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The growing influence of International Financial Reporting Standards (IFRS) has affected countries throughout the world. This includes everything from economically inspired, voluntary participation and adaptation to government-required changeovers. The system reflects a continuous need for strong communication in the evolving global economy. It has given many organizations the ability to expand and thrive where the communication issues inherent in using different reporting methods have previously hindered progress.
An early impact of IFRS was that it gave companies engaged in international business a tool for better communicating external financial information. Instead of constantly attempting to decipher the reporting methods of various nations, businesses now had a single standard. This also improved the ability of companies to communicate their own status and to work more easily with businesses in other nations.
Another impact of IFRS was that with the expansion of its influence some companies and nations began to require the use of the method. Depending on the specifics of individual methods, this was anything from a slight to a dramatic change for the various parties involved. Though these new requirements were introduced slowly, they required prompt attention to training, adjustment of systems, and other key issues related to making the change.
As the method was new to many people, another impact of IFRS was that several professionals needed to be re-trained for a different type of accounting. This has led to the development of many training and certification courses. There have even been entire companies founded for the purpose of teaching IFRS methods.
The impact of IFRS on companies and nations who are not required to use the system has also been significant. This is primarily because often in order to do business with countries that require the use of IFRS for reporting, external entities must use the method as well. In essence, IFRS is sometimes being imposed with economic rather than governmental pressure. In some cases, the national accounting method is similar enough to IFRS that only a minor amount of adjustment is necessary.
Companies and nations who do not use IFRS may find it difficult to do business globally. In places where the method is not required, the impact of IFRS could be slight if an organization is focused on domestic matters. A couple of elements that could increase the significance of the method’s growth in influence are international expansion for the company or the official adoption of the method by the government.