Inconsistent interpretations and a lack of standardisation in certain areas
means that accounts prepared under IFRS are no easier to compare than they were
under local GAAPs, according to a new study.
The report from Moody’s,
entitled ‘Are we better off under IFRS,’ raises serious questions about whether
comparability of company accounts can be achieved and could provide strong
ammunition for those opposed to US adoption of the standards.
‘The financial statements currently prepared under IFRS are not necessarily
any easier to compare,’ said Trevor Pijper, Senior Credit Officer at Moody’s.
‘This is due to a lack of standardisation in certain areas, but we have also
come across several instances of seemingly inconsistent interpretations by
companies and their auditors. The usefulness of the IFRS financial statements
can also be compromised by false volatility and undue complexity. For example,
the amounts reported as “financial expenses” are too often simply
unintelligible, and finding the “true” level of debt can be like searching for a
black cat in a dark room.’
The report also found that profits were higher when companies restated under
IFRS, while balance sheets deteriorated.
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