Will IFRS really help make financial statements more comparable by having all publicly traded company reports based on the same set of standards? In my opinion, they will look comparable and that may be the end of it. The issue I see is having many accountants, both auditors and internal accountants, working from a rules based mindset in a principles based environment.
In the rules based environment there is a line to push up to and to make a clear call when crossed. In the principles based environment there will be many lines depending on personal tastes, preferences, and risk aversions. Some will be overly conservative with the real fear being that some will be overly aggressive. Not all professional judgement is crafted equally. Some CFO’s of small organizations are not that thoroughly experienced and seasoned and rely heavily on the work of external auditors to guide their application of accounting principles or rules.
Not all auditors are imbued with the same degree of professional skepticism and ethical adherence. Some will encourage clients to push the lines and see themselves in a similar light as the corporate counsel that informs of where the lines are clear and where they are not. Cluing the client in to the areas of ambiguity so that lines can be pushed without being technically crossed.
Others will be so scared of being seen in the former light that they will take the most conservative stances thinking that it makes them more ethical than most. Either way too conservative or too agressive does not paint a proper picture of economic standing and well-being.
However, this will probably exhibit a type of normal distribution with most professionals trending towards some median that is seen as an industry or professional norm with outliers that make the news reports on the aggressive side and those that rant against the aggressiveness of the median on the conservative side. Hopefully these norms will be sufficient to produce a resonable degree of comparability for most financial statements, but finding the likely places for abuse to lurk may become more difficult as abuse becomes a more vague concept.
However, more concrete standards may evolve in the way that legal principles evolve into legal precedents with the results of disputes aiding to draw lines in the gray areas of the principles. If this is the route that follows, we essentially get rules anyway even though we started out with principles. However, the rules have been arbitrated and may still be disputable rather than set by the standard setter.