Disclosure quality and international comparability under IFRS: evidence from pension discount rates, impairment and capitalisation of development costs

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This briefing is addressed to accounting practitioners such as financial analysts, finance directors, audit partners and IFRS ‘technical’ departments in audit firms. It reports on the difficulties met when collecting data for an ICAEW-funded investigation into international differences in IFRS practice. In particular, it addresses the areas of pension discount rates, impairment charges and capitalisation of development costs.

Data was collected on these topic areas from 527 firms domiciled in 15 countries. There is no data-base containing the information needed, which is why we hand-collected. The purpose of this briefing is to reveal and discuss the many difficulties that we met.

Among other problems, we found many instances of:

• pension discount rates not distinguished by country
• discount rates disclosed as a range
• duration of the pension obligation not disclosed
• impairment charges mixed in with depreciation/amortisation
• impairment of PPE mixed in with that of other types of asset
• impairments netted against reversals
• capitalised development costs mixed with other intangible assets
• lack of disclosure of the year’s research and development expense.

This is an issue of non-comparable disclosure under IFRS. The severity of the problem varies by country, but as a data problem it should be of interest to analysts. Some of the thinness in disclosures may be due to immateriality but we suspect some non-compliance with IFRS disclosure requirements, which should concern auditors, the IASB and regulators.
Original languageEnglish
Place of PublicationLondon
PublisherInstitute of Chartered Accountants in England and Wales
Number of pages20
ISBN (Print)978-1-78363-814-7
Publication statusPublished - 1 Jun 2017

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