27/01/2023 - Academic study - The Theory and Practice of Discounting in Financial Reporting under IFRS
EFRAG and ICAS has published a co-sponsored academic study on the theory and practice of discounting. The study is available here. Comments are requested by 31 March 2023.
Discounting is a requirement under several IFRS Standards. However, these requirements have different objectives and theoretical bases in different Standards, and the way that discounting is to be applied differs.
Despite this inconsistency and its complexity and importance, discounting is, however, paid only limited attention by academic accounting research.
Given the significant evidence gap, ICAS and EFRAG joined forces to fund an academic research project to critically evaluate and examine the use of discount rates in financial statements, setting out:
- the underlying rationale for the different approaches in each IFRS Standard;
- the economic consequences of the different approaches used; and
- where appropriate, alternative methods that may be applicable.
The views expressed in the academic study do not necessarily represent those of ICAS and EFRAG and the report includes questions for stakeholders on the conclusions reached by the research team.
Comments are requested by 31 March 2023.
