“International accounting standards are ‘unusable” from investor’s point of view and make ‘global allocation of capital more complex instead of simplifying it”. Chief financial officers at large listed entities say. Millions of dollars have been spent adopting international financial reporting standards to help investors make like-for-like comparisons among companies in global capital markets. But CFO’s say they are useless and have driven financial disclosures to unmanageable levels…… Investors don’t open the 60-70 pages of IFRS account, they depend on investor reports and management briefing to understand the company’s numbers……. Criticism comes as the United States, the world’s largest capital market, decides whether to retire its domestic accounting standard (US GAAP) and adopt IFRS”. Australian Financial Review, 6/2/2012.
In the light of the above statement;
1. Explain IASB Conceptual Framework’s perspective of users and their decisions.
2. Which qualitative characteristics of financial reporting, as per the IASB Conceptual Framework, appear not to be satisfied by present reporting practices as per IFRS.
3. In your opinion, do corporate financial reports satisfy central objective of financial reporting as identified in the Conceptual Framework? Discuss and give example to support the opinion.