Contents

Introduction.................................................................................................................................................2
Does IASB not act in a Public Interest?...................................................................................................2
Murphy’s Assertion of Existence of Cartel..............................................................................................2
Implication for accounting in different countries.....................................................................................2
Different accounting systems for local authorities, for different countries..............................................3
IFRS and UK’s Local Authorities............................................................................................................5
Major Beneficiaries of Move and the Bodies Who Get Benefited from the Move..................................5
Audit Case Backing Murph’s argument...................................................................................................6
Lapses, Oversights, Consequences in Audit Profession...........................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................7
Introduction

In this paper, we have answered the questions, which were raised from the case study of Richard

Murphy. Where Murphy has criticized the International Financial Reporting Standards

(IFRS) and suggests that it is under the influence of the top 4. Further, it facilitates them not the

public. Similarly, Murphy is not happy regarding its implementation on the local authorities of

the UK. Furthermore, lapses in Audit judgment. All above and other related asked questions are

answered here, while each answer is backed by literature. (Palmer & Scott, 2021).

Does IASB not act in a Public Interest?

Murphy does not believe that IASB provides any support or facility to public service, he thinks,

its all about entertaining cartel or its top sponsors. However, what I believe, his argument is false

since the IASB was created to ensure that accounting standards and disclosures are in the best

interests of investors and the public. IASB established IFRS to ensure tighter controls, rules, and

oversight so that businesses and organizations cannot deceive their stakeholders. Further to

guarantees transparent accountability in financial reporting and disclosure (Ramirez, 2012).

If we can recall its history, prior to implementing the IFRS scheme, the IASB met with all

stakeholders, including investors and organization and, the IASB examined the effect and

addressed some issues. Likewise, before enforcing the method, an adequate testing area was

developed. Thus, the board has established regulatory to ensure appropriate representation of

stakeholders. These bodies ensure that stakeholders' views are taken into account. Therefore,

appraisal process improves the credibility standards even further.

Murphy’s Assertion of Existence of Cartel

As a result, Murphy's assertion of the existence of a cartel is somewhat inaccurate, since the

board has made efforts to fairly serve all stakeholders and to safeguard stakeholder interests.

Furthermore, as long as the big four firms are concerned, which are, PricewaterhouseCoopers,

Deloitte Touche Tohmatsu, Ernst & Young, and KPMG , all four have an influence on IASB,

The question is not easily answered. It should be remembered that the guidelines for corporate

compliance have been laid down, ensuring greater financial disclosures. Although the firms can

exert some influence and make recommendations, there is no cartel structure since they are

major competitors. Hence, they are not in position to have a major influence on its decisions.

Implication for accounting in different countries

The rate at which various countries adopt the system is dependent on their regulatory authorities.

In addition , Because of the globalization of economies, businesses and coutries prefer a

universal structure to ease dealing with financial matters (Callao et al., 2009).

Empirical research and real-world implementations have shown that the IFRS framework

provides a higher level of financial transparency. It has been discovered that system adopters

have encountered effects on their cost of capital, liquidity, and mark adopters. It has also been

shown that since the implementation of the IFRS, the accuracy of financial statements has

increased. Many studies by experts suggest that its implementations brings an improvement in

the company's worth relevance and earnings. It depends on the country whether voluntarily or

enforced by the regulator, but empirical studies have demonstrated the system's success.

Furthermore, depending on the strength of the regulator, the implementation and application of

the standards has varied from country to country. Countries with strict regulators, such as China
and India, may be wary of implementing the scheme. However, the United Kingdom, the United

States, and the European Union have all effectively embraced the scheme. The adoption of the

International Financial Reporting Standards (IFRS) by large countries made the scheme widely

acceptable. The United Kingdom has also given its public sector divisions more time to

effectively implement the scheme.

Since most companies and government agencies work with organizations all over the world,

using a widely accepted accounting system is critical. A universal system ensures easy

communication between different organizations around the world, which is especially important

for global businesses.

Different accounting systems for local authorities, for different countries

To make the system transparent and make businesses easy, it is best practice to have a uniform

systems in local authorities and countries (Pilcher & Dean, 2009).There may not be a paradigm

change, as Murphy claims. However, all local governments and the central government would

have to make significant efforts to switch to IFRS accounting, but this will not be a pointless or

fruitless process since the accounting system for the entire world will be aligned in this way.

If we give a glance at the nature of local authorities, which provide different nature of services,

in different countries. Where the prime purpose of their existence is to provide timely assistance

and services to the general population. The central government's minimal intervention and

hindrance in the work of local governments has been a key factor in their progress. As a result,

the quality of service and productivity can be impacted, as more effort is required. However,

IFRS would undoubtedly be beneficial because it will provide greater transparency on the

account of services rendered and the costs associated with them (Pilcher & Dean, 2009).
As they planned for the implementation of IFRS, local governments faced a huge challenge. The

International Financial Reporting Standards (IFRS) have been influential in enhancing financial

statement reporting (Pilcher & Dean, 2009). Many who support the introduction of the

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

help provide transparent, easy-to-read, and interpret financial information. Similarly, Local

governments faced a major challenge as they prepared for the introduction of IFRS. International

Financial Reporting Standards (IFRS) have had a major impact on financial statement reporting

(Pilcher & Dean, 2009).

However, many supporters of the International Financial Reporting Standards (IFRS) for local

governments claim that it would help them provide open, easy-to-read, and interpretable

financial information. In addition, local governments will have more time to prepare these

reports, allowing them to provide information more quickly. Another explanation why local

governments would have little difficulty implementing IFRS is that they already have guidelines

and expertise from the federal government.

Furthermore, the key issue with moving to IFRS for local governments, according to Richard

Murphy, is that it will raise workload while also failing to achieve the target of making local

authorities accounts easy to read Pilcher & Dean, 2009). Local authorities must be discussed and

shown that adopting IFRS would make it easier for them to determine whether their investments

have yielded results or what measures need to be taken(Pilcher & Dean, 2009).

The main concern is with several service units, which could have more complicated transactions

and a higher amount of relevant data, necessitating more expertise in order to prepare reports.

This can placed pressure on those authorities, making implementation more difficult. It may be

easier for fire and rescue authorities to execute, and police authorities may believe it is not one of
the most difficult tasks (Pilcher & Dean, 2009).Another problem local governments can face is

determining the value of the land as well as the plant and equipment in use. The key issue is to

revalue the property using the latest IFRS revamped categories. For starters, estimating the worth

of properties is becoming increasingly difficult for authorities. Second, re-categorizing and

calculating the meaning based on the reclassification is becoming more difficult (Pilcher &

Dean, 2009). This, on the other hand, can be overcome by implementing IT skills and thus

managed when certain accounts are maintained on a regular basis. Other problems included

obtaining finance-related values from other agencies, as well as the ongoing monitoring of the

asset registry, which is currently not being done. Another problem that the authorities are dealing

with is part accounting. This is the part that necessitates accounting for each form of plant and

machinery in each department. Local governments must also deal with the issue of leasing,

which requires them to determine if a lease exists or not, and if it does, to review, classify, and

locate embedded leases. The authorities are often confronted with the problem of transparency,

the most serious of which is the segmental reporting disclosure.

Another explanation, as previously mentioned, is that there would be fewer opportunities for

confusion on the part of both investors and local small and medium enterprises when it comes to

investment.

The single accounting method would result in actions that favor the whole planet rather than a

single economy. As a result, the world will take consistent steps in the same direction, with the

help of experts from all over the world, benefiting more economies.

Although aligning local governments with the IFRS can be an expensive and time-consuming

process, it can be avoided thanks to significant technological advancements that aid in a uniform
and consistent transition, reducing, if not fully eliminating, the time needed. As a result,

technology has made the transition easier and will therefore help it.

In conclusion, IFRS would increase the reliability of accounting reports, making them more

investor-friendly and cost-effective. While this will necessitate additional effort, it will

undoubtedly change the way the world views investment decisions and the system's complexity.

Stewardship and transparency are not explicitly stated as a goal of financial reporting by

businesses under the International Financial Reporting Standards (IFRS). To comprehend the

explanation for this, we must first comprehend the meanings of stewardship and accountability.

Stewardship is derived from the base word steward, according to the dictionary meaning. A

steward is a person who, on behalf of his employer, manages the affairs of an estate. The word

"stewardship" has been used in a variety of ways. It is often used to distinguish between the

administration of the reporting entity and the operation of the entity. It is also used to refer to the

asset's custodianship or safekeeping.

Accountable is described as (a) "needed to make account: answerable" and (b) "capable of being

explained" in Webster's II New College Dictionary. In accounting literature, the term

accountability has a variety of meanings. Citizens have the right to know how their hard-earned

money is spent in their country. Government accountability is solely dependent on this right. In a

democratic state, the government must fulfil its obligation to be accountable to the people.

Financial reporting plays a significant role in this regard.

Stewardship has been described as an indicator of management performance under the

International Financial Reporting Standards (IFRS). According to the International Financial

Reporting Standards, determining the stewardship burden for an asset based on historical
expense is not an adequate measure. Asset stewards are responsible not only for the custody and

safekeeping of properties, but also for making efficient and productive use of those assets. The

performance of an investment is a significant indicator of the efficacy of stewardship duty. To

assess the effect of stewardship, one uses the International Financial Reporting Standards (IFRS)

to monitor improvements in the fair value of an asset.

IFRS and UK’s Local Authorities

As long as its implementation on UK is concerned, Such accounting standards are in the best

interests of the UK, not the Big 4 audit firms, since they would help with tighter regulation and

open up investment opportunities for local businesses, resulting in a boost to the economy

(Ramirez, 2012). In addition, since it has been adopted by the majority of countries around the

world, it would be in line with other countries that have already adopted similar policies. Take

the example of the implementation of IFRS in the United States. Despite the issues raised, the

implementation of IFRS was not hampered, due to the uniformity and stability in the system that

IFRS will provide, as well as the opportunities it will provide in terms of business growth and

insight into investment opportunities (Emily, 2009).

Major Beneficiaries of Move and the Bodies Who Get Benefited from the Move

Following several attempts to harmonies accounting requirements, the European Union (EU)

parliament and council endorsed the International Accounting Standards (IAS) legislation, which

made it mandatory for specified groups of companies to prepare their consolidated financial

statements in compliance with the international standards provided by the International

Accounting Standards Board (IASB) (Callao et al., 2009). They believe not on this benefit the

investors, but the public and governments too, which make the total system transparent.
Furthermore, , if IFRS is introduced, it would aid in enabling comparability at the grass roots

level and provide investors with more information for investment (Pilcher & Dean, 2009). While,

as Murphy said, investors will not invest in local governments, the information provided by local

governments would simplify the analysis of information provided by other small and medium

enterprises because they are all linked to each other. This would increase accountability,

lowering investor costs and reducing the chaos in the market environment caused by

inconsistencies that cause ambiguity in the system (Callao et al.,2009).

If it is not adopted, organizations other than local governments would be required to prepare

various reports, some to comply with local government reporting requirements and others to

meet international expectations for investors(Pilcher & Dean, 2009). 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. Which would minimize the costs associated with audit firms, as if it is not made

necessary, the audit firms will be charged higher fees to get the two systems into harmony

(Yoon, 2009).

However, the transition costs are high; many of the costs are one-time and therefore would be

more useful.

Audit Case Backing Murph’s argument.

Deloitte Consulting is working on a project for Rhode Island called the Unified Health

Infrastructure Project (UHIP). This initiative was intended to make eligibility testing for the food
stamp programme, now known as SNAP (which offers nutrition benefits to low-income families

to help them buy healthier food and move toward self-sufficiency), Medicaid, affordable child

care, and cash assistance are some of the programs available (Mara, 2020). This project went live

in September 2016, but there was no contingency plan in place. This caused a slew of issues for

the company and its employees. Deloitte was never compensated for its work as a result of these

issues. There was a backlog of 15,000 applicants for help at the height of the crisis in February,

ranging from cash and food stamps to medical treatment (Mara, 2020).

Governor Gina Raimondo extended the state's contract with Deloitte for two years in April, as

the company's contract was about to expire, and decided not to sue the firm because she did not

want the state to be "tied up in expensive lawsuits for years." (Mara, 2020).

Deloitte agreed to pay Rhode Island $50 million under the terms of the agreement: The state of

Rhode Island will receive $30 million, while the Centers for Medicare and Medicaid Services

and the United States Food and Nutrition Service will each receive $20 million (Mara, 2020).

Lapses, Oversights, Consequences in Audit Profession

Furthermore, Auditing provides customers with the ability to monitor, regulate, and deter threats.

A steady stream of audit errors, on the other hand, demonstrates that it hurts people and

organizations. Failures of audits are often blamed. Not only, it has it has been the reason for lost

in jobs Deposits have been lost, jobs have been lost, and people's livelihoods have been lost.

Furthermore, auditor lapses included when auditors do some serious distortion in the audit

report.

There are many practicle examples, where audit failure has affected many individuals.
Audit deficiencies have been seen to do significant harm to people's lives. Audit delays

contributed to a disaster for 30,000 Maxwell retirees. Audit deficiencies contributed to the

closing of Polly Peck, which resulted in the loss of 17,227 employees and 11,000 Sound

Diffusion Plc investors ( MailOnline, 2002).

Similarly, Auditors overlooked frauds that resulted in the arrest of five Baptist Foundation of

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

£400 million. Likewise, "There should be no doubt that the auditing process failed to perform,"

the US Senate concluded in its opinion on the closing of the Bank of Credit and Commerce

International (BCCI). The audit errors resulted in the loss of 14,000 employees and liabilities to

one million bank depositors with $1.85 billion in deposits ( MailOnline, 2002).

Conclusion

The questions related to International Financial Report Standard refereed by the case study of

Murphy were answered. Where it was concluded with the evidence from the literature, that IFRS

not facilitates the government but also the Public. Moreover, the claim was rejected that it only

serves or works under the instruction of the cartel by facilitating Big 4. Moreover, it was

suggested the uniform system helps entire businesses and countries in the world to have one

finical system globally, though, a tough ask to implement at the start. Moreover, in support of

Murphy’s point of view, a case was presented by literature to highlight the failure of audit

judgments. 
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