As of 2005, all listed companies – financial and other – in the entire EU should apply the new international accounting standards (IAS/IFRS) to their consolidated financial statements. Even if the new standards were applied to a limited extent before 2005, they entail a large, practical readjustment for both companies and investors.
IFRS, which is one of the corner stones in EU's strategy to achieve a common capital market, provides companies with several, new options for preparing their financial statements. The purpose of IFRS is to decrease the differences between the accounting practices of each country. A platform of common standards contributes to a more unified application of the chosen accounting principles, regardless of the group's operations or national affiliation.
In light of this, Finansinspektionen considered it important to try to identify which options companies have chosen. Our examination focused on insurance contracts and financial instruments, both of which are important for financial companies.
IFRS uses a principle-based approach that gives companies the opportunity to customize their financial statements. All of the examined groups took advantage of this opportunity and chose different layouts for their interim financial statements.
Customization of accounting principles also requires that the groups pedagogically explain how the financial statements are affected by the choices made during classification and valuation. The increase in the number of options makes it even more difficult to compare financial statements. For this reason, Swedish industry representatives should, to the extent that it is possible, promote similar presentation of financial information.
Analysts and other stakeholders must also be well initiated in all of the standards in order to understand which valuation assumptions the items in the income statement and balance sheet reflect. The groups' chosen options can vary from year to year, which further complicates analysis of company data.