Contents

Introduction.............................................................................................................................................2
IFRS, Cartel, Big 4, Public Interest & Implication of Accounting in different Countries............................2
Different Accounting System for Different Local Authorities in Different Countries...............................3
IFRS, UK, Local Authorities and Major Beneficiaries................................................................................5
Case involving Big 4 & Audit Failure Judgment and its consequences.....................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................7
Introduction

Financial accounting systems are normally set to facilitate the public, government, and public so

that a common platform may be provided to ease business and create an environment of trust.

Similarly, IFRS provides the same (Hoogendoorn, 2006). However, in this essay, we try the

answer the concerns related to Murphy's case studies. Where he believes that IFRS facilitates the

Big 4. further, he is of the opinion that IFRS does not serve the interests of the common public.

Moreover, he believes the implementation of IFRS on local authorities does not serve the basic

purpose, and he is against its implementation in the UK. However, we think otherwise, though he

is right somehow. But, we suggest it is an independent body that does not get influenced by the

Gig 4. Moreover, it provides services for the public as well as investors (Alon & Dwyer, 2016).

In addition, though implementation on local bodies in different countries is tough,  transition cost

is a one-time cost. Later, that facilitates all stakeholders(Hoogendoorn, 2006). Likewise, Such

accounting standards are in the best interests of the UK, not the Big 4 audit firms, and they

would aid in stricter enforcement and open up investment opportunities for small businesses,

improving the economy (Alon & Dwyer, 2016). Furthermore, since other nations have

implemented similar strategies, that would be aligned with the rest of the planet. Moreover, the

failure of auditing systems or audits judgments are also discussed here.

IFRS, Cartel, Big 4, Public Interest & Implication of Accounting in different Countries

Murphy claims that the IASB does not work in the public interest. Since the IASB was

established to ensure that accounting standards and reports are in the best interests of investors

and the public, this claim is false (Ramirez, 2012). The IASB created IFRS to ensure that

companies and organisations have stricter controls, laws, and oversight so that they cannot
mislead their stakeholders (Hoogendoorn, 2006).Furthermore to improve the consolation

mechanism, the IASB has ensured strict regulations, especially with stakeholders, and the board

needs written responses if the stakeholders' views are not taken into account. This evaluation

process raises the credibility bar even higher.

Moreover, as a result, Murphy's claim that a cartel exists is somewhat misleading, given the

board's attempts to equally represent all stakeholders and protect stakeholder interests. Despite

the presence of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and

KPMG in the IASB, it should be noted that corporate compliance standards have been

established, ensuring greater financial disclosures (Ramirez, 2012). Since the companies are

major rivals, they can exert some control and make suggestions, but there is no cartel structure

(Ramirez, 2012).

Furthermore, the level at which different countries implement the system is determined by the

regulatory authorities in each country. The buinses or organizations prefer the IFRS where their

governments have strictor rules and regulations. The regulator's authority is crucial in ensuring

global IFRS compliance (Hoogendoorn, 2006). The IFRS architecture offers a higher degree of

financial transparency, according to empirical studies and real-world implementations.The

company's value significance and profits have improved as a result of the introduction of IFRS

system. were either voluntarily adopted or mandated have demonstrated the system's

effectiveness. In many setups their rule and regulations are tightly in practice, such as China and

India, may be hesitant to adopt the plan.

The UK, the US, and the European Union, on the other hand, have all effectively adopted the

system. The International Financial Reporting Standards (IFRS) became generally accepted after

major countries adopted them. The UK has also given its public sector divisions more time to
execute the scheme effectively. Since most businesses and government agencies collaborate with

organizations all over the world, it is important to use a commonly recognized accounting

system. A universal framework allows for easy contact between various organizations all over

the world, which is critical for public-private partnerships. As a result, Australian companies

should adopt the International Financial Reporting Standards. Thus, Although the transition costs

are high, many of them are one-time and therefore more beneficial. As a result, it will take more

time, create more uncertainty, and demand more awareness and time from investors. This may

not be optimal for the economy as a whole, as well as for small businesses that need more funds

to expand.

Thus, Its implementation saves investors time and money by comparing competing firms from

different nations. The flow of resources will be more effective, costs will be reduced, and a

variety of stakeholders will benefit from the unified financial reporting structure. As more

enterprises are moving to a competitive market, embracing IFRS ensures that all companies

across the world view their financial statements on the same basis (Alon & Dwyer, 2016). As a

result, U.S. firms will have a comparative edge over their global counterparts, as comparable

financial results transparency will be more understandable and easier to compare to investors

(Hoogendoorn, 2006). Lack of accuracy makes financial statements challenging and difficult to

comprehend for foreign corporations with operations in many countries.

Different Accounting System for Different Local Authorities in Different Countries

It is possible that there won't be a paradigm shift, as Murphy says. Both local governments and

the federal government, on the other hand, will have to make substantial efforts to transition to

IFRS accounting, but this would not be a futile or fruitless task since the global accounting

system would be compatible in this way (Hoogendoorn, 2006).

Such accounting principles do not benefit that much from IFRS but the government likes to avail

of this offer and facility. thus, they can be part of a huge setup. That is why the European Union

preferred its members to have it implemented to have uniform rules through their terri Moreover,

This will reduce audit firm expenses, as if it is not made mandatory, audit firms would be

charged higher fees to get the two systems into alignment (Yoon, 2009).

If we give a look at the nature of local authorities , they act as a refueling station for service

providers including police and fire departments. Therefore, existence has become intangible.

Local units have been effective in providing timely assistance and services to the public. Local

authorities ' success has been aided by the central government's limited interference and

hindrance in their operation. Therefore, service quality and productivity can suffer, as more

effort is needed. IFRS, on the other hand, would certainly be advantageous because it would

have greater accountability on the account of services provided and related costs.moreover,

Training programs and central government assistance, and the efficiency of services will support

this clarification and productivity of accounting reports will be improved.

As they prepared for the implementation of IFRS, local governments faced a significant

challenge. Financial statement reporting has been greatly influenced by the International

Financial Reporting Standards (IFRS) (Hoogendoorn, 2006). Many supporters of the

International Financial Reporting Standards (IFRS) for local governments argue that it will allow

them to provide transparent, understandable, and interpretable financial data. Local authoritis

will have more time to prepare these reports, which will enable them to provide information

more efficiently. Another reason local bodies will have little trouble adopting IFRS is that the

federal government has already provided them with guidance and expertise.
However, there are issues that need to be resolved, such as how PFI contracts are handled, and

steps have been taken to resolve these concerns. As a result, the International Financial

Reporting Standards (IFRS) did not seem to be a major problem for local authorities (Alon &

Dwyer, 2016).

According to Richard Murphy, the main problem with switching to IFRS for local governments

is that it would increase workload while also failing to meet the goal of making local government

accounts easy to read. Peter Hayday, the Director of Finance and Resources at Westminster, has

made a similar argument (Alon & Dwyer, 2016). Another point advanced by Hayday is that

depreciated asset value was not needed in the past, but that with the introduction of IFRS,

depreciation had to be accounted for even for prior years, and an adjustment had to be made.

It must be discussed and demonstrated to local bodies that adopting the International Financial

Reporting Standards (IFRS) would make it easier for them to determine whether their

investments have yielded results and what steps are needed. Infect, the key problem is with many

service groups, which could have more complex transactions and a greater volume of relevant

data, requiring more experience to prepare reports. This can put pressure on those authorities,

complicating implementation. However, It may be less difficult for fire and rescue personnel to

carry out, and police officers may feel it is not one of the most difficult tasks (Hoogendoorn,

2006). In addition, determining the value of the property, as well as the plant and equipment in

use, is another issue that local governments can face. The most important issue is to revalue the

property using the new IFRS groups. For instance, authorities are finding it increasingly difficult

to determine the value of assets. Second, reclassification is becoming more difficult, as is

estimating the value based on the reclassification. This, on the other hand, can be avoided by

using IT skills and thereby handled when such accounts are regularly maintained.
Other issues involved collecting financial-related values from other entities and the asset

registry's ongoing tracking, which is currently not being done.This section requires you to

account for each type of plant and machinery in each department. Local authorities must also

address the question of leasing, which necessitates determining if a lease exists and, if so,

reviewing, classifying, and locating embedded leases. The government is often faced with

accountability issues, the most severe of which is segmental reporting disclosure.

Furthermore, IFRS would help in allowing comparability at the grassroots level and provide

investors with more context for investment if it were implemented. Although investors would not

invest in local governments, as Murphy said, the information provided by local governments will

simplify the study of information provided by other small and medium businesses since they are

all connected to one another. This will improve transparency while also decreasing investor costs

and reducing market chaos created by contradictions that create ambiguity in the system.

IFRS, UK, Local Authorities and Major Beneficiaries

Under the International Financial Reporting Standards, stewardship and accountability are

considered to play a vital role. As this is the right of the public to know where their money is

being spent. Hence, the government must fulfil its duty to be accountable to the people in a

democratic state. In this respect, financial reporting plays a significant role to bring transparcy

and accountability in the system.

Under the International Financial Reporting Standards, stewardship is described as a measure of

management efficiency (IFRS). Determining the stewardship responsibility for safekeeping of

assets, but also the management of those assets. The effectiveness of stewardship duty is
measured by the efficiency of an investment (Hoogendoorn, 2006). To measure the impact of

stewardship, one can use the International Financial Reporting Standards (IFRS) to track changes

in an asset's fair value.

While aligning local governments with the International Financial Reporting Standards (IFRS)

can be a costly and time-consuming operation, it can be avoided thanks to substantial

technological advances that assist in a uniform and consistent transition, reducing, if not

completely eliminating, the time required. Thus, technological advancements have made the

transition simpler and will thus aid it. Another reason is that, as previously said, there will be

fewer chances for investors and local small and medium businesses to be confused when it

comes to investment. Instead of favoring a single nation, a single accounting system would result

in decisions that benefit the entire world. As a result, with the aid of experts from all over the

planet, the world will take consistent steps in the same direction, helping more economies.

Finally, the International Financial Reporting Standards (IFRS) would improve the consistency

of accounting reports, making them more investor-friendly and cost-effective. Although this will

require extra effort, it will inevitably alter how the world views investment decisions and the

complexities of the system. If it were not implemented, non-local governments would be

expected to prepare a variety of reports, some to satisfy local government reporting standards

and others to meet foreign investor expectations. Thus, the transition benefits all the

stakeholders.
As long as its implementation on UKs concerned, such accounting principles are in the UK's best

interests, not the Big 4 audit firms', since they will help with tighter regulation and free up

investment opportunities for local companies, boosting the economy. This will also be consistent

with other countries that have already implemented similar policies, as it has been adopted by the

majority of countries around the world (Alon & Dwyer, 2016). As, The implementation of IFRS

in the United States has been studied, and it has been discovered that, despite the issues raised,

the implementation of IFRS was not hindered, thanks to the uniformity and consistency in the

framework that IFRS would provide, as well as the opportunities for business growth and insight

into investment opportunities that IFRS would provide (Emily, 2009).

To sum up, In order to ensure an internationally uniform rules-based accounting framework, the

International Financial Reporting Standards (IFRS) have taken the drastic step of disclosing

information. When it comes to IFRS in the public sector, the three fields where it is most

important are PFI scheme accounting, derivative care, and lease accounting.in addition, under

IFRS one need to differentiate between land element and building element while talking about

property lease (Alon & Dwyer, 2016). Further, it will be bifrgated as operating lease or finance

lease. This practise is not followed as of now.  Under IFRS, government agencies will be

required to look for embedded derivatives and then decide whether they should be accounted

separately or not depending upon the fair value of embedded derivative. The inclusion of

accruals for employee compensation such as earned leave is more stringent under IFRS (Alon &

Dwyer, 2016)

Thus, Partnerships, cross-border acquisitions, and the establishment of cooperative arrangements

with foreign companies can become much easier and more viable if the International Financial

Reporting Standards (IFRS) are implemented (Hoogendoorn, 2006). As a result, the

implementation of IFRS would undoubtedly improve the global economy's efficiency, thus

benefiting the general public. r.

Case involving Big 4 & Audit Failure Judgment and its consequences

PCAOB fines KPMG Bermuda

In May 2015, the PCAOB (Public Company Accounting Oversight Board) voted to inspect the

auditing business. During 2014 and 2015, Damion Henderson was the head of KPMG Bermuda's

Ethics and Independence (E & I) Department. The department's quality management policies and

procedures at the time allowed firm employees to sign written independence confirmations, or

independence affidavits, on a regular basis during their jobs (Mara, 2020).

A senior manager reviews and signs off on the completed hard-copy documents before giving the

independence affidavits to Henderson to initial and authorise. Those records vanished in October

of 2014. The PCAOB inspectors were scheduled to arrive in May 2015, according to KPMG

(Mara, 2020).

As a result, the E & I department requested that workers re-execute the affidavits and backdate

the re-executed affidavits to the date they signed the originals. The majority of employees

complied and returned the documents to E&I(Mara, 2020).

Naturally, the PCAOB discovered this and fined Damion Henderson $10,000 on April 9. KPMG

Bermuda was fined $250,000 for failing to develop and enforce a quality management

framework that would provide fair confidence that company staff would follow relevant

professional standards and the firm's own quality standards (Mara, 2020).
Moreover, Auditors overlooked frauds that resulted in the arrest of five Baptist Foundation of

Arizona officials on 32 counts of fraud, racketeering, and robbery. 11,000 investors lost £400

million (Mailonline, 2002).

Auditors were convicted in the Senate Report of participating in a "cover up" (US Senate, 1992b,

p 276) and causing "substantial harm to innocent depositors and customers of BCCI" (US

Senate, 1992, p 5). The UK taxpayer had to borrow £3,000 million to bail out secondary banks,

mortgage firms, and insurance companies following audit scandals in the 1970s.

The British government was called in to investigate the frauds and audit irregularities at Barlow

Clowes. Compensation to taxpayers would cost the government £153 million.Audit deficiencies

in the US Savings and Loans sector could have cost taxpayers between $400 and $500 billion in

bailouts.

Professional judgement incorporated in the audit adds benefit by correctly identifying audit

challenges and developing audit processes, as well as a precise determination of the workload

and facts needed to support the audit opinion. However, Audit failures are often linked to

deposits being lost, jobs being lost, and people losing their livelihoods and many more.

Conclusion

In this essay we covered the financial accounting standard board from different perspectives.

Moreover, the work presented here, answers the queries raised by Murphy. His concerns are

answered here from the research. Which totally supports the IFRS in terms of facilitating the

public, businesses, and governments. Moreover, its implementation in local authorities provides

rich dividends to stakeholders, keeping its one-time transitional cost on the side. Moreover, the

disparities and weakness of audit judgments are also discussed here.

References

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examination based in institutional theory. Accounting, Organizations And Society, 48, 1-16.

https://doi.org/10.1016/j.aos.2015.11.002

Hoogendoorn, M. (2006). International Accounting Regulation and IFRS Implementation in

Europe and Beyond – Experiences with First-time Adoption in Europe. Accounting In

Europe, 3(1), 23-26. https://doi.org/10.1080/09638180600920087

Mara, M. (2020, July 9). 21 Scandals, Settlements and Corporate Crimes of Big 4 Accounting

Firms in 2019. Faceless Compliance. https://facelesscompliance.com/7604/21-scandals-

settlements-and-corporate-crimes-of-big-4-accounting-firms-in-2019

Dailymail.co.uk. 2002. April 2002 News Archive | Daily Mail Online. [online] Available at:

<https://www.dailymail.co.uk/home/sitemaparchive/month_200204.html> [Accessed 13

May 2021].

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Auditing. Finance: The Discreet Regulator, 40–58.

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