ABSTRACT

This study was aimed to investigate the challenges and impacts of International Financial Reporting Standards (IFRS) adoption and implementation in Developing country by focusing on extra-financial factors analysis. To collect the data and test the research hypothesis regarding the challenges that facing developing countries in their IFRS adoption and Implementation, series of questionnaires was build up regarding some selected items which have a marginal effect on IFRS adoption and implementation in Indonesian, an emerging country.
The finding of this investigation reveal that extra-financial factors including legal system (X1), taxation system (X2), economy and political ties (X3), accounting education and its infrastructures (X4), and culture structure (X5) are the major challenges of IFRS implementation in Developing countries with the regression function as Y = 0.248 X1 + 0.230 X2 + 0.359 X3 + 0.247 X4 + 0.369 X5  and coefficient of determination (R2) = 1 with mean IFRS adoption and implementation in developing countries can be predicted without error by the factors as legal system (X1), taxation system (X2), economy and political ties (X3), accounting education and its infrastructures (X4), and culture structure (X5).
To ensure the adoption and effective implementation of IFRS in Indonesia, the Institute of Indonesia chartered accountants (IAI), Indonesia government, Indonesia accounting body and academic  must work together to reformed the consistence of accounting standard for better applicability of IFRS in ensuring transparent information environment.

Keywords: IFRS, IAI, developing country, and Indonesia.