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More Accounting Changes
Type: Book
ISBN: 978-1-78635-629-1

Book part
Publication date: 1 January 2008

Ronita D. Singh and Susan Newberry

Purpose – Corporate governance requirements imposed internationally as part of the New International Financial Architecture (NIFA) include compliance with International…

Abstract

Purpose – Corporate governance requirements imposed internationally as part of the New International Financial Architecture (NIFA) include compliance with International Financial Reporting Standards (IFRS). The appropriateness of applying IFRS in developing countries has long been controversial. Recently, the International Accounting Standards Board (IASB) extended its project on IFRS for Small and Medium Entities (SMEs) to include developing countries. This paper provides a history of the controversy over IFRS in developing countries and examines the SMEs project as it affects developing countries.

Design/methodology/approach – This paper uses an agenda-setting theoretical framework and document analysis to analyse IASB's published documents as part of its formal due process.

Findings – The controversies surrounding the application of IFRS in developing countries seem likely to continue. The public submission process may be ineffective and too late for those seeking to influence IFRS developments. The findings suggest that those seeking IFRS for developing countries may need to both devise an acceptable solution and obtain inside access to the standard-setting process to achieve this aim.

Research limitations – The research is limited to literature review and documentary analysis and therefore subject to the known limitations of published project documentation in accounting standard-setting.

Originality/value – Contributes to understanding of international accounting standard-setting, including why developing country issues seem likely to continue.

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Corporate Governance in Less Developed and Emerging Economies
Type: Book
ISBN: 978-1-84855-252-4

Book part
Publication date: 1 March 2012

Eva Heidhues and Chris Patel

Over the last decade, international accounting harmonization and convergence and the increasing adoption of IFRS as national standards have become dominant topics in…

Abstract

Over the last decade, international accounting harmonization and convergence and the increasing adoption of IFRS as national standards have become dominant topics in international accounting research (Alp & Ustundag, 2009; Ashbaugh & Pincus, 2001; Cairns, Massoudi, Taplin, & Tarca, 2011; Christensen et al., 2007; Daske, 2006; Daske & Gebhardt, 2006; Daske et al., 2008; Ding et al., 2007; Gastón, García, Jarne, & Laínez Gadea, 2010; Haverals, 2007; Hellmann, Perera, & Patel, 2010; Lantto & Sahlström, 2008; Othman & Zeghal, 2006; Peng & van der Laan Smith, 2010; Schleicher, Tahoun, & Walker, 2010; Tyrrall et al., 2007). In this move toward convergence, the politics associated with IAS setting by the IASB has become an important and controversial topic in international accounting research. Although previous studies have aimed to examine political issues and stakeholder's perception toward the standard-setting process of the IASB (Alali & Cao, 2010; Chiapello & Medjad, 2009; de Lange & Howieson, 2006), no study has critically examined the complexity of factors influencing attitudes and public opinion toward this standard-setting process. Given that attitudes are likely to guide behavior and lead stakeholders to either advance the work of the IASB or create obstacles, it is timely and relevant to analyze attitudes toward this issue. A recent study has provided evidence that stakeholders’ acceptance of IFRS and preparers’ overall perception of IFRS may influence compliance and the quality of financial reports (Navarro-García & Bastida, 2010). As such, it is the objective of this chapter to provide insights into determinants of attitudes toward the IASB's standard setting and critically examine the influence of power structures and perceived legitimacy on individual attitudes and public opinion.1 Specifically, this study examines German attitudes toward the promotion of professional judgment by the IASB since the adoption of IFRS in the EU in 2005.

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

Abstract

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Advances in Accounting Education: Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-84950-869-8

Book part
Publication date: 28 November 2017

Francesco Bellandi

Part IV provides readers with the extant requirements for the application of materiality to recognition, measurement, presentation, and disclosure in the financial…

Abstract

Part IV provides readers with the extant requirements for the application of materiality to recognition, measurement, presentation, and disclosure in the financial statements. This part also includes a detailed critical review of the recent Practice Statement on materiality, the FASB’s proposed ASU on the notes and the amendments to the Conceptual Framework proposed by the IASB and the FASB.

The part expands to issues that are typical of Management Commentary, including the SEC guidance on materiality in Management Discussion and Analysis.

It informs about the complexities and subtle differences between financial statements and bookkeeping and the different standards of reasonableness versus materiality.

A section moves from materiality to material misstatements and covers the application of materiality in auditing.

Another section goes in depth on internal control over financial reporting, showing the linkages between materiality and risk appetite and risk tolerance and the related application guidance.

Details

Materiality in Financial Reporting
Type: Book
ISBN: 978-1-78743-736-4

Keywords

Book part
Publication date: 28 November 2017

Francesco Bellandi

Part II contrasts the views of materiality in the Conceptual Frameworks of the IASB, FASB, IPSAS, and other framework such as the Integrated Reporting. In particular, it…

Abstract

Part II contrasts the views of materiality in the Conceptual Frameworks of the IASB, FASB, IPSAS, and other framework such as the Integrated Reporting. In particular, it analyzes at what level and how differently that concept interacts with the qualitative characteristics of financial information in each of those frameworks. It looks at its pervasiveness and entity specificity, the interlock with the concept of relevance, reliability and faithful representation, completeness, understandability, neutrality, and drills down to the link to recognition.

This part then compares the definitions of materiality in different standards and contexts, to then draw a taxonomy of materiality and its attributes, such as the subject matter, thecontext of assessment, the addressees, the assessor, and the materiality test. A large part of the analysis involves the comparison between legal definitions of materiality and characterizations in the accounting, financial, and larger management contexts.

Book part
Publication date: 28 November 2017

Francesco Bellandi

Part V analyzes the details of how to assess materiality. It first tackles qualitative versus quantitative criteria and the role of professional judgment. It then analyzes…

Abstract

Part V analyzes the details of how to assess materiality. It first tackles qualitative versus quantitative criteria and the role of professional judgment. It then analyzes the selection of quantitative threshold, to expand to the choice of benchmarks. It contrasts the whole financial statements with subaggregates, line items, and components.

Specific sections contrast IASB, FASB, SEC, and other guidance on materiality applied to comparative information, interim reporting, and segment reporting.

The section on estimates mingles complex guidance coming from accounting, auditing, and internal control over financial reporting to explain how the management can improve its assessment of materiality concerning estimates.

After explaining the techniques to move from individual to cumulative misstatements, the part tackles verification ex post, and finally summarizes the intricacies of whether immaterial misstatements are permissible and their consequences.

Details

Materiality in Financial Reporting
Type: Book
ISBN: 978-1-78743-736-4

Keywords

Open Access
Article
Publication date: 8 December 2021

Paola Ramassa and Giulia Leoni

This paper explores how the International Accounting Standards Board (IASB) has dealt with the emerging issue of accounting for cryptocurrencies by investigating its…

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Abstract

Purpose

This paper explores how the International Accounting Standards Board (IASB) has dealt with the emerging issue of accounting for cryptocurrencies by investigating its constituents' expectations and the motivations underlying its regulatory response.

Design/methodology/approach

The theoretical lens of regulatory space is used to analyse the four-year debate around cryptocurrency holdings and informs the extensive thematic analysis of public documents, meetings recordings and comment letters on the topic.

Findings

Facing national standard setters' initiatives to regulate accounting for cryptocurrency, the IASB defended its position in the regulatory space through an agenda decision based on ewct 2xisting standards, which was finalised by the International Financial Reporting Standards Interpretation Committee (IFRS IC) despite criticism from constituents and Board members.

Research limitations/implications

The paper provides insights into the IASB approach to a regulatory vacuum regarding a new class of items, which derive from a new and rapidly-evolving technology. Disruptive technology impacts the contested arena of accounting regulation, in which the constituents ask for new solutions and the IASB tries to resist such pressures, while defending its position.

Practical implications

The paper sheds light on the growing importance of agenda decisions in the IFRS environment and on the limits of the IASB long regulatory process in the circumstance of emerging accounting issues deriving from rapidly-evolving technology.

Originality/value

This investigation is timely and relevant as it considers the regulatory issues arising from disruptive technological innovations (i.e. cryptocurrency), shedding light on the limits of regulatory processes in times of technological change.

Details

Accounting, Auditing & Accountability Journal, vol. 35 no. 7
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 19 July 2021

Gareth Evans, Joanne Lusher and Stephen Day

The qualitative characteristics of decision-useful financial information (as set out in the revised March 2018 Conceptual Framework for financial reporting of the…

Abstract

Purpose

The qualitative characteristics of decision-useful financial information (as set out in the revised March 2018 Conceptual Framework for financial reporting of the International Accounting Standards Board [IASB]) are fundamental for standard setting relied on by companies when making accounting policy changes and choices. However, there has not been an overarching universally agreed conceptual context of the qualitative characteristics. This paper aims to study the completeness of the qualitative characteristics towards suggesting a revision of the Conceptual Framework.

Design/methodology/approach

The present study evaluated the completeness of these qualitative characteristics using Foucauldian critical discourse analysis and content analysis paradigms to elucidate the inclusion conundrum. Foucauldian analysis allowed focus on power relationships, governmentality and subjectification in accounting society, as expressed through language and practices of the IASB who ultimately decide on the qualitative characteristics. Content analysis was used to analyse data collected via interviews with preparers and users of banks’ accounts, changes in banks’ accounting policies after the conceptual framework was published and comment letters from banks who wrote to the IASB.

Findings

Novel findings from this study revealed the potential significant omissions of the constraints of “materiality”, “transparency” and “regulatory/supervisory framework”. Also, surrounding the qualitative characteristics having been shown to be valid and includable, the adjective “decision-useful” reinstated in the chapter title and the IASB project team technical writers needing to show completeness of attention to all comments.

Originality/value

From these findings, a freshly formulated chapter in the conceptual framework on the qualitative characteristics can now be submitted for consideration by the IASB, with potential for international post-implementation review.

Details

Journal of Financial Reporting and Accounting, vol. 20 no. 2
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 11 April 2016

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…

2901

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

Meditari Accountancy Research, vol. 24 no. 1
Type: Research Article
ISSN: 2049-372X

Keywords

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