A Country Specific Approach To IFRS Accounting Policy Choice In The European, Australian And Turkish Context

Can Ozturk,Nalan Akdogan

doi:10.5195/emaj.2015.70

Abstract

IAS 8 defines the concept of accounting policy as "the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements". Within the framework of this concept, this research that is derived from International Financial Reporting Standards (IFRS) contributes to the accounting literature by focusing on the alternative accounting policies' debate related to presentation and recognition issues in the European, Australian and Turkish context and concludes that there is an influence of local accounting policies over IFRS practice in Turkey and this influence still exists in Europe and Australia. This shows that as long as diversity in accounting policies of IFRS is present, entities are expected to be inclined to select their local accounting policies by leading to comparability of financial statements within the country rather than between countries in the IFRS context.

Highlights

In today's worldwide accounting, the objective of providing understandable, transparent, and comparable financial information as the common denominator of the accounting and financial reporting became an important issue as a result of the increase in commercial activities and foreign direct investments(IASB, 2010: v) because differences in local accounting practices between countries prevent the flow of capital across borders necessary for the optimal allocation of scarce resources in the global context(Ding et al 2008, 145)
The objective of this paper is to investigate the trends in alternative accounting policy choices of International Financial Reporting Standards (IFRS) related to presentation and recognition in terms of selected European countries, Australia and Turkey to determine whether there is an influence of local accounting practice over IFRS
This study is important because it proves that as long as the diversity of alternative accounting policy choices exist under IFRS practice, financial statement preparers are expected to be inclined to select the accounting policy choice that refers to their local accounting policy, if any

Summary

Introduction

In today's worldwide accounting, the objective of providing understandable, transparent, and comparable financial information as the common denominator of the accounting and financial reporting became an important issue as a result of the increase in commercial activities and foreign direct investments(IASB, 2010: v) because differences in local accounting practices between countries prevent the flow of capital across borders necessary for the optimal allocation of scarce resources in the global context(Ding et al 2008, 145). This study is important because it proves that as long as the diversity of alternative accounting policy choices exist under IFRS practice, financial statement preparers are expected to be inclined to select the accounting policy choice that refers to their local accounting policy, if any. In this context, this paper proves that the local patterns of IFRS practice is valid for Turkey and local patterns of IFRS practice, still, exist for Australia, France, Britain, Germany and Italy compared to prior research of Kvaal and Nobes(2010) and Nobes(2011). It considers the trends of accounting policy choices of IFRS that have not been

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Conclusion