The International Financial Reporting Standards - 895 Words

Article: 1 Adoption of IFRS by Central Government in UK The International Financial Reporting Standards (IFRS) have made an impact on the foundations of accounting, resulting in a different stance from the prior UK GAAP. Some of the more noticeable changes included; the increase of government resources being allocated to the standard. Companies will be required to provide all information of the incoming and expenditure of all money and assets under the new regulations. The presentation and terminology were altered in the current â€Å"Income Statement† and â€Å"Statement of Financial Position† leading to a change of some aspects on the budgets and estimates. â€Å"Fair value†; the unbiased evaluation of an assets potential market†¦show more content†¦The review committee of the Scrutiny Unit has addressed the changes made by IFRS. This includes whether the Treasury department adjusts to the fact that the budgets reflect additional costs, minimize hidden costs, therefore making the budget more accurate. Article:2 IFRS adoption and capital market consequences The outcomes on cost of capital required would be lowered as it improves the liquidity of the company within the market under the new regulations that is the IFRS. Many authors such as Daske et al. (2008) and Li (2010), along with Florou and Kosi (2009) have conducted studies to see if these results materialize in adopting the new jurisdiction. A study done by Li in 2010 shows that in 2005, the cost of equity has declined by 47% under the new regulations. Daske et al (2008) found mixed evidence about the effects of the adoption of IFRS. His study was based on the Liquidity of the capital market under the new regulation. In addition to this study, Florou and Kosi decided to look into another dimension by analyzing the impact of debt financing on capital markets. It was surprising to find that the yield was 39 basis points lower by companies that have adopted the International Standards. The research conducted also found out that mutual funds holdings increased over a period by those who had adopted the new standards. In another study done by DeFond et al, the foreign ownership of companies was