The European IFRS Revolution: Compliance, Consequences and Policy Lessons

The INTACCT research project’s principal aim is to contribute to the overcoming of fragmentation in financial accounting research across European universities, while developing an ambitious Scientific Programme focused on the adoption of International Financial Reporting Standards (IFRS) in Europe. The network involves researchers in accounting, finance, economics, law and related areas from the following universities:

  • Lancaster University, UK (Coordinator)
  • HEC School of Management, Paris, France
  • Johann Wolfgang Goethe – Universität Frankfurt, Germany
  • University of Cyprus
  • University of Ljubljana, Slovenia
  • University of Macedonia, Thessaloniki, Greece
  • University of Porto, Portugal
  • University of Valencia, Spain
  • Tilburg University, Netherlands
  • Varna University of Economics, Bulgaria

The INTACCT network will be funded under the European Commission’s Marie Curie FP 6 framework over the period 2007-2010.

The objectives of the network project are threefold. Firstly, it will contribute to overcoming fragmentation in financial accounting research across European universities. Secondly, it will develop an ambitious Scientific Programme, based on the view that financial reporting is a multi-disciplinary phenomenon and part of a complex equilibrium that also includes the legal and institutional frameworks within which businesses exist. The project will thus integrate relevant theory and empirical methods in accounting, finance, law and economics. Finally, the INTACCT Network will also aim to foster industry-academia cooperation, by establishing a dialogue with accounting regulators and financial statements users in the investment community.

Research training programme

The proposed research will introduce pan-European research training that will lead to the development of a new generation of accounting researchers, working on a research agenda of vital importance to the future development of the European economy.

An intensive network-wide research Training Programme will develop the research competences of this new generation of accounting researchers. This training programme will aim to:

  • nurture conceptual and analytical abilities;
  • develop the technical skills necessary to conduct large-scale empirical research; and
  • overcome the significant barriers to such research by developing new databases and opening up wider access to existing commercial databases.

The training and knowledge transfer needs of project researchers will be met by three main complementary activities: (i) the network Training Programme; (ii) formal courses and research workshops/seminars run by host partners as part of their regular pre-doctoral and post-doctoral programmes; (iii) individual training through on-the-job research work under structured supervision by experienced faculty members at the host institution and other network teams; and (iv) online resources.

Scientific programme

From 2005 onwards the EU requires public listed European companies to prepare financial statements using IFRS instead of the country-specific accounting rules. This harmonisation process is a key element in the creation of an European integrated market in financial services and should increase the comparability of corporate financial performance and lead to considerably greater financial transparency and accountability. If these predictions are correct then the efficiency of the European economy could improve significantly. However, it is possible that the benefits from IFRS adoption might have been overestimated and potential costly consequences might have been underestimated.

These concerns create a strong rationale for conducting the research on the impact of IFRS. Research that systematically documents and develops understanding of the first five years’ experience of the IFRS regime will be invaluable in helping policy makers, regulators, practitioners and educators to learn and adapt. The INTACCT research will produce insights of major economic importance concerning IFRS compliance and enforcement as well as the accounting and real economic consequences of IFRS adoption. The proposed research will aim to produce research outputs that will potentially guide accounting regulators, including the International Accounting Standards Board (IASB), to successfully complete on-going work such as the IASB "Accounting Standards for Small-Medium Entities (SMEs)” and the “Conceptual Framework” projects.

The INTACCT programme will shed light on important contemporary corporate accounting and accountability issues that are a high priority to the EU. The research aims to provide answers to questions that are important to policy makers. In short, INTACCT is intended to contribute to successful completion of the new EU Financial Services Policy. The scientific programme will inform and help European policy makers and regulators, such as the Accounting Regulatory Committee (ARC) and the European Financial Reporting Advisory group (EFRAG), to promote a business environment conducive to competitiveness and economic development. The project will contribute theoretical and empirical advances that will be useful to corporate management, analysts and investors concerned with effective financial communication and governance.