The Benefits And Advantages Of IFRS For Kuwaiti Companies Are: Case Study Sample
IFRS reduces international differences in reporting standards.
Comparatively there is transparency and loss recognition which helps in flourishing corporate governance in Kuwaiti companies.
IFRS increases clarity and productivity. Under IFRS, financial makers can judge on their own in their professional matter about how to handle a specific transaction.
IFRS reflects the status of gains and losses in a timely manner. This shows that IFRS is more reliable and credible in comparison to GAAP with respect to reporting standards.
The manipulation by managers by creating hidden reserves is not allowed any more under new IFRS, so less manipulative and more shareholders oriented
Hence because of this, there is the removal of cross-border takeovers and acquisitions by investors. Similarly, as the result of an increase in transparency, the efficiency of contracting between companies and their management also has increased. Also, this has enhanced the corporate governance in Kuwait. This has created an atmosphere for the international investment and business in Kuwaiti companies. Apart from that, due to IFRS, there is a delegation of authority as financial makers can make their own judgment and hence there is time economy when following rules of accounting when there are complications. Similarly, the under IFRS, the balance sheets has become more useful because of its layout and the consistency. Because of this, the complexity in practicing GAAP that used to be detailed is simplified.
Hence, because of this reason, I prefer IFRS than GAAP. Actually, there are certain following limitations in GAAP because of which I recommend using IFRS over GAAP.
Financial statements prepared under national GAAP are not so understandable by new investors, especially foreign investors as the cross country GAAP do have consistency, unlike IFRS.
GAAP is more detailed and complex and more time-consuming and hence difficult to analyze and understand by an outsider.
Because of its giant and complex nature, there is the probability in lack transparency and manipulation.