IFRS adoption. Evidences from Italian companies

Nowadays Italian listed and non listed companies adopt two distinct set of accounting principles. Starting from 2005 the mandatory adoption of IFRS for all listed companies stimulated a huge process of change which involves not only the technicalities about recognition, measurement and disclosure of accounting events, but also entails a cultural revolution in our accounting tradition developed through more than 100 years. In this paper are shown the findings of a research project whose purpose was to identify the most relevant impacts produced by IFRS adoption on company information systems and performance analysis and management. The basic research hypothesis is that the differences between domestic accounting principles and IFRS determine changes in company information systems. This changes involve the whole information production process: collection of data, manipulation and communication of information. Just as example we could think at impairment test: its application require the acquisition of conjectured information, from internal information sources i.e. the management information system, or from external sources. Moreover, as a second research hypothesis, IFRS adoption improve the company disclosure with a wider set of management information (i.e. about business combination, segmental reporting, or transactions with related parties) this should create a convergence tendency between external reporting with those required by internal users. The research was developed through a first step of deep analysis of both the theoretical contributions and the set of IFRS, in order to identify the range of possible implication induced on Italian listed companies, in their management control systems, information systems, and performance indicators. Afterwards the hypothesis about the implications of IFRS adoption have been tested employing the case studies technique. In brief the results show that only a limited number of IFRS generate significant implications on management control systems, because increase the diffusion of dimensions and indicators formerly not widely employed (at least on Italian context). Instead by the side of information systems is possible to determine more relevant implications caused by the introduction of new applications useful to produce the new set of mandatory information. Finally, a limited set of research hypothesis, not even confirmed by the empirical test, drew possibilities for IFRS adoption to stimulate changes on management information processes: for example the adoption of fair value accounting for property, plants and equipments, should produce consequences on product costing methodologies. The results don’t confirm this hypothesis, showing the existence of a kind of double track in elaboration processes which keep separate external from internal reporting: the former IFRS compliant, the second still connected with the traditional accounting principles. This paper gives a deeper description of the implications related to the adoption of IAS 1 for what concern the construction and analysis of the income statement