Country by country - who minds the GAAP?
Company Watch takes a look to see whether IFRS has really proved to be a set of global
standards
International Financial Reporting Standards (IFRS) is a set of accounting standards developed by the International Accounting Standards Board (IASB) for the preparation of financial statements. IFRS’s goal is to enhance international comparability and the harmonisation of financial reporting of publicly listed companies to aid investors and other market participants in making sound economic decisions. Countries that have adopted IFRS for publicly listed companies, as opposed to the local Generally Accepted Accounting Principles (GAAP), typically permit the use of IFRS for private companies. IFRS was developed in 2001 and by 2005; European Union (EU) member states were required to adopt the standard. The EU’s implementation of IFRS was closely monitored by the international community. Once IFRS’ success became apparent, several other countries quickly followed suit. Presently; over 12,000 companies in over 100 countries have either mandatorily or voluntarily adopted IFRS including in most capital markets around the world. Nonetheless, large economies such as China and the United States are still yet to fall under IFRS’ spell, although the Chinese Accounting Standards have substantively converged with it. Similarly, the US is still immensely focussed on its own standard – US Generally Accepted Accounting Principles (US GAAP) as established by the Financial Accounting Standards Board (FASB). Despite this, the IASB and the US based FASB have been working together on the convergence of both standards (IFRS and US GAAP) in order to develop high quality and compatible accounting standards. Significant differences however still remain. There is currently no estimated date for a final decision as to whether IFRS would replace the US GAAP ‐ much favoured by US investors. © Company Watch 2015 Below is a table summarising IFRS adopters by country for publicly listed companies: Region North America South America Country IFRS Required or Permitted Antigua and Barbuda Aruba Bahamas Barbados IFRS required Not Applicable IFRS required IFRS or local GAAP Bermuda British Virgin Islands Canada IFRS or US GAAP Not Applicable IFRS or US GAAP Cayman Islands Costa Rica Dominican Republic Dutch Caribbean El Salvador Guatemala Honduras Jamaica Mexico IFRS or US GAAP IFRS required IFRS required IFRS required IFRS required Not Applicable IFRS required IFRS required IFRS or local GAAP There is no local exchange Only financial institutions and insurance companies can use local GAAP Nicaragua Panama St. Kitts and Nevis St. Lucia Trinidad and Tobago United States Not Applicable IFRS or US GAAP IFRS required Not Applicable IFRS required No There is no local exchange There is no local exchange US GAAP required Argentina IFRS required IFRS cannot be used for financial institutions and Insurance Companies Bolivia Brazil No IFRS and local GAAP Chile Colombia IFRS required No Local GAAP required (Bolivian GAAP) Both IFRS and local GAAP are used simultaneously Local GAAP is required Ecuador Paraguay Peru IFRS or IFRS for SMEs IFRS or local GAAP IFRS required Uruguay IFRS required © Company Watch 2015 Commentary There is no local exchange However, all listed companies currently use IFRS There is no local exchange US GAAP acceptable for US listed issuers IFRS cannot be used for financial institutions regulated by CBU Region Country IFRS Required or Permitted Europe Venezuela IFRS required Albania Austria Belarus IFRS required IFRS required IFRS required Belgium IFRS required IFRS is currently required for banks and nonbanking financial organisations. Will be required for other listed domestic companies from 2016 Required for listed companies on NYSE Euronext and financial institutions Bosnia and Herzegovina Bulgaria Channel Islands IFRS or local GAAP Cyprus Czech Republic Denmark Estonia Finland France Georgia Germany Greece Greenland Hungary Iceland Ireland Isle of Man IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS or UK GAAP or US GAAP Italy Kosovo Latvia Lithuania Luxembourg Macedonia Malta Moldova Montenegro Netherlands IFRS required Not Applicable IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required © Company Watch 2015 IFRS required IFRS or UK GAAP or US GAAP Commentary Local GAAP is based on IFRS as translated into local language Other GAAPs may be considered equivalents as well, depending on where the entity is listed dependent upon the requirements of the regional exchange on which they are listed There is no local exchange IFRS Required or Permitted Region Country Norway Poland Portugal Romania Russian Federation Serbia Slovak Republic Slovenia Spain Sweden Switzerland Ukraine United Kingdom IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS required IFRS or US GAAP or local GAAP IFRS required IFRS required Asia Afghanistan Armenia Azerbaijan Bahrain Cambodia China Not Applicable IFRS required IFRS required IFRS required IFRS required No Hong Kong India IFRS or local GAAP IFRS or local GAAP Indonesia Israel No IFRS or US GAAP or local GAAP Japan Jordan Kazakhstan Korea (Republic of Korea) Kuwait Kyrgyz Republic Laos IFRS or local GAAP IFRS required IFRS required IFRS required IFRS required IFRS required IFRS or local GAAP Lebanon IFRS required © Company Watch 2015 Commentary Local GAAP is Swiss GAAP FER There is no local exchange Local GAAP required. However, Chinese Accounting Standards (“CAS”) have substantively converged with IFRS, though it is not a direct translation of IFRS All companies currently seem to be preparing their financial statements in Indian GAAP Local GAAP Only banking institutions (listed and unlisted) can use local GAAP The local GAAP is Japanese GAAP However, as IFRS is still new under Lao environment, Lao Accounting Manual (“LAM”) is also acceptable (local GAAP) Region Africa IFRS Required or Permitted Country Macao Special Not Applicable Administrative Region Commentary There is no local exchange Malaysia Local GAAP Mongolia Oman Pakistan Philippines Qatar Saudi Arabia IFRS required IFRS required IFRS required IFRS required IFRS or local GAAP IFRS or local GAAP Singapore Sri Lanka Taiwan Thailand IFRS required IFRS required IFRS required No Turkey United Arab Emirates IFRS required IFRS required Uzbekistan Vietnam IFRS required IFRS or local GAAP West Bank/Gaza IFRS required Malaysian Financial Reporting Standards (“MFRS”) Reporting Framework is identical to IFRS IFRS as adopted locally IFRS as adopted locally ‐ PFRS Required only for banks and insurance companies regulated by the Central Bank. Others are only permitted to look to IFRS for guidance on matters where the local accounting standards setting body has not issued any guidance or relevant accounting standards IFRS as adopted locally Local GAAP required (Thai Financial Reporting Standards (TFRS)). TFRS is based on IFRS IFRS is already used by all banks, although it has not been adopted for other companies IFRS is required for state owned banks and permitted for commercial banks. All other listed companies must use local GAAP Algeria Angola IFRS required Not Applicable There is no local exchange Botswana Cameroon IFRS required No Chad No Local GAAP is required. Financials must be prepared using the organisation for the harmonisation of business law in Africa (OHADA) Local GAAP is required. Financials must be prepared using the organisation for the harmonisation of business law in © Company Watch 2015 Region Country IFRS Required or Permitted Cote D'Ivoire No Democratic Republic of Congo Not Applicable Egypt Equatorial Guinea No No Gabon Ghana Guinea Conakry Kenya Libya No IFRS required Not Applicable IFRS required IFRS Permitted Madagascar Not Applicable Local GAAP is required Local GAAP is required. Financials must be prepared using the organisation for the harmonisation of business law in Africa (OHADA) There is no local exchange None of the listed companies traded on Libyan stock exchange have applied IFRS till date There is no local exchange Malawi Mauritius Morocco Mozambique Namibia Nigeria Republic of Congo Rwanda Senegal South Africa Swaziland Tanzania Tunisia Uganda Zambia Zimbabwe IFRS required IFRS required IFRS Permitted IFRS required IFRS required IFRS required No IFRS required No IFRS required IFRS required IFRS required No IFRS required IFRS required IFRS required IFRS as adopted locally Local GAAP is required (Tunisian GAAP) Australia New Caledonia New Zealand Papua New Guinea IFRS required IFRS required IFRS required IFRS required Oceania © Company Watch 2015 Commentary Africa (OHADA) Local GAAP is required. Financials must be prepared using the organisation for the harmonisation of business law in Africa (OHADA) There is no local exchange © Company Watch 2015