The Impact of the Adoption of International Financial Accounting Standards (IFRS) on Consolidated Financial Statements of Italian Enterprises

Abstract

In this paper we present a preliminary analysis on the main changes due to the introduction of the International Accounting Financial Standards (IFRS) in the process of drafting consolidated financial statements, with respect to the currently adopted Italian Accounting Principles. The consolidated financial statements of 191 Italian holdings, listed in the Milan Stock Exchange and active in manufacturing and services sectors, have been analyzed. Important implications have been assessed for the following parts of the consolidated financial statement: the definition of the consolidation area, the goodwill treatment, the representation of the minority interests, and the elimination of intragroup transactions. It’s clearly apparent how new accounting rules may cause remarkable changes on values included in financial statements, with consequences on the stakeholders’ judgement and, in particular, on the investors’ judgement.This study constitutes a partial step of a research (the adoption of the international accounting standards (IFRS) in Italy: effects on management decisions and on the economic and financial communication process), supported by the Italian Ministry of Education, University and Research, started in 2003 and conducted by Universities of Parma, Brescia, Genova, Napoli and Pisa (co-ordinated by University of Parma).