Search results
1 – 10 of over 154000Linda Kidwell and Suzanne Lowensohn
Accounting standards are issued only after a comprehensive due process, which includes opportunities for external constituents to participate via public hearings and comment…
Abstract
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.
Details
Keywords
Christa Wingard, Jan Bosman and Bright Amisi
The purpose of this paper is to assess the influences on the due process of standard-setting with reference to the legitimacy of the financial reporting “soft law” that is…
Abstract
Purpose
The purpose of this paper is to assess the influences on the due process of standard-setting with reference to the legitimacy of the financial reporting “soft law” that is International Financial Reporting Standards (IFRS).
Design/methodology/approach
This study uses a literature review to analyse the governance structures, due process steps, staffing and funding of IFRS standard-setting activities. The study also uses descriptive statistics to analyse constituent participation during the development of two IFRS standards. The mean, median and standard deviation are used as measures of location and dispersion when analysing constituent participation.
Findings
IFRS governance structures are dominated by G20 countries. The International Accounting Standards Board (IASB) depends on international accounting firms, the European Commission and the G8 countries for its financial viability. Well-resourced national standard-setters, major international companies, international accounting firms and educational institutions are able to second their staff to the IASB thereby providing them with direct lobbying opportunities. The IFRS due process procedures provide opportunities for participation but actual participation is dominated by constituents from Europe with African and South American constituents the least active.
Practical Implications
IFRS are required or permitted in over 100 countries. The IASB, with no legal or formal mandate, is performing a task normally reserved for national standard-setters. The legitimacy of IFRS is questionable if the standard-setting due process is perceived as invalid.
Originality/value
The global financial crisis exposed weaknesses in the IFRS due process when the IASB amended IAS 39 without following the due process. African and South American standard-setters should take note that their lack of participation in IFRS standard-setting, coupled with the influence of powerful stakeholders on IFRS standard-setting, could result in standards not relevant for their regions.
Details
Keywords
Dinuja Perera, Parmod Chand and Rajni Mala
The International Accounting Standards Board (IASB) has justified the simplification of International Financial Reporting Standards (IFRS) for small- and medium-sized enterprises…
Abstract
Purpose
The International Accounting Standards Board (IASB) has justified the simplification of International Financial Reporting Standards (IFRS) for small- and medium-sized enterprises (SMEs) in several ways, but no effective justification for this simplification has been made based on the information needs of users. This study aims to provide empirical evidence of the decision usefulness of IFRS for SMEs from a prominent user group of SME financial statements – the banks.
Design/methodology/approach
This study uses a mixed-method approach. First, a survey was conducted on commercial bank lending officers to assess the usefulness of different disclosure items included in the SME financial statements. Second, semi-structured interviews were conducted with commercial bank lending officers to gain an in-depth insight into the appropriateness and economic consequences of the requirements of IFRS for SMEs on their lending decisions.
Findings
The findings show that commercial bank lending officers did not consider all the disclosure requirements presented to them to be equally important. Hence, to facilitate the actual needs of the users’ decision usefulness, it is imperative that when given the opportunity, users participate in the development of accounting standards.
Originality/value
The findings of this study will be of interest to accounting regulators for evaluating the successful implementation of IFRS for SMEs and planning the next review of IFRS for SMEs. The IASB and SME Implementation Group are presently considering ways to increase user involvement for the next review of IFRS for SMEs, and the findings of this study signify the need for user involvement in the standard setting process.
Details
Keywords
Rebecca Warren, David Bernard Carter and Christopher J. Napier
The purpose of this paper is to investigate an element of the internal politics of standard setting by reference to the International Accounting Standards Board’s (IASB) movement…
Abstract
Purpose
The purpose of this paper is to investigate an element of the internal politics of standard setting by reference to the International Accounting Standards Board’s (IASB) movement to the International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs). The authors examine the politics of the IASB’s expertise in technocratic governance by focussing on how the IASB defined SMEs, gave the standard a title and issued a guide for micro-entities.
Design/methodology/approach
The narrative case study focusses on central “moments” in the development of IFRS for SMEs. The authors employ Laclau and Mouffe’s condensation, displacement and overdetermination to illustrate embedded politics in articulating IFRS for SMEs.
Findings
The authors extend literature on the internal politics of standard setting, such as agenda setting, by examining the condensing of disagreements between experts and political pressures and processes into central decision moments in IFRS for SMEs. The authors illustrate these moments as overdetermined, manifesting in an act of displacement through the production of a micro-entity guide. This form of politics is hidden due to the IASB’s attempt to protect their technocratic neutrality through fixing meaning.
Originality/value
The authors make three contributions: first, overdetermination through condensation and displacement illustrates the embedded nature of politics in regulatory settings, such as the IASB. Second, the authors provide a theoretical explanation of the IASB’s movement from listed entities to IFRS for SMEs, drawing on Laclau and Mouffe. Third, the authors reinforce the necessity of interrogating the internal politics of standard setting to challenge claims of technocracy.
Details
Keywords
Nicola Moscariello and Michele Pizzo
Grounded in the legitimacy theory and framed within the context of European Union’s (EU's) endorsement process, this paper analyses the International Accounting Standards Board’s…
Abstract
Purpose
Grounded in the legitimacy theory and framed within the context of European Union’s (EU's) endorsement process, this paper analyses the International Accounting Standards Board’s (IASB's) response to the COVID-19 crisis and the impact of its practical expedient COVID-19-Related Rent Concession on the IASB's output legitimacy.
Design/methodology/approach
This study uses a qualitative process-tracing approach and combines inductive historical narratives and deductive reasoning to draw theoretical implications concerning the COVID-19 crisis' impact on the standard-setting process.
Findings
The paper shows a growing reliance on practical expedients in International Financial Reporting Standards (IFRS) to maintain the IASB's output legitimacy. While introducing some theoretical flaws, practical expedients increase the standards' flexibility and strengthen the IASB's ability to respond to the European political bodies' concerns. Indeed, an analysis of the IASB's response to the COVID-19 outbreak reveals the role practical expedients might play not only in reducing (ex ante) new IFRS transition costs but also in dealing (ex-post) with the broader economic impact of unexpected systemic crises to limit criticisms and controversies surrounding IFRS.
Originality/value
This study reveals a causal relationship between the rise of the European public good criterion in the EU endorsement process and the wider use of practical expedients in IFRS. An analysis of the latest amendment to IFRS 16 in response to the COVID-19 crisis also confirms the role of practical expedients in strengthening the acceptance of IFRS in an increasingly complex economic reality and sheds some light on the new strategies adopted by the IASB to preserve its legitimacy in the EU.
Details
Keywords
Sara Abdullah Bakr and Christopher J. Napier
The paper investigates attitudes towards and perceptions of the adoption of the International Financial Reporting Standard (IFRS) for small and medium-sized entities (SMEs) in…
Abstract
Purpose
The paper investigates attitudes towards and perceptions of the adoption of the International Financial Reporting Standard (IFRS) for small and medium-sized entities (SMEs) in Saudi Arabia, immediately before and during the period of adoption.
Design/methodology/approach
The study adopts an interpretive approach, using a new institutional theory framework, drawing on concepts of institutional isomorphism and institutional logics. Research was undertaken using extensive interviews of business owners and managers, accountants, auditors, regulators and others. Interviewees were identified using snowball sampling, and the paper discusses the appropriateness of this method for research in management in MENA countries.
Findings
The adoption of IFRS, and in particular IFRS for SMEs, in Saudi Arabia can be understood best as an example of mimetic isomorphism, as many respondents suggested that the country adopted these standards in order to emulate other countries in the Gulf Cooperation Council and the G20 group of countries.
Practical implications
The study examines issues relating to the adoption of IFRS for SMEs in an emerging economy where adoption was not imposed by international financial institutions.
Originality/value
In addition to being the first study of the adoption of IFRS for SMEs in Saudi Arabia, the paper examines snowball sampling as a particularly useful method in MENA countries.
Details
Keywords
Vittorio Chiesa, Elena Gilardoni and Raffaella Manzini
This paper is aimed at studying the technology in buy‐cooperate‐sell decisions process in order to identify and analyse the logical steps that should characterise a complete and…
Abstract
Purpose
This paper is aimed at studying the technology in buy‐cooperate‐sell decisions process in order to identify and analyse the logical steps that should characterise a complete and reliable appraisal process.
Design/methodology/approach
The paper develops a framework to support the whole process, based on literature analysis and an empirical study. A case study is presented in order to discuss some of the theoretical and practical problems affecting the appraiser during a technology valuation.
Findings
It is found that the use of the proposed framework: forces the appraiser to perform a systematic and rational analysis, coherent with the internal and external context of the valuation; points out the most critical elements that could lead to a misleading and/or unusable and/or biased valuation; forces the appraiser to solve some critical trade‐offs and to deal with contrasting elements; imposes coherence throughout the process and consistency among the various hypotheses and assumptions needed to finally identify a (range of) final value(s); gives the appraiser a communication tool, as different people are involved during the process; allows people (even if not directly involved in the process) to understand how the value of the asset has been determined and the validity, reliability and precision of the results obtained; and increases the bargaining power of the appraiser during the negotiation with a potential counterpart, allowing a clear and complete understanding of the value of the asset.
Originality/value
This paper analyses the entire process and gives emphasis to the critical aspects of each phase, suggesting some solutions.
Details
Keywords
Shatha Mustafa Hussain and Amer Alaya
This study aims to examine investors' reactions to bad financial news (IRBFN) based on complex financial accounting disclosures (CFAD) as well as how investors' herding behavior…
Abstract
Purpose
This study aims to examine investors' reactions to bad financial news (IRBFN) based on complex financial accounting disclosures (CFAD) as well as how investors' herding behavior influences investor reactions in United Arab Emirates (UAE) project-based organizations (PBOs).
Design/methodology/approach
The primary data collection was furnished via online questionnaires, and 310 completed questionnaires were analyzed using structural equation modelling (SEM), moderation analysis, multiple regression simulations and path analysis.
Findings
The study shows that four out of the five CFAD dimensions observed – investors’ relations (IR), board and management structure, transparency disclosure and other disclosure channels – have a direct influence on investor's reactions to bad financial news, with the exception of “external auditing and audit service”. In addition, investor herding has a moderation impact on the relationship between CFAD and IRBFN.
Research limitations/implications
There is a possibility that the broad view of the results may be limited by the size of the research sample. The paper's findings should therefore be authenticated at an intercontinental level with the same conceptual framework in other nations.
Practical implications
The purpose of modeling stakeholders' decision-making process is to improve their decisions and to control their reactions that may negatively affect PBOs in the UAE.
Originality/value
This research contributes to planned behavior theory and agency theory in the UAE context, both of which are empirically tested.
Details
Keywords
Muhammad Jahangir Ali and Kamran Ahmed
The purpose of this paper is to examine the determinants of accounting policy choices under International Accounting Standards (IASs) of listed firms in South Asia.
Abstract
Purpose
The purpose of this paper is to examine the determinants of accounting policy choices under International Accounting Standards (IASs) of listed firms in South Asia.
Design/methodology/approach
We selected three IASs-based accounting policy choices from 369 listed companies in India, Pakistan and Bangladesh for the financial year 2007-2008.
Findings
Our results show that firm size, investment opportunity set, leverage and ownership by the general public are significant determinants of accounting policy choice in South Asian countries. However, we do not find a significant relationship between firms’ accounting policy choices and profitability, assets-in-place and taxes.
Practical implications
Our results suggest that as some flexibility exists in IASB’s accounting standards, this may allow managers to use income-increasing/decreasing methods. There is scope for regulators and standards setters to reduce the alternative methods which are likely improve firms’ reporting quality.
Originality/value
Our study contributes to the understanding as to what determines managers’ choice of a particular accounting method allowed in IAS.
Details