Government Grants and Disclosure Quality: A Descriptive Comparative Analysis of IFRS and US GAAP

This thesis aims to analyze the different accounting treatment of Government Grants under the IFRS accounting system and within the US GAAP framework. This is particularly relevant and central to current debates in the accounting world, both because Government Grants represent an increasingly significant and structural element in today’s economies, and because numerous amendments have been introduced to the related regulations in recent years. The legislator’s intention is indeed increasingly directed toward achieving convergence between the two accounting systems, to enhance the comparability of companies’ financial statements. The main objective of the thesis is to assess the transparency and clarity of the disclosure provided in financial statements prepared according to the two accounting systems under examination. To do so, the analysis focuses on six companies operating in three different sectors that have been at the center of political and economic debate in recent years: the pharmaceutical sector, the automotive industry, and the green energy sector. The study adopts a descriptive and comparative approach, examining the financial statement texts of the companies with the aim of highlighting any shortcomings or recognizing the information that effectively enhances the quality and transparency of disclosures. The perspective adopted is the one of a potential investor or final user of the financial statements seeking a clear understanding of the impact of Government Grants on corporate financials, for which informational transparency is crucial. This thesis adopts an approach focused on qualitative aspects and on subjective interpretation, elements that would be difficult to capture through other types of analysis. The conclusion reached does not intend to favor one system over the other, although the findings suggest that US GAAP financial statements tend to be clearer and more comprehensive in the information provided regarding Government Grants received. The underlying reason may be found in the context in which such companies operate, a market characterized by pressures and requirements different from those faced by companies reporting under IFRS.