Posted: July 3rd, 2015
IFRS implementation in Europe: lessons learned from the adoption and its implications for countries planning to adopt IFRS
Table of Contents
2.0 Preliminary Literature Review.. 4
3.1 Research Design & Philosophy. 5
3.2 Research method – Data Collection. 5
5.0 Structure of the dissertation along with the timelines proposed. 6
Topic: IFRS implementation in Europe: lessons learned from the adoption and its implications for countries planning to adopt IFRS
1.0 Introduction
Adoption of IFRS as a reporting mechanism by countries has triggered sizzling debates with respect to the implications such a decision may have and the lessons that can be learned post IFRS adoption (Mirza and Holt, 2011). While it can be observed that developed and developing economies have equally shown their interest towards IFRS adoption, the implications significantly vary from country to country (Bellandi, 2012). European Council of Ministers and European Parliament passed a regulation in July 2002 warranting the adoption of IFRS. Resultantly, 2005 onward all EU listed companies were required to adopt the IFRS framework when preparing financial statements (ICAEW, 2015).
1.1 Rationale
The curiosity to undertake research in this domain comes from the gaps that exist in existing literature. Whilst various researches in the past have extensively focused on the financial implications of adoption, little attempt has been made to decipher the consequences such a decision may have on countries that are in the process of or are planning to adopt IFRS (Epstein and Jermakowicz, 2010). Similarly, prior literature highlights comparability and uneven adoption as an area of concern thereby completing ignoring other consequences that are specific to developed and developing economies (Palea, 2006).
1.2 Aims
The research proposed aims to explore the process of IFRS implementation in Europe, the lessons that can be learned from such an adoption, and the impact such a decision may have on developing countries that are inclined towards IFRS endorsement. It will also attempt to provide a comparison and a detailed account of the similarities and differences that exist in the challenges faced by developing economies in the adoption of IFRS.
1.3 Objectives
The study proposed will seek to:
- Consider the political and historical standard setting environment including the context of adoption;
- Analyse and evaluate the role of institutions, organisations, and people in the adoption process; and
- Study and explore the unintended consequences resulting from the decision to implement and adopt IFRS.
- Assess the benefits and risks of IFRS adoption along with a detailed account of lessons that can be learned from such an adoption and its relevance to countries (developing economies in particular) planning to endorse IFRS.
1.4 Research Questions
The proposed study will seek answers to the following questions:
- What are the financial consequences and cost implications of adopting IFRS?
- How relevant are the aforementioned implications for entities operating in developed and developing economies?
- Does IFRS implementation have similar implications for all developed economies? Do they differ from those of emerging economies?
- What lessons can be learned from IFRS implementation in EU?
2.0 Preliminary Literature Review
Whilst extensive research has been undertaken previously to explore the consequences of IFRS adoption and factors that influence the adoption of IFRS, there have been very few efforts made to identify and assess the implications IFRS adoption in EU may have on countries that have recently adopted IFRS or are considering doing so. One particular exception to this is the report published by the ICAEW that outlines the lessons learned from IFRS adoption in Europe along with recommendations and practical insights for interested parties, standard setters, regulators, and policy makers in developing and developed economies that are considering adopting IFRS or have recently adopted (IAS Plus, 2015).
Researches in the past that have focused on the corporate governance aspects or other implications of IFRS adoption have undertaken such analysis in silos (Cheung, Evans and Wright, 2008). Effects of such decisions have been restricted to one specific economy only and there is a gap in existing literature with respect to a comparison of insinuations of IFRS adoption between developed and developing economies.
The research proposed will add significant value as it will aim to address the aforementioned gaps outlined in existing literature. Theoretical frameworks and structuration theory concepts will be referred to thereby highlighting the shades of functionalism and interpretive sociologies. An empirical account of the factors that influence the adoption of IFRS, unintended hidden consequences that may result from such a decision and the lessons that can be learned from IFRS endorsement in EU are some of the key areas that will be explored.
3.0 Research Methodology
3.1 Research Design & Philosophy
Interpretivisim research philosophy will be preferred as opposed to a philosophy of positivism for the purpose of this research as it will better enable us to accomplish the aims and objectives stated earlier. The philosophy will warrant the use of qualitative techniques to answer research questions (Walsham, 1995). In combination naturalistic methods will be used that comprise existing texts, observation, and interviewing (Crane and Ruebottom, 2011).
3.2 Research method – Data Collection
A cluster sampling approach will be adopted to identify interviewees that are working in different organisations which are part of developed and developing economies. 100-Index companies will be the target population as it is believed they are subject to greater securities’ regulations.
The choice of primary research will enable us to gather fresh responses to the problem statement. As the implications of IFRS adoption and the lessons that may be learned from such endorsement will vary from person to person and institution to institution, attempts will be made to gather opinion from different experts. However, the telephonic interviews will be restricted to accounting, finance, audit, compliance, and risk management staff only as they are better aware of what the implications of IFRS adoption can be. Insights from professionals working in standard setting bodies and public accounting firms will also be obtained along with views of academic circles and companies that have witnessed the transition from local GAAP to IFRS.
3.3 Data Analysis
As telephonic interviews will be relied upon, data analysis will be predominantly qualitative in nature with the same being compared and contrasted against facts reported in various governmental and professional publications.
Findings will also be compared against existing literature to identify and assess the similarities and differences that exist between the theoretical frameworks entailed in past researches and the actual findings of the research.
4.0 Ethical Considerations
The University’s policy on ethics will be fully complied with. Confidentiality of responses and respondent demographic data along with respondent anonymity will be ensured. All unfair means to gather data will be avoided and a neutral stance adopted when sampling participants ensuring no question bias.
Refer to Appendix A of this proposal for the completed Ethics Form.
5.0 Structure of the dissertation along with the timelines proposed
The timelines for the research process to be initiated and concluded along with the accomplishment of key milestones are as follows:
References
Bellandi, F. (2012). The handbook to IFRS transition and to IFRS U.S. GAAP dual reporting. Chichester: John Wiley.
Cheung, E., Evans, E. and Wright, S. (2008). The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) Intangible Assets. Australian Accounting Review, 18(3), pp.248-256.
Crane, A. and Ruebottom, T. (2011). Stakeholder Theory and Social Identity: Rethinking Stakeholder Identification. Journal of Business Ethics, 102(S1),
Epstein, B. and Jermakowicz, E. (2008). Wiley IFRS 2008. Hoboken, N.J.: Wiley.
Epstein, B. and Jermakowicz, E. (2010). Wiley IFRS 2010. Hoboken, N.J.: Wiley.
IAS Plus, (2015). IFRS in Europe – Background information. [online] Iasplus.com. Available at: http://www.iasplus.com/en/resources/ifrs-topics/europe [Accessed 7 Jun. 2015].
IASPlus, (2015). Seven lessons learned from the IFRS adoption in the EU. [online] Iasplus.com. Available at: http://www.iasplus.com/en/news/2015/05/7-lessons [Accessed 7 Jun. 2015].
ICAEW, (2015). Worldwide adoption of IFRS | Accounting standards | Library | ICAEW. [online] Icaew.com. Available at: http://www.icaew.com/en/library/subject-gateways/accounting-standards/worldwide-adoption-of-ifrs [Accessed 7 Jun. 2015].
Mirza, A. and Holt, G. (2011). Wiley IFRS. Hoboken, N.J.: John Wiley & Sons.
Palea, V. (2006). IAS/ IFRS. Milano: F. Angeli.
Walsham, G. (1995). The Emergence of Interpretivism in IS Research. Information Research, 6(4), pp.376-394.
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.