IMPROVING FINANCIAL TRANSPARENCY WITH IFRS

Accountability and proper governance are two concepts that work hand in hand and in business establishing financial transparency is crucial. However, up to some time, the variation in national accounting standards posed challenges towards the facilitation of cross-jurisdictional comparison and meaningful analysis of company figures. One problem pertaining to the global markets was the lack of comparability because investors could not compare investment opportunities easily by comparing financial statements across borders because of the differences in reporting structures. The IFRS was developed to overcome this challenge to accountancy and the presentation of financial statements. IFRS is a set of principles based standards framed by International Accounting Standards Board (IASB). The primary goal of IFRS is aimed to enhance transparency, accountability and governance worldwide in terms of having a single identical reporting platform with standard of high quality. The focus of this research paper is to analyses how the increased use of IFRS in the last two decades has contributed to increased financial transparency across the world. The discussion is carried out under the assumptions of previous different local GAAP and the increasing importance of IFRS for providing international accounting framework. The study also examines pro-IFRS findings gathered from prior academic research that underlines how the use of this Global Accounting Standard contributes to greater transparency provided by higher comparability, improved disclosure and increased overall quality of reported earnings information. Thus, it can be concluded that the IFRS have brought a great improvement in the pursuit of transparent financial reporting although some of the challenges still occur due to variation in implementing and enforcing of the standards.