Quality of Financial Reporting towards the Improvement Corporate Governance Mechanism

International Financial Reporting Standards is a set of high-quality, understandable, enforceable and globally accepted accounting standards used by companies to prepare financial statements (IFRS Foundation, 2001). IFRS was established in 2001 by International Accounting Standards Board (IASB) which operates as the independent standard-setting body of the IFRS Foundation. This accounting standard is being adopted by more than 100 countries in the world. However, some amendments been made according to certain countries’ requirements. For example, Malaysian Financial Reporting Standards (MFRS) are issued by the MASB in respect of its application in Malaysia (MASB, 2015).

Further, one of the most important objectives of financial reporting standards is to enhance transparency in providing financial statements. In this assignment, transparency is an important indicator to discuss on shareholders’ trust. Practically, transparency helps in building and maintaining shareholders’ trust. This is because the investors or shareholders seek for a reliable report in order to make a decision. With the adoption of the financial reporting standards, the reliability of the reports will be increased since the standards guide company in providing true and fair reports. In conjunction with the article we choose, our discussion will focus on financial reporting standards and its influence towards the shareholders’ trust.