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IFRS enforcement: how to measure the risk of non-compliance with IFRS?

Author

Listed:
  • Phu Dao-Le Flécher

    (LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris])

Abstract

The objective of this study is to elaborate a technical model of enforcement of IFRS to be used by the regulators. Our model has been developed following the risk-based approach which consists of assessing the risk of non-compliance with IFRS, in order to focus the review on areas which are more likely to contain a risk of non-compliance. Our model is then tested in a preliminary sample of European listed companies over 3 reporting periods (2005, 2010 and 2018). The preliminary results show a low average level of compliance with a restricted number of critical information items identified through the process of assessment of risk of non-compliance with IFRS. The levels of compliance vary significantly across companies, industries and countries. We observe that the IFRS learning curve is moving up over the three reporting periods across the whole sample. Further, effective non-compliance relates to areas which require a high level of management's judgment and high efforts from companies and their management, and covers discretionary items that companies are reluctant to disclose.

Suggested Citation

  • Phu Dao-Le Flécher, 2019. "IFRS enforcement: how to measure the risk of non-compliance with IFRS?," Post-Print hal-04319211, HAL.
    • Handle: RePEc:hal:journl:hal-04319211
    as

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