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Article
Publication date: 8 June 2021

Md Mustafizur Rahaman and Parmod Chand

This paper aims to address a topical and controversial issue, namely, the degree of conformity with the new auditor reporting requirements in Australia and the extent of…

Abstract

Purpose

This paper aims to address a topical and controversial issue, namely, the degree of conformity with the new auditor reporting requirements in Australia and the extent of variations in the reporting of key audit matters (KAMs) by Australian firms.

Design/methodology/approach

This paper compares the 64 elements identified in the applicable standards with the auditor’s report from the sampled companies to determine the degree to which the top 200 firms listed on the Australian Stock Exchange are complying with the requirements of the new audit report. This paper investigates KAM disclosures within and across industries.

Findings

The results indicate that there is a high degree of conformity with the new reporting framework, yet significant variations in the contents of the report, particularly in KAM disclosures. This paper observes that the number of KAMs and their extent of disclosure generally varies within industries. The types of KAMs presented vary both within and across industries. This paper further provides evidence that auditors have a tendency of not disclosing negative KAMs and tend to avoid negative wordings when describing KAMs. This paper also finds that there are significant differences in the placement of various types of KAMs in the audit report.

Practical implications

These findings have important policy implications for the standard-setters, regulators, auditors and users of financial reports on the adequacy of the new auditor reporting framework.

Originality/value

This study is one of the first to examine the degree of conformity with the new audit reporting model in Australia.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

Keywords

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Article
Publication date: 12 September 2016

Noriyuki Tsunogaya, Satoshi Sugahara and Parmod Chand

The purpose of this paper is to examine the effects of a principles-based accounting standard with guidance (principles-with-guidance approach), stringency…

Abstract

Purpose

The purpose of this paper is to examine the effects of a principles-based accounting standard with guidance (principles-with-guidance approach), stringency (conservativeness) of numerical thresholds, and incentives (high or low debt-equity ratio environment) on the judgments of Japanese auditors in a lease accounting setting.

Design/methodology/approach

To reflect Japanese auditors’ judgmental features, this study adopts a quasi-experiment that uses both manipulation for different environments (i.e. stable or critical financial condition) and perceptions about the importance of “principles” and “guidance” in different types of lease accounting standards (i.e. substantially all, approximately 90 and 88 percent).

Findings

“Principle” (substantially all) has a positive effect, while “guidance” (approximately 90 percent) has a negative effect on encouraging Japanese auditors to capitalize lease transactions. “More stringent guidance” (approximately 88 percent) has a positive effect only when clients are in critical financial conditions. Other findings indicate that judgments of Japanese auditors are strongly influenced by their colleagues’ perceived judgments.

Originality/value

This is the first quasi-experiment to examine Japanese auditors’ professional judgments using a lease accounting setting. To find out whether Japanese auditors interpret and apply International Financial Reporting Standards (IFRS) in the similar manner as their counterparts in other countries will be important when Japanese policymakers make their final decision regarding the adoption of IFRS. The discussion and findings also contribute to the International Accounting Standards Board (IASB) with regard to enhancing global convergence of financial reporting.

Details

Asian Review of Accounting, vol. 24 no. 3
Type: Research Article
ISSN: 1321-7348

Keywords

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Book part
Publication date: 23 December 2011

Parmod Chand, PhD (Macquarie) is a senior lecturer in the Department of Accounting and Corporate Governance, Macquarie University, Sydney, Australia. He has also held…

Abstract

Parmod Chand, PhD (Macquarie) is a senior lecturer in the Department of Accounting and Corporate Governance, Macquarie University, Sydney, Australia. He has also held teaching positions at the University of the South Pacific, Fiji. He has published in a variety of professional and refereed journals, including the European Accounting Review, Advances in Accounting, Incorporating Advances in International Accounting, Critical Perspectives on Accounting, and Australian Accounting Review. He is also involved in various consulting activities for the professional body in Fiji.

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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Book part
Publication date: 23 December 2011

Abstract

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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Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

We have considered both the de jure and de facto aspects of comparability in financial reporting. Generally, the findings presented in this monograph show that there is a…

Abstract

We have considered both the de jure and de facto aspects of comparability in financial reporting. Generally, the findings presented in this monograph show that there is a lack of both de jure and de facto comparability in financial reporting across countries. We have considered the de jure aspect of comparability in financial reporting by identifying the ways in which IFRS are adopted and enforced in the South Pacific region and also investigated the relationship between country-specific characteristics and the selection of the appropriate approach for adoption. An examination of the convergence process in the South Pacific region provides evidence that countries use different approaches in their adoption of IFRS. We have broadly identified five different approaches for convergence and harmonization of accounting standards, ranging from adoption of IFRS in their entirety to the lack of reference to IFRS, that is, no convergence or harmonization.

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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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…

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

To view the access options for this content please click here
Book part
Publication date: 23 December 2011

Abstract

Details

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

To view the access options for this content please click here
Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

The globalization of the world's economies has inevitably brought with it moves to establish a single set of financial reporting standards. Prima facie, the formulation…

Abstract

The globalization of the world's economies has inevitably brought with it moves to establish a single set of financial reporting standards. Prima facie, the formulation and promulgation of International Financial Reporting Standards (IFRS) is concealed behind reified icons of “relevance.” This chapter adds a new dimension to the international accounting debate by discussing themes of regulation, public and private interests, from a critical perspective. Specifically, this chapter examines the reasons for the willingness to accept IFRS in Fiji. A critical conception of “relevance” and “accountability” is developed to demonstrate how the needs of private interests' are met in adopting the IFRS. This study demonstrates that in this process of convergence, the influence of these private interests – multinational enterprises and large international accounting firms – can lead to a transfer of economic resources in their favor, wherein the public interests are usually ignored. The study offers suggestions on how public interest might be best served within the current financial reporting system and how, in principle, the needs to report both globally and locally can be reconciled.

Details

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

To view the access options for this content please click here
Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

This study extends prior cross-cultural research by examining the effects of both cultural and noncultural factors on the judgments of professional accountants. It…

Abstract

This study extends prior cross-cultural research by examining the effects of both cultural and noncultural factors on the judgments of professional accountants. It examines the extent and the cause of differences in judgments of professional accountants in Australia and Fiji when interpreting and applying selected International Financial Reporting Standards (IFRS). A comparative study between these two countries, which have both adopted IFRS, provides empirical evidence that IFRS are not interpreted and applied consistently. It supports the views that: (a) both national culture and organizational culture (Big 4 and non-Big 4 firm affiliations) have a significant effect on the manner in which professional accountants in a country interpret uncertainty expressions contained in IFRS; and (b) national culture and organizational culture interact to influence the judgments of professional accountants. Further, the results of the effects of noncultural factors on the judgments of professional accountants in Australia and Fiji show that the professional accountants' perceived level of task complexity has a significant effect on their judgments. An important implication of this study is that the adoption of IFRS in different countries alone may not result in uniformity in financial reporting as IFRS may not be consistently applied by those countries because of differences in cultural as well as noncultural factors.

Details

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

To view the access options for this content please click here
Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

International bodies such as the European Union (EU), the International Organization of Securities Commissions (IOSCO), the Association of South-East Asian Nations…

Abstract

International bodies such as the European Union (EU), the International Organization of Securities Commissions (IOSCO), the Association of South-East Asian Nations (ASEAN), and the World Trade Organization (WTO) are actively working toward the creation of business structures that will facilitate international trade and commerce.1 Certain aspects of international business and trade – such as law, marketing, finance, and economics – have all, by methods such as treaties and bilateral agreements, transcended national boundaries and converged (Carlson, 1997, p. 357). There is an expectation within the international capital market that since accounting is an important source of business information, it should further transcend national boundaries, and practices should also converge (Carlson, 1997; Purvis, Gernon, & Diamond, 1991; Whittington, 2005). In the international accounting literature, this process has been denoted as “harmonization” or “convergence.”

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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