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

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

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

Further reading:

IASB chief vows to produce one global standard

FASB to discuss delay of Fair Value

Related reading

Fiona Westwood of Smith and Williamson.