IFRS in EU

Journal of International Accounting, Auditing and Taxation
13 (2004) 89119
Convergence with IFRS in an expanding Europe:

progress and obstacles identified by large
accounting firms survey
Robert K. Larson , Donna L. Street1
Department of Accounting, School of Business Administration, University of Dayton,
300 College Park, Dayton, OH 45469-2242, USA
Abstract
The International Accounting Standards Board (IASB) acquired greater legitimacy and stature
when the European Union (EU) decided to require all listed companies to prepare consolidated
accounts based on International Financial Reporting Standards (IFRS) beginning in 2005. This
study examines the progress and perceived impediments to convergence in 17 European countries
directly affected by the EUs decision. These include: (1) the 10 new EU member countries, (2) EU
candidate countries, (3) European Economic Area (EEA) countries, and (4) Switzerland. We utilize
data collected by the six largest international accounting firms during their 2002 convergence survey.
Additionally, we analyze subsequent events and studies.
While all surveyed countries will either require or effectively allow listed companies to prepare
consolidated financial statements in accordance with IFRS by 2005, few are expected to require
IFRS for non-listed companies. This suggests the development of a two-standard system. The two
most significant impediments to convergence identified by the survey appear to be the complicated
nature of particular IFRS (including financial instruments) and the tax-orientation of many national
accounting systems. Other barriers to convergence include underdeveloped national capital markets,
insufficient guidance on first-time application of IFRS, and limited experience with certain types of
transactions (e.g. pensions).
2004 Elsevier Inc. All rights reserved.
Keywords: Convergence; International Financial Reporting Standards (IFRS); Europe
Corresponding author. Tel.: +1 937 229 2497.

E-mail addresses: Robert.Larson@notes.udayton.edu (R.K. Larson), Donna.Street@notes.udayton.edu
(D.L. Street).
1 Tel.: +1 937 229 2461; fax: +1 937 229 2270.
1061-9518/$ see front matter 2004 Elsevier Inc. All rights reserved.
doi:10.1016/j.intaccaudtax.2004.09.002
90
R.K. Larson, D.L. Street / Jnl. of Internatonal Accounting, Auditing and Taxation 13 (2004) 89119
1. Introduction
In recent years, the International Accounting Standards Board (IASB) has acquired
greater legitimacy and stature (Choi, Frost, & Meek, 2002; Herz, 2003; Meek & Thomas,
2004; Roberts, Weetman, & Gordon, 2002). Indeed, the 2002 convergence survey conducted
by the six largest accounting firms reveals that 95% of the countries surveyed are committed
to either the complete or partial convergence of their national accounting standards with
International Financial Reporting Standards (IFRS)2 (BDO et al., 2003). A major event for
the IASB was the European Unions (EU) decision in 2002 to require all EU listed companies
to prepare consolidated accounts using IFRS beginning in 2005. To date, considerable
research has focused on convergence in the first 15 members of the EU (see, for example,
Haller, 2002; Street & Larson, 2004).3
Although it has received limited attention by academic researchers, the EUs decision
regarding IFRS has substantial ramifications for the rest of Europe. All new EU member
countries are obligated to follow accounting decisions made by the EU. This most directly
affects the ten new EU members that joined May 2004 and the three EU candidate countries.
In addition, Norway, Iceland, and Liechtenstein are members of the European Economic
Area (EEA). EEA countries, by treaty, are obligated to comply with EU Accounting Directives and Regulations, including the adoption of IFRS in 2005. Finally, although not an
EU member, Switzerland is geographically in the midst of the EU and has close economic
relationships with many EU countries.
The current study examines the state of convergence in these 17 countries by providing
an overview of how IFRS are being adopted and investigating the perceived impediments
to convergence. The study addresses a key question recently posed by Meek and Thomas,
What about non-listed companies and companies nonconsolidated (i.e. individual company) accounts, particularly those from European code law countries? Will they continue to reflect national accounting systems, or will they shift away from them? (Meek
& Thomas, 2004, p. 31)
This research utilizes the extensive data set collected by the six largest international accounting firms in their GAAP Convergence 2002 survey. Additionally, subsequent events
and studies are reviewed.
All 17 countries examined in this study will either require or effectively allow listed
companies to prepare consolidated financial statements in accordance with IFRS by 2005.
However, several barriers to convergence were identified by the large firms survey. The most
frequently noted impediments were limited national capital markets, insufficient guidance
on first-time application of IFRS, the lack of existence of transactions of a specific nature
(such as pensions and other post-retirement benefits), the tax-driven nature of national
accounting regimes (i.e., the alignment between financial accounting and tax reporting),
and the complicated nature of particular standards. In regards to the latter, several of the
2
The term IFRS in the paper includes current and future standards issued by the IASB as well as International
Accounting Standards (IASs) issued by the former International Accounting Standards Committee.
3 Before May 2004, the EU member countries were Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.
91
countries were particularly concerned about financial instruments. Other standards most
commonly viewed as complicated were impairment of assets, income taxes, and employee
benefits (pensions).
Our analysis reveals that concerns about tax linkages and complicated standards appear
to be creating a situation in certain European countries where IFRS are most often used
for listed companies consolidated accounts, and another basis of accounting is used for
non-listed companies and/or for individual accounts.4 The research finds that few of the
countries studied intend to require IFRS for non-listed companies, and only about half will
require IFRS when listed companies prepare individual accounts. This finding suggests
the emergence of a two-standard system of financial reporting in a majority of these 17
European countries and is consistent with Street and Larsons (2004) findings for the first
15 EU countries.
The rest of the paper is organized as follows. The study continues with a summary of
the major findings reported by the firms in GAAP Convergence 2002. This is followed by
an overview of official EU convergence efforts and a literature review. A detailed countryby-country analysis of the data is then presented and followed by a discussion of the results
and the conclusion.
2. GAAP Convergence 2002

GAAP Convergence 2002 is the third major survey sponsored by the six largest accounting
firms aimed at encouraging convergence of national accounting standards with IFRS [GAAP
2000, GAAP 2001, and GAAP Convergence 2002 are available at www.pwcglobal.com].
GAAP 2001 found that, at year-end 2001, many national accounting systems included numerous and significant differences from IFRS and that greater effort must be directed at identifying differences in these countries and planning for their timely elimination (Andersen
et al., 2001). The 2002 survey explores the extent to which nations have developed country
plans aimed at converging their national standards with the international benchmark and
identifies impediments these countries have encountered, or anticipate facing, in their efforts
to converge with IFRS.
To provide context for the survey analysis by individual country, an understanding of the
overall findings of GAAP Convergence 2002 is important. The 2002 survey indicates global
accounting convergence towards IFRS is underway. In some manner, 56 of the 59 participating countries had either adopted IFRS or intended to converge their national GAAP with
IFRS. While the survey findings support the legitimacy of the IASBs global accounting
role, it also identifies obstacles that continue to impede convergence in many countries. A
slim majority of the 59 countries express concerns regarding the complicated nature of certain international standards, especially those associated with fair value accounting. Almost
half note that the tax-driven nature of their national accounting regime hinders convergence.
Three impediments to convergence are identified by about one-third of the 59 countries:
4 The term non-listed includes all EU domiciled companies that are not listed on an EU stock exchange. The
terms individual accounts or individual financial statements are used in this paper. In some countries, these financial
statements may be known as annual, single-entity, or parent-only.
92
(1) disagreements with certain significant IFRS; (2) insufficient guidance on first-time application of IFRS; and (3) limited domestic capital markets. Translation difficulties and
satisfaction with national standards among investors and financial statement users represent barriers to convergence in about 20% of the countries. In addition to dealing with the
obstacles noted above, the large firms conclude that capital market participants need to join
forces to ensure that (1) the coverage of IFRS in the education and training of accountants
is increased, and (2) national language translations of IFRS, including interpretations, are
produced on a timely basis.
GAAP Convergence 2002 includes a copy of the survey questionnaire completed by
partners representing the participating accounting firms in the 59 countries (see pages 19
through 23). For each country, the findings reported in GAAP Convergence 2002 reflect
the consensus view of the participating partners in that country and not necessarily those
of the national governments or accounting standard setters. Respondents focused on listed
companies. In countries where requirements for listed and non-listed companies differ,
the responding partners were asked to provide additional information regarding the situation for non-listed companies (i.e. would they be allowed or required to prepare consolidated accounts based on IFRS, etc.).5 The primary data source for this paper is the
explanatory comments provided by the partners. In addition, subsequent events and studies
are reviewed.
3. EU convergence efforts
Effective January 1, 2005, European Commission (EC) Regulation No. 1606/2002 requires all EU listed companies to prepare their consolidated accounts in accordance with
IFRS.6 However, listed companies will only be required to use those IFRS approved
for use by the EU. In September 2003, the EU endorsed all then existing IFRS except
those relating to financial instruments (including IAS 32, IAS 39, and Standing Interpretations Committee (SIC) interpretations 5, 16, and 17). As of September 2004, the EU
still had not endorsed either the IASBs financial instrument standards or the 16 International Accounting Standards (IASs) just revised as part of the Improvements Project
(EC, 2004).7
The EU regulation allows the 25 member countries to determine whether IFRS endorsed
by the EC will be required beyond the preparation of consolidated financial statements by
listed companies. Each EU country is given the choice of whether IFRS will be required
or allowed in preparation of: (1) listed companies individual accounts, and (2) non-listed
companies consolidated and/or individual accounts.
5 The survey also did not seek to address any different or additional requirements that may apply to financial
services or other specialized industries.
6 Companies can delay use of IFRS if: (1) they only have publicly traded debt securities; or (2) they already
use another set of internationally accepted standards and are publicly traded both in the EU and on a regulated
third country market.
7 The ECs Accounting Regulatory Committee met in September, 2004 to discuss whether to recommend that
the EC in October endorse IAS 32 and IAS 39. It recommends endorsing IAS 39, except for two sections: the
prohibition on hedge accounting for core deposits and the fair value option.
93
EU regulations also affect member states of the EEA. Effective since 1994, the EEA
agreement allows Iceland, Liechtenstein, and Norway to participate in the EU Single Market without full EU membership. However, EEA countries are expected to comply with
the accounting directives and regulations (DTT, 2003b), including adoption of IFRS for
preparation of consolidated financial statements by listed companies (Andersen et al., 2001).
4. Literature review
Research addressing the convergence or harmonization of international accounting
standards is both growing and becoming more empirical in nature (for more extensive
discussions of this literature, see Abd-Elsalam & Weetman, 2003; Garrido, Leon, & Zorio,
2002; Meek & Thomas, 2004; Rahman, Perera, & Ganesh, 2002; Street & Larson 2004;
Tarca, 2004). Many studies assess the International Accounting Standard Committees
(IASC) (predecessor of the IASB) and the IASBs success in facilitating or achieving
harmonization. These studies focus on either: (1) accounting practices of corporations,
de facto; or (2) national accounting standards, de jure (Tay & Parker 1990). This study is
concerned with the latter, de jure, and how or whether national accounting standards are
actually moving toward convergence.
Early studies investigating the harmonization of official national accounting standards
with IASs produced varying results (Larson & Kenny, 1999). While more recent studies
point out that convergence is still not complete (Bloomer, 1999; Street & Gray 1999), these
studies indicate that the increased legitimacy of the IASC, and now the IASB, is creating a
situation where national accounting standards are in the process of converging with IFRS
(Abd-Elsalam & Weetman, 2003; Andersen et al., 2000, 2001).
Numerous studies have focused on accounting harmonization within the EU and other
European countries (Aisbitt & Nobes, 2001; Canibano & Mora, 2000; Haller, 2002; Hoarau,
1995; Roberts et al., 2002; Thorell & Whittington, 1994; Walton, 2003). In many of the
earlier studies, the major harmonization issues examined and debated typically center on the
proper and actual roles of the EU accounting directives and the IASC (e.g. Hoarau, 1995;
Thorell & Whittington, 1994). One stream of research investigates the problems associated
with translating accounting terminology and concepts, such as true and fair, into different
European languages (Aisbitt & Nobes, 2001; Evans, 2003). Another stream of research
used annual reports and indexes in an effort to measure European harmonization (Canibano
& Mora, 2000; Taplin, 2004). Roberts et al. (2002) and Walton (2003) document the development of accounting harmonization in Europe through the EU directives and note the shift
towards convergence with IFRS. After providing an in-depth analysis of EU harmonization
and its movement toward the IASB, Haller (2002) raises many important issues. For example, Haller (2002, 182) points out that the current EU solution of mandating IFRS for the
consolidated accounts of listed companies and allowing countries to require national GAAP
for individual accounts is not really an increase in efficiency and a reduction in complexity!
Recent developments in the EU and other European countries allow for an examination
of the effect of mandated regional regulations requiring convergence on national accounting
standards. Rahman et al. (2002) empirically support the idea that regulatory harmony can
improve practice harmony. However, the EU regulation mandating IFRS adoption by listed
94
Table 1
Sources of information regarding accounting practices in 17 European countries
Sources
GAAP Convergence
2002
GAAP 2001
GAAP 2000
EU (2004c)
DTT (2000)
Alexander and Archer
(2001)
European Accounting
Review articles
Other reports and

journal articles
Cypus
Xa
Czech Republic
X
Estonia
X
Hungary
X
Latvia
X
Lithuania
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Vafeas,
Sucher, Seal, and
Trigeorgis, and Zelenka (1996),
Georgiou (1998) Holeckova (1996),
Seal, Sucher, and
Zelenka (1995)
Bailey, Alver,
Mackevicius, and
Paupa (1995)
Rooz, Sztano, and Sztano Bailey et al.

(1996); Clarkson, Fraser, (1995)
Iles, and Weetman (1996),
Boross, Clarkson, Fraser,
and Weetman (1995)
Bailey et al.
(1995)
Ernst and
Young
Cyprus (2004)
DTT (2003a)
Roberts et al. (2002), de

Bruin (2000)
World
(2002b)
World Bank
(2003a), PwC
(2002a)
Malta
Bank DTT (2004b)
Poland
X
Slovakia
X
Slovenia
X
X
X
X
X
X
X
X
X
X
Daniel,
Suranova,
and de
Beelde
(2001)
Garrod and
Turk (1995)
Kosmala-MacLullich
(2003), Schroeder
(1999), Jaruga and
Szychta (1997),
Jaruga, Walinska, &
Baniewicz, 1996.
Krzywda, Bailey, and
Schroeder (1994)
PwC (2002b), World
Bank (2002c),
Gornik-Tomaszewski
and Jermakowicz
(2001)
E&Y/Weinhold
Legal
(2004), PwC
Slovensko
(2003)
Panel B: European Union (EU) candidate countries, European Economic Area (EEA) member countries and Switzerland
GAAP Convergence
2002
GAAP 2001
GAAP 2000
EU (2004b)
DTT (2000)
Alexander and Archer
(2001)
European Accounting
Review articles
Other reports and journal

articles
a
BulgariaEU
candidate
X
RomaniaEU candidate
World Bank
(2002a)
TurkeyEU candidate
IcelandEEA
member
X
X
X
X
X
X
King, Beattie, Cristescu,

and Weetman (2001),
Dutia (1995)
Cooke and Curuk (1996),

Simga-Mugan (1995)
PwC (2004), World Bank

(2003b), Ernst and Young
Romania (2003)
DTT (2004b), DTT

(2002), Bursal (1998)
LiechtensteinEEA
member
NorwayEEA member
Switzerland
X
X
X
X
X
Alexander and Schwencke

(2003), Aisbitt and Nobes
(2001), Eilifsen (1996),
Johnsen (1993)
DTT (2003b), Ordelheide
and KPMG (2001)
Achleitner (1995)
Cyprus returned a GAAP Convergence 2002 survey, but the response did not address all areas this paper investigates. Cyprus already uses IFRS.
DTT (2004a), PwC

(2002c), Ordelheide
and KPMG (2001)
Panel A:New European Union (EU) member countries (as of May 1, 2004)
95
companies followed a variant of ideas suggested by Hoarau (1995) and others by allowing
each country to decide whether national standards should still be allowed or required for
non-listed companies and the individual accounts of listed companies. The current study
contributes to the literature by exploring the dynamics that evolve when regional regulations mandate convergence for consolidated accounts of listed companies while allowing
individual countries to determine the degree to which national standards converge with
IFRS.
Convergence of national accounting standards with IFRS in what, until recently, could
be called non-EU Europe has received limited attention in academic accounting journals
based outside of Europe. Indeed, much of the existing English language academic literature
addressing this issue has appeared in the European Accounting Review. Most other prior
studies addressing convergence of IFRS and national standards were conducted by the large
public accounting firms or the World Bank. While not meant to be exhaustive, Table 1 lists
the major English language studies and reports regarding convergence for the 17 European
countries examined in this study. Many focus on comparisons of one or more countrys
national GAAP and IFRS (e.g. Andersen et al., 2000, 2001; PwC, 2002a, 2002b, 2002c).
The most complete study is Deloitte Touche Tomatsus (DTT) (2000) detailed comparison
of IFRS with GAAP in 14 Eastern European countries. In general, this body of research
indicates that, while over time national accounting standards are gradually converging with
IFRS, a number of significant differences remain to be addressed before convergence is
achieved. While European countries are moving to converge their accounting standards with
IFRS, research is needed to provide updated assessments of convergence and impediments
to its progress (Meek & Thomas, 2004).
Street and Larson (2004) investigated convergence in the first 15 EU member countries
and found that it is focused primarily on the consolidated accounts of listed companies.
A major barrier to convergence of national standards with IFRS appears to be that most
continental European countries have historically linked their financial reporting and tax
laws (Eberhartinger, 1999; Eilifsen, 1996; Haller, 2002; Hoogendoorn, 1996; Holeckova,
1996; Jaruga et al., 1996; Lamb, Nobes, & Roberts, 1998). Guenther and Hussein (1995, p.
132) concluded that one of the biggest impediments to uniform international accounting
standards is the requirement in many countries that financial reporting standards conform
to tax regulations. In the new EU environment, Meek and Thomas (2004, 31) ask, How
will taxation influence their accounting? Our review of the large firms 2002 convergence
survey findings and recent developments provides preliminary evidence of the extent to
which the European countries examined in this study have been motivated to break or relax
this traditional link.
5. Findings
We examine convergence efforts in 17 European countries that are either new EU members or have close economic and political ties to the EU. While the study examines 17
countries, it primarily focuses on the 13 countries that provided detailed responses to the
large accounting firms 2002 convergence survey. GAAP Convergence 2002 did not cover
convergence efforts in Liechtenstein, Malta, and Turkey, and the survey response from
96
Cyprus lacked detail (i.e. IFRS had already been adopted). This section begins by reporting
each countrys plans to converge national GAAP with IFRS (see Table 2 for a summary
of the countries included in the 2002 survey). Then, for the countries covered in GAAP
Convergence 2002, this section explores the difficulties experienced or anticipated in working towards convergence (see Table 3). This includes highlighting the particular accounting
topics and standards that the survey finds to be hindering convergence (see Table 4). While
the analysis focuses on data from the survey, it also incorporates information from other
pertinent reports to provide a more complete and up-to-date snapshot of convergence efforts in these countries. The discussion begins with the new EU members, followed by EU
candidate countries, the EEA countries, and Switzerland.
5.1. Cyprusnew EU member country
Cyprus requires all companies to use IFRS in preparation of both individual and consolidated financial statements (Ernst & Young Cyprus, 2004). Thus, Cyprus survey response
did not indicate any significant obstacles to convergence.
5.2. Czech Republicnew EU member country
The Czech Republic will require all listed companies to apply IFRS in consolidated and
individual financial statements for 2005 accounts (EU, 2004c). Non-listed companies will
be allowed, but not required, to use IFRS for consolidated accounts. Non-listed companies
will still be required to use Czech GAAP for individual accounts. Where applicable, early
adoption of IFRS is permitted.
Accounting legislation effective January 1, 2002 resulted in the elimination of some differences between Czech GAAP and IFRS and, accordingly, made Czech GAAP more convergent with IFRS. Further progress is expected toward convergence. However, the World
Bank (2003a) notes a number of differences between IFRS and Czech GAAP, including
Changes in Accounting Policies (IAS 8), Intangible Assets (IAS 38), Business Combinations (IAS 22), Special Purpose Entities, and Financial Leasing (IAS 17). The World Bank
(2003a, p. 1) also reports that in practice, compliance with certain complex EU Directives
and IAS requirements, including those dealing with consolidation and deferred tax, has
been delayed.
A number of impediments to convergence were identified by the 2002 convergence survey. These include insufficient guidance on first-time application of IFRS, the tax-driven
nature of the national accounting requirements (viewed as a major obstacle), a relatively
underdeveloped capital market, and a general satisfaction with national accounting standards. On a more positive note, foreign investors are seen as supporting the adoption of
IFRS. Another impediment to convergence noted on the Czech Republic survey is the lack
of transactions of a specific nature, such as pension schemes and other post-retirement benefits. The survey also suggested that national standard-setting authorities believe the local
environment is specific and needs tailored accounting and reporting standards that reflect
the Czech environment.
The survey indicates convergence could be further stimulated by the introduction of an
independent body that would issue Czech accounting standards. Convergence could also be
IFRS required for consolidated statements of

listed companies
IFRS required for individual accounts

of listed companiesa
IFRS Required for consolidated

statements of non-listed companies
IFRS required for individual

accounts of non-listed companies
Yes
Yes
Yes
Yes
Yes
Yes
Hungary
Yes, to extent does not conflict with national law
No
Yes
No
Required for financial institutions;
allowed for others
No
Latvia
Lithuania
Allowed, to extent there is no conflict with national

law
Yes
Allowed, to the extent there is no conflict

with national law
Yes
Yes
Allowed option
Required for financial institutions; allowed for others
Allowed option, to extent does not conflict with national law
Allowed, to extent there is no conflict
with national law
Yes for banks; not allowed for others
Malta
Poland
Yes
Yes
Yes
Allowed option
Slovakia
Slovenia
Yes
Yes
Yes
Being considered as required
Yes
Yesb
Allowed option
Yes
Yesb
Allowed option
Yes
Yesb
Yes
Yesb
Yes, EEA members expected to (must) comply

with EU accounting directives and regulations
Being considered as allowed option
Allowed option
Allowed option
Allowed option
Will probably not be allowed
Will probably not be allowed
Multinational companies must use IFRS or US

GAAP; Others may use Swiss GAAP
No
No
No
European country
New EU members
Cyprus
Czech Republic
Estonia
EU candidates
Bulgaria
Romania
Turkey
EEA members
Iceland
Liechtenstein
Norway
Other
Switzerland
Yes
Yes for banks; not allowed for most
others
Yes
Proposed as required for banks and insurance firms; allowed for some others
Data sources: GAAP Convergence 2002 Survey Data, 2004 EU Surveys, DTT, E&Y, and PwC.
a Several countries state that companies may use IFRS as long as it does not conflict with national accounting laws.
b Except for small entities and where Romanian Accounting Law conflicts with IFRS.
Allowed, to extent there is no conflict with national law

Yes for banks; not allowed for
others
Yes
Not allowed for most companies
No
Proposed as required for banks and
insurance firms; allowed for some
others
Table 2
Expected use of IFRS in 2005 for 17 European countries by listed and non-listed, and by consolidated and individual financial statements
97
98
European country
New EU members
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Poland
Slovakia
Slovenia
Complicated nature
of particular
standards
Insufficient guidance
on first-time
application of IFRS
Limited
capital
markets
Satisfaction with
national accounting
standards among
investors/users
X
X
Translation
Difficulties
Lack of Existence
of transactions of a
specific nature
X
X
X
X
X
X
X
X
X
EEA members
Iceland
Norway
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Other
Switzerland
a
Disagreement with
certain significant
IFRS
EU candidates
Bulgaria
Romania
Total
Tax-driven nature
of national
accounting regime
X
8
As of December 31, 2002.
Table 3
Perceived impediments to achieving IFRS convergence identified in large firm surveya
European country
Standards seen as too complicated or complex
Financial
Instruments
(IAS 39)
New EU members
Czech Republic
Estonia
Impairment
of Assets
(IAS 36)
Deferred Income
Taxes (IAS 12)
Hungary
Latvia
Lithuania
Poland
X
X
X
X
Slovakia
Slovenia
Standards where country

has little experience with
such transactions
Employee
Benefits (pensions)
(IAS 19)
Other
Reporting by Retirement Plans (IAS 26),

Hyper-Inflation (IAS 29), Joint Ventures
(IAS 31)
Construction Contracts (IAS 11), Leases

(IAS 17), Investment Property (IAS 40)
Business Combinations (IAS 22), SIC 19
and SIC 30 (Reporting Currency)
Pensions and
post-retirement
benefits
X
X
X
X
X
EU candidates
Bulgaria
Romania
EEA members
Iceland
Norway
Leases (IAS 17), Reporting by Retirement

Plans (IAS 26), Provisions (IAS 37)
Hyper-Inflation (IAS 29), SIC 19 and SIC
30 (Reporting Currency)
Other
Switzerland
Total
a
As of December 31, 2002.
Other
Financial
Instruments
Table 4
Accounting standards and areas perceived as barriers to convergence in surveya
99
100
facilitated by changes in tax and other business legislation. In regard to the former, the World
Bank (2003a) has expressed concern that the Ministry of Finance drives both accounting
regulations and the regulation and collection of taxes.
The survey noted that while new IFRS translations are usually prepared on an annual
basis, at year-end 2002, the most recent version of IFRS available in the Czech language
was the 2000 version. Confirming the survey, the World Bank (2003a) notes that 2001 and
2002 translations were not published. The World Bank further noted that the 2000 version
was expensive and, therefore, not widely available. An IASB (2004) approved 2003 Czech
language translation is now available.
5.3. Estonianew EU member country
In 2005, Estonia will require all listed companies and all financial institutions to apply
IFRS in their consolidated and individual financial statements (EU, 2004c). Non-listed
companies may choose to prepare their consolidated and individual accounts using either
IFRS or Estonian GAAP. Larger companies are expected to choose IFRS while smaller and
medium-size companies (SMEs) are expected to choose Estonian GAAP.
The new law states that standards of the Estonian Accounting Standards Board (Estonian
GAAP) should be harmonized with IFRS and cross-referenced to applicable IFRS paragraphs. New Estonian GAAP should be in line with IFRS recognition and measurement
requirements. Any differences in the local standards should be explained and justified
(DTT, 2003a). By mid-2003, most Estonian GAAP had been rewritten to conform with the
new law and IFRS.
Although new standards of Estonian GAAP are to be based on IFRS, they will require less
disclosure and will allow simplified treatments in certain accounting areas. Several IFRS
deemed less relevant in the Estonian economic environment will not be covered by Estonian
GAAP. Standards not expected to be adopted into Estonian GAAP in the near future include
IAS 19 (Employee Benefits), IAS 26 (Accounting and Reporting by Retirement Plans),
IAS 29 (Hyperinflation), and IAS 31 (Joint Ventures). Estonian GAAP recommends that
companies follow IFRS where local GAAP is silent.
Convergence with IFRS is relatively widely supported by different authorities. The Estonian Accounting Standards Board understands that, for a small country like Estonia, IFRS
is the most effective way of improving the quality of the accounting framework.
Unlike many countries, the Estonian survey response states that the national accounting
environment is absolutely not tax-driven (there is no annual profit tax). Rather, as DTT
(2003a) notes, corporate tax is based on dividends, not profit.
While considerable progress has been made, the survey identified several impediments
to convergence. These include: (1) the complicated nature of certain IFRS, particularly
IAS 39 (Financial Instruments); (2) a relatively underdeveloped capital market, including
difficulties in measurement of the fair value for items such as long-term investments and
biological assets; (3) the lack of existence of transactions of a specific nature, such as pension
funds; and (4) translation difficulties.
IFRS were not translated into the national Estonian language at the time of the 2002
survey. However, a translation was in process, and it was hoped that a completed text would
be published by the end of 2003 or the beginning of 2004.
101
5.4. Hungarynew EU member country

In 2005, Hungary will require listed companies to prepare consolidated financial statements in accordance with IFRS, to the extent there is no conflict with national law. IFRS
will also be permitted, but not required, for preparing consolidated accounts of non-listed
companies. However, IFRS will not be permitted for the individual accounts of listed and
non-listed companies unless the individual accounts also comply with the Hungarian Accounting Act (EU, 2004c).
Government Resolution No. 2099/2002 (dated March 29, 2002) sets out a detailed time
schedule of steps to harmonize Hungarian accounting legislation with the EU norms. Hungarian national accounting standards will be based on IFRS, and the deadline for completion is 2008. The standard-setting process was initiated by several meetings set up
by the Ministry of Finance (which is responsible for the current accounting legislation)
to discuss basic decisions regarding the standards. Attendees represented the Chamber
of Auditors, the Association of Qualified Accountants, several Ministries, preparers and
users of financial statements, and Big 4 accounting firm representatives. The standardsetting process is intended to eliminate some allowed alternatives included in IFRS. It
is also expected that some additional rules will be incorporated to reflect Hungarian
specialties.
The tax-driven nature of national accounting requirements is seen as an impediment to
convergence. Previously, de Bruin (2000) noted that Hungary still had a strong linkage to
accounting for tax purposes. Also, the survey identified some concerns that IFRS are too
comprehensive and complex for owner-managed SMEs.
At the time of the survey, the most recent Hungarian version of IFRS was an unofficial
translation prepared in 1994. The 2002 edition was expected to be officially translated by the
end of 2003, and plans are to translate new IFRS as they are issued. With EU membership,
it is believed that problems with translation availability should disappear.
5.5. Latvianew EU member country
Legislation currently in force allows companies to use IFRS in the preparation of individual and consolidated financial statements, but only to the extent it does not conflict
with the national Latvian accounting laws (EU, 2004c). Additionally, Riga Stock Exchange
listing rules currently require that all Official List companies prepare and submit financial
statements prepared in accordance with IFRS. However, for statutory reporting purposes,
these companies are required to prepare another set of accounts prepared in accordance
with the accounting law.
Latvia plans to establish a board to develop Latvian standards in compliance with IFRS.
At the time of the survey, the new accounting law was still in the process of approval. The
proposed law would require the Cabinet of Ministers of Latvia to mandate the process of
convergence in accordance with EU requirements and IFRS, and it would apply to a long
list of companies and entities, including commercial companies, branches of international
companies, not-for-profit organizations, permanent representatives of foreign companies,
state and municipality organizations, public organizations, and individuals carrying out
business activities. However, the Cabinet of Ministers would have the authority to determine
102
the mandatory Latvian accounting standards (which should comply with IFRS) and the
scope of the entities to which the Latvian accounting standards apply.
While Latvian standards are to comply with EU regulations and IFRS, it is intended
that Latvian accounting standards will be more simple, understandable, and easier to use.
Thus, few international standards will be incorporated without changes. While there should
not be any real conflicts with IFRS, Latvian standards may ignore subjects not generally
applicable to Latvia. When national accounting law does not make specific requirements,
best practices of IFRS are to be followed, but this guidance is likely to apply only to large,
local companies and foreign subsidiaries subject to the judgment of the auditor.
At the time of the survey, four national accounting standards had been issued by the
Financial Accounting Standardisation Technical Committee under the Latvian Ministry of
Economics. These include: (1) Presentation of Financial Statements; (2) Inventories; (3)
Cash Flow Statements; and (4) Net Profit or Loss for the Period, Fundamental Errors and
Changes in Accounting Policies. These standards are not legally binding, although they
represent generally accepted practice and may be voluntarily applied.
Several impediments to convergence in Latvia were identified by the survey. One impediment is the lack of financial resources, including money to involve professionals in the
local standard development process. The survey also revealed concerns regarding insufficient guidance on first-time application of IFRS, although respondents noted there was no
reason to believe such guidance could not be issued if necessary.
The Latvian survey respondents believe a separate system of accounting for tax assessment is a necessity. Under the existing system, application of IFRS influences calculation
of the tax base. Tax adjustments needed when taxable profit is different than accounting
profit under IFRS had not been developed at the time of the survey.
Indeed, there is reluctance of national authorities in Latvia to accept standards based
on rules prepared by an international organization, such as the IASB. Until EU admission,
Latvia could not directly incorporate IFRS in the Latvian legal system, which is based on
Continental law principles. However, the survey suggested recent admission to the EU may
facilitate inclusion of IFRS in Latvias legal system.
While the Latvian accounting profession is definitely interested in developing more
sophisticated national standards, IFRS are generally viewed as too complex, especially
with regard to extensive disclosures. Indeed, a major concern highlighted by the survey
is the complicated nature of some IFRS. Adoption of the following standards would be
complicated for SMEs (which constitutes more than 99% of enterprises in Latvia): IAS
11 (Construction Contracts), IAS 12 (Income Taxes), IAS 17 (Leases), IAS 19 (Employee
Benefits), IAS 36 (Impairment of Assets), IAS 39 (Financial Instruments), and IAS 40
(Investment Property).
Three additional barriers to convergence were identified by the survey. Certain types of
transactions, such as pensions and post-retirement benefits, do not exist or are not common
in Latvia. Thus, a lack of applicability may impact the perceived need for standards in these
areas. Another impediment is the relatively undeveloped state of the Latvian capital market,
which is seen as rather illiquid. Finally, translation difficulties were seen as a barrier.
At the time of the survey, the most recent translation of IFRS available was the version
effective January 1, 2000 and published in 2001. Private organizations developed the 1997
and 2001 translations, which were not officially sanctioned. In the past, limited financial
103
resources were available for translation efforts. At the time of the survey, a translation of
the 2002 version of IFRS was underway.
5.6. Lithuanianew EU member country
In Lithuania, as of January 1, 2004, IFRS are required to be used by all companies listed
on the National Stock Exchange. By 2005, all listed companies and all banks (whether or
not listed) will be required to use IFRS to prepare both consolidated and individual financial
statements (EU, 2004c). Except for banks, all non-listed companies will be required to use
Lithuanian GAAP for both consolidated and individual financial statements.
A new national accounting standard-setting body has been established by law (World
Bank, 2002b). The Lithuanian Law of Financial Accounting specifically states that
Lithuanian Business Accounting Standards (Lithuanian GAAP) should comply with
IFRS. Lithuanian GAAP is being developed and is expected to be similar to
IFRS.
According to the survey, several obstacles pose a barrier to convergence in Lithuania,
including insufficient guidance on first-time application of IFRS, the tax-driven nature of
the national accounting regime, and a relatively underdeveloped capital market. Certain
international standards are also seen as being relatively complicated, including IAS 12
(Income Taxes), IAS 36 (Impairment of Assets), and IAS 39 (Financial Instruments). The
World Bank (2003b) notes that the Bank of Lithuania prohibits banks from using IAS 39
and has rules regarding consolidation that conflict with IFRS.
The survey also indicated that in Lithuania both accountants and financial directors
in most companies and the public in general have very limited knowledge of IFRS. In
addition, up-to-date consolidation and equity methods of accounting were not required by
Lithuanian GAAP; therefore, companies do not have relevant experience. Another perceived
barrier to convergence identified by the survey is the lack of existence of certain types of
transactions in Lithuania, particularly pensions for employees and other post-retirement
benefits. Derivative instruments, including embedded derivatives, are also not widely used
in Lithuania.
An official translation of IFRS in the Lithuanian language has been published. However,
according to the survey, it is not easily available (expensive and sold only in certain places),
and the quality of the translation is poor.
5.7. Polandnew EU member country
As of July 2004, Polands Parliament had a proposal pending on how to officially converge with IFRS (EU, 2004c). In light of Polands then anticipated accession to the EU,
survey respondents expected that public companies would be required to produce IFRS
consolidated financial statements as of 2005. Expectations are that listed corporations will
be allowed, but not required, to use IFRS for their individual financial statements (EU,
2004c). While non-listed banks are expected to be required to prepare their consolidated
accounts using IFRS, few other non-listed companies will be permitted to use IFRS for their
consolidated or individual accounts.
104
Recent changes to the Polish accounting law (applicable from 2002) moved Poland
significantly towards IFRS (e.g. long-term contracts, leasing, financial instruments). Poland
also adopted IAS 33 (Earnings Per Share). While not compulsory, Polands accounting law
states that for issues where Polish GAAP is silent, IFRS may be used. Beginning in 2004,
all public companies are required to produce a reconciliation of net profit and net assets
between Polish GAAP and IFRS.
The 2002 accounting law additionally created the Polish Accounting Standards Committee (KSB). The Committees responsibilities include: (1) preparation of national accounting standards; (2) analysis of IFRS, other national standards, and EU directives; and
(3) liaison with international bodies concerned with convergence of accounting standards.
In practice, expectations are that IFRS will be a key benchmark used by the Polish Accounting Standards Committee when preparing Polish National Accounting Standards.
However, at the time of the survey, many IFRS had not yet been addressed, including
IAS 1, IAS 8, IAS 14, IAS 17, IAS 19, IAS 22, IAS 26, IAS 29, IAS 36, IAS 38,
and IAS 41. The World Bank (2002c) has also expressed concerns about differences between IFRS and Polish Accounting Regulations, including reporting under hyperinflationary conditions, revaluation of fixed assets, consolidation requirements, segment reporting,
research and development, leasing, accounting for employee benefits, and many disclosure
requirements.
According to the survey, a positive move towards convergence was the change in the
accounting law that removed the remaining elements of tax-driven accounting. However, according to the survey, there is some reluctance of national authorities in Poland
to accept standards based on rules prepared by an international organization, such as
IASB. The reluctance stems from a mixture of factors, including a nationalist fear
of loss of sovereignty (i.e. decisions made outside of Poland) and the loss of status or position (full adoption of IFRS would make domestic legislators/standard setters
redundant).
Other perceived impediments to convergence revealed by the survey include insufficient
guidance on first-time application of IFRS and a lack of practical knowledge on IFRS
application. There is also a general satisfaction with national accounting standards and a
lack of interest from investors and other users to change national standards. Indeed, there
is no significant demand from domestic investors for IFRS as opposed to Polish GAAP
reporting. The relatively underdeveloped capital market in Poland is perceived as limiting
the number of potential users of IFRS.
According to the survey, some IFRS are viewed as being particularly complicated. For
example, wide adoption of fair valuation causes problems with practical application, especially in regard to IAS 22 (Business Combinations), IAS 36 (Impairment of Assets) and IAS
39 (Financial Instruments). Also, the lack of existence of transactions of a specific nature
is considered an impediment. For example, there are no defined benefit plans in Poland and
financial instruments tend to be unsophisticated.
The most recent translation of IFRS into Polish appears to be based on the 2001 standards.
While expectations are that translations will be conducted on an annual basis, the Polish
experience of the translation process suggests the time lag is likely to be significant. An
example of the difficulties that can be associated with translating accounting concepts from
one language to another is provided by Kosmala-MacLullichs (2003) analysis of how
105
the notion of true and fair has been translated into Polish and the Polish accounting
framework.
5.8. Slovakianew EU member country
In 2005, Slovakia will require all companies (both listed and non-listed) to use
IFRS to prepare consolidated financial statements (EU, 2004c). Listed companies
will also be required to prepare individual accounts using IFRS. However, non-listed
companies will be required to prepare individual financial statements using national
standards.
Slovakia wanted to implement all required EU legislation before joining the EU. Therefore, Accounting Act No. 431/2002 became effective on January 1, 2003 (PwC Slovensko,
2003). The law is based on EU directives and incorporates many provisions similar to IFRS,
including the True and Fair override principle. The survey indicates Slovakias goal is to
adopt IFRS into national GAAP on a standard-by-standard basis and, whenever possible,
to eliminate any differences between IFRS and Slovakian GAAP. The Ministry of Finance
can also prescribe accounting rules, as was done in the case of consolidation methods
(E&Y/Weinhold Legal, 2004).
Obstacles to convergence identified by the survey include the tax-driven nature of Slovakian accounting requirements, the relatively underdeveloped capital markets in the country, the lack of existence of certain types of transactions, and the complicated nature of
certain IFRS. Regarding the latter, areas of particular concern include deferred tax assets
and financial instruments. Another problem identified by the survey is the cost and financing
of the convergence project.
A 2000 translation of IFRS in the national language is available. The only updates
since then are translations of IAS 40 and IAS 41. However, accounting firms are providing some up-to-date information on IFRS (for examples, see www.pwcglobal.com/sk and
www.ey.com).
5.9. Slovenianew EU member country
In May 2004, Slovenia continued to contemplate how to adopt IFRS. Expectations are that IFRS will be required for use in the preparation of the consolidated
and individual financial statements of listed companies (EU, 2004c). For non-listed
companies, Slovenia will probably require banks and insurance companies to use
IFRS to prepare consolidated and individual accounts. All other non-listed companies
will be permitted to use IFRS in their consolidated and individual accounts (EU,
2004c).
According to the survey, revisions to Slovenian accounting standards continue to align
them more closely with IFRS. Presently, Slovenian Accounting Standards are nearly completely in compliance with IFRS. The Companys Act requires that Slovenian Accounting
Standards comply with EU practice. EU requirements for listed companies are also to be
adopted in Slovenia. Given the current state of Slovenian Accounting Standards, no extensive plans are considered necessary because Slovenia sees itself as being in almost full
compliance with IFRS.
106
A 2001 translation of IFRS is available in the national language. There is usually a

two to three month time lag between the issuance and availability of a new standard or
interpretation after it has been approved by the IASB.
5.10. BulgariaEU candidate country
The Bulgarian Accountancy Act states that, effective January 1, 2005, all entities should
prepare and submit both consolidated and individual accounts in accordance with IFRS.
Since January 1, 2003, transitional provisions of the Act require that banks, insurance
companies, and investment and pension assurance companies prepare both individual and
consolidated financial statements in compliance with IFRS. Since 2003, all Bulgarian companies have been allowed to use IFRS. The 2001 Accounting law requires full convergence
of Bulgarian national accounting standards with IFRS (see World Bank, 2002a).
Until the enactment of IFRS, Bulgarian companies will apply national accounting standards adopted by the Council of Ministers. In 2002, national standards were amended and
became quite similar to IFRS. The objective is to have the requirements of local GAAP follow IFRS so that the transition is smooth. Until complete implementation of IFRS in 2005,
the National Accountancy Council, as a consultative body to the Ministry of Finance, will
assist in the preparation of the normative acts for the accounting activities in the country.
According to the survey, there are no longer significant disagreements between Bulgarian
GAAP and IFRS. Remaining differences relate to IAS 12 (Income Taxes), IAS 17 (Leases),
IAS 23 (Borrowing Costs), and IAS 34 (Interim Reports). In addition, not all of the SICs
have been taken into account by national standards. There are additionally specific national
standards which do not have an equivalent IFRS. These include national standards covering
financial statements of insurance companies, specialized investment companies, not-forprofit organizations, and accounting for environmental expenses. The Bulgarian accounting
profession will await guidance on international practice for the above-mentioned issues.
In Bulgaria, several items are perceived as impediments to convergence. These include
insufficient guidance on first-time application of IFRS, the tax-driven nature of the national
accounting requirements, the underdeveloped nature of capital market, translation difficulties, and the complicated nature of particular IFRS. The survey respondents listed several
standards as being complicated. These include IAS 12 (Income Taxes), IAS 17 (Leases),
IAS 19 (Employee Benefits), IAS 26 (Accounting and Reporting by Retirement Plans),
IAS 36 (Impairment of Assets), IAS 37 (Provisions, Contingent Liabilities and Contingent
Assets), and IAS 39 (Financial Instruments). According to the survey, the nature of pensions
and other post-retirement benefits locally are different from international practice. Due to
the underdeveloped business environment and market, there are also difficulties with the
application of IAS 36 and especially IAS 39.
The timely translation of IFRS into Bulgarian is a concern. At the time of the survey,
a 2001 translation was available, but unofficial, and a 2002 translation was in process.
The World Bank (2002a) reports that translation efforts rely on the goodwill of committee
members from academe and international accounting firms that have been working with the
Ministry of Finance. The survey indicated there is often a 612 month time lag between the
issuance of new IFRS and the availability of a Bulgarian translation.
107
5.11. RomaniaEU candidate country

After 2006, all companies, except small entities, will be required to use IFRS in Romania. In 2001, the Ministry of Public Finance issued Order 94, which approved accounting
regulations regarding harmonization with the Fourth EU Directive and IFRS. Order 94 requires a stepped implementation of IFRS between 2001 and 2006. Each year smaller and
smaller Romanian companies are required to use IFRS. For example, in 2003 (vs. 2004) [vs.
2006], firms must use IFRS if they meet at least two of the following criteria: (1) revenues
of at least 7 (6) [5] million euros, (2) asset book value of at least 3.5 (3) [2.5] million euros,
and (3) at least 150 (100) [50] employees (Ernst & Young Romania, 2003, World Bank,
2003b).
The official IAS Romanian translation was incorporated into local legislation regarding financial reporting. However, the survey notes that some subsequent regulations and
guidance are contrary to harmonization, such as one encouraging non-application of IAS
29 (Hyperinflation). The World Bank (2003b, pp. 12) is quite concerned that the Accounting Law and secondary legislation include specific accounting requirements that may
conflict with IAS and undermine government efforts to implement reliable accounting
standards.
The survey reports several obstacles to convergence in Romania, including insufficient
guidance on first-time application of IFRS and the tax-driven nature of national accounting
requirements. An interesting point related to the latter is the fact that the Ministry of Finance
is currently responsible both for setting accounting standards and for planning and collecting
taxes (World Bank, 2003b).
Another perceived barrier to convergence in Romania is the complicated nature of certain
IFRS. The survey notes that IAS 29 (Hyperinflation), IAS 36 (Impairment of Assets), IAS 39
(Financial Instruments), SIC 19 and SIC 30 (Reporting Currency), and standards referring
to consolidation are particularly problematic. This may be a significant issue because, in
practice, the imposition of complex IAS dealing with financial instruments, consolidation,
and hyperinflation has been delayed (World Bank, 2003b, p. 1).
According to the survey, there are also major disagreements with certain significant
IFRS, including, but not limited to: (1) mandatory non-application of IAS 29 for financial
statements filed with the Ministry of Finance; (2) the basis for fixed assets valuation; (3)
prescribed format for notes; and (4) non-application of SIC 19 (IAS 21) and SIC 30. According to PwC (2004), several differences remain between IFRS and Romanian GAAP,
including financial instruments.
The survey notes a reluctance of national authorities to accept standards based on rules
prepared by an international organization, such as IASB. Romanian authorities have a
tendency to try to amend the application of certain IFRS via detailed Ministry of Public
Finance Instructions. These instructions can, while officially requiring application of all
IFRS, prescribe certain fixed format disclosures that might introduce contradictions to
IFRS.
According to the survey, there is also a perception in Romania that financial statements
are for the fiscal authorities. The capital market is still evolving, resulting in less pressure
from investors to achieve full IFRS compliance. So, another perceived impediment is due
to the relatively underdeveloped capital markets in Romania.
108
The 2001 IFRS were translated into Romanian, and at the time of the survey, the 2002
edition was being translated. The World Bank (2003b) notes that while the Department for
International Development in the United Kingdom is funding the translation, copies of the
translation are considered expensive by local standards.
5.12. TurkeyEU candidate country
While not included in the 2002 convergence survey, Turkey is making many changes to
converge national rules with IFRS. Currently, Turkey permits domestic listed companies
to use IFRS (DTT, 2004b). Two regulatory bodies define accounting standards in Turkey:
the Banking Regulation and Supervision Agency (BRSA) for the banking sector, and the
Capital Market Board (CMB) for publicly traded companies (DTT, 2002). Effective July
2002, BRSA requires a completely new set of standards to converge their standards with
IFRS. These new standards closely conform to IAS 7, 8, 10, 16, 17, 20, 21, 22, 24, 27, 28,
29, 31, 32, 36, 37, 38, and 39.
Historically, CMB accounting standards were quite different from IFRS. In 2002, the
CMB translated IFRS into Turkish and proposed changes to CMB rules to make most
quite similar to IFRS. The effective date for these proposals was December 31, 2003 (DTT,
2002).
5.13. IcelandEEA member
In Iceland, at the end of 2002, there were no formal plans to converge Icelandic GAAP and
IFRS in full or in part. However, a committee was reviewing the Annual Accounts Act (No.
144/1994) on behalf of the Ministry of Finance. The review of the act focused on whether
Iceland is in compliance with the EUs Fourth Council Directive and the Seventh Council
Directive, based on comments from the European Free Trade Association Surveillance
Authority (ESA). An EU (2004b) survey found Iceland was still in the Work Group Stage.
The EU survey suggests IFRS will only be required for the consolidated accounts of
listed companies in Iceland. Listed companies will also probably be permitted, but not
required, to prepare individual accounts using IFRS. In addition, while not required, nonlisted Icelandic companies will probably be permitted to prepare individual and consolidated
financial statements using IFRS.
The Annual Accounts Act and Regulation No. 696/1996 Presentation and contents of
financial statements are the primary sources of financial reporting requirements in Iceland.
These acts and regulations do not refer to IFRS. However, because IFRS presentation and
accounting principles are more clear and accurate and give a better view of a companys
financial standing than national Icelandic GAAP, the survey states that companies using
IFRS fulfill all the requirements of Icelandic GAAP. Further, by the end of 2002, the
Icelandic Financial Accounting Standard Board (a body set up by law) had issued five
rules for preparing accounts based on IAS 1 (Presentation of Financial Statements), IAS
2 (Inventories), IAS 7 (Cash Flow), IAS 8 (Net Profit or Loss for the Period), and IAS 12
(Income Taxes).
The survey indicates that major groups seen as influencing convergence in Iceland include
its accounting profession and Icelandic corporate executive directors. A major impediment
109
to convergence according to the survey is the lack of interest of national standard-setting

authorities (the Icelandic Parliament). Beyond a general lack of interest, another impediment may be the relatively small and underdeveloped capital market in Iceland. Finally,
while not considered an impediment, IFRS has not yet been translated into the national
language.
5.14. LiechtensteinEEA member
Liechtenstein was not included in the firms 2002 convergence survey. Although the
country does not have an active stock exchange, Liechtenstein has passed laws regarding
IFRS (EU, 2004b). All EEA countries are bound by treaty to require that listed corporations
consolidated accounts be prepared in accordance with IFRS. In addition, IFRS will be
permitted, but not required, in preparing individual accounts of listed companies and for
both the consolidated and individual accounts of non-listed companies.
5.15. NorwayEEA member
Norway, as a member of the EEA, is required to implement the EU accounting directives
(Alexander & Schwencke, 2003; DTT, 2003b). The 2002 convergence survey found that a
process had been started to evaluate whether the accounting act in Norway should be changed
so listed companiesand perhaps other large companieswould be required to prepare
consolidated accounts in accordance with IFRS. The EU (2004b) survey indicates this
process is continuing. Expectations are that IFRS will be allowed for preparing consolidated
accounts of both listed and non-listed companies. For individual accounts of all companies,
IFRS will not be required, and will probably not be allowed.
The Norwegian Accounting Standards Board has stated that one of its goals is to
converge with IFRS. Because EU regulations do not have the force of law in Norway,
the Norwegian Accounting Act must be revised before implementation of IFRS would
be allowed. The government intends to follow the EU regulation and is considering
convergence.
Norwegian standard setters are very aware of the fact that Norwegian companies operate
in an international market. This fact, combined with the globalization of capital markets,
has necessitated Norwegian GAAP adapting to IFRS. The survey indicates that apart from
some circumstances where a requirement under IFRS would be prohibited under Norwegian
law, Norwegian GAAP is in line with IFRS.
Alexander and Schwencke (2003, p. 563) confirm that new Norwegian accounting standards heavily rely on IFRS but further state that some standards include minor violations
of some explicit rules of the IASB. These authors are more concerned about the Norwegian
standards direction because Norway is probably the only country which has implemented
the EC directives without explicitly formulating a general prudence principle within the law
(p. 562). While noting this situation may violate the directive, Alexander and Schwencke
raise the larger issue that compared to IFRS, Norwegian accounting is giving more emphasis to matching, as opposed to prudence, and the profit and loss statement, rather than the
balance sheet.
110
Because Norway has a well-established GAAP, the survey finds that one impediment to
convergence is a general satisfaction with national accounting standards. Therefore, many
companies have a lack of interest to change national standards. Conversely, taxes are not a
problem because tax and accounting rules are mainly separated in Norway.
Another impediment to convergence is the belief that insufficient guidance exists on firsttime application of IFRS. Also, until clarification is provided as to exactly which companies
will be affected, companies are less willing to start the process to prepare for convergence
to IFRS. In addition, some IFRS are seen as particularly complicated, especially IAS 39
(financial instruments).
The survey suggested that IFRS had not been translated into Norwegian; however, expectations were that IFRS would be translated into Norwegian in the future. Records indicate
that a Norwegian translation of IAS was available in 1995 (IASC, 1995).
5.16. Switzerland
Beginning in 2005, Swiss listed companies that are considered to be multinational will
be required to use either IFRS or US GAAP for consolidated accounts (DTT, 2004a). All
other listed companies will alternatively be allowed to use Swiss GAAP. Swiss GAAP will
also continue to be used by non-listed companies and for the individual accounts of listed
companies.
For statutory (individual) accounts, Swiss companies do not adopt IFRS for tax reasons.
Therefore, the tax-driven nature of the national accounting requirements is seen as an
impediment to convergence. Income taxes are determined on an unconsolidated level and
are based on the statutory accounts.
The Swiss standard setter has introduced many IFRS requirements to Swiss GAAP, and
convergence is anticipated to continue but only for consolidated accounts. All attempts to
introduce a true and fair view to Swiss GAAP for the preparation of individual accounts
have failed.
According to the survey, Swiss investors and users are interested primarily in consolidated accounts. Also, as Swiss law allows different accounting standards for consolidated
accounts, survey respondents see no real need to convert national GAAP to IFRS.
In October 2003, official translations were available in three official Swiss languages
(German, French, Italian) through the EU. However, the survey noted that a one-year time
lag often exists between the issuance of new IFRS and their translations being available in
the Swiss national languages.
6. Discussion and conclusion

6.1. Translation issues
An important issue affecting convergence with IFRS highlighted by the survey is whether
or not quality accounting materials are available in a countrys national language(s). The
survey emphasizes that, in recent years, IFRS either were not available or were not available
in a timely manner in the national language of several of the countries studied. While editions
111
Table 5
Translations of IFRS into national languages
European country
Translation of IFRS
available in countrys
national language
Translation official
(approved) or unofficial
Most recent IFRS

translation
Yes (Greek)
Done by EU; not IASB
Approved
Hungary
Latvia
Lithuania
Yes
Translation was in
progress; expected in
2003 or 2004
Yes
Yes
Yes
October 2003 EU
translation of all EU
endorsed IFRS
2003 standards
Poland
Slovakia
Yes
Yes
Available, but not approved

Available, but not approved
Considered official by
Lithuania; Not IASB
Approved
Approved
New EU membersa
Cyprus
Czech Republic
Estonia
Slovenia
Yes
Approved
EU candidates
Bulgaria
Yes
Considered official by
Bulgarian Ministry of
Finance; not IASB
Romania
Turkey
Yes
Yes
Approved
Done by Turkish authorities;
not IASB
EEA members
Iceland
Liechtenstein
Norway
Other
Switzerland
No
Yes (German)
2003 standards
2001 standards
Recent, but unclear which
year
2001 standards
2000 standards; plus IAS
40 and 41
2001 standards
2001 standards;
translation of 2002
standards expected by
April 2003
2002 standards
2002 standards
Approved
October 2003 EU
endorsed IFRS
Approved
October 2003 EU
endorsed IFRS
Old translation; new

translation expected
in future
Yes (German, French
and Italian)
Sources: Survey (December 2002), IASB (2004b), EU website (2004), and World Bank Reports (ROSC reports).
Sometimes it is unclear whether the date referred to the date of the translation or the date of the IFRS edition that
was translated.
a The EU expects to have all EU legislation and important documents translated into the nine new EU languages
by the end of 2004 (EU, 2004a).
of IFRS have been translated into all national languages of these countries except Estonian
and Icelandic, many of these translations do not include all recent standards (see Table 5).
For example, until recently, Hungary was using a 1994 translation. Thus, most new EU and
EU candidate countries do not possess complete IFRS translations and, accordingly, have
112
had little opportunity to develop any significant experience using and implementing IFRS.
Additionally, while the EU plans to translate all key materials into the nine new official
EU languages by the end of 2004 (EU, 2004a), as of May 1, 2004, EU approved IFRS had
not been officially translated and published in the EUs Official Journal. Unfortunately, this
leaves little time for developing a high level of familiarity with IFRS.
In general, the survey further reveals that significant time lags have often existed between
issuance of a new standard or interpretation and its availability in the national languages
of these countries. This time lag varies greatly. Some countries report relatively short time
lags, such as Slovenia (2 or 3 months), Bulgaria (612 months), and Switzerland (1 year).
As Table 5 shows, other countries have translations that are at least two years old. Once all
existing IFRS are translated, an important remaining issue will be how quickly proposed
and new IASB standards and interpretations are actually translated into the languages of
new EU members and EU candidate countries.
Despite the issues noted above, the large firms convergence survey indicates that, at the
time of the survey, most of the countries examined in our study did not view translation
of IFRS as a problem. Of course, some of these countries have up-to-date translations
that include all or most IFRS. For example, Switzerland has up-to-date translations in its
three national languages, German, French, and Italian. The finding additionally suggests
that, at the time of the survey, expectations were that EU translations would be issued in a
timely manner in order to allow for sufficient preparation for 2005 implementation.8 These
expectations should perhaps be tempered by the findings of Abd-Elsalam and Weetman
(2003, p. 67). These authors studied implementation of IAS in an emerging capital market
and suggest two stages are important in this process: (1) relative familiarity with the
contents of the IAS, and (2) the accessibility of IAS in the language of the country. AbdElsalam and Weetman found that lower disclosure levels were associated with relative
unfamiliarity with regulations and the non-availability of an authoritative translation (p.
80). Thus, while up-to-date translations of existing IFRS may be available by 2005 for most
countries included in this study, the impact of unfamiliarity associated with a history of
translation problems may hinder the effective adoption of IFRS. The impact of lags in the
translation of new IFRS, especially those addressing complex reporting issues, is also an
area of concern, particularly in the case of developing countries with emerging transitional
economies.
6.2. The development of a two-standard system
All countries included in our study will either require or effectively allow listed companies to prepare consolidated financial statements in accordance with IFRS by 2005. A
majority of new EU members (Cyprus, Czech Republic, Estonia, Lithuania, Malta, and
Slovakia) and EU candidate countries (Bulgaria and Romania) will also require IFRS for
the individual accounts of listed companies. This scenario differs from the plans of the
first 15 EU members (Street & Larson, 2004) and may relate to the fact that most new EU
member and EU candidate countries have recently changed from a communist system to a
8
See http://europa.eu.int/eur-lex/en/archive/2003/l 26120031013en.html regarding language availability. EU

endorsed IFRS in the 11 official languages of the first 15 EU member states were posted in October 2003.
113
capitalistic system and are more amenable to new ideas. Additionally, our analysis reveals
that, in comparison to most of the first 15 EU states, the link between financial accounting
and tax accounting, while existent, may not be as pronounced in some of the countries
included in this current study. Our analysis further finds that, similar to the first 15 EU
members (Street & Larson, 2004), most European countries studied here currently do not
plan to require non-listed companies to use IFRS.
In GAAP Convergence 2002, the firms caution that, while only requiring IFRS for listed
companies may represent a logical transition towards convergence, a two-standard system,
where some companies continue to use national GAAP, may be difficult to maintain in
the long-run. The firms recommend that governments and national standard setters develop
formal convergence plans to eliminate these dual standards.
6.3. Perceived impediments to convergence
Development of a two-standard system in several countries included in our study
may relate to the barriers to convergence identified by the large firms survey. The most
common impediments were limited national capital markets, insufficient guidance on firsttime application of IFRS, the tax-driven nature of national accounting regimes (i.e., the
alignment between financial accounting and tax reporting), and the complicated nature of
particular standards. Several countries also noted concerns regarding applicability of IFRS
for SMEs.
Most perceived impediments to convergence were seen as more of a problem in the new
EU member and EU candidate countries. For example, seven of these countries identified 12
major IFRS they believed were too complicated (see Table 4). These countries were particularly concerned about IAS 39 (Financial Instruments), followed by IAS 36 (Impairment of
Assets), IAS 12 (Income Taxes), and IAS 19 (Employee Benefits/Pensions). In contrast, the
only concern about a complicated IFRS by EEA countries or Switzerland was from Norway
in regards to IAS 39 (Financial Instruments). In total, 8 of the 13 countries surveyed by
the firms specifically mentioned financial instruments as a barrier to convergence. As of
September 2004, the EU still had not endorsed the IASBs standards regarding financial
instruments. Even IASB Chair Sir David Tweedie admitted he might have to concede defeat
on financial instruments since he was not confident the EU would adopt the IASBs standard
(Anonymous, 2004).
Several other impediments to convergence were mentioned by new EU member and EU
candidate countries. Six of the 10 surveyed by the firms noted that the lack of transactions
of a specific nature, such as pensions and other post-retirement benefits, represent a perceived barrier to convergence (see Table 4). As companies evolve and begin to engage in
more sophisticated transactions, careful planning should be made to ensure that financial
reporting staff are adequately trained in the proper accounting for these transactions and that
accounting systems are sufficiently updated. Additionally, six of the surveyed countries also
noted that insufficient guidance on first-time application of IFRS was a concern. Hopefully,
issuance of IFRS 1 (first-time adoption of IFRS) will provide some relief in this regard.
A review of explanatory material provided in the surveys for two barriers, lack of transactions of a specific nature and insufficient guidance on first-time application of IFRS,
confirm that affirmative responses to these questions were at times associated with a lack
114
of familiarity with certain accounting transactions and/or a lack of technical accounting

expertise. Therefore, these findings further highlight the need for timely up-to-date translations of IFRS, and additionally draw attention to the need for high quality education and
training materials in the national languages of these countries. As stated in GAAP Convergence 2002, the accounting profession and international organizations should devote more
resources to developing and providing quality IFRS education and training materials and
programs, and universities worldwide should include IFRS in the core accounting curriculum. Additionally, as the Trustees of the IASC Foundation currently consider the role, if
any, the Foundation will play in IFRS education, ample consideration should be given to
these findings.
While only Latvia and Slovakia specifically mentioned the cost of convergence given
limited financial resources, several other countries implied that cost was an issue, especially
in regards to having current and up-to-date IFRS translations available. Current national
language translations are a necessity for the effective implementation of IFRS. Translations
of new IFRS must be done quickly, but even the EU admitted that its endorsement of most
IFRS in 2003 was delayed by six months because of translation problems (EC, 2003).
Eight of the 10 new EU member and EU candidate countries also indicated that their
countrys relatively underdeveloped capital markets hindered convergence. Without active
capital markets, many listed companies have not been forced to produce financial statements
using internationally recognized accounting standards. Woolfe (2004) agrees that a key
problem for these countries is the lack of liquid markets. For example, it is hard to value
company shares for various financial reporting purposes when they have not been traded
for long periods of time.
The study finds that the linkage between tax accounting and financial reporting influences the reluctance of most studied European countries to converge national GAAP
with IFRS, particularly for individual accounts of non-listed companies. Among the new
EU members and EU candidate countries surveyed by the firms, only Estonia, Latvia,
Poland, and Slovenia did not cite the tax-driven nature of their national accounting regime
as an obstacle to convergence. These findings are consistent with prior research that
notes the importance of the relationship between tax and financial reporting in many
continental European countries and the resulting negative influence of this link on accounting harmonization (Guenther & Hussein, 1995; Lamb et al., 1998; Street & Larson,
2004).
Survey comments indicated resistance from national accounting standard setters in at
least five countries. Some standard setters believe that accounting needs to be tailored to a
particular countrys environment, something which the IASB and EU oppose. While one
EEA standard setter simply expressed little interest in convergence, a couple of standard
setters appeared somewhat hostile to the idea that they may lose some or all of their decisionmaking authority. European accounting convergence is largely based on the legal authority of
the EU. Therefore, the EUs power to mandate and enforce regional accounting convergence
is at stake. The EU appears ready to force the issue. In July 2004, the EU dealt with noncompliance by formally asking seven EU countries to put in their national laws the 2001
accounting fair value Directive (2001/65/EC) (Lymer, 2004). If a satisfactory response is
not received within two months, the EU may decide to take these countries to the European
Court of Justice.
115
Several countries reviewed in this study also noted that for SMEs, IFRS are too complicated and require excessive disclosures. Consistent with a recommendation of the large
firms set forth in GAAP Convergence 2002, the IASB accelerated its project on SMEs. In
June 2004, the IASB (2004a) issued a discussion paper, Preliminary Views on Accounting
Standards for Small and Medium-sized Entities. The proposed IASB SME standards are
being designed for companies with no public accountability and may require less disclosure than IFRS. National regulators will establish their own size criteria to determine which
entities may or must use these standards. Comment letters regarding this discussion paper
were due to the IASB by September 24, 2004.
6.4. Conclusion
This research provides evidence both on the status of convergence with IFRS and on
issues perceived as affecting the drive toward accounting convergence in 17 European
countries. Issues including complicated standards and linkages between tax and financial
reporting appear to be creating a situation whereby IFRS will be required for listed companies consolidated accounts while another basis of accounting will frequently be used for
non-listed companies and/or individual accounts. This finding provides further evidence
of the emergence of a two-standard system of financial reporting in many European
countries.
The finding regarding complicated standards also emphasizes the significance of the
EUs reluctance to adopt IAS 32 and 39. Summarizing a recent report issued by the Federation des Experts Comptables Europeens (FEE), the organizations President, David Devlin,
stated,
As a general principle, FEE calls for global standards. As a consequence, we emphasise
the need for endorsed IFRS to be the same as IFRS. The endorsement process should
not be used as a means to create European standards. Only global standards will meet
the wider objectives of financial stability, efficiency and transparency and provide the
benefits of increasing confidence in financial markets, reducing the cost of capital and
facilitating global investments.
There would be serious drawbacks if elements of IFRS were not to be endorsed as
EU standards would be seen as very much a second best. There would also be serious
implications for audit reporting if endorsed IFRS were different from IFRS: IFRS
could no longer be referred to as the reporting framework (FEE, 2004).
FEEs position is consistent with the large firms view that the ultimate goal of each
countrys convergence plan should be to adopt IFRS, supplemented only in rare instances
for national issues (BDO et al., 2003, p. 8). If convergence and proper implementation
of IFRS are to become a reality, all parties should work toward a reasonable solution. The
current situation creates major uncertainties for preparers and compounds existing barriers
to convergence.
The studys results highlight the need for more research in the area of convergence. In
particular, the roles of national GAAP requirements, stock exchange listing requirements,
and the links between financial reporting and tax accounting merit further investigation.
116
These issues need to be better understood in order to determine if accounting convergence

via IFRS will become a reality or will remain an elusive goal within a two-standard
system.
References
Abd-Elsalam, O. H., & Weetman, P. (2003). Introducing International Accounting Standards to an emerging capital
market: Relative familiarity and language effect in Egypt. Journal of International Accounting, Auditing and
Taxation, 12, 6384.
Achleitner, A. (1995). Latest developments in Swiss regulation of financial reporting. The European Accounting
Review, 4(1), 141154.
Aisbitt, S., & Nobes, C. (2001). The true and fair view requirement in recent national implementations. Accounting
and Business Research, 31(2), 8390.
Alexander, D., & Schwencke, H. R. (2003). Accounting changes in Norway. The European Accounting Review,
12(3), 549566.
Alexander, D., & Archer, S. (Eds.) (2001). European Accounting Guide (4th ed.). Aspen Publishers.
Andersen, BDO, Deloitte Touche Tohmatsu, Ernst & Young International, Grant Thornton, KPMG, et al. (2000).
In C. W. Nobes (Ed.), GAAP 2000. A Survey of National Accounting Rules in 53 Countries.
Andersen, BDO, Deloitte Touche Tohmatsu, Ernst & Young International, Grant Thornton, KPMG, et al. (2001).
In C. W. Nobes (Ed.), GAAP 2001. A Survey of National Accounting Rules Benchmarked Against International
Accounting Standards.
Anonymous. (2004). About Schmid. Accountancy (May), 4546.
Bailey, D., Alver, J., Mackevicius, J., & Paupa, V. (1995). Accounting law reform in the Baltic states: The initial
steps. The European Accounting Review, 4(4), 685711.
BDO, Deloitte Touche Tohmatsu, Ernst & Young, Grant Thornton, KPMG, and PricewaterhouseCoopers. (2003).
GAAP Convergence 2002: A Survey of National Efforts to Promote and Achieve Convergence with International
Financial Reporting Standards (D. L. Street, Researcher).
Bloomer, C. (Ed.). (1999). The IASC-U.S. Comparison Project: A Report on the Similarities and Differences
between IASC Standards and U.S. GAAP (2nd ed.). Norwalk, CT: FASB.
Boross, Z., Clarkson, A. H., Fraser, M., & Weetman, P. (1995). Pressures and conflicts in moving towards harmonization of accounting in Hungary. The European Accounting Review, 4(4), 713737.
Bursal, N. I. (1998). Recent changes in the accounting profession and financial reporting in Turkey. Advances in
International Accounting, (Suppl. 1), 207237.
Canibano, L., & Mora, A. (2000). Evaluating the statistical significance of de facto accounting harmonization: A
study of European global players. The European Accounting Review, 9(3), 349369.
Choi, F. D. S., Frost, C. A., & Meek, G. K. (2002). International accounting (4th ed.). Upper Saddle River, NJ:
Prentice Hall; Pearson Education.
Clarkson, A. H., Fraser, M., Iles, K., & Weetman, P. (1996). Change and choice in Hungarian accounting practice:
An exploratory study of the accounting law of 1991. The European Accounting Review, 5(3), 523543.
Cooke, T. E., & Curuk, T. (1996). Accounting in Turkey with reference to the particular problem of lease transactions. The European Accounting Review, 5(2), 339359.
Daniel, P., Suranova, Z., & de Beelde, I. (2001). The development of accounting in Slovakia. The European
Accounting Review, 10(2), 343359.
de Bruin, E. (2000). Financial reportingHungarian GAAP v IASsClosing the gap. Accountancy, (June), 108.
Deloitte Touche Tohmatsu (DTT). (2000). GAAP Differences: IAS and GAAP in Eastern Europe. Available at:
http://www.iasplus.com/dttpubs/ce2000.pdf.
DTT. (2002, November). Country updates: Turkey. Available at: http://www.iasplus.com/country/turkey.htm.
DTT. (2003a, July). Country updates: Estonia. Available at: http://www.iasplus.com/country/estonia.htm.
DTT. (2003b). European IFRS regulation will apply to three EEA non-EU countries. IAS plus, Europe-Africa
April quarterly edition, Issue No. 9, p. 18.
DTT. (2004a). Switzerland: Exchange backtracks on IFRS. IAS plus, April quarterly edition, p. 21.
117
DTT. (2004b). Use of IFRS for reporting by domestic listed and non-listed companies, by country. Available at:
http://www.iasplus.com/country/useiastest.htm (accessed on July 26, 2004).
Dutia, T. (1995). The restructuring of the system of accounting in Romania during the period of transition to the
market economy. The European Accounting Review, 4(4), 739748.
Eberhartinger, E. L. E. (1999). The impact of tax rules on financial reporting in Germany, France, and the UK.
The International Journal of Accounting, 34(1), 93119.
Eilifsen, A. (1996). The relationship between accounting and taxation in Norway. The European Accounting
Review, 5(Suppl.), 835844.
Ernst & Young Cyprus. (2004). Doing business in Cyprus. Available at: www.ey.com.
Ernst & Young Romania. (2003). Doing business in Romania. Available at: www.ey.com.
Ernst & Young/Weinhold Legal. (2004). Doing business in the Slovak Republic. Available at: www.ey.com.
European Union. (2004a). EUR-LexEnlargement. Available at: http://europa.eu.int/eur-lex/en/accession.html
(accessed on May 25, 2004).
European Union. (2004b, July 12). Planned implementation of the IAS regulation (1606/2002) in the EU and
EEA. Available at: http://europa.eu.int/comm/internal market/accounting/docs/ias/ias-use-of-options en.pdf
(accessed on July 26, 2004).
European Union. (2004c, July 22). Planned implementation of the IAS regulation (1606/2002) in the new Member
States. Available at: http://europa.eu.int/comm/internal market/accounting/docs/ias/ias-use-of-options-newmemberstates en.pdf (accessed on July 26, 2004).
European Commission. (2003). International Accounting Standards endorsed. Available at: http://europa.
eu.int/comm/internal market/accounting/ias/2003-07-ias-endorsed en.htm
(accessed
on
July
26,
2004).
European Commission. (2004, July 19). International Accounting Standards (IASs) adopted in the European Union by the European Commission. Available at http://europa.eu.int/comm/internal market/
accounting/docs/ias/ias-adoption-process en.pdf (accessed on September 17, 2004).
Evans, L. (2003). The true and fair view and the fair presentation override of IAS 1. Accounting and Business
Research, 33(4), 311325.
Federation des Experts Comptables Europeens (FEE). (2004, June 4). Europes accountants seek global standards
for nancial instruments in position paper. Avaiable at: http://www.fee.be (accessed on July 26, 2004).
Garrido, P., Leon, A., & Zorio, A. (2002). Measurement of formal harmonization progress: The IASC experience.
The International Journal of Accounting, 37, 126.
Garrod, N., & Turk, I. (1995). The development of accounting regulation in Slovenia. The European Accounting
Review, 4(4), 749764.
Gornik-Tomaszewski, S., & Jermakowicz, E. (2001). Accounting-based valuation of Polish listed companies.
Journal of International Financial Management and Accounting, 12(1), 5074.
Guenther, D. A., & Hussein, M. E. A. (1995). Accounting standards and national tax laws: The IASC and the ban
on LIFO. Journal of Accounting and Public Policy, 14, 115141.
Haller, A. (2002). Financial accounting developments in the European Union: Past events and future prospects.
The European Accounting Review, 11(1), 153190.
Herz, R. H. (2003). A year of challenge and change for the FASB. Accounting Horizons, 17(3), 247255.
Hoarau, C. (1995). International accounting harmonization: American hegemony or mutual recognition with
benchmarks? The European Accounting Review, 4(2), 217233.
Holeckova, J. (1996). Relationship between accounting and taxation in the Czech Republic. The European Accounting Review, 5(Suppl.), 859869.
Hoogendoorn, M. N. (1996). Accounting and taxation in EuropeA comparative overview. The European Accounting Review, 5(Suppl.), 783794.
International Accounting Standards Board (IASB). (2004a, June). Preliminary views on accounting standards
for small and medium-sized entities (Discussion Paper). Available at: www.iasb.org.uk (accessed on July 29,
2004).
International Accounting Standards Board (IASB). (2004b). Translations. Available at IASB website:
www.iasb.org.uk (accessed on July 29, 2004).
International Accounting Standards Committee (IASC). (1995, November 29). Translations of International Accounting Standards and their sources. London: IASC.
118
Jaruga, A., Walinska, E., & Baniewicz, A. (1996). The relationship between accounting and taxation in Poland.
The European Accounting Review, 5(Suppl.), 883897.
Jaruga, A. A., & Szychta, A. (1997). The origin and evolution of charts of accounts in Poland. The European
Accounting Review, 6(3), 509526.
Johnsen, A. (1993). Accounting regulation in Norway. The European Accounting Review, 2(3), 617626.
King, N., Beattie, A., Cristescu, A. -M., & Weetman, P. (2001). Developing accounting and audit in a transitional
economy: The Romanian experience. The European Accounting Review, 10(1), 149171.
Kosmala-MacLullich, K. (2003). The true and fair view construct in the context of the Polish transition economy:
Some local insights. The European Accounting Review, 12(3), 465487.
Krzywda, D., Bailey, D., & Schroeder, M. (1994). Financial reporting by Polish listed companies for 1991. The
European Accounting Review, 3(2), 311328.
Lamb, M., Nobes, C., & Roberts, A. (1998). International variations in the connections between tax and financial
reporting. Accounting and Business Research, 28(Summer), 173188.
Larson, R. K., & Kenny, S. Y. (1999). The harmonization of international accounting standards: Progress in the
1990s? Multinational Business Review, (Spring), 112.
Lymer, A. (2004, July 22). EC asks seven member states to allow application of fair values for derivatives. Double
entries (Issue 10.28). Available at: http://accountingeducation.com/news/news5278.html (accessed on July 29,
2004).
Meek, G. K., & Thomas, W. B. (2004). A review of markets-based international accounting research. Journal of
International Accounting Research, 3(1), 2141.
Ordelheide, D., & KPMG. (2001). Transnational Accounting (TRANSACC) (2nd ed.). Hampshire, UK: Palgrave.
PricewaterhouseCoopers (PwC). (2002a, April). IAS, US GAAP and CZ GAAPSimilarities and Differences.
Available at: www.pwcglobal.com.
PwC. (2002b, April). IFRSSimilarities and DifferencesIFRS, US GAAP and Polish Accounting Regulations.
Available at: www.pwcglobal.com.
PwC. (2002c, January). Swiss GAAP FER, IAS and US GAAPSimilarities and Differences. Available at:
www.pwcglobal.com.
PwC. (2004). Business guide to Romania, 2004 edition. Available at: www.pwc.global.com.
PwC Slovensko. (2003). New Accounting ActComparison of the most signicant provisions. Available at:
www.pwcglobal.com/sk.
Rahman, A., Perera, H., & Ganesh, S. (2002). Accounting practice harmony, accounting regulation and firm
characteristics. ABACUS, 38(1), 4677.
Roberts, C., Weetman, P., & Gordon, P. (2002). International Financial Accounting: A Comparative Approach
(2nd ed.). Essex, UK: Financial Times; Prentice Hall; Pearson Education.
Rooz, J., Sztano, F., & Sztano, I. (1996). The regulation of joint ventures in Hungary. The European Accounting
Review, 5(1), 115147.
Schroeder, M. (1999). A description of the contents of the long-form statutory audit reports of a sample of Polish
listed companies for 1996. The European Accounting Review, 8(1), 115137.
Seal, W., Sucher, P., & Zelenka, I. (1995). The changing organization of Czech accounting. The European Accounting Review, 4(4), 659681.
Simga-Mugan, C. (1995). Accounting in Turkey. The European Accounting Review, 4(2), 351371.
Street, D. L., & Gray, S. J. (1999). How wide is the gap between IASC and US GAAP? Impact of the IASC comparability project and recent international developments. The Journal of International Accounting, Auditing,
and Taxation, 8(1), 133164.
Street, D. L., & Larson, R. K. (2004). Large accounting firms survey reveals emergence of Two Standard system
in the European Union. Advances in International Accounting, 17.
Sucher, P., Seal, W., & Zelenka, I. (1996). True and fair in the Czech Republic: A note on local perceptions. The
European Accounting Review, 5(3), 545557.
Taplin, R. S. (2004). A unified approach to the measurement of international accounting harmony. Accounting and
Business Research, 34(1), 5773.
Tarca, A. (2004). International convergence of accounting practices: Choosing between IAS and US GAAP. Journal
of International Financial Management and Accounting, 15(1), 6091.
Tay, J. S. W., & Parker, R. H. (1990). Measuring international harmonization and standardization. ABACUS, 26(1),
7188.
119
Thorell, P., & Whittington, G. (1994). The harmonization of accounting within the EU: Problems, perspectives
and strategies. The European Accounting Review, 3(2), 215239.
Vafeas, N., Trigeorgis, L., & Georgiou, X. (1998). The usefulness of earnings in explaining stock returns in an
emerging market: The case of Cyprus. The European Accounting Review, 7(1), 105124.
Walton, P. (2003). European harmonization. In F. D. S. Choi (Ed.), International Finance and Accounting Handbook
(3rd ed.). Hoboken, NJ: John Wiley & Sons, Inc (pp. 17-117-17).
Woolfe, J. (2004, April). New EU members face accounts struggle. Accountancy, 8.
World Bank. (2002a, December 16). Report on the observance of standards and codes (ROSC) Bulgaria. Principle
authors: J. Hegarty & F. Gielen. Available at www.worldbank.org/ifa/rosc aa.html.
World Bank. (2002b, June 28). Report on the observance of standards and codes (ROSC) Lithuania. Principle
author: J. Hegarty. Available at www.worldbank.org/ifa/rosc aa.html.
World Bank. (2002c, July 25). Report on the observance of standards and codes (ROSC) Poland. Principle authors:
M. Z. Rahman, J. Hegarty, & I. Warzecha. Available at www.worldbank.org/ifa/rosc aa.html.
World Bank. (2003a, July 17). Report on the observance of standards and codes (ROSC) Czech Republic. Principle
authors: M. Z. Rahman & F. Gielen. Available at: www.worldbank.org/ifa/rosc aa.html.
World Bank. (2003b, May 9). Report on the observance of standards and codes (ROSC) Romania. Principle author:
F. Gielen. Available at: www.worldbank.org/ifa/rosc aa.html.

IFRS in EU

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

IFRS in EU

Hochgeladen von

Copyright:

Verfügbare Formate

Journal of International Accounting, Auditing and Taxation

Convergence with IFRS in an expanding Europe:

Corresponding author. Tel.: +1 937 229 2497.

2. GAAP Convergence 2002

Other reports and

Rooz, Sztano, and Sztano Bailey et al.

Roberts et al. (2002), de

Bank DTT (2004b)

Other reports and journal

King, Beattie, Cristescu,

Cooke and Curuk (1996),

PwC (2004), World Bank

DTT (2004b), DTT

Alexander and Schwencke

DTT (2004a), PwC

IFRS required for consolidated statements of

IFRS required for individual accounts

IFRS Required for consolidated

IFRS required for individual

Yes, to extent does not conflict with national law

Allowed, to extent there is no conflict with national

Allowed, to the extent there is no conflict

Yes, EEA members expected to (must) comply

Being considered as allowed option

Being considered as allowed option

Being considered as allowed option

Will probably not be allowed

Being considered as allowed option

Will probably not be allowed

Multinational companies must use IFRS or US

Allowed, to extent there is no conflict with national law

As of December 31, 2002.

Standards seen as too complicated or complex

Standards where country

Reporting by Retirement Plans (IAS 26),

Construction Contracts (IAS 11), Leases

Leases (IAS 17), Reporting by Retirement

As of December 31, 2002.

5.4. Hungarynew EU member country

A 2001 translation of IFRS is available in the national language. There is usually a

5.11. RomaniaEU candidate country

to convergence according to the survey is the lack of interest of national standard-setting

6. Discussion and conclusion

Most recent IFRS

Done by EU; not IASB

Available, but not approved

Old translation; new

See http://europa.eu.int/eur-lex/en/archive/2003/l 26120031013en.html regarding language availability. EU

of familiarity with certain accounting transactions and/or a lack of technical accounting

These issues need to be better understood in order to determine if accounting convergence

Das könnte Ihnen auch gefallen