Accounting Treatment Of Goodwill Under IFRS Norms

The entry into force of the IFRS norms implied numerous accounting changes forthe concerned companies and more specifically regarding the goodwill accountingtreatment. The purpose of this paper is to report the findings of a study made anddesigned to understand the extent of compliance with the goodwill accounting andreporting disclosure requirements under IFRS norms and more specifically under IAS36among the French listed companies of the SBF120in2012.The approach consisted in examining the goodwill reporting practices adopted by asample of100French listed companies from the SBF120, which disclosed theexistence of goodwill as at December31st2012in which they produced financialstatements pursuant to IFRS norms. This analysis is based on the technical accuracy andthe quality of the goodwill disclosures produced by the organizations of the SBF120,with an assessment of the goodwill values and disclosures by sector. We found all therequired information in order to complete the study within the financial statements ofthe companies of our sample: we accessed these financial statements through thecompanies’ websites.The findings of previous studies based on Belgian and Australian companiesshowed relative important levels of non-compliance, at least on specific points of theIFRS norms, with the applicable goodwill accounting standards. We were expecting atsome points, a kind of reluctance from the companies of the sample to comply with theIAS36disclosure requirements which are quite constraining. The results of our studysuggest a global good compliance of the French listed companies with the accountingstandards. We did not find companies that did not comply at all with these standards,only some small oversights about the information to provide.These results suggest that a viable organization option in the fact of change is tosucceed in taking steps to comply.The question pondered pertains to the nature of organizational responses tochanges such as those brought about by reforms and continued development ofreporting standards. The question of the compliance of the largest French listedcompanies with the IAS36requirements has implications for numerous stakeholderssuch as investors, regulators, auditors, financial analysts and any report users. We foundtwo studies made about the compliance of Belgian and Australian firms with theapplicable goodwill disclosure requirements but none on the compliance of the Frenchcompanies with the applicable standards. Moreover, both studies are based on smallersamples than ours and are older than this study: both studies are based on data datingfrom one or two years after the entry into force of the IFRS norms. Using recent data from2012allows us to see the improvements made by the French companies regardingthe goodwill disclosure requirements.