IFRS adoption on the Accounting Practice in Lebanon

IFRS adoption on the Accounting Practice in Lebanon

Introduction

The researcher known as Ball (2006) predicted that there would be two levels of compliance with International Financial Reporting Standards (IFRS): one, where the country would embrace IFRS in form by using the IFRS brand name and the other, where a country would accept IFRS in substance by employing the mandatory disclosures as well as creating an enforcement regime to provide oversight of financial reporting in that country. He expected substantial differences among countries in implementing IFRS and expected that these differences would be concealed by a veneer of uniformity. He further suggested that IFRS alone would not necessarily produce uniform financial reporting. The objective of the present study was to see if Ball's prediction was true: those companies have complied with IFRS on a low cost level and have demonstrated a veneer of uniformity but have not complied with IFRS on a high cost level, one that has involved the enforcement of IFRS.

Proponents of IFRS have argued that the use of international standards alone has led to consistent and comparable financial statement disclosures, but others have countered that compliance has occurred not merely by adopting IFRS but also by developing local enforcement of IFRS through corporate governance and regulatory agencies. Local enforcement has been a key component in compliance with IFRS. Countries have adopted international accounting standards easily, but developing enforcement mechanisms to ensure successful compliance has been more complex and time consuming. Developing a local enforcement body has required a major commitment and investment both in terms of time and money. Ball (2006) expected that some companies would comply only at the basic level if their country lacked an effective national enforcement regime. In the case of Lebanon, there are certain issues which need to be assessed properly before implementing IFRS on the accounting standards in the country. First of all it would be vital to assess that what is the present accounting standards followed in the country. The major issue would be to evaluate the impact of the IFRS accounting standards on the existing accounting standards followed in Lebanon. The IFRS accounting standards were originated from the IAS (International Accounting Standards) that was followed all over the world from 1973-2001. Then the formation of IFRS became the basis for implementing accounting standards having international recognition which is now followed by many countries of the world. This is the reason why the major issue of the study is to assess the impact of IFRS adoption on the accounting practice in Lebanon.

Question 1: What is the impact of IFRS adoption on the accounting practice in Lebanon?

The adoption of IFRS accounting standards has taken place at a very rapid place in most of the countries. The Middle Eastern countries also implement the IFRS accounting standards in their financial system. The implementation of IFRS accounting standards started in Lebanon during the early 1980s but there was not any formal effective mechanism for monitoring compliance of ...