South Africa and IFRS
South Africa and IFRS
Jesse J. Case
Assignment a couple of
November several, 2014
Within the last decade there has been an increased push for the International Financial Reporting Standards (IFRS) all over the world around the world. Many countries are pushing intended for General Acceptance Accounting Practice (GAAP) that is to be accepted internationally. At the present time above 130 countries and developing worldwide possess adopted IFRS. Of that amount include many countries in Africa. However , it is quite surprising that Africa as whole had contemplated adopting IFRS given the muddled nature of these requirements on the worldwide grounds plus the often unseen justification given for the adoption of IFRS especially in The african continent. South Africa became the initially country in 2007 to adopt the Exposure Draft with the IFRS being a Statement of Generally Acknowledged Accounting Practice (GAAP). The intention from the early re-homing of the standard at that time was to provide quick relief to get limited curiosity entities beneath the then pending Corporate Laws and regulations Amendment Action.
The features of IFRS often included, improved regularity of financial claims amongst corporations and countries, subsequent in a decrease in the equity expense of capital, superior transparency, and a decline in materials processing price and a decrease in risk of international expenditure decisions amongst others. Although these kinds of advantages look very appealing, it is also the situation that these positive aspects cannot be reached in every overall economy. To be clear, IFRSs was designed for developed and seasoned capital markets. By least the economics echoes for by itself. It is an fehaciente fact that economical statements assisted investors for making critical purchase choices.
At the time it was considered, Africa was in a developmental level, IFRS probably would not have a simple solution at all, but rather have an actual threat. A past reportВ by the Southern region African Company of Chartered Accountants claimed that the IMF and EL had expected Africa's expansion in GDP to increase by simply 5% could favor the adoption of IFRS. The african continent wanted to communicate " a single financial revealing languageвЂќ. I read this while having a lot of truth. Even so, communicating a single financial terminology would not solve the many problems of legislation in Africa and the accounting standards.
Even though, African countries include adopted IFRS, it's ambiguous how the benefits of IFRS would assist in the evolution of Africa as well as the implementation inside the region could fall in the hands of individual countries. Each country in Africa differs in the others monetarily. Therefore , for instance a countries are clearly natural resource powered, some countries are taxes based financial systems. While some countries are highly outweighed by the public sectors, different countries largely depend on the private sectors. This made their needs different from the others and therefore put IFRS in this sort of economies that might not yield the desired objective of financials.
The re-homing of IFRS seemed to be influenced by the big four audit firms. Options documented their strong engagement in the placing of IFRS. The real issue was that, The african continent lacked professionals to stand-in and aid in a smooth change to IFRS. I think Africa should have paused and used a serious go through the possibilities of a great accounting system that better reflects the needs of Africa and its individual countries. The question is, was Africa ready for IFRS?
Even though IFRS has been " adoptedвЂќ by many countries, the applying and guidelines of it appeared to be picked and chosen simply by each nation. These consequences lack continuity between the distinct countries that already work with IFRS which overthrows the purpose of having a single worldwide accounting standard. In case the countries will pick and choose which will standards they would like to apply and which ones they will don't, will not make sense to improve standards it does not accomplish what it was designed to do. This International...
Bibliography: IFS Application Around the World Jurisdicitonal Profile: South Africa. (2013, Summer 5). Recovered from IFRS: http://www.ifrs.org/Use-around-the-world/Documents/Jurisdiction-profiles/South-Africa-IFRS-Profile.pdf
Bhattacharjee, S. (2009). Problems of Adoptoins and Application of Inside FInancial Reporting Standards. Foreign Journal of Business and Management, Vol. 4, And. 12.
Generic, R. (2011, January 2011). Africa emraces IFRSs. Gathered from IFRS: http://www.ifrs.org/news/features/Pages/africa-embraces-ifrss.aspx