The uniformity-flexibility dilemma when comparing financial statements. The view of auditors, analysts and other users.

Abstract

Purpose - The introduction of the IFRS in the European Union, and many other countries, has not eliminated the need for research concerning the comparability of ?nancial statements. The IFRS still offers many options. Extensive theoretical literature exists concerning the de?nition of comparable ?nancial statements and the factors that in?uence this comparability. This paper aims to investigate this issue.

Design/methodology/approach - The paper uses a survey of 426 individuals who use European IFRS ?nancial statements.

Findings - This study shows that most of the respondents (67 per cent) interpret comparability as uniformity, that is, that all companies using the same accounting methods. Comparability of ?nancial statements over time and of companies operating within the same industry are considered to be the most important types of comparability. Both types are jeopardised because of continuous changes in IFRS and the lack of industry speci?c guidance. Only 41 per cent of the respondents believe that all IFRS ?nancial statements are comparable. Not only accounting methods used, but also judgements made by preparers and interpretation differences are viewed as important factors in?uencing the comparability of ?nancial statements.

Research limitations/implications - As surveys are uncommon in accounting literature, often because of sampling problems, the validity of this research should be further improved by additional surveys or other empirical research approaches.

Originality/value - This study contributes to the research by determining which factors in?uence the comparability of ?nancial statements according to the auditors, analysts and other users and what their view is on the comparability of ?nancial statements.