The trend in financial reporting is toward fair presentation, at least for consolidated financial statements. This trend is particularly true in the European Union. In 2002, the EU approved an accounting regulation requiring all EU companies listed on a regulated market to follow IFRS in their consolidated financial statements, starting in 2005. Member states are free to extend this requirement to all companies, not just listed ones, including individual company financial statements. For using IFRS in the five countries surveyed in this chapter. Convergence in financial reporting can be expected where IFRS are required, but differences remain where they are not.
To understand accounting in Europe, one must understand both IFRS and local accounting requirements. Many companies will choose to follow local requirements in instances where IFRS are permitted. For example, they may view IFRS as not relevant for their needs or too complicated. Thus, we provide an overview of IFRS in this section. The rest of the chapter looks at accounting in the five countries surveyed.
