Flexibility of International Financial Reporting Standards

Abstract

Aiming to achieve the highest quality of financial information, International Accounting Standards Board had to left some areas of flexibility within its regulations. The possibility to adjust the method of preparation of financial statements to the specifics of particular reporting entity gives an opportunity to provide current and potential investors together with its creditors with the most useful information from the perspective of economic decision-making process. The areas of flexibility include the ability of selecting and applying individual accounting policy as well as the use of estimates and judgments during the preparation of financial statements. Undoubtedly, the total abandonment of the flexibility of regulations governing financial reporting would reduce significantly the possibility of presenting true and fair view of particular company, but on the other hand, a discretion left to the leadership of the unit may become a field for abuses.