| Abstract: | This study aims to investigate the challenges and prospects of first-time
adoption of International Financial Reporting Standards (IFRS) in financial
institutions with particular reference to selected commercial banks. To
answer research questions, the study adopted mixed research approach.
Thus, to gather data, both primary and secondary sources have been used.
As primary sources of data, questionnaires and interviews have been used
while review of relevant documents as secondary sources. The closed-ended
questionnaire data were analyzed and interpreted quantitatively using
descriptive statistics – frequency distribution and percentages. Whereas,
data gathered from semi-structured interviews and open-ended
questionnaires were interpreted qualitatively. On the basis of the major
findings, lack of preparedness for IFRS adoption both from the companies
and the regulatory bodies’ side, difficulty of understanding and
implementing IFRS, existence of difference between the directives of the
National Bank and the requirement of some IFRSs, lack of proper guidance
from the regulatory bodies and fair value measurements are the major
challenges during first-time adoption of IFRS. In addition, the requirement
of the regulatory bodies is the major factor that influenced the companies to
adopt IFRS not their own interest. Moreover, the study also found that
improvement of the quality of financial reporting, reporting transparency
and simplicity of raising capital are the main practical benefits (prospects)
that the companies expect to derive from IFRS adoption. Finally, conclusion
is made on the basis of the above major findings and also the study suggests
recommendations that a combined effort from the concerned stakeholders to
be put in order to successfully achieve practical adoption and
implementation of the International Financial Reporting Standards. |
