INTERNATIONAL FINANCIAL REPORTING Essay Example | Topics and Well Written Essays - 3000 words

INTERNATIONAL FINANCIAL REPORTING - Essay Example However, adopting IFRS itself may not always result in increasing the quality of financial information. In addition to adopting IFRS several relevant changes in the overall economic and institutional framework need to be implemented to achieve the enhanced quality financial reporting. Further, before implementing IFRS fully to all countries, an international consensus taking into account of the country specificities needs to be obtained regarding the treatment of various financial instruments and various accounting procedures .This is needed to implement IFRS without affecting the information provided by the financial statements of enterprises Financial Statements of an enterprise are intended to give valuable information about the financial health of the company to its owner investors and lenders (Tracy, 2004).In other words, they are supposed to give information about the financial position, performance and changes in financial position of the enterprise. These are a major source of financial information that helps the users in making decisions about economic activities. Thus according to IASC(1989,paragraph 12), â€Å"The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.† On the other hand, it is argued that the preparers of the financial statements can manipulate the financial statements by the transformation of financial accounting figures from what they actually are to what preparers desire by taking advantage of the existing rules and/or ignoring some or all of them (Nasar, 1993:2). It may not be illegal in all cases but they are considered as unethical (Amt et al, 1999). This process is called creative accounting. The inappropriate use of creative accounting has resulted into financial statement frauds in many cases, which has been an issue of