Abstract:
This study is aimed at understanding the impact of International Accounting Standards (IFRS) on the quality of financial statements. In this study we will see if different industries used GAAP instead of IFRS how that would make an impact on the financial statements of the business. In our study the several differences between the two frameworks are discussed of supreme importance is to realize the fact that items contained in the financial statements have different effects. For instance, sales figure, when changed, affects the entire range of financial reports. This pervasive effect is magnified and hence impacts the gross profit, net profit, taxes, equity, and deferred tax as well. This tells the reader that by changing the framework makes a serious impact on the quality of the financial statement. This study will talk about how different rules applied to the same business have different effects on the information of the financial statements. Then ratio analysis will also be discussed showing that when IFRS is applied instead of GAAP how this change in accounting framework makes a difference on the information presented. Different ratios gave different results this was because of the change in the format for the statement of profit and loss. The aim and foremost aim of this study is to conclude how the implication of IFRS has on the quality of financial statements. Applying IFRS is more advantageous since it makes comparisons easier. One of the major limitations of this study was that we only had access to published information which is not enough to make comprehensive comparison
