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What are the advantages of convergence?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Puja Agarwal asked almost 3 years ago

What are the advantages of convergence?

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

The convergence of accounting standards refers to the goal of establishing a single set of accounting standards that will be used internationally.Convergence in some form has been taking place for several decades, and efforts today include projects that aim to reduce the differences between accounting standards. Convergence is driven by several factors, including the belief that having a single set of accounting requirements would increase the comparability of different entities' accounting numbers, which will contribute to the flow of international investment and benefit a variety of stakeholders. Criticisms of convergence include its cost and pace,[5] and the idea that the link between convergence and comparability may not be strong. By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide. Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. Companies may also benefit by using IFRS if they wish to raise capital abroad.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

convergence with IFRS will provide greater credibility and transparency to financial reporting in Malaysia making it easier for global investors to understand and rely on the financial report of Malaysian companies. Another benefit is that it will help incorporate better practices within corporate Malaysia by adopting international standards. With convergence, Malaysian multinational companies are expected to benefit from reduced compliance costs and reduced translation risks when consolidating multiple international subsidiaries into a single set of consolidated financial statements. Companies—large and small—are able to attract capital from a larger pool of investors, driving down the cost of capital and facilitating cross-border mergers and acquisitions activity and strategic investments.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarti Vadnerkar answered almost 3 years ago

By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide. Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. Companies may also benefit by using IFRS if they wish to raise capital abroad.

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Open uri20170510 32134 1ue0f38?1494421710 rohit agarwal answered almost 3 years ago

What are the advantages of convergence? convergence with IFRS will provide greater credibility and transparency to financial reporting in Malaysia making it easier for global investors to understand and rely on the financial report of Malaysian companies. Another benefit is that it will help incorporate better practices within corporate Malaysia by adopting international standards. With convergence, Malaysian multinational companies are expected to benefit from reduced compliance costs and reduced translation risks when consolidating multiple international subsidiaries into a single set of consolidated financial statements. Companies—large and small—are able to attract capital from a larger pool of investors, driving down the cost of capital and facilitating cross-border mergers and acquisitions activity and strategic investments. Therefore full convergence with IFRS is now even more important for Malaysia as it serves to complement the CMP2 strategies, whose theme is Growth with Governance, which aims to further unlock the potential value of the capital market over the next 10 years.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prity answered almost 3 years ago

What are the advantages of convergence? Investors would have better understanding of financial statements prepared by companies in Malaysia and in making comparisons between companies worldwide as investors are increasingly making decisions in a global context. Therefore it is important the Malaysian capital market uses internationally recognised standards for financial reporting purposes. Convergence will enhance national reputation of Malaysia as being in compliance with international accounting standards. The need to establish this profile is imperative to ensure Malaysia is not left out from the globalisation wave, especially since more than 100 countries are converging or have converged with IFRS, including Australia, Brazil, Canada, Korea, South Africa, the United Kingdom and other European countries. China, India, Japan, Singapore and Indonesia are also in the process of converging with or adopting IFRS whilst the United States, which has published proposals for conversion to IFRS, permits foreign issuers to file IFRS financial statements. This is because IFRS has been established to be the preferred international accounting language compared to any other generally accepted accounting practices. Therefore information provided under the IFRS converged framework will be comparable with IFRS jurisdiction’s companies thus giving Malaysia’s companies and our capital market the recognition that they deserve.

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