The International Financial Reporting Standard commonly known as IFRS provides supportive standards for emerging countries to help them boost their financial revenues by displaying the fair and genuine standing of the economy. Today, it’s a common practice to adopt IFRS as a country’s regulation segment. IFRS has been implemented in a number of countries and several are proceeding to enforce it in near future. This is due to the fact that all the registered international organizations follow IFRS. Developing countries like Pakistan are also implementing IFRS for the innumerable benefits associated with it; for instance, resource allotment, comparative quality, expanded portfolios, boosted investment, cost effectiveness and enhanced financial declarations. However, even with so many advantages there are certain challenges in its execution like mutual funds issues, difference in the bookkeeping transactions recoding system, contrast in the policies of dividend distribution and confutation with the prevailing rules and procedures.
IFRS implementation in Pakistan has been carried out by ICAP (Institute of Chartered Accountants of Pakistan). ICAP reviewed IFRS and suggested the acceptance of this standard in Pakistan which was then implemented by SECP (Securities and Exchange Commission of Pakistan) under the 1984 companies’ ordinance. Since then all organizations are bound to follow this standard in maintaining their financial records. Pakistan compl with all the IFRS principles enforced by the IASB (International Accounting Standards Board) except IFRS 1 and IFRS 9 which are still under discussion.
The strategy for the acceptance of IFRS by all public organizations was formulated by ICAP according to which strict administration of IFRS along with regular follow-up allows the entities to assess the issues coming across in the implementation of IFRS. ICAP further reported that current regulations are required to be modified so as to adopt IFRS completely.
Hence, despite of certain hurdles in the way of its compliance, IFRS has become a standard for producing fair and valid financial declarations in Pakistan. The IFRS principles are helping the organizations to keep their financial statements rationalized, organized and qualified for assessment across the businesses as well as countries.