Ten Years of Mandatory Use of IFRS in the European Union: A Status Report

Published date01 July 2016
AuthorArno Forst,David F. Salerno
DOIhttp://doi.org/10.1002/jcaf.22176
Date01 July 2016
29
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI 10.1002/jcaf.22176
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Ten Years of Mandatory Use
of IFRS in the European Union:
A Status Report
Arno Forst and David F. Salerno
Last year marked
10 years since
the effective
date of the European
Union (EU)’s Regu-
lation No 1606/2002
of the European
Parliament and of
the Council of 19
July 2002 on the
Application of Inter-
national Accounting
Standards (hereinaf-
ter: the Regulation).1
Adopted in 2002, but
not taking effect until
2005, the Regula-
tion put in place the
mandatory applica-
tion of International
Financial Reporting
Standards (IFRS)
for certain compa-
nies in all member
countries of the EU. The EU’s
decision to require IFRS likely
provided the pivotal event that
fueled the rapid proliferation
of IFRS around the globe. To
date, as widely reported, over
100 countries worldwide have
adopted IFRS; however, prior
research (Pownall & Wieczyn-
ska, 2012) report widespread
misconceptions about the
extent of IFRS use in the EU
following the Regulation’s
effective date. The Regulation
allowed for various
options regarding
the timing and scope
of implementation.
These adoption
choices were left up
to the individual
member states and
have been evolving
ever since.
In light of this
milestone, it is use-
ful to reflect on
the status of IFRS
implementation in
the EU 10 years
since IFRS became
mandatory. First, we
provide a summary
of the adoption varia-
tions allowed by the
Regulation. Second,
using the latest data
form the EU, we
outline the result by country of
their adoption choices. Third,
because significant differences in
the extent of IFRS implementa-
tion exist, the question arises
as to which countries actually
can be considered similar with
This article reports on the result, 10 years later,
of the International Financial Reporting Standards
(IFRS) adoption choices allowed under the EU’s
Regulation No. 1606/2002 of the European Parlia-
ment and of the Council of 19 July 2002 on the
Application of International Accounting Standards.
The regulation, which took effect in 2005, allowed
country-level variations in the completeness, tim-
ing, and scope of implementation. We provide a
background of the implementation choices that
the regulation allowed, and report the choices
made by individual EU member states. Next,
because significant differences in the extent of
IFRS implementation exist, we use the European
Commission’s most recent IFRS implementation
data to provide an up-to-date analysis of which
countries actually can be considered similar with
respect to their accounting practice.
© 2016 Wiley Periodicals, Inc.
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