The main result of this research is that approximately one half of the surveyed preparers replied that the costs of IFRS adoption exceed the benefits, and only around 10% of the respondents replied that the benefits exceed the costs.
According to the research, high costs seem to arise from difficulties in dealing with certain aspects of IFRS financial statements. The preparers especially mentioned the following five aspects:
- preparation of notes to the financial statements,
- preparation of consolidated financial statements,
- fair value measurement,
- making discretional judgments for application of principle-based accounting, and
- accounting for financial instruments.
As a result of these difficulties they also felt that understandability had deteriorated, that comparability had decreased and that there was an increase of excessive interference by external organisations.
The KASB has analysed the difficulties and has concluded that the following measures can help to improve the IFRS implementation environment:
- The technical inquiry service should be strengthened by providing information on general IFRS implementation issues to the public in Q&A format and providing more detailed information grouped by industry.
- The accounting education, which has seen little change since the adoption of IFRS, should be reformed. It seems especially desireable to move the focus from items of financial statements to standards and accounting principles and to help students to develop the ability to make necessary judgments.
- Relevant laws and regulations should be amended to bridge the gap that has arisen between accounting standards and the accounting requirements under the commercial law.
- Improvements need to be made in relation to notes to the financial statements to improve the level of understanding of and usefulness for the users of financial statements by encouraging entities to focus on preparing notes considering materiality or use of easy-to-understand expressions.
Please click to download the full research paper, which is a slightly abridged translation of an earlier Korean version, from the KASB website.