Pr.

Touzani

International Accounting Standards, also known as International Financial Reporting

Standards (IFRS), are a set of accounting standards developed by the International Accounting
Standards Board (IASB) to provide a common global language for business affairs. The IFRS
Foundation, which oversees the IASB, has worked to create high-quality, globally accepted
accounting standards for more than 40 years with the intention of those standards being capable
of being applied on a globally consistent basis—by developed, emerging and developing
economies.
The objective of IFRS is to provide financial information that is useful in making
business decisions. The standards aim to provide investors and other stakeholders with
consistent, transparent, and comparable information across different jurisdictions. IFRS is
mandatory for many companies in the European Union, and a growing number of other
countries around the world have also adopted IFRS.
IFRS covers a wide range of accounting topics, including financial statement
presentation, revenue recognition, leases, and inventory. The standards are regularly updated to
reflect changes in the business environment and to ensure that they remain relevant and useful.
In today’s increasingly globalized world, the interaction of different economic units such as
MNCs, with each other, the increase of company M&As and the rapid movement of
international capital force companies to adapt to changing conditions. This situation
necessitates the preparation of transparent, comparable and accurate financial statements by
making their current accounting systems more effective in order for companies to increase their
competitiveness and keep up with developing capital markets and to enhance their reliability
by subjecting them to auditing. All stakeholders of the business such as investors, partners,
employees, managers, analysts, credit institutions, suppliers, customers and relevant public
institutions will be able to access transparent, comparable, timely and accurate information
about the business through the audit. In this way, the interests of all parties will be preserved
and the long-term profitability and sustainability of businesses will be ensured.
The ability of businesses to build trust in their stakeholders depends on financial
reporting in accordance with national and international standards. These standards ensure that
financial information users are presented with the information appropriate to their needs in a
truthful manner. The independent audit process expresses its opinion on whether the financial
statements prepared by the management are prepared in accordance with these standards. In this
way, the accuracy and honesty of the information contained in the financial statements will serve
the stakeholders to have an idea about whether the company reflects its financial status in a
realistic way. Therefore, it will contribute to the preservation of the principle of equality by
protecting the rights of the stakeholders, and the provision of the principle of transparency
through the fact that the financial statements reflect the status of the enterprise faithfully. With
this aspect, independent audit is effective in establishing and maintaining corporate governance
in companies.
 Companies that have made financial reporting in accordance with IFRS and have good
corporate governance practices will be among the companies preferred by investors, as the level
of public disclosure and transparency, which are the basic principles of corporate governance,
will increase. As a result of these companies being subject to IFRS, having their financial
reports audited will also increase the reliability level of financial reports. This will make
positive contributions to both companies and the national economy.

I- Comprehension:

Answer the following questions:

1) Who overseas the development of IFRS and what is its purpose?
2) What is the objective of IFRS and what topics does it cover?
3) Which countries are expected to adopt IFRS?
4) Which countries have already adopted IFRS?
5) What characterizes today’s world in relation to economy?
6) What do the abbreviations MNCs and M&As stand for?

II-Vocabulary:

Match the following words underlined in the text to their meanings:

1) Globally accepted a) Improve
2) Consistent b) Precisely executed
3) Transparent c) Reveal information to the people by publishing it
4) Mandatory d) Approved by all world’s countries
5) Relevant e) Compatible
6) Accurate f) Trustworthiness
7) Enhance g) Obligatory
8) Reliability h) Pertinent
9) Corporate Governance i) Presenting all information without secrets
10) Public disclosure j) Companies best practice management

III- Writing:

Write a ten lines paragraph on one of the following topics:

1) Discuss the benefits and challenges of implementing IFRS in various countries.
2) Discuss the advantages and difficulties of constituting mergres.