The Role and the Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Spain

Abstract

The way Spain adapted the legislation to the Accounting Directives as well as a brief analysis of the Spanish standard setting process is followed by a description of the influence of International Financial Reporting Standards (IFRS) is the Spanish legislation and the different stakeholders’ position on IFRS. We show and explain why the local General Accepted Accounting Principles (GAAP) are clearly inspired by IFRS principles, even for Small- and Medium-Size entities, while at the same time there is no direct application of IFRS and no mention of IFRS as a complementary source of interpretation. We explain the influence of different stakeholders in the standard setting process and highlight the mostly positive attitude towards IFRS principles. We also show the major differences between the IFRS and local GAAP.

Keywords:

• IFRS influence
• Spanish GAAP
• Small- and Medium-Sized Entities
• EU Accounting Directive 2013/34/EU

JEL Classification:

• M40
• M41
• M48
• M49

Acknowledgements

The author is grateful to the reviewers and the editor, Paul André, for their comments and suggestions.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1 Further details on this change can be found in Mora (1996), Giner (2003) and Larrinaga and Macias (2010).

2 The PGC comprises the detailed rules on recognition and measurement, but it is issued in a Royal Decree, which emanates from the Government; so it is lower than Laws in hierarchy of rules. Therefore, companies cannot apply whatever contradicts the Law in the PGC in force at the date this paper is written.

3 Its application is voluntary when for two successive years at each year end are below at least two of the following thresholds: total assets €2,850,000; revenue €5,700,000, average number of employees 50, except with the are for companies that meet the requirements with the exceptions of listed securities, form part of a group, functional currency different to euro and banks). There are also some specific rules for micro-companies when they meet at least two of the following conditions for two consecutive years: total assets €1,000,000, revenue, €2,000,000 and average number of employees 10.

4 The President at that time was an ex-partner of a big auditing firm, and it was not the only time in the ICAC’s history that its President has not been a civil servant but an auditor.

Additional information

Funding

This work was supported by Ministerio de Economía y Competitividad [grant number ECO2013-48208-P].