Adoption of International Financial Reporting Standards (IFRS) in Term Paper

Adoption of International Financial Reporting Standards (IFRS) in European Union - Term Paper Example According to the paper findings the adoption of IFRS in European Union constituted one of the biggest financial reporting alterations in current years and was debatable. The adoption of IFRS results in the use of a universal set of financial coverage standards within Europe, and between Europe and many other countries that require or apply IFRS. This essay declares that the impact created by conversion to IFRS was much bigger and broader than expected. The EU experience states that it affects many areas beyond finance and includes human resources, business operations, IT, customers and external stakeholders. Furthermore, it can be learnt from the EU conversion that IFRS switchover will add considerable intricacy to a range of openings which firms currently pursue. These are mergers or acquisitions, expansion of global operations and new enterprise information systems implementation. IFRS renders companies with a major opening to attain broader transformational change and motor business gains beyond compliance. The economic arguments for the adoption of IFRS are that it is being viewed by many as having very good quality and is sufficient for the task. Indeed there is some empirical research evidence which supports the belief that same standards of financial reporting globally will surely increase market liquidity, reduce tra nsaction costs for capitalists, lessen cost of capital and finally facilitate international capital formation and flows.