The Illusion of Comparable European IFRS Financial Statements - The View of Auditors, Analysts and Other Users

The comparability of financial statements is an important research topic in accounting literature. The introduction of the International Financial Reporting Standards (IFRS) in Europe has not eliminated the need for research concerning this topic, on the contrary. Several studies already determined the problem areas within the IFRSs and the factors that influence the comparability of financial statements. There is also extensive literature concerning the definition of comparable financial statements. This study contributes by determining how important these factors and problem areas are according to the auditors, analysts and other users of European IFRS financial statements and what their view is on the comparability of financial statements. Our survey of 426 individuals shows that, when forced to choose, most of them (67%) interpret comparability as uniformity, that is all companies using the same accounting methods. Flexibility, that is all companies can apply an accounting method that is adapted to their unique circumstances, is less preferred. Comparability of financial statements over time and of companies operating within the same industry are considered to be the most important forms of comparability. Accounting methods used, judgements made by preparers and interpretation differences of the applied standards are viewed as the most influential factors for the comparability of financial statements. Only 41% of the respondents believe that the IFRS financial statements are comparable. We defined 13 areas that are viewed as problematic by at least half of the respondents