PERCEPTIONS OF PREPARERS FROM ROMANIAN BANKS REGARDING IFRS APPLICATION

Marian Socoliuc

15 citations0/0 files storedJournal of Accounting and Management Information Systems

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Accounting Theory and Financial Reporting Auditing, Earnings Management, Governance Accounting and Financial Management

Abstract

Starting 1 January 2012, credit institutions are required to apply the International Financial Reporting Standards (IFRS) as basis of accounting for the preparation of the individual financial statements. Regulatory reforms wer e done and banks prepared to face the transition process.In this context, the aim of our study is to investigate, the perceptions of the main actors from banks (responsible with the transition process) on the cost and benefits involved by the use of IFRS as reporting standards (implementation strategy used by some banks before 2012) and on the peculiarities related to the application of IFRS as accounting basis (each transaction or event being recorded following IFRS requirements) immediately after 1 st January 2012. We intended to investigate also if the transition process changed the attitude of banks towards the application of IFRS. We observed that preparers still have a positive attitude towards the application of IFRS considering that the cost benefit report is a positive one. Not all preparers are convinced that the conversion will lower the cost of capital. The complex nature of IFRS, the insufficient application guidance and the necessity to adapt to frequent changes of IFRSs were considered as diffi culties related to IFRS reporting. Double reporting costs reduction and eliminating confusions by publishing two sets of financial statements were considered unanimously benefits of using IFRS as basis of accounting. It resulted that most preparers are concerned about the costs involved by the modification of internal evidence systems, the necessity to satisfy multiple reporting requirements (accounting, prudential and fiscal), the impact on prudential indicators and the insufficient resources allocated to this process. The most important cost was related to the modification of actual IT systems. The impairment methodology described by IAS 39 was rated as most challenging by preparers.

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References

2008International Accounting Standards and Accounting Quality 2010Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital?2006Economic Benefits of Adopting IFRS or US‐GAAP – Have the Expected Cost of Equity Capital Really Decreased?2006Implementing IFRS from the perspective of EU publicly traded companies 2009The Development of Accounting Quality of IAS and IFRS over Time: The Case of Germany 2004Convergence with IFRS in an expanding Europe: progress and obstacles identified by large accounting firms’ survey 2011Mandatory IFRS Adoption and Accounting Quality of European Banks (2011), with Günther Gebhardt 2006Market Reaction to Events Surrounding the Adoption of IFRS in Europe

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