This document discusses accounting standards and their implications in different countries. It addresses claims that International Financial Reporting Standards (IFRS) facilitate large audit firms and do not serve the public interest. However, IFRS aim to increase transparency and oversight. While transition costs to IFRS may be high, benefits include improved financial reporting, comparability between companies globally, and more efficient resource allocation. The document also examines applying IFRS to local authorities, noting challenges but also potential advantages like greater accountability and productivity if issues are addressed. Overall, it argues the benefits of a global accounting system outweigh the costs, though implementation may take time.

1. Contents
Introduction ..............................................................................................................................................2
IFRS, Cartel, Big 4, Public Interest & Implication of Accounting in different Countries ...........................2
Different Accounting System for Different Local Authorities in Different Countries...............................4
IFRS, UK, Local Authorities and Major Beneficiaries.................................................................................7
Case involving Big 4 & Audit Failure Judgment and its consequences .....................................................9
Conclusion...................................................................................................................................................11
References ..................................................................................................................................................11

2. Introduction
Financial accounting systems are normally set to facilitate the public, government, and public so
that a common platform may be provided to ease business and create an environment of trust.
Similarly, IFRS provides the same (Hoogendoorn, 2006). However, in this essay, we try the answer
the concerns related to Murphy's case studies. Where he believes that IFRS facilitates the Big 4.
further, he is of the opinion that IFRS does not serve the interests of the common public. Moreover,
he believes the implementation of IFRS on local authorities does not serve the basic purpose, and
he is against its implementation in the UK. However, we think otherwise, though he is right
somehow. But, we suggest it is an independent body that does not get influenced by the Gig 4.
Moreover, it provides services for the public as well as investors (Alon & Dwyer, 2016). In
addition, though implementation on local bodies in different countries is tough, transition cost is a
one-time cost. Later, that facilitates all stakeholders(Hoogendoorn, 2006). Likewise, Such
accounting standards are in the best interests of the UK, not the Big 4 audit firms, and they would
aid in stricter enforcement and open up investment opportunities for small businesses, improving
the economy (Alon & Dwyer, 2016). Furthermore, since other nations have implemented similar
strategies, that would be aligned with the rest of the planet. Moreover, the failure of auditing
systems or audits judgments are also discussed here.
IFRS, Cartel, Big 4, Public Interest & Implication of Accounting in different Countries
Murphy claims that the IASB does not work in the public interest. Since the IASB was established
to ensure that accounting standards and reports are in the best interests of investors and the public,
this claim is false (Ramirez, 2012). The IASB created IFRS to ensure that companies and
organisations have stricter controls, laws, and oversight so that they cannot mislead their

3. stakeholders (Hoogendoorn, 2006).Furthermore to improve the consolation mechanism, the IASB
has ensured strict regulations, especially with stakeholders, and the board needs written responses
if the stakeholders' views are not taken into account. This evaluation process raises the credibility
bar even higher.
Moreover, as a result, Murphy's claim that a cartel exists is somewhat misleading, given the board's
attempts to equally represent all stakeholders and protect stakeholder interests. Despite the
presence of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG in
the IASB, it should be noted that corporate compliance standards have been established, ensuring
greater financial disclosures (Ramirez, 2012). Since the companies are major rivals, they can exert
some control and make suggestions, but there is no cartel structure (Ramirez, 2012).
Furthermore, the level at which different countries implement the system is determined by the
regulatory authorities in each country. The buinses or organizations prefer the IFRS where their
governments have strictor rules and regulations. The regulator's authority is crucial in ensuring
global IFRS compliance (Hoogendoorn, 2006). The IFRS architecture offers a higher degree of
financial transparency, according to empirical studies and real-world implementations.The
company's value significance and profits have improved as a result of the introduction of IFRS
system. were either voluntarily adopted or mandated have demonstrated the system's effectiveness.
In many setups their rule and regulations are tightly in practice, such as China and India, may be
hesitant to adopt the plan.
The UK, the US, and the European Union, on the other hand, have all effectively adopted the
system. The International Financial Reporting Standards (IFRS) became generally accepted after
major countries adopted them. The UK has also given its public sector divisions more time to
execute the scheme effectively. Since most businesses and government agencies collaborate with

4. organizations all over the world, it is important to use a commonly recognized accounting system.
A universal framework allows for easy contact between various organizations all over the world,
which is critical for public-private partnerships. As a result, Australian companies should adopt
the International Financial Reporting Standards. Thus, Although the transition costs are high, many
of them are one-time and therefore more beneficial. As a result, it will take more time, create more
uncertainty, and demand more awareness and time from investors. This may not be optimal for the
economy as a whole, as well as for small businesses that need more funds to expand.
Thus, Its implementation saves investors time and money by comparing competing firms from
different nations. The flow of resources will be more effective, costs will be reduced, and a variety
of stakeholders will benefit from the unified financial reporting structure. As more enterprises are
moving to a competitive market, embracing IFRS ensures that all companies across the world view
their financial statements on the same basis (Alon & Dwyer, 2016). As a result, U.S. firms will
have a comparative edge over their global counterparts, as comparable financial results
transparency will be more understandable and easier to compare to investors (Hoogendoorn,
2006). Lack of accuracy makes financial statements challenging and difficult to comprehend for
foreign corporations with operations in many countries.
Different Accounting System for Different Local Authorities in Different Countries
It is possible that there won't be a paradigm shift, as Murphy says. Both local governments and the
federal government, on the other hand, will have to make substantial efforts to transition to IFRS
accounting, but this would not be a futile or fruitless task since the global accounting system would
be compatible in this way (Hoogendoorn, 2006).
Such accounting principles do not benefit that much from IFRS but the government likes to avail
of this offer and facility. thus, they can be part of a huge setup. That is why the European Union

5. preferred its members to have it implemented to have uniform rules through their terri Moreover,
This will reduce audit firm expenses, as if it is not made mandatory, audit firms would be charged
higher fees to get the two systems into alignment (Yoon, 2009).
If we give a look at the nature of local authorities , they act as a refueling station for service
providers including police and fire departments. Therefore, existence has become intangible. Local
units have been effective in providing timely assistance and services to the public. Local authorities
' success has been aided by the central government's limited interference and hindrance in their
operation. Therefore, service quality and productivity can suffer, as more effort is needed. IFRS,
on the other hand, would certainly be advantageous because it would have greater accountability
on the account of services provided and related costs.moreover, Training programs and central
government assistance, and the efficiency of services will support this clarification and
productivity of accounting reports will be improved.
As they prepared for the implementation of IFRS, local governments faced a significant challenge.
Financial statement reporting has been greatly influenced by the International Financial Reporting
Standards (IFRS) (Hoogendoorn, 2006). Many supporters of the International Financial Reporting
Standards (IFRS) for local governments argue that it will allow them to provide transparent,
understandable, and interpretable financial data. Local authoritis will have more time to prepare
these reports, which will enable them to provide information more efficiently. Another reason local
bodies will have little trouble adopting IFRS is that the federal government has already provided
them with guidance and expertise.
However, there are issues that need to be resolved, such as how PFI contracts are handled, and
steps have been taken to resolve these concerns. As a result, the International Financial Reporting
Standards (IFRS) did not seem to be a major problem for local authorities (Alon & Dwyer, 2016).

6. According to Richard Murphy, the main problem with switching to IFRS for local governments is
that it would increase workload while also failing to meet the goal of making local government
accounts easy to read. Peter Hayday, the Director of Finance and Resources at Westminster, has
made a similar argument (Alon & Dwyer, 2016). Another point advanced by Hayday is that
depreciated asset value was not needed in the past, but that with the introduction of IFRS,
depreciation had to be accounted for even for prior years, and an adjustment had to be made.
It must be discussed and demonstrated to local bodies that adopting the International Financial
Reporting Standards (IFRS) would make it easier for them to determine whether their investments
have yielded results and what steps are needed. Infect, the key problem is with many service
groups, which could have more complex transactions and a greater volume of relevant data,
requiring more experience to prepare reports. This can put pressure on those authorities,
complicating implementation. However, It may be less difficult for fire and rescue personnel to
carry out, and police officers may feel it is not one of the most difficult tasks (Hoogendoorn, 2006).
In addition, determining the value of the property, as well as the plant and equipment in use, is
another issue that local governments can face. The most important issue is to revalue the property
using the new IFRS groups. For instance, authorities are finding it increasingly difficult to
determine the value of assets. Second, reclassification is becoming more difficult, as is estimating
the value based on the reclassification. This, on the other hand, can be avoided by using IT skills
and thereby handled when such accounts are regularly maintained.
Other issues involved collecting financial-related values from other entities and the asset registry's
ongoing tracking, which is currently not being done.This section requires you to account for each
type of plant and machinery in each department. Local authorities must also address the question
of leasing, which necessitates determining if a lease exists and, if so, reviewing, classifying, and

7. locating embedded leases. The government is often faced with accountability issues, the most
severe of which is segmental reporting disclosure.
Furthermore, IFRS would help in allowing comparability at the grassroots level and provide
investors with more context for investment if it were implemented. Although investors would not
invest in local governments, as Murphy said, the information provided by local governments will
simplify the study of information provided by other small and medium businesses since they are
all connected to one another. This will improve transparency while also decreasing investor costs
and reducing market chaos created by contradictions that create ambiguity in the system.
IFRS, UK, Local Authorities and Major Beneficiaries
Under the International Financial Reporting Standards, stewardship and accountability are
considered to play a vital role. As this is the right of the public to know where their money is
being spent. Hence, the government must fulfil its duty to be accountable to the people in a
democratic state. In this respect, financial reporting plays a significant role to bring transparcy and
accountability in the system.
Under the International Financial Reporting Standards, stewardship is described as a measure of
management efficiency (IFRS). Determining the stewardship responsibility for safekeeping of
assets, but also the management of those assets. The effectiveness of stewardship duty is measured
by the efficiency of an investment (Hoogendoorn, 2006). To measure the impact of stewardship,
one can use the International Financial Reporting Standards (IFRS) to track changes in an asset's
fair value.

8. While aligning local governments with the International Financial Reporting Standards (IFRS) can
be a costly and time-consuming operation, it can be avoided thanks to substantial technological
advances that assist in a uniform and consistent transition, reducing, if not completely eliminating,
the time required. Thus, technological advancements have made the transition simpler and will
thus aid it. Another reason is that, as previously said, there will be fewer chances for investors and
local small and medium businesses to be confused when it comes to investment. Instead of favoring
a single nation, a single accounting system would result in decisions that benefit the entire world.
As a result, with the aid of experts from all over the planet, the world will take consistent steps in
the same direction, helping more economies.
Finally, the International Financial Reporting Standards (IFRS) would improve the consistency of
accounting reports, making them more investor-friendly and cost-effective. Although this will
require extra effort, it will inevitably alter how the world views investment decisions and the
complexities of the system. If it were not implemented, non-local governments would be expected
to prepare a variety of reports, some to satisfy local government reporting standards and others to
meet foreign investor expectations. Thus, the transition benefits all the stakeholders.
As long as its implementation on UKs concerned, such accounting principles are in the UK's best
interests, not the Big 4 audit firms', since they will help with tighter regulation and free up
investment opportunities for local companies, boosting the economy. This will also be consistent
with other countries that have already implemented similar policies, as it has been adopted by the
majority of countries around the world (Alon & Dwyer, 2016). As, The implementation of IFRS

9. in the United States has been studied, and it has been discovered that, despite the issues raised, the
implementation of IFRS was not hindered, thanks to the uniformity and consistency in the
framework that IFRS would provide, as well as the opportunities for business growth and insight
into investment opportunities that IFRS would provide (Emily, 2009).
To sum up, In order to ensure an internationally uniform rules-based accounting framework, the
International Financial Reporting Standards (IFRS) have taken the drastic step of disclosing
information. When it comes to IFRS in the public sector, the three fields where it is most important
are PFI scheme accounting, derivative care, and lease accounting.in addition, under IFRS one need
to differentiate between land element and building element while talking about property lease
(Alon & Dwyer, 2016). Further, it will be bifrgated as operating lease or finance lease. This
practise is not followed as of now. Under IFRS, government agencies will be required to look for
embedded derivatives and then decide whether they should be accounted separately or not
depending upon the fair value of embedded derivative. The inclusion of accruals for employee
compensation such as earned leave is more stringent under IFRS (Alon & Dwyer, 2016)
Thus, Partnerships, cross-border acquisitions, and the establishment of cooperative arrangements
with foreign companies can become much easier and more viable if the International Financial
Reporting Standards (IFRS) are implemented (Hoogendoorn, 2006). As a result, the
implementation of IFRS would undoubtedly improve the global economy's efficiency, thus
benefiting the general public. r.
Case involving Big 4 & Audit Failure Judgment and its consequences
PCAOB fines KPMG Bermuda

10. In May 2015, the PCAOB (Public Company Accounting Oversight Board) voted to inspect the
auditing business. During 2014 and 2015, Damion Henderson was the head of KPMG Bermuda's
Ethics and Independence (E & I) Department. The department's quality management policies and
procedures at the time allowed firm employees to sign written independence confirmations, or
independence affidavits, on a regular basis during their jobs (Mara, 2020).
A senior manager reviews and signs off on the completed hard-copy documents before giving the
independence affidavits to Henderson to initial and authorise. Those records vanished in October
of 2014. The PCAOB inspectors were scheduled to arrive in May 2015, according to KPMG
(Mara, 2020).
As a result, the E & I department requested that workers re-execute the affidavits and backdate the
re-executed affidavits to the date they signed the originals. The majority of employees complied
and returned the documents to E&I(Mara, 2020).
Naturally, the PCAOB discovered this and fined Damion Henderson $10,000 on April 9. KPMG
Bermuda was fined $250,000 for failing to develop and enforce a quality management framework
that would provide fair confidence that company staff would follow relevant professional
standards and the firm's own quality standards (Mara, 2020).
Moreover, Auditors overlooked frauds that resulted in the arrest of five Baptist Foundation of
Arizona officials on 32 counts of fraud, racketeering, and robbery. 11,000 investors lost £400
million (Mailonline, 2002).
Auditors were convicted in the Senate Report of participating in a "cover up" (US Senate, 1992b,
p 276) and causing "substantial harm to innocent depositors and customers of BCCI" (US Senate,

11. 1992, p 5). The UK taxpayer had to borrow £3,000 million to bail out secondary banks, mortgage
firms, and insurance companies following audit scandals in the 1970s.
The British government was called in to investigate the frauds and audit irregularities at Barlow
Clowes. Compensation to taxpayers would cost the government £153 million.Audit deficiencies
in the US Savings and Loans sector could have cost taxpayers between $400 and $500 billion in
bailouts.
Professional judgement incorporated in the audit adds benefit by correctly identifying audit
challenges and developing audit processes, as well as a precise determination of the workload and
facts needed to support the audit opinion. However, Audit failures are often linked to deposits
being lost, jobs being lost, and people losing their livelihoods and many more.
Conclusion
In this essay we covered the financial accounting standard board from different perspectives.
Moreover, the work presented here, answers the queries raised by Murphy. His concerns are
answered here from the research. Which totally supports the IFRS in terms of facilitating the
public, businesses, and governments. Moreover, its implementation in local authorities provides
rich dividends to stakeholders, keeping its one-time transitional cost on the side. Moreover, the
disparities and weakness of audit judgments are also discussed here.
References
Alon, A., & Dwyer, P. (2016). SEC's acceptance of IFRS-based financial reporting: An
examination based in institutional theory. Accounting, Organizations And Society, 48, 1-16.
https://doi.org/10.1016/j.aos.2015.11.002

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Europe and Beyond – Experiences with First-time Adoption in Europe. Accounting In
Europe, 3(1), 23-26. https://doi.org/10.1080/09638180600920087
Mara, M. (2020, July 9). 21 Scandals, Settlements and Corporate Crimes of Big 4 Accounting
Firms in 2019. Faceless Compliance. https://facelesscompliance.com/7604/21-scandals-
settlements-and-corporate-crimes-of-big-4-accounting-firms-in-2019
Dailymail.co.uk. 2002. April 2002 News Archive | Daily Mail Online. [online] Available at:
<https://www.dailymail.co.uk/home/sitemaparchive/month_200204.html> [Accessed 13
May 2021].
Ramirez, C. (2012). How Big Four Audit Firms Control Standard Setting in Accounting and
Auditing. Finance: The Discreet Regulator, 40–58.
https://doi.org/10.1057/9781137033604_3