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Research paper on IFRS compliance across Europe shows inconsistencies

28 Jan 2013

A recent research report by the Centre for Financial Analysis and Reporting Research (CeFARR) at the Cass Business School entitled 'Accounting for asset impairment: a test for IFRS compliance across Europe' shows inconsistencies in IFRS compliance reflected in European listed companies' impairment reporting practices.

The authors, Hami Amiraslani, George E. Iatridis, and Peter F. Pope, investigate the degree of compliance with International Financial Reporting Standards by analysing impairment disclosures related to non-financial assets within a sample of over 4,000 listed companies from the European Union plus Norway and Switzerland during 2010-11.

The key findings of the research are:

  • Compliance with some impairment disclosure requirements varies quite considerably. This might also point at differences in applying IFRSs
  • Impairment disclosure requirements that require more effort are less often followed than those that require less effort or can be dealt with by boilerplate disclosures
  • Reporting environments with stronger regulatory and institutional infrastructure will see more high-quality impairment reporting
  • Reporting environments with a strong regulatory infrastructure and strict enforcement will see more timely recognition of impairment losses.

Accounting for asset impairment: a test for IFRS compliance across Europe can be downloaded from the Cass Business School website.

The IASB chairman Hans Hoogervorst commented on the results of the research and the responsibilities of the IASB regarding compliance in a speech given at the Cass Business School.

The CeFARR results support the finding of the European Securities and Markets Authority (ESMA) review of 2011 IFRS financial statements related to impairment testing of goodwill.