Adoption of IFRS in Saudi Arabia
The aim of every business is profit maximization. Therefore, department of finance in any company is critical (Kaplan, 2016). This has led to the development of standardized ways of summarizing and reporting financial records in organizations. The adopted methods are recognized all over and are used to ensure uniformity in the financial documents prepared and especially for companies in the same industry (Nobles, Mattison & Matsumura, 2016).
Adoption of International Financial Reporting Standards (IFRS) in Saudi Arabia has made companies face challenges as the firms try to transform and adopt the new reporting method. PricewaterhouseCoopers (PWC) is a company in Middle Mast committed to delivering quality in assurance, advisory, and tax services (Adoption of IFRS in Saudi Arabia, 2015). Adoption of IFRS affected the performance of the company and caused an impact on the daily activities at large. The impact of IFRS on the structure of the balance sheets has a direct impact on the credit rating, borrowing costs, analyst’s assessments and dividend payment policy. IFRS impact the performance of the company’s stock exchange (Adoption of IFRS in Saudi Arabia, 2015).
PWC Saudi Arabia confirms that IFRS possess a big challenge to the company but adoption and transition rules also are beneficial to the company. PWC entities engage experts with its valuation expert’s as a result of the requirement of IFRS (Adoption of IFRS in Saudi Arabia, 2015). The scenario has led to incurrence of additional costs thereby lowering the firm’s level of profits. Some companies have also used the opportunity to take advantage and create value in the balance sheets that was not recognized previously.
Adoption of IFRS and other financial reporting methods is mandatory. Many companies have a hard time incorporating all the data in the reports and presenting it as recommended (Christian & Lüdenbach, 2013). Some companies end hiring experts to streamline their financial records thereby making sure that final reports are up to standards.
Adoption of IFRS in Saudi Arabia. (2015). Retrieved from http://www.pwc.com/m1/en/media-centre/articles/adoption-of-ifrs-in-saudi-arabia.html
Christian, D., & Lüdenbach, N. (2013). IFRS Essentials. Hoboken, NJ: Wiley.
Kaplan, P. (2016). Fia fa2 maintaining financial records – study text. S.l.: Kaplan Publishing.
Miller-Nobles, T. L., Mattison, B., & Matsumura, E. M. (2016). Horngren’s Accounting.