THE GROWING IMPORTANCE OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

This paper highlights the importance, development, and evolution of International Financial Reporting Standards (IFRS), emphasizing some relevant issues in contemporary accounting, such as the need for a globally recognized financial reporting system and a conceptual base of different accounting measurement approaches in order to increase transparency and comparability in financial reporting. The first section of the paper illustrates the main reasons for the changes in financial reporting that are required in order to satisfy the information needs of both existing and potential investors of business entities in global capital markets. The subsequent section describes the main purpose and role of financial accounting, followed by a description of different ways of regulating financial reporting emphasizing the increased role of the standard-setting activities of private-sector bodies, such as the International Accounting Standards Board (IASB). This section also reveals that the standards published by the IASB are gaining ever wider acceptance and recognition in today’s globalized world economy, although this also illustrates the growing future importance of IFRS and the IASB’s work in several areas. The next part of this section presents the main advantages, features, and stages of the standard-setting process of the IASB, providing evidence about how investors can use IASB’s standards as a valuable predictive device. The third section of the paper introduces some major problems associated with contemporary accounting measurement issues, for example delivering new measurement concepts in financial reporting. This section also establishes that measurement is fundamental to accounting, and for this reason the improvement of measurement concepts must be emphasized in financial reporting. In the last section the paper assesses the increased role of reporting under IFRS today and argues that the constant improvement of standard-setting contributes to satisfying the needs of investors. The main finding of this paper is that the continuous and marked improvement in standard-setting by the IFRS Foundation enhances the quality and usefulness of financial reporting