Affirmations of compliance with IFRS: A study of financial statements and audit reports

ABSTRACT We analyse the extent to which companies’ financial statements and audit reports affirm compliance with IFRS as issued by the IASB (IASB-IFRS) to add clarity for international users of financial information. We examine the annual reports of large companies of five major countries that have locally-endorsed versions of IFRS (Australia, France, Germany, Spain and the UK). We find that affirmations of IASB-IFRS in financial statements are rare in the EU but universal in Australia. In the UK, roughly 40 percent of FTSE-100 companies affirm IASB-IFRS, but there are seven different types of affirmation. Audit reports contain fewer affirmations of IASB-IFRS than do financial statements. They are very rare in the EU. Australian audit reports once contained such affirmations, but they are now almost non-existent. Our data strongly support a hypothesis that US listing explains affirmations of IASB-IFRS. We make policy recommendations for various types of regulator and for companies.