ICAEW's 1st report card on IFRS: can do better

ICAEW’s report card on the first year of implementing the International Financial Reporting Standards (IFRS) and Fair Value Directive across the EU shows that, although there was a fair degree of satisfaction with the current suite of IFRS, certain standards were singled out for criticism.

In contentious standard in particular was IAS 39 Financial Instruments: Recognition and Measurement. A number of participants in ICAEW roundtable discussions and telephone interviews queried whether the valuations of intangibles required under IFRS 3 business combinations merited the associated costs.

Figures showing the typical overall cost associated with preparing the first IFRS consolidated financial statements indicate that the smallest companies carried proportionately the greatest costs. The costs for companies with turnover below €500m (₤350m) represented 0.31% of returns; compared to 0.05% of returns for companies with turnover from €500m to €5bn and above.

Participants in the study also expressed concern about the complexity of the standards. These concerns were reflected in 'a general lack of appetite at present for any wider application of full IFRS', the report noted. However, key findings show 80% of auditors thought IFRS had improved the quality of consolidated financial statements against 8% who thought that IFRS had made it worse.

Further reading:

IASB chief vows to produce one global standard

FASB to discuss delay of Fair Value