Problem areas when comparing European IFRS financial statements

The implementation of the International Financial Reporting Standards (IFRS) in the European Union in
2005 has had important consequences for the presentation and the content of the consolidated financial
statements of listed, or publicly traded European companies. Instead of using different local GAAPs based on the 7th European Directive, all European listed companies now apply the same standards. One might therefore assume that European IFRS financial statements are now comparable. Reaching higher comparability was one of the main goals of the European commission, in order to contribute to a better functioning of the internal market. Studies already showed, however, that differences in the application
of IFRS standards still exist due to for example open and covert options or due to different interpretations resulting from different cultural backgrounds (for example Nobes (2006)). These differences in application can have a negative impact on the comparability of the financial statements. Users of European IFRS financial statements might wrongfully assume that these financial statements are comparable. This can have an adverse impact on their economic decisions.
There is thus a need for research on how comparable the consolidated financial statements of the European listed companies truly are. This study contributes by determining what the problem areas of European IFRS financial statements are when it comes to comparability according to auditors, analysts and other users of these financial statements. Auditors are important for their professional judgement. Analysts typically are experienced users. The other users include investors, employees and consultants. Knowing the view of auditors, analysts and other users of European IFRS financial statements can improve future discussions concerning the comparability of IFRS financial statements and help the IASB with its standard setting process.