Difficulties of applying IFRS in continental Europe from the perspective of codification

Abstract

The implementation of the Accounting Standards Codification (hereinafter: „Codification”) in July 2009 resulted in significant changes to the structure of the US GAAP. The Codification collects all existing US GAAPs in a single codified structure, being conceptually different from previous standard-based accounting structures typical to the IFRS, and to accounting structures applied in the UK and Canada. The paper presents the structure of the Codification and compares it to the traditional continental statutory accounting systems. The results show that the continental accounting systems are similar to the Codification in structure and highlight a possible reason why these countries have difficulties in implementation of the standard-based IFRS regulations. I demonstrate in the paper the links difficult to traverse, resulting from the currently diversified standard-based structure of the IFRS. This novel approach underlines this fact and supports it by a SWOT analysis on the possibility of codification of IFRS. Considering the merits and demerits of the analysis, the introduction of a codification approach similar to the Codification is proposed.