, governments, financial markets and economic policy-makers. Weber (1992) points out that: “International investment decisions and financial-based management decisions are then made with less risk. [...] Regulators and auditors will be receiving the same information, facilitating the evaluation process. [...] International