"IFRS and MENA YEARperspective by analysing accounting choices regarding the conservatism principle. Thisapproach WATTS and ZIMMERMAN (1990) : « the label positive distinguish researchaimed at explanation and prediction from whose objective are prescription”. 1.2. Conservatism in Accounting: The common definition of prudence is “attentiveness to possible hazard”. Applied toaccounting, we talk about prudence principle or conservatism principle. Both expressionsare used in the literature. BASU (1997) asserts that “conservatism has influencedaccounting practice and theory for centuries- i.e. historical records from early 15thcentury”. The prudence principle is “traditionally defined by the adage anticipate norprofit, but anticipate all losses”, WATTS (2003a). “This traditional definition ofconservatism implies a consistent understatement of both book value of shareholders?equity (which should imply a market-to book ratio consistently greater than one) andearnings”, GARCIA LARA and MORA (2004). Furthermore, for GARCIA LARA and MORA (2004) there are two different approachesof conservatism which are articulated from the legal law constraint. On the one hand,countries characterized of code law, such as Germany and France, apply continentalaccounting. In this case prudence shows a larger balance sheet conservatism implying anundervaluation of assets. On the other hand, countries from civil law, like UnitedKingdom, which apply accounting methods supporting earnings conservatism. In everyinstance, conservatism accounting reveals a will of avoiding dangerous valuation of total13 IFRS and MENA YEARassets which could lead to a fictitious payment of dividends and to the diffusion ofvoluntary overstated financial information. French GAAP are based on code law. That is the reason why balance sheet conservatismis retained by the commercial code “any event which is likely to decrease the value of thetotal assets of the company must be taken into account. According to this principle, anyevent which can increase the value of assets of the company cannot be subject of acountable recording. Thus, increase of the portfolio stocks? value of a company cannot berecognized, contrary to latent depreciation”. Conservatism has been the mainstreamduring years in terms of valuation model. Nevertheless, its relevance has been criticizedby people who see in conservatism an obviously pessimistic method, which does notreflect economic reality. IASB framework maintained prudence as a characteristic ofinformation but refused the principle as a systematic approach. 1.3. Fair ValueFrench GAAP are typically characterized as stakeholder-oriented and tax-driven((BERTONI and DEROSA (2005)). It differs substantially from IAS/IFRS, which areshareholder-oriented and independent of tax reporting considerations. This divergenceappears on the way of approaching asset valuation. While France emphasizesconservatism (e.g., limited recognition of assets), “IAS focuses on fair-value accountingand balance-sheet valuation (e.g., use of fair value for financial instruments andrecognition of internally developed intangibles)” HUNG and SUBRAMANYAM (2004).The enforcement of IAS/IFRS introduces the fair value approach in French practices.14 IFRS and MENA YEARIndeed, several standards give the fair value approach as a valuation option. This sectionpresents briefly the fair value approach and the stakes of its introduction in Frenchpractice. Firstly, fair value is defined such as “the amount for which an asset or a liability could besettled between knowledgeable, willing parties in an arm's length transaction” (IAS16§6). More than a measurement method, fair value is an approach of the accountingpractice. Fair value represents an economic way of valuating capital, it refers to thesubstance over form principle which means that a “Faithful representation of real-worldeconomic phenomena is an essential qualitative characteristic, which includes capturingthe substance of those economic phenomena” FASB (2005b). The substance over formgives the primacy to economic characteristics on juridical form. Then IAS/IFRS areshareholders oriented. Indeed, the Framework concludes that investors are significantproviders of risk capital to the organization, and its financial statement that meet theirrequirements as per the industry norms.III ChapterResearch MethodologyChapter three15 IFRS and MENA YEARResearch DesignThe research is designed in the form of the questionnaires and other secondary sources ofdata.The attempt was made to keep secrecy and clarify the questions to the respondentbefore the filling of questionnaire. Also the interview questions were designed tomaintain secrecy of the identity of the person.Sources of DataThere are two types of data in any research, primary and secondary data. In this report theresearchers have used the primary source of data through distributing questionnairesalong with secondary source of data. Purpose and research questions or null hypothesisThe purpose of the research is to find out the use of IFRS standards in financial report inMENA area. The objective of the study is to identify and assess the recognition andmeasurement requirements set out in International Financial Reporting Standards (IFRSs)in the the MENA region. The IFRSs of MENA region include Standards as issued by theInternational Accounting Standards Board (IASB), Interpretations issued by the IFRSInterpretations Committee (formerly known as the „IFRIC?), International AccountingStandards (IASs) and Standing Interpretations Committee (SIC) Interpretations.Sample Size:16 "