There are certain features of IFRS that have earned appreciation from different institutions. Like ICAEW10 has prepared a report ‘ EU implementation of IFRS and the Fair value directive’ at the instance of EU; and according to this report, it was “ found that fair value accounting is much less expensive than is sometimes to be assumed in the case, and is in fact very limited overall. In particular, where companies are given an option as to whether to use cost or fair value, they typically choose a cost model. ” At the same time, it is important to note that companies shied away from the application of fair value rules.
It was stated in the report that the option of using fair value was used very selectively. The point to note is that in cases of financial assets and financial liabilities a large number of companies measured those assets and liabilities on a cost model basis. In a press release of Finland- Financial Supervision Authority (FIN-FSA) about IFRS performance in listed companies, it was reported that “ Companies mainly engaged in investment property activities measured their property in the balance sheet at fair value’ (Tina Visakorpi, Sep 2006)16Implementation of any accounting system or standard should not be costly enough to overtake the benefits derived from its application.
Implementation of IFRS 3 has become a costly affair for larger companies’ engaging in mergers and takeovers, so much so that IFRS 3 has suffered direct criticism from intellectuals overviewing or assessing its implementation. Thayne Forbes14, joint managing director of ‘ Intangible Business in London’ has assessed that “ The implementation of International Accounting Standards and IFRS 3 in particular, has resulted in a great deal of work for the accounting profession.
The cost of this for business has been substantial: an estimate of the fee paid by FTSE 100 companies to the accounting and valuation firm for implementing IFRS3 could be estimated at 0.2% of the deal value or about $80 million. In addition, it has required significant resources from the companies themselves. ” (Intellectual Assets Management, December/ January 2007)
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