Financial Reporting Differences In Europe

In most European countries, public entities are subject to IFRS and must prepare their accounts accordingly. While local GAAP is aligned to IFRS, it is here and in taxation that key differences emerge.

The European Union's alignment to the International Financial Reporting Standard (IFRS) for accounting purposes makes financial reporting in Europe quite streamlined for companies. Private entities need to follow the local GAAP (Generally Accepted Accounting Principles), but in most European countries it is aligned to IFRS. 

Differences do exist however, and one source of difference is the fact that IFRS as adopted by the EU is sometimes behind the actual IFRS standards. This is because the EU goes through an endorsement process, and this can result in a gap of approximately six months between the implementation of a new standard, and implementation in practice.