Compliance with financial information disclosures in business combinations under IFRS parameters in Ecuadorian companies

Abstract

Introduction: The International Financial Reporting Standard (IFRS) 3 "Business Combinations" and Section 19 of the International Financial Reporting Standard for small and medium-sized enterprises IFRS SMEs, which focuses on the information disclosed by companies related to business combinations ("mergers and acquisitions"), same that require an entity to recognize and measure at fair value all assets acquired and liabilities assumed, including intangible assets and contingent liabilities not previously recognized by the acquired entity. Objective: The objective of this article was to determine the level of compliance with disclosure requirements in business combinations in Ecuador in 2020, to identify good practices in the disclosure of financial information. Methods: 51 companies merged in Ecuador in 2020 were analyzed. The study evaluated compliance with financial disclosure requirements, using annual reports and explanatory notes, using a descriptive and qualitative approach Results: The results indicated that IFRS are not easily applied in Ecuador, since there is a deficiency in the application and teaching of these standards, which has caused professionals in the accounting field to have shortcomings in the theoretical knowledge and practical application of IFRS in companies. Conclusions: There is an absence and deficient application of the good practices of financial information disclosure in the merged companies; the companies in the study demonstrated non-compliance with the disclosure requirements requested by the IFRS.