Interpreting the European Union's IFRS Endorsement Criteria: The Case of IFRS 9

Accounting in Europe, Forthcoming

76 Pages Posted: 4 Jul 2016

See all articles by Jannis Bischof

Jannis Bischof

University of Mannheim - Accounting and Taxation

Holger Daske

University of Mannheim - Accounting and Taxation

Date Written: June 30, 2016

Abstract

EU Regulation requires that any international accounting standards (IFRS) and interpretations (IFRIC) pronounced by the IASB meet three sets of criteria before they become binding for EU-based companies: a ‘true and fair view’ criterion, a list of qualitative criteria, and a ‘European public good’ criterion. During the endorsement process, EU institutions evaluate each standard or interpretation’s compliance with these three criteria. Nevertheless, despite plenty of past endorsement decisions, there is still disagreement about a unanimous interpretation of the criteria in the literature. In this study, we interpret all three criteria against the background of European accounting law and academic accounting research. Then, the paper illustrates for the case of the new IFRS 9 standard on accounting for financial instruments how these criteria can be applied in the endorsement practice. We conclude that the standard cannot reasonably be rejected on grounds of the IAS Regulation. We also explain that the vagueness of the endorsement criteria and the inherent discretion in the eventual endorsement decision help maintain the EU’s political influence on the IASB’s standard setting ex ante.

Keywords: European Union, IFRS, Endorsement, True and Fair View, European Public Good, Bank Accounting

JEL Classification: K22, M41, M48

Suggested Citation

Bischof, Jannis and Daske, Holger, Interpreting the European Union's IFRS Endorsement Criteria: The Case of IFRS 9 (June 30, 2016). Accounting in Europe, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2803567

Jannis Bischof (Contact Author)

University of Mannheim - Accounting and Taxation ( email )

Mannheim, 68131
Germany

Holger Daske

University of Mannheim - Accounting and Taxation ( email )

Mannheim, 68131
Germany

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