ADOPTION OF IFRS: A GUIDE TO HANDLE CHALLENGES AND PITFALLS
The conversion from local Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) poses multifaceted challenges for companies. These challenges arise from the disparities between the two accounting frameworks, including differences in the recognition, measurement, and presentation precepts. The complexity of aligning existing accounting policies with IFRS standards necessitates careful evaluation and adjustment of financial reporting practices, resources, and expertise. This transition to IFRS has a significant impact on financial statements. The adoption of new accounting treatments can lead to changes in the recognition, measurement, and presentation of financial elements. These changes can affect key financial metrics, ratios, and indicators, potentially influencing stakeholders’ perceptions, credit ratings, and financial analysis techniques. Companies must carefully analyze the impact of the transition on their financial statements to ensure accuracy, comparability, and transparency. This paper examines the challenges and implementation issues encountered by companies during the transition from local GAAP to IFRS and proposes a guide for this adoption by prospecting a case study of International Financial Reporting Standards implementation in Saudi Arabia.
GAAP, Accounting policies, disclosure requirements, financial statements, Capital Market Authority, Zakat.