Philippe Danjou answers ten misconceptions about IFRSs
06 Feb 2013
In an online paper, International Accounting Standards Board (IASB) member Philippe Danjou responds to ten recurring misconceptions about IFRSs that currently exist, in particular in continental Europe.
The paper examines ten misconceptions of IFRS, which are:
- IFRS practise a generalised "fair value"
- IFRS are intended to reflect the global financial value of the company
- IFRS deny the concept of accounting conservatism
- IFRS give prominence to economic reality over legal form
- Directors can’t make head or tail of IFRS financial statements
- The IFRS financial statements do not reflect the business model
- Financial instruments will soon be "full fair value" thereby maximising earnings volatility
- The "fair value" is always defined as "market value" even when markets are illiquid
- The treatment of business combinations is irrational
- IFRS create accounting volatility that does not reflect the economic reality.
The views expressed in this paper are the personal views of Mr Danjou and not the official views of the IASB. The paper is available on the IASB website, initially in French only, with the IASB indicating an English translation will be forthcoming in due course.
Update
On 21 February 2013, the IASB has made available an English translation of the paper.
