What are the Practical issues and challenges in IFRS implementation?

Adoption of IFRS is a difficult task and has many challenges.  Some of the major challenges are as follows:

Difference in GAAP and IFRS

Adoption of IFRS means that the entire set of financial statements will be required to undergo a drastic change. The differences are wide and very deep routed. It would be a challenge to bring about awareness of IFRS and its impact among the users of financial statements.

Initial transition will be a challenge given differing recognition and measurement criteria for assets and liabilities. These will not only impact earnings, but it is important to be able to capture those differences through appropriate information systems.

Specific accounting areas that will be more complex included business combinations and financial instruments. Many of the problems associated with them arise from the greater use of fair value accounting under IFRS.

Interaction between Legislation and Accounting

There are concerns about the compatibility of local laws with IFRS in certain matters pertaining to accounting, such as formats and presentation requirements. Similarly, there is uncertainty over tax treatments of items arising from convergence such as unrealized gains and losses and the move from a tax basis for depreciation to one of useful economic life (IFRS).

Training and Education

Lack of training facilities and academic courses on IFRS is also a challenge. A key challenge is to ensure companies, auditors, regulators and the investment community is appropriately skilled to apply and interpret IFRS.

Fair Value Measurement

 IFRS uses fair value as a measurement base for valuing most of the items of financial statements. The use of fair value accounting can bring a lot of volatility and subjectivity to the financial statements. It also involves a lot of hard work in arriving at the fair value and valuation experts have to be used.

-Financial information provides the performance on listed companies accurately & in a timely manner is indispensable to the realiable fair price information required for the  exchange.

-Amid the ongoing globalization of the economy and enhanced cross- border nature of corporate activeties , the necessary and the value of I F R S  are growing rapidly.

-I F R S  is a strict  standard in terms of management ,companies   will have to make profit based on capital that is managed fair value.

Yeah I can fully agree. It also happens that local law makers give you the chance to use IFRS but in this same time they don't unify the regulations.

• The biggest challenge faced is the resistance to change that is found in the mindset of the people. This resistance is found in Corporates, Government Department, and to an extent even in the stakeholders.
• Also in every Country, there is existence of various laws and reporting requirements which have to be taken care of before implementation of these IFRS. The adoption of IFRS would benefit on a large scale on a global level and even the accounting profession would benefit from having the updated knowledge of the International accounting world.
• Another possible challenge that can be faced is the management of the data as per the old accounting standards and the management of the new data which will be prepared on the basis of the New Accounting Standard which are nothing but the converged IFRS.

In my thinking the most important issue is that sometimes the ifrs conflict with the domestic laws

Thank you for your kindness invitation.

I agree with all previous answers.

Regards

t IFRS is a strict standard in terms of management. Companies will have to make profits based on capital that is measured at fair value. I think that will be a higher hurdle for the companies.

Thanks for Invitation

Yes You are right Ahmad, sometimes we face such situation when IFRS conflict with the domestic laws.

I am also agree with all previous answers.