I just read the abstract of a forthcoming paper (Kvaal and Nobes 2010) that compares the accounting policies of blue chip companies in the largest five stock markets that use IFRS. By comparing the policy disclosures in annual reports, the authors find “significant evidence that pre-IFRS national practice continues where this is allowed within IFRS.”  The authors conclude that national patterns of IFRS continue after IFRS adoption.

Although I haven’t been able to read the paper itself (so I cannot comment on the quality of the analysis or the conclusions), I am intrigued by the question and am interested in any evidence that describes how IFRS is applied in practice. My own experience with IFRS is that preparers often find themselves with little practical guidance on how to interpret or apply the vague principles within many IFRS standards.  For example, paragraph 13 of IAS 18 Revenue contains the only guidance in IFRS on multiple element arrangements. Many IFRS preparers simply look to US GAAP’s EITF 00-21 (now referred to as ASC 605-25 Multiple Element Arrangements) rather than create from scratch their own policy interpretation. One big benefit of this approach is that they know their international auditors are likely to be accepting of the EITF 00-21 approach too.

Because so many IFRS standards contain principles only with very little implementation guidance, and because these principles are often so loosely described, it seems relatively easy for countries and companies to argue that their own legacy GAAP is consistent with those principles. For those standards where this is the case, companies can conclude that they are following IFRS, but we still see inconsistent policies across countries (as the Kvaal and Nobes paper documents). Unless IFRS standards can become more concrete in their principles and provide a sufficient amount of authoritative implementation guidance to clarify those principles, I wonder whether IFRS can ever produce global comparability.