Challenging the compliance myth: evidence from the IFRS impairment testing regime

There has been much criticism of the IFRS impairment testing regime, principally because of the increased potential for opportunism in financial statement preparation due to the subjective and unverifiable nature of a range of required assumptions. This paper adds to the extant literature’s catalogue of concerns by documenting systematic non compliance with the disclosure requirements of AASB136. We argue that a key problem resulting from this phenomenon is a decline in financial statement comparability and we raise questions as to the implications of the complexity of the IFRS based impairment testing regime both from the preparer and audit perspective.