02 March 2015

IASB/Philippe Danjou: The extension of the scope of IFRS

Philippe Danjou, a member of the IASB, summarised which countries are making IFRS obligatory, authorised or prohibited as of the tenth anniversary of the application of IFRS in Europe.

The IFRS Foundation has been able to analyse 138 jurisdictions, out of the 197 that are recognised by the UN. In practically all of them, the relevant authority has taken a position in favour of IFRS as the sole global accounting standard for financial information.

Hence, 126 jurisdictions have made a positive pronouncement, including all the countries represented at the G20. They represent 96 per cent of global GDP. In eight jurisdictions however, the relevant authority has not made a public announcement (Belize, Bermuda, Cayman Islands, Egypt, Macau, Surinam, Switzerland and Vietnam). But even in the major jurisdictions which have not yet adopted them, IFRS are widely used.

In addition to the declarations of intent, 114 jurisdictions (82 per cent) make IFRS compulsory for all or most of their publicly accountable companies.

They are the following: Bermuda, Cayman Islands, Guatemala, Honduras, India, Japan, Madagascar, Nicaragua, Panama, Paraguay, Surinam and Switzerland. IFRS is not obligatory in Switzerland, but is authorised and is widely used. Hence, in the international market segment, in other words the companies whose securities are likely to be acquired by foreign investors, 84 per cent of the companies apply IFRS, compared with 16 per cent that apply US GAAP.

Eight jurisdictions apply their national rules (Bolivia, China, Egypt, Guinea-Bissau, Macau, Niger, United States and Vietnam). The two largesteconomies on the planet, China and the United States, have made a commitment in favour of IFRS,as have all the countries in the G20, but have not (yet?) put it into effect. This is the reason why,although the jurisdictions which have made a commitment in favour of IFRS represent 96 per cent ofglobal GDP, the score falls to 58 per cent when the jurisdictions that actually apply them are takeninto consideration. However, there is no suggestion that IFRS is not applied there at all.

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