Proposed Financial Statement Changes By The FASB-IASB: Reactions From Chinese Accounting Majors

Don E Giacomino,Xin Li,Michael D Akers

doi:10.19030/rbis.v17i2.7847

Abstract

Based on concerns regarding the usefulness of the current format of the financial statements to assist users in making decisions and as part of the convergence efforts of the IAS and GAAP, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) created a joint project (2004) on financial statement presentation which resulted in the publication of their joint Discussion Paper, Preliminary View on Financial Statement Presentation. Prior research has examined the response of academics, preparers (CPAs) and US accounting students (future preparers). This paper extends that research by examining the reaction of Chinese accounting students, future international preparers. While the Chinese students show greater support for the proposals of the FASB and IASB than the US students, the support is moderate. We believe the stronger support of the Chinese students for the proposals is primarily related to cultural issues as compared to the substance of the proposals. The findings of this study are consistent with findings of prior research. While the project is currently on hold the findings of this study and prior research suggests that the FASB and IASB should consider whether the proposals appropriately address the concerns in making the decision to renew this project.

Highlights

I n response to concerns about the inadequacy of the current formats of financial statements to assist users with their decisions and as part of the convergence efforts of the IAS and GAAP, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) created a joint project (2004) on financial statement presentation
Preparer’s will most likely incur tremendous cost to their accounting information systems in order to comply with the changes and such changes could trigger additional costs if leases or long-term debt agreements are affected by the proposals; 2) Proposals don’t enhance the usefulness of the presentation of the information in the financial statement and won’t enhance the users’ decision making. and 3) Possible lack of understanding of the proposals by CPAs and Accounting students implies such changes will necessitate considerable educational efforts
This paper provides an international perspective of future preparers/users and this is consistent with the planned outreach activities of the FASB and IASB

Summary

Introduction

I n response to concerns about the inadequacy of the current formats of financial statements to assist users with their decisions and as part of the convergence efforts of the IAS and GAAP, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) created a joint project (2004) on financial statement presentation. The findings of this study are compared to the results of two prior studies: 1) Shough (2009) surveyed CPAs to obtain their perceptions of the proposed changes and 2) Giacomino and Akers (2010) surveyed US accounting and finance majors. This additional input from international students, along with the comparison of the Shough (2009) and Giacomino and Akers (2010) findings, provides more information about the acceptability of the Boards’ proposals

Objectives

Findings

Discussion

Conclusion