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Article
Publication date: 21 October 2013

Adel Mohammed Sarea and Mustafa Mohd Hanefah

The objective of this paper is to determine the level of compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) accounting standards by…

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Abstract

Purpose

The objective of this paper is to determine the level of compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) accounting standards by Islamic banks of Bahrain.

Design/methodology/approach

The paper is based on diffusion of innovation theory whereby the perceived relative advantage, compatibility, complexity, trialability and observability factors are expected to influence the level of compliance with AAOIFI accounting standards.

Findings

The findings indicate that Islamic banks of Bahrain are in full convergence with AAOIFI accounting standards.

Research limitations/implications

This research, just like many other studies, faces data limitations. Sample size employed for this study contains only the accountants in Islamic banks of Bahrain.

Originality/value

The results of this paper are expected to serve as a guide to the regulatory bodies and the setter of accounting standards for Islamic financial institutions (IFIs).

Details

Journal of Financial Reporting & Accounting, vol. 11 no. 2
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 22 November 2023

Ying Zhee Lim, Anna Che Azmi and Tuan Hock Ng

This study aims to extend the current literature on International Financial Reporting Standard (IFRS) teaching by examining the argument by Hodgdon et al. (2013) that arranging…

Abstract

Purpose

This study aims to extend the current literature on International Financial Reporting Standard (IFRS) teaching by examining the argument by Hodgdon et al. (2013) that arranging accounting prescriptions into the level of concept, principle and rules is helpful to students in comprehending the complex set of accounting standards. Besides, the study aims to attest the argument that analogy is a useful tool in teaching, especially when dealing with complex knowledge or concepts.

Design/methodology/approach

The study used a 3 × 2 between-subjects design, which includes the independent variables of the three-step teaching method (concept-only, concept + principle and concept + principle + rules) and the presence or absence of analogy.

Findings

The findings support Hodgdon et al. (2013). However, the combination of Hodgdon et al.’s (2013) technique with analogy resulted in only better-perceived comprehension under the concept-only condition.

Research limitations/implications

There are limitations to the use of analogy as an instructional tool. The reasoning behind an analogy is that it is produced from different fields in which the target and source topics have only some similarity in structure or function. This suggests a limited capacity in which the source topic can be used to fully explain a targeted topic, and thus caution needs to be exercised in the use of analogy as a teaching tool. Additionally, this study uses a perceived understanding of control in IFRS 15. While perceived understanding may likely result in actual comprehension, there is a possibility that this may not be the case. Finally, this study did not consider about how rule comprehensiveness is affected.

Practical implications

The findings of this study provide a useful combination of teaching tools to educators on how to deliver technical business subjects such as accounting effectively.

Originality/value

This paper aims to answer the call by Hodgdon et al. (2013) to verify the effectiveness of teaching IFRS via the three-step approach. In addition, this study extends the literature by examining whether an analogy could be used with the three-step approach to effectively improve students’ understanding of IFRS.

Details

Journal of International Education in Business, vol. 17 no. 1
Type: Research Article
ISSN: 2046-469X

Keywords

Book part
Publication date: 1 March 2012

Eva Heidhues and Chris Patel

Over the last decade, the accounting convergence process with the development and adoption of IFRS as national standards has become the focus of governments, professionals, and…

Abstract

Over the last decade, the accounting convergence process with the development and adoption of IFRS as national standards has become the focus of governments, professionals, and researchers. In 2005, the EU (including Germany) and Australia adopted IFRS. A survey by Deloitte Touche Tohmatsu (2010) reported that 89 countries have adopted or intend to adopt IFRS for all their domestic listed companies. Currently, more than 100 jurisdictions require or permit the use of IFRS, with countries such as Canada, Brazil, and Argentina being the most recent adopters (IFRS Foundation, 2011b). This growing number of countries implementing IFRS and their experiences and emerging challenges have further raised researchers' interest in this controversial topic (Ashbaugh & Pincus, 2001; Atwood et al., 2011; Byard et al., 2011; Christensen et al., 2007; Daske et al., 2008; Ding et al., 2007; Hail et al., 2010a, 2010b; Kvaal & Nobes, 2010; McAnally et al., 2010; Mechelli, 2009; Niskanen, Kinnunen, & Kasanen, 2000; Stolowy, Haller, & Klockhaus, 2001; Tyrrall et al., 2007). However, these studies have concentrated on the development and application of specific accounting standards and practices and/or cross-national and cross-cultural issues concerning adaptation, implementation, and evaluation of IFRS. Moreover, an increasing number of studies have been devoted to classifications of accounting models and categorization of accounting standards, principles, and values (Chanchani & Willett, 2004; D'Arcy, 2000, 2001; Doupnik & Richter, 2004; Doupnik & Salter, 1993; Gray, 1988; Kamla, Gallhofer, & Haslam, 2006; Nair & Frank, 1980; Patel, 2003, 2007; Perera & Mathews, 1990; Salter & Doupnik, 1992). However, very few studies have critically examined the historical development of accounting practices and issues related to convergence in its socioeconomic context and, importantly, we are not aware of any study that has rigorously examined the institutionalization of Anglo-American accounting practices as international practice with an emphasis on power and legitimacy in the move toward convergence of accounting standards.

Details

Globalization and Contextual Factors in Accounting: The Case of Germany
Type: Book
ISBN: 978-1-78052-245-6

Book part
Publication date: 23 August 2021

Mohammad Nurunnabi

The purpose of this study is to review a synthesis of International Financial Reporting Standards (IFRS) implementation in developing countries in an attempt to provide directions…

Abstract

The purpose of this study is to review a synthesis of International Financial Reporting Standards (IFRS) implementation in developing countries in an attempt to provide directions for future research. The in-depth analysis was performed with the use of the data analysis tool available in the Scopus databases. The study initially reviewed 145 papers and in particular 35 papers were analysed. Fifteen articles (43%) were published in seven journals including International Journal of Accounting, Critical Perspectives on Accounting, Advances in Accounting, International Journal of Accounting and Information Management, Asian Review of Accounting, Journal of Applied Accounting Research, and Asian Journal of Business and Accounting. Specifically, 89% citations were from 14 articles, but 9 (25%) articles were without any citations. Most of the studies focus on qualitative followed by quantitative, and very few studies were based on mixed methods. Researchers should focus on few areas for future research on IFRS implementation in developing countries including theory implications, policy prescriptions, and case of particular standard.

Details

International Financial Reporting Standards Implementation: A Global Experience
Type: Book
ISBN: 978-1-80117-440-4

Keywords

Book part
Publication date: 15 October 2015

Pawan Adhikari, Chamara Kuruppu, Andy Wynne and Dayananda Ambalangodage

The adoption of International Public Sector Accounting Standards (IPSASs) in particular the Cash Basis IPSAS has now become a priority for the World Bank and other donors in less…

Abstract

Purpose

The adoption of International Public Sector Accounting Standards (IPSASs) in particular the Cash Basis IPSAS has now become a priority for the World Bank and other donors in less developed countries (LDCs). The paper explores the dissemination and implementation of the Cash Basis IPSAS in Nepal, a less developed country which is considered as one of the front-runners in terms of embracing the Cash Basis IPSAS.

Methodology/approach

The paper draws on diffusion theory to explain the internal and external factors related to the adoption and implementation of the Cash Basis IPSAS in the Nepali public sector. Data for the paper are derived from document analysis and semi-structured interviews.

Findings

The study shows that the adoption and implementation of the Cash Basis IPSAS in Nepal has become more of rhetoric than reality. Claims that the Cash Basis IPSAS is gaining popularity and widespread success across less developed countries are therefore contentious.

Research limitations

The case of Nepalese central government may not be adequate to generalise the adoption of the cash basis IPSAS in all less developed countries. Nonetheless, the study provides an overview of on-going public sector accounting reforms in less developed countries.

Originality/value

The paper emphasises the need for the identification of good accounting practices for less developed countries rather than forcing them into symbolic acceptance of the Cash Basis IPSAS. An example of such a good practice can be the promotion of certain aspects of modified cash accounting.

Details

The Public Sector Accounting, Accountability and Auditing in Emerging Economies
Type: Book
ISBN: 978-1-78441-662-1

Keywords

Book part
Publication date: 18 January 2021

Serap Sebahat Yanik, Seval Kardes Selimoglu and Gul Yesilcelebi

Government accounting shows the assets and resources of the government, the changes that occur in them, to provide the necessary information to evaluate the effectiveness of the…

Abstract

Government accounting shows the assets and resources of the government, the changes that occur in them, to provide the necessary information to evaluate the effectiveness of the government in revenue and expense management, and to produce the information required by economic management. In this context, the past, present, and future of the Turkish government accounting system discussed in the theoretical framework in the study.

Article
Publication date: 21 December 2023

Meena Subedi

The current study uses an advanced machine learning method and aims to investigate whether auditors perceive financial statements that are principles-based as less risky. More…

Abstract

Purpose

The current study uses an advanced machine learning method and aims to investigate whether auditors perceive financial statements that are principles-based as less risky. More specifically, this study aims to explore the association between principles-based accounting standards and audit pricing and between principles-based accounting standards and the likelihood of receiving a going concern opinion.

Design/methodology/approach

The study uses an advanced machine-learning method to understand the role of principles-based accounting standards in predicting audit fees and going concern opinion. The study also uses multiple regression models defining audit fees and the probability of receiving going concern opinion. The analyses are complemented by additional tests such as economic significance, firm fixed effects, propensity score matching, entropy balancing, change analysis, yearly regression results and controlling for managerial risk-taking incentives and governance variables.

Findings

The paper provides empirical evidence that auditors charge less audit fees to clients whose financial statements are more principles-based. The finding suggests that auditors perceive financial statements that are principles-based less risky. The study also provides evidence that the probability of receiving a going-concern opinion reduces as firms rely more on principles-based standards. The finding further suggests that auditors discount the financial numbers supplied by the managers using rules-based standards. The study also reveals that the degree of reliance by a US firm on principles-based accounting standards has a negative impact on accounting conservatism, the risk of financial statement misstatement, accruals and the difficulty in predicting future earnings. This suggests potential mechanisms through which principles-based accounting standards influence auditors’ risk assessments.

Research limitations/implications

The authors recognize the limitation of this study regarding the sample period. Prior studies compare rules vs principles-based standards by focusing on the differences between US generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) or pre- and post-IFRS adoption, which raises questions about differences in cross-country settings and institutional environment and other confounding factors such as transition costs. This study addresses these issues by comparing rules vs principles-based standards within the US GAAP setting. However, this limits the sample period to the year 2006 because the measure of the relative extent to which a US firm is reliant upon principles-based standards is available until 2006.

Practical implications

The study has major public policy suggestions as it responds to the call by Jay Clayton and Mary Jo White, the former Chairs of the US Securities and Exchange Commission (SEC), to pursue high-quality, globally accepted accounting standards to ensure that investors continue to receive clear and reliable financial information globally. The study also recognizes the notable public policy implications, particularly in light of the current Chair of the International Accounting Standards Board (IASB) Andreas Barckow’s recent public statement, which emphasizes the importance of principles-based standards and their ability to address sustainability concerns, including emerging risks such as climate change.

Originality/value

The study has major public policy suggestions because it demonstrates the value of principles-based standards. The study responds to the call by Jay Clayton and Mary Jo White, the former Chairs of the US SEC, to pursue high-quality, globally accepted accounting standards to ensure that investors continue to receive clear and reliable financial information as business transactions and investor needs continue to evolve globally. The study also recognizes the notable public policy implications, particularly in light of the current Chair of the IASB Andreas Barckow’s recent public statement, which emphasizes the importance of principles-based standards and their ability to address sustainability concerns, including emerging risks like climate change. The study fills the gap in the literature that auditors perceive principles-based financial statements as less risky and further expands the literature by providing empirical evidence that the likelihood of receiving a going concern opinion is increasing in the degree of rules-based standards.

Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

This study extends prior research on accounting judgment and decision-making research by examining the effects of “new” and “complex” accounting standards on judgments of…

Abstract

This study extends prior research on accounting judgment and decision-making research by examining the effects of “new” and “complex” accounting standards on judgments of professional accountants. It examines whether there are differences in the judgments of professional accountants in Fiji when interpreting and applying selected IFRS. A significant within-country difference in such judgments has serious implications for the convergence of accounting standards. The results show that the interpretation and application of accounting standards is affected by the complexity of the accounting standard and the professional accountant's familiarity with that standard. The study also finds strong support for the existence of an interactive effect of familiarity with the accounting standards and their complexity on the judgments of professional accountants. Furthermore, the results show that differences in judgments exist between the Big 4 and non-Big 4 professional accountants when they are provided with new accounting standards that require complex judgments. The results of this study are of interest to stakeholders at a time when IFRS are increasingly being adopted throughout the world and standard setters are struggling to promote compliance with those standards.

Details

Achieving Global Convergence of Financial Reporting Standards: Implications from the South Pacific Region
Type: Book
ISBN: 978-1-78052-443-6

Book part
Publication date: 18 January 2021

Agim Mamuti, Evlia Hysa and Francesco Caputo

The increasing attention toward the so-called globalization is underlining the need to build and enforce the contact point among the multiple domains of culture, knowledge, and…

Abstract

The increasing attention toward the so-called globalization is underlining the need to build and enforce the contact point among the multiple domains of culture, knowledge, and experiences over the world. Within the specific business domain, global trends are underlying the need for linking multiple local and national accounting standards to support global activities and international collaborations. In such a domain, this chapter investigates the topic of Albanian national accounting standards for depicting opinions and perceptions of interested actors through a direct interview with 35 experts including, economists, accounting experts, tax inspectors, and businessmen. The research shows the existence of a divergent approach to the process for accounting harmonization in Albania and it opens the possibility for tracing a possible path for supporting the inclusion of Albania under the international accounting standards framework.

Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

The forces of globalization and political expediency are forcing an increasing number of countries to adopt International Financial Reporting Standards (IFRS) issued by the…

Abstract

The forces of globalization and political expediency are forcing an increasing number of countries to adopt International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Although numerous countries are adopting IFRS, the approaches used for convergence continue to differ significantly across countries. Using selected countries from the South Pacific region, this chapter investigates the relationship between country-specific characteristics and the selection of the appropriate approach for the adoption of IFRS. The country-specific attributes that have been found to influence convergence are (1) the set of accounting standards that prevailed in the country at the time the selection was made, (2) the availability and experience of professional accountants, (3) the relevant educational and professional training, (4) the presence of the Big 4 accounting firms, and (5) the accounting regulatory framework. The results of this study suggest that complete comparability in financial reporting may be difficult to achieve across all countries in the region even after adopting the IFRS because of differences in country-specific factors. These findings are important because they indicate that attention should be concentrated on theorizing and empirically testing the effects of country-specific attributes on convergence efforts across jurisdictions.

Details

Achieving Global Convergence of Financial Reporting Standards: Implications from the South Pacific Region
Type: Book
ISBN: 978-1-78052-443-6

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