International Financial Reporting Standards Compliance Research Articles

Examining the Moderating Role of Firm Characteristics in the Corporate Governance-Financial Reporting Quality Nexus: Evidence From a Developing Country

Corporate governance is a stewardship system where directors are expected to provide leadership and supervision of the management of an organization and communicate to the absentee owners on the progress and performance of the organization, including through financial reporting. International Financial Reporting Standards (IFRS) were created to ensure corporate transparency, comparability, consistency and integrity of financial reporting. Since corporate governance is to ensure the effective operation of an organization, it is assumed that corporate governance will lead to quality financial reporting all other things being equal. Despite the existence of numerous publications on the relationship between corporate governance and financial reporting quality, the scientific literature still lacks comprehensive studies on the impact of individual firm characteristics on this relationship. The objective of this study is to assess how firm characteristics such as Firm size, Firm age, and ROA influence the relationship between corporate governance and the quality of financial reporting. A regression analysis based on balanced panel data of 598 observations from 46 companies in Ghana with full annual reports from 2009 to 2021 allowed us to assess the impact of such corporate governance variances as Board Size, Board Gender Diversity, and Independence of the Audit Committee on IFRS compliance. Mitigating effects and hypothetical correlations between variables were assessed using the STATA software package. Using the Hausman test, the appropriateness of the fixed effects model was substantiated (model specifications for proxy variables and moderating variables were built). The first part of the study was based on the results of linear regression. The linear regression results suggest that Board Size significantly predict IFRS compliance with a coefficient of 0.003 and p-value of 0.028. The independence of the Audit Committee exhibits a positive and statistically significant relationship with IFRS compliance, with a coefficient of 0.027 and a p-value of 0.018. Board Gender Diversity, despite having a coefficient of 0.024, does not display a statistically significant relationship with IFRS compliance (p=0.682). The second part of the study involved analysis to assess the moderating effect of firm characteristics on the relationship between corporate governance and financial reporting quality (an effect that occurs when a third variable changes the nature of the relationship between a predictor and an outcome, especially in analyses such as multiple regression). In this case, the results were different. In particular, Board Size does not significantly influence IFRS compliance with a coefficient of 0.001 and p-value of 0.477. Board Gender Diversity negatively influences IFRS compliance with a coefficient of -0.882 and is highly significant at the 1% level. The Independence of the Audit Committee is positively associated with IFRS compliance, with a coefficient of 0.233 and significance at the 1% level. In terms of firm characteristics, Firm Size and Return on Assets both exhibit significant negative relationships with IFRS compliance, while Firm Age (FA) has a positive effect, all significant at the 5% level. Again, the findings of the study showed that the relationship between board size and IFRS compliance changes depending on the firm’s return on assets and that there is a significant positive interaction between Board Gender Diversity and firm characteristics. While firm size and firm age significantly moderate the relationship between the independence of the audit committee and IFRS compliance. The findings of the study indicated a significant impact of both Board Gender Diversity and Independence of the Audit Committee on the level of compliance with International Financial Reporting Standards (IFRS). Specifically, the link was shown to be highly influenced by firm characteristics such as size, age, and return on assets. Thus, the study allowed us to confirm the hypothesis that the success of corporate governance in guaranteeing high-quality financial reporting depends on certain characteristics of the organisation. It is advisable for regulatory agencies to consider the modification of governance principles to align with the unique characteristics of specific firms. There is a growing call for firms to actively promote and support gender diversity among their Board of directors, as well as prioritize the independence of their Audit committees. Furthermore, it is advisable for organisations to adopt a proactive stance to enhance internal controls and implement targeted training programmes for board members, with the aim of effectively addressing unique issues faced by the organisation.

Corporate Governance, Financial Leverage, External Audit Quality, and Financial Reporting Quality in Ghanaian Companies

Good corporate governance influences the capital structure adopted by a firm. Higher financial leverage increases a firm’s risk. This might result in a window-dressing of financial statements to maintain the value of the firm. The study examined the interaction between corporate governance, financial leverage, external audit quality, and their combined influence on the quality of financial reporting inside enterprises in Ghana. The extensive inquiry was conducted using a dataset consisting of 650 observations and encompassing the timeframe from 2009 to 2021 using SPSS Process version 4.2. The findings of this study revealed a significant inverse correlation between the size of the board and the level of compliance with International Financial Reporting Standards with a correlation coefficient of -0.056. With a correlation coefficient of 0.003, the analysis revealed that there is no linear association between Board Gender Diversity (BGD) and International Financial Reporting Standards. With regards to Independent Audit Committee with a correlation coefficient of around 0.068, the findings of the study indicated a statistically significant positive relationship between the presence of an Independent Audit Committee and the level of compliance with International Financial Reporting Standards. The study showed a negative correlation of -0.024 between Financial Leverage and International Financial Reporting Standards Compliance. The observed data suggests a notable and favourable correlation between Audit Fee and International Financial Reporting Standards Compliance with a significant positive correlation of around 0.157. The model employed in the study exhibited multiple R (R) of about 0.191, indicating a modest positive association between the predictor variables and International Financial Reporting Standards Compliance. The coefficient of determination (R Square) was 0.037, indicating that 3.7% of the variation in International Financial Reporting Standards Compliance can be attributed to the predictor variables in the model used for the study. Furthermore, the study revealed an unstandardized coefficient of -0.003 and a standardized coefficient of -0.078 for Board Size, 0.023 and 0.016 for Board Gender Diversity, 0.028 and 0.109 for the Independent Audit Committee, -2.152E-05 and -0.031 for Financial Leverage and 2.809E-08 and 0.156 for Audit Fee. The study again revealed a significant indirect effect through Financial Leverage (FL) on Board Size and International Financial Reporting Standards Compliance with bootstrapped results of 0.0001. On the contrary, the study revealed that Financial Leverage does not mediate Board Gender Diversity and International Financial Reporting Standards Compliance, Independent Audit Committee, and International Financial Reporting Standards Compliance with, an indirect effect of -0.0021 and -0.0009 respectively. With mediation through Audit Fee, the study showed significant indirect effects for all three independent variables. Board Size at 0.0000, Board Gender Diversity at -0.0016, and Independent Audit Committee at -0.0027. The findings from the direct effects study indicate that Board Size and Audit Fee have a notable influence on IFRS Compliance, hence affecting the quality of financial reporting. However, no concrete evidence was found to establish a link between Board Gender Diversity and Independent Audit Committee and IFRS Compliance. For the mediation effects, it was discovered that Financial Leverage played a role as a mediator in elucidating the connection between Board Size and IFRS Compliance. Furthermore, the Audit Fee variable served as an intermediary in clarifying the associations between Board Size, Board Gender Diversity, Independent Audit Committee, and IFRS Compliance. It is recommended for companies to give utmost importance to the principles of openness, accountability, and consistent monitoring of financial leverage. Moreover, the study recommends the allocation of resources towards high-caliber external audits as it plays a pivotal role in bolstering the precision and dependability of financial reporting.

Effect of International Financial Reporting Standards Compliance on Financial Reporting Quality: Evidence from a Developing Country

Purpose: Despite global adoption of International Financial Reporting Standards to improve financial reporting quality, there is still inconclusive and limited empirical evidence of improving financial reporting quality especially from developing countries. Therefore, the study analysed the relationship between International Financial Reporting Standards compliance and Financial Reporting Quality from an African country perspective.
 Methodology: Financial Reporting Quality was measured using measurement tool developed by the Nijmegen Center for Economics and International Financial Reporting Standards compliance was measured using dichotomous and partial compliance methods. Study period was 2012 to 2018 involving 20 Zambian listed companies. Study involved panel data analysis and hence, Hausman test was conducted to select the model. Multiple linear regression was used as a data analysis method.
 Findings: The results indicated a statistically insignificant relationship between International Financial Reporting Standards compliance and Financial Reporting Quality. Therefore, the implication of the study is that the adoption of International Financial Reporting Standards does not influence financial reporting quality among Zambian listed companies. The low compliance with International Financial Reporting Standards among the listed may have contributed.
 Unique Contribution to Theory, Practice and Policy: This is first study in Zambia looking at the influence of IFRS Compliance on Financial Reporting Quality and therefore, contributes to the extant empirical studies analysing whether IFRS compliance influences the financial reporting quality given the mixed results across.

Standards’ Compliance and Financial Reporting Quality Among Listed Companies in Nigeria

The study determined the extent of compliance with financial reporting standards and the extent of financial reporting quality among quoted non-financial firms in Nigeria between 2005 and 2020. The study used secondary data sourced from the published annual audited reports and financial statements of 50 non-financial firms listed in the Nigeria Stock Exchange. Descriptive statistics and Beneish Model were used to determine the compliance and the extent of financial reporting quality. The results showed that the level of compliance with financial reporting standard among quoted non-financial firms is significantly high. Also, results showed that since the adoption of International Financial Reporting Standards (IFRS) in 2012, the level of financial reporting quality of quoted non-financial firms has increased as there was no manipulation of any financial statement of the selected firms up to 2020. Keywords : Financial Reporting Quality, IFRS compliance, Beneish Model. DOI: 10.7176/RJFA/13-14-08 Publication date: August 31 st 2022

International Financial Reporting Standards Compliance, Disclosure and Relevance of Financial Statements as Perceived by Investors with Regards to their Decision Making

Purpose: The purpose of this research was to investigate the International Financial Reporting Standards (IFRS) compliance, disclosure and relevance of financial statements as perceived by investors with regards to their decision making. Design/Methodology/Approach: Since the study based its findings on perceptions of investors, a concept that cannot be defined with certainty and is not constant since it varies due to factors such as regulatory framework, country polies, investor experience, technological factors, just to mention a few, the regression model was used to portray the relationship between investment decision making and financial reporting relevance, credibility/reliability and quality of disclosures Findings: Corporate governance, audit form reputation, audit committee and company size have a great impact on IFRS compliance and disclosure in financial statements. Verifiability and understandability help to improve IFRS Disclosure and Financial Statement Relevance. Relevance is considered an important attribute of quality financial information in decision making. Practical Implications: Investors need to make effective and informed decisions on investment. For this to be possible, information provided in the financial statements has to be relevant and faithfully represent the substance of what it purports to represent. Companies should practice voluntary disclosure on information items that influence investment decisions and be required to give a simplified interpretation of the information contained in the annual reports. Originality/Value: The analysis will assist investors in better judging the disclosure and relevance of financial statements of organizations from a thorough knowledge of the two aspects so as to make more informed decisions

IFRS compliance in GCC countries: Do corporate governance mechanisms make a difference?

This research aims at examining the level of International Financial Reporting Standards (IFRS) compliance across the entire Gulf Cooperation Council (GCC) region and seeks to explore the impact of corporate governance mechanisms on the level of compliance with IFRS disclosure requirements. We employ a cross-sectional analysis of 314 non-financial listed companies within the GCC countries. The compliance level with IFRS was measured using a self-built disclosure index consisting of 379 mandatory disclosure items of IFRS. The partial compliance method was implemented in calculating the compliance score for the targeted companies. The results show that none of the targeted companies had fully complied with the disclosure requirements of IFRS. Three corporate governance mechanisms were found to have a significant effect on the level of compliance with IFRS, namely board independence, concentrated ownership and the external auditor quality. Further, the results are not indicative of any distinctive contributions of board size, chief executive officer duality, institutional ownership, audit committee size and the number of audit committee meetings held during the year on the level of compliance with IFRS. Hence, the current results may reflect that corporate governance best practices need to be revised to improve the level of compliance with IFRS, particularly in emerging markets. We draw out the implications for theory and practice.

Mediating Perception of Accounting Professionals Towards Implementation of International Financial Reporting Standards

Indian companies are also growing their wealth worldwide due to diversification, cross-border fusions, acquisitions, or dis-investments with the growth and development of the economy and increasing convergence of global economies. Under these conditions, it is necessary for the Indian corporate globe to follow IFRS (To create a common accounting language throughout the world, so that businesses and their financial statements can be consistent and reliable across nations, International Financial Reporting Standards (IFRS) were created by International Accounting Standards Board (IASB) in the year 2001) for its financial reporting. The Core Group of ‘Ministry of Corporate Affairs’ of India (MCA) has recommended IFRS convergence in a phased manner from April 1, 2012. The present study examines the attributes that form the perceptions of accounting professionals towards the ‘International Financial Reporting Standards’ (IFRS) implementation. The studies suggested that the implementation of IFRSs has been focused, with a view to minimize difficulties for the implementation participants (Sharad Sharma, Manag Audit J 32(4/5), 406–426. https://doi.org/10.1108/MAJ-05-2016-1374 , 2017). A similar view expressed by (Weaver, Account Europe, 12(2), 1–25, 2015) observed different dimensions about the global accounting standards and the challenges faced during the implementation such as costs to be incurred in the implementation, IFRS awareness, and IFRS training and technology to be adopted to enhance that the implementation of IFRS brings comparability and uniformity. A comparative study conducted on usage of the national GAAP (Generally Accepted Accounting Principles (GAAPs) are those concepts and conventions on which the accounting system is based. The primary objective of these principles is to bring uniformity and consistency in the preparation and presentation of final statements). The author focused on reliability of information and openness in the capital markets are positively linked with the IFRS compliance (Bova, J Int Account Res, 11(1), 83–111, 2012).

IFRS compliance, corporate governance and financial reporting quality of GSE-listed non-financial firms

The adoption of International financial reporting standards (IFRS) has been presented in several empirical literature as a factor that could improve the quality of financial reports. However, Ghana has not attained the desired levels of financial reporting quality after the adoption of IFRS. Literature reveals that lack of proper enforcement of these high-quality standards may result in limited compliance and will undermine the effectiveness of these standards in terms of attaining high-quality financial reports. This study therefore argues that the relationship between IFRS compliance and reporting quality revolves around some enforcement mechanisms like corporate governance structures. In view of that, by using random effect estimation technique, this study examined the role of corporate governance in the relationship between IFRS compliance and the reporting quality of firms listed on the Ghana Stock Exchange (GSE). The study found that the right corporate governance mechanisms will enhance the positive effect of IFRS compliance on reporting quality. This study further recommends that to gain an appreciable level of public confidence in the annual reports of firms listed on the GSE, the audit committee’s independence and the board’s independence should be strengthened to ensure that management does not only adopt IFRS, but that the standards are actually complied with.

Has traditional accounting information lost its relevance?

PurposeThis paper aims to examine whether traditional accounting information has lost its relevance in the context of sub-Sahara Africa. Specifically, the study examines whether historical cost and inflation-adjusted data are related to the market value of equity and stock returns on the Ghana Stock Exchange (GSE).Design/methodology/approachThe authors collect firm-specific data from annual reports of 20 listed firms from the GSE over the period 2007-2012. The authors use ordinary least squares and two stage least square (2SLS) to examine the value relevance of historical and inflation-adjusted income and equity.FindingsThe results suggest that the market equity is related to both historical-cost and inflation-adjusted earnings. Market return is also associated with both historical-cost and inflation-adjusted earnings and book value. Overall, the authors conclude that inflation-adjusted information content is more value relevant than the traditional cost accounting information.Research limitations/implicationsThe findings are a wake-up call to policymakers and practitioners in formulating financial reporting policies. This study, however, focuses on only non-financial listed firms on the GSE. Thus, the results may not be valid for all companies in Ghana.Practical implicationsThe finding has an implication on the choice of valuation used in the preparation and reporting of financial statements. Accordingly, the authors offer policy directions to financial reporting regulatory authorities to enhance the value relevance of accounting information.Social implicationsRegulators, especially the GSE may improve life of investors if the recommendations are transformed into directives that will help enhance the quality of financial reporting.Originality/valueThe findings suggest that inflation-adjusted data are more relevant in countries with extreme inflationary trend and lax International Financial Reporting Standards compliance enforcement. The results also lend support for the current cost accounting theory.

The association between internal audit department characteristics and IFRS compliance

PurposeThe purpose of this paper is to analyze whether internal audit (IA) influences the successful implementation of the International Financial Reporting Standards (IFRS). From January 2017, listed companies in Saudi Arabia have been mandated to adopt the IFRS. Conducted in the 2014–2016 years before this deadline, the study investigates the readiness of IA departments in the Kingdom to adopt the IFRS in their totality, as required, by January 2017.Design/methodology/approachData were collected for the period 2014 and 2016, two years after the announcement of the intended adoption of the standards, and hence, two years into the five-year preparation period. Data obtained from 78 chief internal auditors from listed companies in Saudi Arabia, and the extraction of information from companies’ annual reports.FindingsResults of regression analysis show a significant association between the readiness for IFRS adoption and IA size and IA staff training. In firms that adopted the IFRS in the period before the mandatory implementation, IA is weak in the role of monitoring. In this connection, it is demonstrated that the adoption and implementation of the IFRS are likely to be more effective when IA reports directly to the audit committee rather than to management. Further, the results reveal that the Hausman test is not significant for the IA characteristics. Hence, there is implication that the measurement instruments used in the study are exogenous and do not associate with the error term.Originality/valueThe new insights into the impact of IA on IFRS adoption, gained from studying this issue within the oil-based Saudi Arabian economy, represent a contribution to the IA literature. The results of this study provide new insights to several stakeholders. First, to academia, which can benefit from new IA knowledge and understanding in the specific context of the Kingdom of Saudi Arabia (KSA), which can be representative of the Gulf region and the wider Arab World. Second, to policy-makers and practitioners in the KSA and other Middle-Eastern, Asian and developing countries that share similar cultural predispositions, socio-economic institutions and/or general socio-economic environments. Additionally, it offers insights for small- to medium-sized companies that have not thus far, adopted the IFRS.

Firm Characteristics and Compliance with International Financial Reporting Standards (IFRS) by Listed Financial Services Companies in Nigeria

This study investigated the level of compliance with International Financial Reporting Standards (IFRS) by listed financial services companies in Nigeria, and the effect firm characteristics have on the level of compliance. The study also examined whether compliance with IFRS significantly differs between listed Deposit Money Banks (DMB) and Insurance Companies (INC) in Nigeria. Secondary data used for the study were extracted from the annual report and accounts of the sampled firms and analyzed using the multiple regression technique and Wilcoxon Rank Sum Test for two independent samples. The study found that (i) the level of compliance with IFRS by the sampled firms is high (about 85.9%); (ii) profitability is positive and significantly associated with IFRS at 10% level; (iii) firm size and auditor type are positive but insignificantly associated with IFRS compliance; and (iv) leverage and internationality are negative and insignificantly associated with IFRS compliance. Furthermore, the study found that compliance with IFRS by DMB is higher than INC but the difference is not statistically significant. The major conclusion reached in this study was that compliance with IFRS by listed financial services companies in Nigeria is not driven by firm attributes. The study recommended that adequate steps be taken by regulatory authorities such as the Financial Reporting Council (FRC) of Nigeria to ensure full compliance with the mandatory disclosure requirements of IFRS by listed firms in Nigeria.

IFRS adoption and auditing: a review

Purpose The purpose of this paper is to review the empirical research literature dealing with International Financial Reporting Standards (IFRS) and auditing. The authors identify four main topics related to the effect of IFRS adoption on audit fees, audit market and audit report lag and the influence of auditor choice on IFRS compliance. Design/methodology/approach For each reviewed stream of research, the authors present its theoretical underpinning and summarize its main results. Findings Based on 26 empirical studies, the review reveals four main findings. First, IFRS adoption is associated with increased audit fees. Second, IFRS adoption has had an effect on audit market through auditor choice, audit switching and audit market concentration. Third, IFRS adoption has increased audit report lag. Finally, the authors document that audit quality, as proxied by auditor type, may play an important role in enforcing the compliance with IFRS. Practical implications For regulators the review highlights that IFRS adoption is associated with several effects dealing with audit cost (audit fees), audit efficiency (audit report lag) and may benefit audit firms with international affiliation compared to local ones and this may inform regulators in settings that plan to adopt IFRS in the future. Originality/value This literature review represents a historical record and an introduction for researchers who aim to investigate this topic in the future since the authors provide specific guidance for future research avenues for these reviewed strands of research and other unexplored topics related to auditing and IFRS.

Auditor choice in Italian non-listed firms

Purpose This paper aims to investigate auditor choice in those Italian non-listed firms adopting the “traditional” model of corporate governance. In Italy, non-listed firms can choose between two types of auditor: the Board of Statutory Auditors (BSA), that is the statutory auditors, or an “external” auditor. At the same time, a BSA conducts the administrative auditing for all companies with equity exceeding €120,000. Design/methodology/approach The paper estimates a logistic regression model of firm auditor choice between an external auditor and the BSA, which incorporates variables proxying for both agency conflict and organizational complexity effects. Findings The results show that of the potential agency factors, only board independence drives auditor choice, whereas organizational complexity and risk factors including firm size, investment in inventories, subsidiary status and complexity drive auditor choice. These results may be explained in the administrative audit role of the BSA, which monitors both day-by-day firm operations and the financial statements preparation “project”. Stakeholders as a result are reassured that, in general, their interests are protected. Finally, it was found that legal form and voluntary International Financial Reporting Standards compliance exert an impact on auditor choice. Originality/value The paper provides support for an internal yet independent auditing body such as the Italian BSA as a wider model for corporate governance in European non-listed firms (OECD, 2004 and 2015). The BSA as an administrative and financial auditing body made up solely of independent highly qualified professionals can work within the firm on an operational basis, and in so doing can increase stakeholder protection.

International Financial Reporting Standards Compliance: Evidence from Ghana

Ghana adopted International Financial Reporting Standards (IFRSs), in place of Ghana National Accounting Standards (GNASs) from 1st January, 2007, for all listed companies including government business enterprises, banks, insurance companies, security brokers, pension funds, and public utilities. This study examines the extent of compliance with IFRSs disclosure requirements, by analysing annual reports of listed companies on the Ghana Stock Exchange. The study also investigates factors associated with the level of compliance. Findings reveal a high level of (83%) compliance with IFRSs disclosure requirements with leverage and multiple listing statistically associated with the level of compliance. Although, the listed companies complied with more than 60% of the IFRSs disclosure requirements, regulatory intervention is needed to ensure full compliance.

IFRS -Imperatives for Indian Banks

Indian Finance Minister recently announced the IFRS (International Financial Reporting Standards) compliance date for Indian Companies. However, the IFRS transition date for Indian Banks is not yet announced. This article gives author's view point on likely effective date for IFRS Transition for Indian Banks and the key areas the Indian Banks need to Focus-on, on their journey towards IFRS Compliance.

Accounting development and international financial reporting standards in small island economies

PurposeThe purpose of this paper is to examine the accounting development process and international financial reporting standards (IFRS) in small island economies (SIEs), with particular reference to Mauritius. SIEs are different from large economies in terms of economic and political dependence, colonial influences and international pressures, as well as vulnerability to natural shocks.Design/methodology/approachThis paper uses Briston's Accounting Evolutionary Theory (BAET) and the Transcendental Stage of Accounting Development (TSAD) proposed by Boolaky and adopts a descripto‐explanatory research tradition to explain accounting development and IFRS in Mauritius. Data on key development economic policies between 1960 and 2008 are collected and analysed using secondary sources, whereas data related to colonisation and basis of legal system are archived from the National Library.FindingsMauritius has experienced little difficulty compared to other countries in the African region such as Madagascar, Mozambique, Angola, Swaziland etc. in its accounting development process because it is used to the Anglo‐Saxon accounting system, has adopted the phase‐by‐phase development process, has an adequate supply of professionally qualified accountants and made IFRS compliance mandatory in 2001 through the revised Companies Act, 2001 and through the revision of other related legislations. As regards IFRS, Mauritius has a legal, political, business and economic environment conducive to sustain IFRS.Research limitations/implicationsThis paper applies BAET to examine accounting development from basic book‐keeping to IFRS adoption in Mauritius. It also explains that there is a transcendental stage of accounting development which BAET has not taken into consideration.Originality/valueThere is no previous study which has used BAET and TSAD to examine accounting development and IFRS in small island jurisdictions. Previous studies have mostly focused on large economies. This paper also provides a basis for future research in similar jurisdictions.

Accounting Development and the Relevance of International Financial Reporting Standards in the Context of Small Island Economies - Using Briston’s Theoretical Foundation in the Context of Mauritius (1960-2008)

Purpose - This paper examines the accounting development process and the relevance of International Financial Reporting Standards (IFRS) in Small Island Economies (SIEs) with particular reference to Mauritius. SIEs are different from large economies in terms of economic and political dependence, colonial influences, international pressures, as well as vulnerability to natural shocks.Design/methodology/approach - This paper uses (i) Briston’s Accounting Evolutionary Theory (BAET) (1978) and (ii) the Transcendental Stage of Accounting Development (TASD) proposed by Boolaky (2004) to explain the different stages of accounting development in Mauritius. Five factors influencing IFRS relevance (colonisation, regulation, accounting education, capital market and global business) are considered. Global business is for the first time brought into accounting literature to discuss the relevance of IFRS in small island jurisdictions.Findings - Mauritius has experienced little difficulty compared to other countries in the African region such as Madagascar, Mozambique, Angola, Swaziland etc. in its accounting development process because (i) it is used to the Anglo-Saxon accounting system, (ii) has adopted the phase-by-phase development process, (iii) has an adequate supply of professionally qualified accountants and (iv) made IFRS compliance mandatory in 2001 through the revised Companies Act 2001 and through the revision of other related legislations. As regards IFRS relevance, Mauritius has a conducive legal, political, business and economic environment to sustain IFRS.Implications - This study has applied BAET to examine accounting development from basic book-keeping to IFRS adoption in Mauritius. It also explains that there is a transcendental stage of accounting development which BAET has not taken into consideration.Originality - There is no previous study which has used BAET and TASD to examine accounting development and IFRS relevance in small island jurisdictions. This paper, therefore, provides a basis for future research in similar jurisdictions

An empirical insight on Spanish listed companies’ perceptions of International Financial Reporting Standards

Since 2005, all publicly traded European Union companies must prepare their consolidated statements in accordance with the International Financial Reporting Standards (IFRS). This paper analyzes the consequences of IFRS adoption in a code-law country (Spain), whose context is very different from the Anglo-Saxon system. This study provides evidence on the way that environment can affect Spanish financial managers and chief accountants, when they have to prepare financial reports under high-quality standards such as IFRS. The study used a questionnaire-based survey, which was completed by 63 Spanish listed firms. The results show that IFRS are perceived as a high-quality regulation appropriate for decision-making. However, IFRS are also seen as (1) significantly different from Spanish standards, (2) troublesome, and (3) failing to meet a cost-benefit trade-off in some cases. IFRS are not considered by the survey respondents as more appropriate than Spanish standards. The results of the study indicate that statement preparers’ overall views of IFRS could lead to less IFRS compliance and, therefore, lower quality financial reports than could be reached under strict IFRS application.