The costs and benefits of IFRS implementation in the UK and Italy

Abstract

PurposeThe purpose of this paper is to examine the opinions of national stakeholders on the costs and benefits of International Financial Reporting Standards (IFRS) implementation and to determine whether countries with disparate social, economical and political backgrounds have different experiences when complying with IFRS.Design/methodology/approachSemi‐structured interviews were conducted with preparers, users and auditors of annual reports and accounting regulators in the UK (including Ireland) and Italy.FindingsThere were some differences in the experiences of IFRS implementation between stakeholders from different countries. However, there was widespread agreement that costs exceeded the benefits of reporting under the new standards. Further it is recognised that international standard‐setters have a large set of stakeholder views to manage and it is therefore important that standard‐setters are aware of the costs and benefits of their accounting requirements.Originality/valueThis analysis is useful for companies that have not already adopted IFRS. It explains the differences and similarities of the costs and benefits of IFRS implementation from an Anglo‐Saxon and an EU continental perspective.

A Review of the IFRS-Adoption Literature

“…The reporting and enforcement incentives are also affected by governments' decisions to tie accounting numbers to tax policies. Fox, Hannah, Helliar, and Veneziani (2013) illustrate the links between accounting numbers and legal, cultural, and institutional factors in relative detail through a comparison of Italy and the UK, which represent extremes within Europe along these dimensions. First, in terms of legal systems, Italy is a civil-law country; its accounting standards are subservient to its Civil Code, and its accounting regulations tend to be incorporated into its national laws.…”

International financial reporting standards applied in the Czech Republic

“…The diffi cult and longterm approval procedure of amendment act on IFRS 9 -Financial instruments, that shall replace IAS 39, is solved by companies by temporary accounting following the original standard IAS 39. The reason probably consists also in implementation costs, that following [8] include the project team, training of employees and IT employees, internal audit, consultancy of technical and fi scal character, changes in software as well as internal systems, etc.…”

A research about adoption of international financial reporting standard on G20 countries

“…While many countries hesitate to join IFRS due to effects of taxation and dividends, the article states that Brazil is changing its laws on companies which eases the transition from Brazilian GAAP to IFRS. Fox et al (2013) analyzed the costs and benefits of IFRS implementation at Italy and Great Britain. For this purpose, they conducted a survey among participants from different countries.…”