Iranian GAAP and IFRS: The history and current status of IAS/IFRS convergence process in Iran

Document Type : Original Article


1 Department of Accounting, Faculty of Humanities, Najafabad branch, Islamic Azad University, Najafabad, Iran

2 Faculty of Economics and Business Administration, Ferdowsi University of Mashhad

3 Faculty of Management, university of Qom, Qom, Iran


This study attempts to compare and highlight the major differences between International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) with National Accounting Standards (NAS) in one of the developing nations, Iran. Over the past two decades, the Iranian accounting standards setter, Audit Organization, has decided to eliminate the differences between IFRS and NAS as a part of its convergence and harmonization project. In 2011, the Audit Organization decided that IFRS implementation would be permitted for all listed companies. The primary purpose of implementing IFRS is to enhance the international comparability of financial reports, which would attract more foreign investors to participate in the Iranian capital market, improve the efficient allocation of resources and boost the competitiveness of the market. In spite of her announcement, Iran has not supported IFRS. The purpose of this paper is to provide possible reasons for non-adoption by highlighting some important socioeconomic factors that are likely to influence the accounting environment in Iran. The main question we try to answer in this study is: to what extent is Iranian GAAP congruous with IFRS?


  1. Agostino, Mariarosaria, Drago, Danilo, & Silipo, Damiano B. (2011). The value relevance of IFRS in the European banking industry. Review of quantitative finance and accounting, 36(3), 437-457.

  2. Akman, Nazlı Hosal. (2011). The Effect of IFRS Adoption on Financial Disclosure: Does Culture Still Play A Role? American International Journal of Contemporary Research, 1(1), 6-17.

  3. Ashbaugh, Hollis, & Pincus, Morton. (2001). Domestic accounting standards, international accounting standards, and the predictability of earnings. Journal of accounting research, 39(3), 417-434.

  4. Askary, Saeed. (2006). Accounting professionalism–a cultural perspective of developing countries. Managerial Auditing Journal, 21(1), 102-111.

  5. Ball, Ray. (2006). International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and business research, 36(sup1), 5-27.

  6. Bartov, Eli, Goldberg, Stephen R, & Kim, Myungsun. (2005). Comparative value relevance among German, US, and international accounting standards: A German stock market perspective. Journal of Accounting, Auditing & Finance, 20(2), 95-119.

  7. Biddle, Gary C, & Saudagaran, Shahrokh M. (1989). The Effects of Financial Disclosure Levels on Firms' Choices among Alternative Foreign Stock Exchange Listings*. Journal of International Financial Management & Accounting, 1(1), 55-87.

  8. Borker, David R. (2012). Accounting, culture, and emerging economies: IFRS in the BRIC countries. Journal of Business & Economics Research (JBER), 10(5), 313-324.

  9. Borker, David R. (2013). Is There A Favorable Cultural Profile For IFRS?: An Examination And Extension Of Gray's Accounting Value Hypotheses. International Business & Economics Research Journal (IBER), 12(2), 167-178.

  10. Brown, Philip. (2011). International Financial Reporting Standards: what are the benefits? Accounting and business research, 41(3), 269-285.

  11. Cieslewicz, Joshua K. (2013). Relationships between national economic culture, institutions, and accounting: Implications for IFRS. Critical Perspectives on Accounting.

  12. Clements, Curtis E, Neill, John D, & Stovall, O Scott. (2010). Cultural diversity, country size, and the IFRS adoption decision. Journal of Applied Business Research (JABR), 26(2).

  13. Collett, Peter H, Godfrey, Jayne M, & Hrasky, Sue L. (2001). International harmonization: Cautions from the Australian experience. Accounting Horizons, 15(2), 171-182.

  14. Covrig, Vicentiu M, Defond, Mark L, & Hung, Mingyi. (2007). Home bias, foreign mutual fund holdings, and the voluntary adoption of international accounting standards. Journal of accounting research, 45(1), 41-70.

  15. Dahawy, Khaled, Merino, Barbara D, & Conover, Teresa L. (2002). The conflict between IAS disclosure requirements and the secretive culture in Egypt. Advances in international Accounting, 15, 203-228.

  16. Ding, Yuan, Jeanjean, Thomas, & Stolowy, Hervé. (2005). Why do national GAAP differ from IAS? The role of culture. The International Journal of Accounting, 40(4), 325-350.

  17. Doupnik, Timothy S. (1987). Evidence of international harmonization of financial reporting. International Journal of Accounting, 23(1), 47-67.

  18. Ferretti, Marco, & Parmentola, Adele. (2010). FDI knowledge spillovers and host government policies: the Iranian experience. European Business Review, 22(2), 175-194.

  19. Flynn, T. (2008). US warming to IFRS as it moves on from GAAP. Retrieved December, 9.

  20. Graham, Roger C, & Wang, Chin-hsin Coco. (1995). Taiwan and international accounting standards: A comparison. The International Journal of Accounting, 30(2), 149-167.

  21. Guler, Isin, Guillén, Mauro F, & Macpherson, John Muir. (2002). Global competition, institutions, and the diffusion of organizational practices: The international spread of ISO 9000 quality certificates. Administrative science quarterly, 47(2), 207-232.

  22. Hail, Luzi, Leuz, Christian, & Wysocki, Peter D. (2009). Global accounting convergence and the potential adoption of IFRS by the United States: An analysis of economic and policy factors. Available at SSRN 1357331.

  23. Haskins, Mark E, Ferris, Kenneth R, & Selling, Thomas I. (1996). International financial reporting and analysis: a contextual emphasis: Irwin Chicago etc.

  24. Hou, Qingchuan, Jin, Qinglu, & Wang, Lanfang. (2014). Mandatory IFRS adoption and executive compensation: Evidence from China. China Journal of Accounting Research, 7(1), 9-29.

  25. Houqe, Nurul, Monem, Reza, & Tareq, Mohammad. (2013). Joint Effect of Culture and Mandatory IFRS Adoption on Earning Quality-A Test of the Secrecy Hypothesis. Available at SSRN 2235941.

  26. Jermakowicz, Eva K. (2004). Effects of adoption of International Financial Reporting Standards in Belgium: the evidence from BEL-20 companies. Accounting in Europe, 1(1), 51-70.

  27. Jermakowicz, Eva K, Prather‐Kinsey, Jenice, & Wulf, Inge. (2007). The Value Relevance of Accounting Income Reported by DAX‐30 German Companies. Journal of International Financial Management & Accounting, 18(3), 151-191.

  28. Judge, William, Li, Shaomin, & Pinsker, Robert. (2010). National adoption of international accounting standards: an institutional perspective. Corporate Governance: An International Review, 18(3), 161-174.

  29. Karampinis, Nikolaos I, & Hevas, Dimosthenis L. (2011). Mandating IFRS in an unfavorable environment: The Greek experience. The International Journal of Accounting, 46(3), 304-332.

  30. Karbassi, AR, Abduli, MA, & Mahin Abdollahzadeh, E. (2007). Sustainability of energy production and use in Iran. Energy Policy, 35(10), 5171-5180.

  31. Leuz, Christian, & Verrecchia, Robert E. (2000). The economic consequences of increased disclosure. Journal of accounting research, 91-124.

  32. Mashayekhi, Bita, & Mashayekh, Shahnaz. (2008). Development of accounting in Iran. The International Journal of Accounting, 43(1), 66-86.

  33. Murphy, Ann B. (2000). The impact of adopting international accounting standards on the harmonization of accounting practices. The International Journal of Accounting, 35(4), 471-493.

  34. Nobes, Christopher, & Parker, Robert Henry. (2008). Comparative international accounting: Pearson Education.

  35. Perumpral, Shalini E, Evans, Mark, Agarwal, Sanjay, & Amenkhienan, Felix. (2009). The evolution of Indian accounting standards: Its history and current status with regard to International Financial Reporting Standards. Advances in Accounting, 25(1), 106-111.

  36. Reisloh, Christian. (2011). Influence of National Culture on IFRS Practice: An Empirical Study in France, Germany and the United Kingdom: Peter Lang.

  37. Rezaee, Zabihollah, Smith, L Murphy, & Szendi, Joseph Z. (2010). Convergence in accounting standards: Insights from academicians and practitioners. Advances in Accounting, 26(1), 142-154.

  38. Roudaki, Jamal. (2006). Accounting profession and evolution of standard setting in Iran.

  39. Roussey, Robert S. (1992). Developing international accounting and auditing standards for world markets. Journal of International Accounting, Auditing and Taxation, 1(1), 1-11.

  40. Street, Donna L, & Gray, Sidney J. (1999). How wide is the gap between IASC and US GAAP? Impact of the IASC comparability project and recent international developments. Journal of International Accounting, Auditing and Taxation, 8(1), 133-164.

  41. Tarca, Ann. (2004). International convergence of accounting practices: Choosing between IAS and US GAAP. Journal of International Financial Management & Accounting, 15(1), 60-91.

  42. Wang, Yutao, Hou, Yu, & Chen, Xiaolin. (2012). Accounting standard changes and foreign analyst behavior: Evidence from China. China Journal of Accounting Research, 5(1), 27-43.

  43. Wyatt, Arthur R. (1997). International Accounting Standards and Organizations: Quo Vadis? International Accounting and Finance Handbook.