Wednesday, June 24, 2009


The firm Audit Integrity has reported that a recent report shows that IFRS has no noticeable advantage over U.S. GAAP. Also, U.S. GAAP filers have more metrics and greater depth of reporting, and U.S. corporations file more frequently and in a more timely manner than do European corporations. In addition, the report noted that some governance data such as executive compensation and board composition, are reported in much less detail in Europe than in the U.S.

One of their questions:
Does IFRS provide better financial reporting and financial statement data than U.S. GAAP?

The Report’s answer:

A. Depth of Metric Coverage – Overall, U.S. corporations report more detailed financial data. Governance data such as executive compensation and Board composition are reported at a much lower level in Europe.

Several individual metrics were reported on with differing frequencies. In general, U.S. companies reported on more metrics, but certain metrics (e.g., Pension metrics) were reported with greater frequency in Europe.

B. Differences Continue post IFRS – In looking at average metric values, a small number of metrics had notable differences. Along with expectations for differences in financial reporting between IFRS and GAAP, this would lead to concerns in comparing financial statements using different standards.

The study of accounting-related fraud in Western Europe has found substantial differences in the approach taken to IFRS by different countries and companies.

Audit Integrity has been assessing and rating European companies and rating them based upon their perceived level of accounting and governance risk.

Audit Integrity reports that that the riskiest countries in Western Europe, from an accounting and governance standpoint are Greece and the Netherlands. Luxembourg, Austria and Switzerland have the best ratings. Large cap European banks were criticized for aggressive accounting and bad governance.

The study uses phrases like “lack of transparency” and “corporations...hiding losses.”

Audit Integrity also compared IFRS with U.S. GAAP. They wanted to know if IFRS is an acceptable alternative to U.S. GAAP.

The study found that IFRS has significantly improved the consistency of financial reporting in Europe. But they found discrepancies in applying IFRS in various countries. Such discrepancies were not limited to the European Commission’s “carve out” exceptions to IFRS. The exceptions relate to IFRS adoption rates, financial reporting frequency and timeliness of filings. Timeliness of financial statement filing varied widely by country and was significantly slower in Europe than in the U.S.”

Read the full report

1 comment:

Tom Selling said...

If you want to provide your own opinion regarding IFRS adoption in the U.S., you can do so by answering the 12 short questions in our IFRS opinionn survey. It is available at: