Set Of Accounting Standards Research Articles

THE FUTURE OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS IN THE UNITED STATES: CONSIDERATIONS ON THE CRITICAL QUESTION

In the present article a subject matter that has attracted great interest over the recent decades is discussed. The critical question of the likelihood of adopting the International Financial Reporting Standards in the United States has raised a lot of debates around the world. The problem has been the focus of long-lasting and profound deliberations among both scientific and professional community.Our research found out that the strategic goal of reaching one single set of global accounting standards through the project of convergence developed by the most influential Boards in the world – the International Accounting Standards Board located in London with second headquarters in Tokyo, and the U.S. Financial Accounting Standards Board has not been achieved. It is appropriate to emphasize that the realisation of the convergence project began in 2002 as a result of the Norwalk agreement achieved in September 2002, Norwalk, Connecticut, USA. However, it is increasingly recognized that the era of convergence is coming to an end.Prominent scholars argue that the strategic goal turned out to be neither practical nor achievable in the foreseeable future. For the time being the authorized American institutions do not intend to fully adopt the International Financial Reporting Standards as issued by the IASB into the U.S. financial reporting system. Moreover the authoritative organizations in the United States attempt to continue keeping in line with specifics of the U.S. business environment. It is assumed that the Securities and Exchange Commission will never perhaps risk causing a political storm by yielding the control on its accounting to an institution outside the USA.An essential reason that causes inconveniences in the implementation of the IASB’s accounting standards and the principles is that the accounting standards interact in different ways with national laws, social and ethic codes, domestic fiscal rules and guidelines, and that is unavoidable. However, in each state and jurisdiction the interaction has its essentials and specifics. Complications may arise out of the local tradition, culture and historical continuity in performing accounting as a practice as well as by the legal doctrine and the degree of their interrelation. No less important are the essence and peculiarities of the national legal and accounting system, the extent of cultural impacts on the contemporary development of accounting as well as the principles on the basis of which the systems of state authority are established, interact and function.

The (in)coherence in accounting for goodwill

PurposeIn the process of harmonizing International Accounting Standards (IAS/IFRS), scholars and standard setters still need to overcome unresolved issues related to both goodwill duration and accounting recognition. This paper aims to compare the academic background on goodwill with current IAS. Specifically, the goal is to criticize existing practices and advance a revision of accounting for goodwill.Design/methodology/approachThe paper is based on a review of the relevant literature on notions, theories and accounting approaches on goodwill and on an investigation of IAS/IFRS on accounting for goodwill. By critically integrating literature and practices, the authors provide implications for a revision of IAS.FindingsThe findings show the two main internally coherent theoretical approaches and the incoherence in current goodwill accounting standards. The paper contributes to the debate on accounting for goodwill by suggesting new conceptual arguments in relation to the controversies related to its accounting treatment.Practical implicationsThe findings offer insights and guidelines that can help standard setters revise current accounting standards. Inter alia, standards setters should revisit issues related to goodwill evaluation and record limitations in future debates to find better solutions.Originality/valueThis study shows the incoherence of current accounting standards. Furthermore, the findings contradict the general opinion that, in current IAS, goodwill can be recognized only if acquired in business combinations and not if internally generated. Thereby, the authors suggest to shift the international accounting standards board focus from the preference between amortization and impairment to the coherence of goodwill accounting approaches.

Transition to Ind AS and Profit Reporting of the Initial Adopters

Once investment and product market were opened up world-wide, it did not take much time to realise that differences in procedures of financial reporting in different parts of the world stood as a major barrier to readability of financial statements and consequently hampers expansion. As a uniform accounting and reporting framework, the IFRS was introduced with the objective to bring more transparency and for the better understanding of financial statements. However, unlike many other countries, India did not straightway adopt the IFRS, instead the Accounting Standard Board of the ICAI, in consultation with the Ministry of Corporate Affairs, opined for convergence with the IFRS by drafting a complete new set of Indian Accounting Standards, popularly known as Ind AS. The MCA released a phase-wise implementation plan and accordingly, the first phase of adoption took place in the financial year 2016-17. Nearly 350 companies adopted Ind AS for the year and also redrafted their comparative financial statements. Reporting of Profit has been a major concern for corporates because of its stock-market implications. It has been seen that due to the transition to Ind AS, many figures including the Net Worth, the Working Capital, the Reserves have witnessed revisions. Further, the author of this paper in his earlier papers, observed that transition to Ind AS resulted in revaluation as well as reclassification of Balance Sheet items. Existing Literatures provide varied outcomes regarding the effect of IFRS over the financial reporting in different parts of the world. India’s case is unique and calls for evaluation as India is implanting a framework which is neither the old Indian GAAP, nor the IFRS. On other words, since the Ind AS differs from both, depending upon literatures that evaluated IFRS may not be appropriate. In this paper, an attempt has been made to evaluate how the transition to Ind AS affected the profit reporting of the companies that adopted it during the first phase. Both the absolute profit figures and the relative return ratios have been taken into consideration. It is observed that unlike Balance Sheet items, the Reported Profit did not significantly change due to the transition. This is because the revenue items did not witness much of revaluation as a result of adoption of Ind AS. However, since Ind AS hit the Balance Sheets with reclassification of equity and liabilities, it affected the ROE ratios. This paper concludes that unlike Balance Sheet items, Reported Profit does not vary to a great extent due to the transition to Ind AS.

Large Charities' Financial Reporting Framework Choice in Australia

Our study informs the current debate around financial reporting framework choice by examining factors associated with whether large charities produce General Purpose Financial Statements (GPFS) or Special Purpose Financial Statements (SPFS). For those producing GPFS, we further examine whether these charities report in accordance with the complete set of Australian Accounting Standards (Tier 1) or Reduced Disclosure Requirements (Tier 2), as per AASB 1053. Using manually-collected data from 7,637 large-registered charities, we find that while revenue concentration, total revenue, donation income, deductible gift recipient endorsement and total liabilities are significant in explaining charities producing GPFS, around 88 percent of the variation could not be explained by a model containing eight measures of the three indicative factors from the Statement of Accounting Concepts (SAC) 1. Further, we find significant variation across different industry sectors and types of audit providers in factors explaining charities’ decisions to produce GPFS versus SPFS. For those that lodge GPFS, we find that the model has very little explanatory power for choice of GFPS Tier 1 versus Tier 2. For the comparison of SPFS versus GPFS-Tier 2, charities are more likely to be audited by a Big 4 or a mid-tier audit firm, and have a greater spread of ownership, a higher economic importance, and a higher level of indebtedness. Our results inform charities and accounting firms in factors influencing their choice of financial reporting frameworks, and the AASB and the ACNC in their current review of reporting frameworks.

The perceptions of South African accounting practitioners on the post-implementation of IFRS for SMEs in an institutionalised environment

Orientation: Small and medium-sized entities (SMEs) play a crucial role in the South African economy. The financial reporting framework applicable to SMEs may contribute to the success of the SME. This study was exploratory in nature and followed an interpretive approach to seek an in-depth understanding of the application of the International Financial Reporting Standards for Small and Medium-Sized Entities (IFRS for SMEs) in South Africa. Research purpose: This article explores the perceptions of South African accounting practitioners regarding the post-implementation of the IFRS for SMEs in the South African SME sector. Motivation for the study: South African research on IFRS for SMEs is scarce. This study was designed to contribute to the scarce body of literature on IFRS for SMEs and will benefit both the South African and international accounting profession. Research approach/design and method: In-depth semi-structured interviews with 21 accounting practitioners were carried out during 2017 and 2018. An interpretive approach was adopted to analyse the data into themes providing the insight into the perceptions of South African practitioners. Main findings: Overall, there appears to be an approval of IFRS for SMEs. The uniformity associated with IFRS for SMEs is one of the significant advantages, while factors such as the age of the practitioners, the use of automated software systems and South African legislative requirements affect the relative merit of using the standard. Practical/managerial implications: The use of the interpretive style will assist professional accounting organisations, standard setters and regulators in understanding the various benefits and drawbacks of the IFRS for SME framework. Contribution/value-add: This article is the first to explore the in-depth views of accounting practitioners after IFRS for SMEs was adopted in South Africa. The article also highlights the challenges faced by accounting practitioners in developing economies that service SMEs.

The need for Islamic accounting standards: the Malaysian Islamic financial institutions experience

Purpose The purpose of this paper is to examine views of financial statements preparers with regard to the practices in reporting Islamic Financial Institutions (IFIs), thereby contributing to answer whether there is indeed a need for a separate set of Islamic accounting standards for IFIs. Design/methodology/approach Drawing upon seven in-depth semi-structured interviews conducted with IFIs’ leading officers who are highly involved in preparing financial statements in Malaysia, the paper offers evidence on the current stance of reporting the operation of IFIs, the influence of AAOIFI accounting standards and the feasible application of IFRSs in reporting IFIs. Findings While it is shown that most of the interviewees admit the feasibility of IFRSs in reporting IFIs, many interviewees placed greater emphasis on the spirit of Islam based on Islamic contract. In that case, the findings show that to convince the public that they offer Shariah compliance products approved by Shariah Advisory Council, there is a need for specificity guidelines or standards for IFIs within the IFRS framework. The main concern raised in the paper is that separate Islamic accounting standard is not needed, instead the option needs to be within the IFRS framework with the collaboration work of Accounting and Auditing for Islamic Financial Institutions (AAOIFI) and the International Accounting Standard Board (IASB). Originality/value With the recent rapid growth of IFIs, this paper contributes regarding the inconclusive stance on the need for specificity accounting standards for IFIs such as the ones issued by AAOIFI. It adds to the current body of knowledge by highlighting the collaboration of the AAOIFI and the IASB for the intended specific guidelines for IFIs to be accepted globally.

Relationship between competency as per the international education standards for accounting professionals and the awareness and understanding of the Thai financial reporting standards for small and medium sized enterprises: A case study of accounting professionals in Thailand's southern region

The aims of this empirical research were to investigate the competency levels according to the International Education Standards (IES) for Accounting Professionals and the awareness and understanding (perception) level with regard to the Thai Financial Reporting Standards (TFRS, a new set of local accounting standards to take effect in 2017) for Small and Medium Sized Enterprises (SMEs) of accountants in southern Thailand; to test the differences in the perception of the TFRS for Non-Publicly Accountable Entities (NPAEs) and for SMEs; and to examine the relationships between five IES competencies and the perception of the TFRS for SMEs. The sample size was 425 accountants working in one of the 14 southern provinces of the country. Descriptive analysis and multiple regression were employed for analysis of the data. The research findings revealed that of the five IES competencies, the skills competency was the most prominent in the participating accountants, followed by the relations, analysis, ethics, and knowledge competencies. In addition, the perception levels of the TFRS for NPAEs and SMEs were both medium and no significant difference was found between the perception of the TFRS for NPAEs and SMEs. Nonetheless, statistically significant relationships existed for gender, age, work experience, and analysis competency with the perception of the TFRS for SMEs. Age, work experience, and relations competency significantly influenced the perception level of the TFRS for NPAEs. This research was the first to investigate Thai accountants’ perception (awareness and understanding) of the TFRS for SMEs.

Charity performance reporting, regulatory approaches and standard-setting

Internationally, there are strong calls for charities’ formal annual reporting to include non-financial performance information. Without the international standards common in other sectors, national accounting standard-setters often regulate charities’ reporting. Lacking evidence on approaches to encouraging/mandating charity performance reporting, and the effectiveness of these approaches, we ask: “How have different jurisdictions responded to calls for increasing performance reporting?”We conduct a benchmarking study that indicates differences in current reporting practices between Australia, New Zealand, the United Kingdom and the United States. By discussing both current regimes and proposed projects, we develop and illustrate a typology of regulatory approaches to performance reporting. These range from command and control, where standard-setters mandate specific performance reporting standards, through to market regulation, where charities and/or sector bodies acting as regulatory entrepreneurs determine what is to be reported. Between these extremes, the typology describes new governance approaches, with standard-setters partnering and collaborating with other actors. These approaches lead to different requirements with potentially significant implications for performance accountability in the respective jurisdictions. We argue that our regulatory typology contributes useful insights for the many jurisdictions grappling with how to regulate their charity sector and encourage performance reporting.

The Effectiveness of Setting Governmental Accounting Standards: The Case of Michigan Governments in Fiscal Distress

The purpose of setting accounting standards is to improve the quality of the financial statements on which users base their decisions. The financial reporting model set up by the Governmental Accounting Standards Board (GASB) is comprehensive and complex, as are the governments on which these statements report. We provide a framework for evaluating whether financial statements are used and understood by decision makers and explain the components of the GASB Statement No. 34 financial reporting model introduced in 1999. We present financial indicators from the Comprehensive Annual Financial Reports for 12 Michigan governments over three points in a 10-year period, along with an indication of whether trends are favorable or unfavorable. We suggest that governing bodies assess to what extent their members use financial statements in making decisions. If officials are trained to monitor financial performance on a regular basis, then decision-making may improve and fiscal crises may be averted.

Financial Reporting Standards for Firms That Can Gather and Disclose Private Information

The aim of general purpose financial reporting is to provide information that is useful to investors, lenders, and other creditors. With this goal, regulators have tended to mandate increased disclosure. We show that increased mandatory disclosure can weaken a firm's incentive to acquire and voluntarily disclose private information that is not amenable to inclusion in mandated reports. Specifically, we provide conditions under which a regulator, seeking to maximize the total amount of information provided to investors via both mandatory and voluntary disclosures, would mandate less informative financial reports even in the absence of any direct costs of increasing informativeness. We show that this result is robust to allowing the firm to make reports more informative and to imposing a nondisclosure cost or penalty on the firm. These results and comparative statics analysis contribute to our understanding of potential interactions between mandatory reporting and voluntary disclosure, and demonstrate a novel benefit to setting accounting standards that mandate imperfectly informative reports.

Stakeholder participation in the governmental accounting standard-setting process

Purpose Accounting standards are issued only after a comprehensive due process, which includes opportunities for external constituents to participate via public hearings and comment letters. The purpose of this paper is to identify stakeholders unique to government and evaluate the extent to which they respond to 13 due process documents issued by the Governmental Accounting Standards Board (GASB). The results provide insight into the comment letter element of due process – who participates, in what way do they participate, and why do they participate? Design/methodology/approach Comment letters received by the GASB in response to eleven exposure drafts and three preliminary views (PV) documents from 2010-2013 were examined, and respondents were categorized according to Cheng’s (1994) model as modified by Kidwell and Lowensohn (2011), resulting in the following 16 participant types: academics, budget officers, bureaucratic managers, state auditors/controllers, citizens, financial markets, elected officials, external auditors/CPA firms, finance officers, government accountants, government auditors, interest groups, media, professional associations, standard setters, and other governments. The authors next examined responses in favor of and opposed to for each document by group and responses by stakeholder group over time. Findings The authors find that participants came from various stakeholder groups. Consistent with findings in different standard-setting environments, the primary financial statement preparers – finance officers – were the most frequent individual respondents; however, there was participation from a wide variety of stakeholders. Responses are generally constructive and relatively consistent in their balance of favorable and unfavorable feedback over time, with a few exceptions. Closer examination of comment letters in response to the financial projections PV document reveals both conceptual and practical considerations underlying respondent participation. Research limitations/implications Motivations for participation were discerned from the letter content, but direct data on motivation was not measured, limiting the conclusions to apparent motivation. Future research might examine the extent to which comment letter content is incorporated into the basis of conclusions section of issued standards to assess the direct impact of comment letters on the governmental accounting standard-setting process. It would also be relevant to trace specific projects that advanced from a PV stage to the exposure draft stage to assess whether the proportional participation of these stakeholder groups is different throughout due process. Practical implications The GASB has long been receptive to constituent feedback (Lowensohn, 2000) and can glean useful input from comment letters. By closely examining arguments impounded within comment letters, including conceptual and practical considerations, and by utilizing a more delineated understanding of the stakeholders in governmental accounting standard setting, the Board can better forge into the future. Originality/value Much of the extant research documents that stakeholder participation is relatively low, given the number of parties affected by accounting standards. Prior research into both public and private sector accounting standard setting in the USA and abroad has not used all unique actors specific to the public sector. Using a comprehensive stakeholder model designed for the governmental environment, the authors examine who participates in the GASB comment letter process, assess the nature of GASB comment letter participant responses, determine whether relative participation by stakeholder group is relatively constant over time, and consider why the participants respond.

How International Accounting Research Influences Policy and Standard Setting

ABSTRACT For accounting to be a learned profession, research must play an important role in shaping accounting practice. This keynote address focuses on how international accounting research influences policy and financial reporting standard setting. It begins by clarifying what is, and is not, accounting. Next, it provides perspective on characteristics of the research that make it suitable for informing standard setters and identifies sources of research topics. Seven studies provide examples of research that can influence global financial reporting standard setting. The address closes by reinforcing the keys to conducting research to influence policy.

The macroeconomic determinants of the adoption of IFRS for SMEs

Small and medium-sized entities (SMEs) represent more than 95% of companies worldwide and account for more than 65% of employment. As a move towards SME harmonization, in 2009 the International Accounting Standards Board (IASB) issued the International Financial Reporting Standards (IFRS) for SMEs. Due to the lack of studies on adoption of IFRS for SMEs, we analyze the relationship between macroeconomic factors and countries’ decision to adopt IFRS for SMEs. Based on a sample of 84 adopters and non-adopters of IFRS for SMEs, both developed and developing countries, we find evidence that countries without a national set of financial accounting standards for SMEs, with experience of applying IFRS and a common law legal system are more likely to adopt IFRS for SMEs. These results may be due to low transaction costs, the importance of having some knowledge of IFRS reporting given its complexity and belonging to IFRS based countries facilitating adoption of IFRS for SMEs. Additionally, we find that European Union (EU) member countries are less likely to adopt the standard. Knowledge of macroeconomic factors affecting the decision to adopt IFRS for SMEs is useful for the various entities that define international accounting harmonization, such as the IASB, regulators and international accounting firms, since this information can help them to promote worldwide adoption of the standard.

Accounting (f)or Tax: The Global Battle for Corporate Transparency

A growing number of leaks and scandals from tax havens have put tax avoidance by multinational companies on the political agenda. Yet under conditions of corporate financial secrecy, reforms remain incomplete and their impact on reducing illicit financial flows uncertain. This paper details how proposals by the United Nations for greater corporate transparency, and specifically rules to compel multinational companies to break down their consolidated accounts to a company specific, or regional, basis have been blocked by the business lobby for a period of over forty years. It discerns three main lobby tactics used to prevent progress, namely forum shifting, regulatory capture/embedded lobbyism and reframing. These tactics first resulted in shifting responsibility for global accounting standard setting away from the United Nations, and to the self-regulatory bodies dominated by the Big 4 accounting firms. Later, these tactics were used to block progress at the OECD and European Union levels. The three major capital-exporting nations Germany, Japan and the United States are shown to play a key role in defending the status quo of corporate secrecy and accounting self regulation under which corporate tax avoidance can thrive.

IAS/IFRS Adoption and Behavioral Dimension: A Meta-Analysis of the Empirical Evidence

Abstract In this article, we investigate the causality links between behavioral factors and the decision to adopt IFRS in developing countries until the year 2013. We implement this empirical model by using the neo-institutional approach and based on a sample of 108 developing countries. Our empirical results show that there exists bidirectional causal relationship between the majority of the developed behavioral variables and the decision of adopting or not IFRS by developing countries. They also indicate through multivariate analysis that the selection of IAS / IFRS by developing countries is primarily legitimized by institutional and social pressures (institutional isomorphism). These empirical insights are of particular interest to local accounting standard setters of selected countries since they can provide a better discernment of factors that can encourage the adoption of IAS IFRS.

Integrating prediction markets into the due process of international accounting standard setting: A possible path to achieving legitimate accounting standards?

The authors present the idea of integrating prediction markets into the IASB’s due process of accounting standards development in order to assure the legitimacy of IFRS. They refer to the constitutional economics concept of hypothetical consent and further substantiate literature claims that the legitimacy of any regulation with a lack of governmental control should be linked to adequate processes of rule development. The authors argue that standard-setting procedures which integrate market solutions into the search process for legitimate standards outperform pure discourse solutions that dominate contemporary accounting regulation. The prediction market approach is of particular interest because it addresses the identified major legitimacy concerns regarding the IASB’s current due process. Compared to other market solutions, prediction markets could be integrated relatively easily into the current institutional setting of global accounting regulation. The authors therefore suggest a basic design of a due process for the IASB that utilises a prediction market. The main contributions of the article are as follows: (1) it expands literature on the legitimacy of global standard setting in accounting; (2) it offers a new market approach to international accounting regulation and (3) it generally furthers the theoretical foundation for proposing prediction markets for regulatory purposes. The authors finally provide arguments as to how a prediction market approach could (re-)align standard setting and academic accounting research.

A Rationale for Imperfect Reporting Standards

The aim of general purpose financial reporting is to provide information that is useful to investors, lenders, and other creditors. With this goal, regulators have tended to mandate increased disclosure. We show that increased mandatory disclosure can weaken a firm's incentive to acquire and voluntarily disclose private information that is not amenable to inclusion in mandated reports. Specifically, we provide conditions under which a regulator, seeking to maximize the total amount of information provided to investors via both mandatory and voluntary disclosures, would mandate less informative financial reports even in the absence of any direct costs of increasing informativeness. We show that this result is robust to allowing the firm to make reports more informative and to imposing a nondisclosure cost or penalty on the firm. These results and comparative statics analysis contribute to our understanding of potential interactions between mandatory reporting and voluntary disclosure, and demonstrate a novel benefit to setting accounting standards that mandate imperfectly informative reports.

The role of local accounting standard setters in institutional complexity

PurposeThe purpose of this paper is to locate the role of local standard setters in institutional complexity, where multiple sources of pressure for change and continuity coexist. The existing research does not fully explore this since it tends to illustrate the way in which a particular interpretation concerning certain accounting standards prevails over time (Archel et al., 2011; Murphy and O’Connell, 2013; Pelger, 2016; Young, 2014).Design/methodology/approachIt empirically examines and critiques the Japanese experience through the concepts of institutional complexity and translation that specify the relationship between the name and types of practice of accounting standards in the local context (Czarniawska and Sevón, 1996, 2005; Erlingsdóttfr and Lindberg, 2005; Røvik, 2016; Sahlin and Wedlin, 2008). Data sources are texts produced (between 2001 and 2015) by the local accounting standard setter and relevant organisations that represent firms, the certified public accountants and regulatory agency, respectively.FindingsThe local accounting standard setter in Japan was exposed to competing pressures between change and maintenance, which was translated by the standard setter in Japan. Consequently, the translation led to an “explosion” of local accounting standards (“pure” International Financial Reporting Standards (IFRS), Japanese Generally Accepted Accounting Principles (GAAP), modified IFRS and US GAAP).Originality/valueThis paper is the first attempt to systematically examine the role of a local standard setter under institutional complexity. It illustrates how institutional complexity is turned into divergent outcomes against the assumption of previous research that indicates multiple interpretations of particular accounting standards finally merging into a specific one.

Agenda Entrance Complexity in International Accounting Standard Setting: The Case of IFRS for SMEs

Features of rational decision making (such as agenda entrance criteria and statement of jurisdiction) barely conceal the complexity of international accounting standard setting. In 2003, when the International Financial Reporting Standard for Small and Medium‐sized Entities (IFRS for SMEs) project achieved agenda entrance, the International Accounting Standards Board's (IASB) jurisdiction was to develop, ‘a single set of … accounting standards … to help participants in the world's capital markets’. Drawing on interviewees' recollections and other material, this study of how the project achieved agenda entrance finds within‐IASB opposition to the project, arguing it was outside the IASB's jurisdiction that dissolved with the realisation that the IASB's jurisdiction would be changed to encompass the project.

PENGARUH KINERJA BANK ATAS DANA PIHAK KETIGA

Bank capital structure comes more from the third party fund than banking owner. Banking customers is almost impossible to control the actions of managers in the distributions of funds. Control of banking operations regulated by several provisions made by monetary authorities. Banking customers can monitor the progress by viewing the performance of the bank. The purpose of this study is to see how the performance of the bank influent the third party fund. Bank performance variables are NPL (Non Performing Loan), NIM (Net Interest Margin) dan LDR (Loan to Deposit Ratio) dan third party fund variables are Savings and Deposits. This study uses data that is state-owned bank in Indonesia in 2003-2012.The data were analyzed by EVIEWS program. The results showed that NPL does not significantly influence the placement of customers funds, but, NIM have positive affect and LDR have negative affect. The results of this study are expected to contribute for the customers in deciding the placement of funds in the bank and for the IAI compartments and OJK to set accounting standards to improve the quality of reporting banks