Auditors' Affirmations of Compliance with IFRS around the World: An Exploratory Study*

It is widely believed that international financial reporting standards (IFRS) have been adopted in many countries, at least for the consolidated reporting of listed companies. However, in nearly all cases, what the rules require is some national or supranational version of IFRS. This might create problems for investor confidence and comparability. We examine what companies and auditors report concerning compliance with IFRS, focusing on the first full year of IFRS reporting by companies in the stock market indices of four major European countries and Australia. We find that, even when companies were complying with IFRS, they were generally not saying so, which seems to miss part of the point of the 35‐year project on international harmonization. In a small number of cases, auditors provided dual reports: on full IFRS in addition to the mandated reference to national GAAP where the latter corresponds with full IFRS. These cases were found only in Germany and the United Kingdom, and mainly related to companies that filed with the Securities and Exchange Commission as foreign private issuers. We propose explanations for the general lack of dual reports and for the exceptions. We call for widespread adoption of dual reporting where a plain report on IFRS is not yet possible.     

Adopting commercial software in the accounting classroom: A focus on learning

Concerns about the current state of accounting education are well documented. A common anxiety is that students are not prepared to deal with the complex issues and unstructured problems that they will encounter throughout their professional lives. Recent studies conclude that an educational objective for accounting is to teach students how to learn. This paper discusses adopting commercial-use software as an approach to accomplish this objective. The paper also provides an example for an accounting information systems class. Because “learning to learn” involves teaching students learning strategies, accounting educators need to find new ways to help students acquire these strategies. This paper will be useful for instructors seeking ways to assist students in developing strategies for learning that will better prepare them for careers in a complex and dynamic environment.     

Enhancing Students' Enabling Competencies: Student Perspectives and Recommendations for Educators*

Employers continue to express concern that accounting graduates lack the necessary competencies when they enter the workplace. These concerns have been addressed in part by periodic revisions to Chartered Professional Accountants of Canada's (CPA Canada) CPA Competency Map, which is used to define competencies for entry into the profession. The CPA Competency Map has recently been revised to include a new set of enabling competencies (often called generic or soft skills). However, the accounting literature highlights a concern that time and resources spent on the expanding set of enabling competencies could take valuable resources away from teaching technical accounting skills. In addition, the education literature indicates that student motivation plays a key role in learning. If students are motivated to learn enabling competencies, then educational efforts could be more efficient and effective. Conversely, a lack of student motivation could reduce student engagement and learning. To address these concerns, we investigated the student's perspective on the importance of enabling competencies as well as on how and where enabling competencies should be learned. We surveyed 380 students enrolled in the CPA Canada Professional Education Program (PEP). We investigated the three new enabling competencies that are most distinct from the previous set of competencies and that may be the most difficult for accounting educators to teach: adaptability and resilience; creativity and innovation; and active listening. We asked students about the importance of these new enabling competencies for their future careers and whether the competencies should be taught in PEP or in the workplace. Our results indicate that students believe that the new enabling competencies are important and should be learned in both the classroom and the workplace. Moreover, student responses to open-ended questions provide educators with suggestions on how to incorporate enabling competencies into the classroom by blending activities that could simultaneously enhance enabling competencies with technical competencies.     

Convergence between US GAAP and IFRS: Acceptance of IFRS by the US Securities and Exchange Commission (SEC)

Abstract

The world's capital markets stand to benefit significantly from widespread acceptance and use of global accounting standards that are high quality, comprehensive and rigorously applied. The US Securities and Exchange Commission (SEC) announced in April 2007 a series of actions it intends to take relating to the acceptance of International Financial Reporting Standards (IFRS). To implement this, the SEC proposed in July 2007 amendments to Form 20-F and conforming changes to SEC Regulation S-X to accept financial statements prepared in accordance with IFRS without reconciliation to US Generally Accepted Accounting Principles (GAAP) when contained in the filings of foreign private issuers with the SEC. This paper analyses the forces driving convergence between US GAAP and IFRS and discusses the most recent activities by the SEC in relation to IFRS and international cooperation, including the SEC vote as of 15 November 2007, to allow foreign private issuers to prepare their financial statements using IFRS as issued by the IASB without reconciling to US GAAP.     

Accounting and business students’ approaches to learning: A longitudinal study

This study reports the results of an investigation into the learning approaches of undergraduate accounting and business students from three universities in Ireland who were exposed to a learning environment, namely the case study method, which aimed to encourage a deep approach to learning. In order to assess the effectiveness of the intervention, the ASSIST research instrument was used to investigate changes in students’ approaches to learning over time. Consistent with previous research, this study considers whether gender is related to students’ approaches to learning over time and if there are differences between students majoring in accounting or business in their approaches to learning. The results of the study indicate that the case study intervention was successful in some respects. However, contrary to expectations, an overall statistically significant increase in students’ surface approach to learning was found. Additionally, it is reported that changes in students’ approaches to learning over time are not associated with gender or degree program. The results of this study offer insights to accounting educators developing educational interventions to encourage deep approaches to learning.     

Eliminating the 20-F reconciliation from IFRS to U.S. GAAP: Short-term and long-term liquidity effects

This paper examines the effects of the SEC’s 2008 decision to no longer require foreign private issuers using IFRS and trading on U.S. exchanges to reconcile their financial statements to U.S. GAAP. Extant research has found conflicting results using short event windows, while studies using longer event windows have found limited capital market impact from eliminating the reconciliation. Motivated by the SEC’s interest in understanding how disclosure rules impact market liquidity, we examine changes in effective bid-ask spreads, the price impact of trades, and quoted depth around 20-F filing dates for a sample of foreign private issuers. We find that effective spreads increase more around 20-F filing dates for filers using IFRS than for filers using U.S. GAAP, suggesting the 20-F report is more informative for filers using IFRS. We then find, in a subsample of filers using IFRS, that the increase in effective spreads for IFRS firms around 20-F filing dates is directly related to the magnitude of differences in book values between IFRS and U.S. GAAP. In sum, our results suggest a loss of useful information after the SEC’s rule change.     

Perceived costs and benefits of IFRS adoption in Saudi Arabia: An exploratory study

In response to a current lack of research in the Middle East, this study aims to critically evaluate the perceived costs and benefits associated with the adoption of International Financial Reporting Standards (IFRS) in Saudi Arabia, the world's leading oil and natural gas exporter. Using documentary analysis and interviews with stakeholders (account preparers from listed companies in Saudi Arabia, auditors from Big 4 and local accountancy firms, and university academics), the study contributes to the literature by concluding that the benefits of IFRS adoption in Saudi Arabia outweigh the costs. Importantly, a lack of qualified accountants, significant dependence on Big 4 accounting firms, inadequate coverage of IFRS in university education, and a lack of research are identified as major obstacles to the effective implementation of IFRS. The findings offer a possible policy agenda for local and international policy makers.     

Are international accounting standards more credit relevant than domestic standards?

We examine whether the credit relevance of financial statements, defined as the ability of accounting numbers to explain credit ratings, is higher after firms are required to report under International Financial Reporting Standards (IFRS). We find an improvement in credit relevance for firms in 17 countries after mandatory IFRS reporting is introduced in 2005; this increase is higher than that reported for a matched sample of US firms. The increase in credit relevance is particularly pronounced for higher risk speculative-grade issuers, where accounting information is predicted to be more important; and for IFRS adopters with large first-time reconciliations, where the impact of IFRS is expected to be greater. These tests provide reassurance that the overall enhancement in estimated credit relevance is driven by accounting changes related to IFRS adoption. Our results suggest that credit rating analysts’ views of economic fundamentals are more closely aligned with IFRS numbers, and that analysts anticipate at least some of the effects of the IFRS transition.     

Professional Skills and Capabilities of Accounting Graduates: The New Zealand Expectation Gap?

Much has been written about teaching and learning deficiencies in accounting education. Universities have grappled with the challenge and developed a number of strategies to address the concerns raised. Many of the recommended strategies for addressing these deficiencies have included a focus on the development of professional capabilities and skills. This paper reports on a study which has identified the capabilities which are considered to be the most important for successful practice in accountancy during the first years after graduation and identified the extent to which New Zealand universities have focused on these in the delivery of their study programmes. Most attempts to measure the nature and extent of change to accountancy degree programmes have collected data from current or graduating students or from the university itself. This study instead collected feedback from accountancy graduates employed in public practice with three to five years post graduation professional experience and from their workplace supervisors. This paper reports on the results of the graduate feedback, provides a useful insight into where progress has been made and identifies where further improvement is necessary.     

Reviewing IFRS Goodwill Accounting Research: Implementation Effects and Cross-Country Differences

We review 42 studies from 2008 to early 2017 about IFRS goodwill accounting choices for recognition, impairment, and disclosure of goodwill, focusing on cross-country evidence of implementation effects. We develop a model of application of goodwill accounting based on IFRS 3, IAS 36, and country- and firm-level influences to analyze the research and to summarize existing evidence about goodwill accounting choices. We report evidence in support of IFRS accounting for goodwill recognition, impairment, and disclosure from many countries. However, evidence regarding value relevance is mixed. Overall, there is a lack of cross-country evidence regarding factors affecting goodwill accounting. Many studies show goodwill recognition, impairment, and disclosure are associated with economic and firm factors, and there is some evidence about the impact of managerial incentives and a lack of timeliness in impairment recognition. There is scope for more cross-country studies showing how institutional factors affect the application of IFRS 3 and IAS 36.     

The Impact of IFRS 8 Adoption on the Usefulness of Segment Reports

We analyze the impact of IFRS 8 on the usefulness of segment reports from an investor's perspective. The analysis comprises three steps. First, we compare the value relevance of segment reports before and after the introduction of IFRS 8. Second, we analyze a treatment group of firms that had to change their segmentation upon IFRS 8 adoption and a control group that was unaffected by its introduction. Third, the requirement to report financial information for the current and previous year under current accounting rules allows us to analyze a unique data set of segment reports for the same company and the same year under two different standards. Our results based on German listed firms show superior value relevance of segment reports according to IFRS 8 compared to IAS 14 in all three steps. Additional analyses suggest that the adoption of IFRS 8 is also related to a decline in information asymmetry. Our findings are robust to a number of alternative specifications.     

The interactive effects of extroversion/introversion traits and collectivism/individualism cultural beliefs on student group learning preferences

This paper examines the interactive effects of extroversion/introversion personality traits and collectivism/individualism beliefs on students' group learning preferences. The primary motivation for this study is the mixed results obtained with prior studies on the relationship between extroversion/introversion and student preference for different learning approaches. These divergent results may be explained by the failure of previous studies to account for the confounding effects of students' cultural beliefs. Seventy six final year students from two universities in Hong Kong were asked to complete questionnaires on the extroversion/introversion 10-item test (MBTI) and the collectivism/individualism 4-item scale. The results confirm the concerns raised in this study that an examination of the effects of extroversion/introversion on aspects of students' attitudes and performance should also recognise the confounding effects of students' cultural and other beliefs.     

IFRS adoption in the United States: An analysis of the role of the SEC’s Chairs

In this paper, we study the role of the SEC’s Chairs in the possible adoption of IFRS in the United States between 2005 and 2017. We mobilize the theoretical framework of institutional entrepreneurship to analyze the multidimensional institutional process which involves the streams of problem recognition, policy development and politics. Our qualitative empirical study finds that the SEC Chairs attempted to couple the three streams to different extents to achieve policy breakthroughs on IFRS adoption. We show how the coupling endeavors of Chair Cox opened a temporal window of opportunity for IFRS adoption, while Chairs Schapiro and White were unsuccessful in coupling the streams due to limited recognition of IFRS adoption as a central problem for the SEC, the inability to develop a practicable policy solution and unfavorable conditions in the policy stream. Our paper offers insights into the reasons for the SEC’s substantial efforts to introduce IFRS to U.S. capital markets and why these efforts never resulted in a formal decision on adopting IFRS for U.S. issuers. Our findings contribute to literatures on IFRS adoption, the temporal dimension of institutional entrepreneurship and the U.S. debate on IFRS.     

Perceptions of the learning context and learning approaches: Implications for quality learning outcomes in accounting

This study analyses learning approaches, course perceptions and learning outcomes of a group of second year accounting students at an Australian university using qualitative data analysis techniques. The research method involves the development of a series of matrices linking types of motives and strategies used by students in their study, together with their perceptions of the learning context associated with learning outcomes. The study focuses on assessing the links between learning approaches and a qualitative assessment of students' conceptual understanding of aspects of financial accounting studied at the undergraduate level. The results confirm how individual differences in the perceptions of the learning context relate to study motives and strategies. The findings show how different forms of memorisation relate to study strategies and how the completion of accounting tasks link to students' perceptions of course requirements. There was also some evidence that, in terms of learning outcomes, students with sophisticated levels of understanding of concepts, tended to have consistent deep and achieving approaches to learning. This result was compared with students' academic performance as a measure of learning outcome. Discrepancies between these two measures of learning outcome are highlighted in the conclusions. The findings strengthen the case for further investigation of the use of measures other than academic performance in examining relationships between learning approaches and learning outcomes.     

Accounting instruction using the open learning approach

Open learning, with its focus on flexibility, user choice, and learner autonomy helps develop important personal and business skills, encourages learner involvement and personalises education. This paper reports on how open learning was used to teach introductory accounting in a Higher National Certificate programme at one UK university, over a 3-year period. The approach involved giving students a range of choices in the areas of course content, methods of study, and modes and timing of assessment. The open learning approach required a heavy front-loaded investment for teachers in preparing resources. Results were, however, positive in many respects. For example, examination performance improved over immediately preceding years, and evidence of more effective student learning was found. There was also some recognition, by initially skeptical students, of the benefits of open learning, although the approach continued to be seen as alien and unconventional.     

The Challenges Faced by Reporting Entities on Their Transition to International Financial Reporting Standards: A Qualitative Study

Abstract

This study explores the challenges of implementing International Financial Reporting Standards (IFRS) at the organisational level. Based on interviews with experts with aggregated experience relating to the transition projects of over 170 reporting entities, this paper highlights the main challenges in delivering a successful implementation of IFRS. The findings show that the problems faced in implementation include lack of education and training, securing executive-level support, identifying and responding to the wider business-related implications of the transition, and issues with capturing the necessary information for reporting under IFRS.This paper complements the existing literature and offers a qualitative alternative to considering the transition to IFRS, offering insight into the organisational context of IFRS implementation. These insights are useful not only from a historic perspective, but also for organisations and regulators in the many jurisdictions where IFRS is permitted but not required, where more reporting entities will voluntarily move to IFRS-based reporting in the future. More broadly, they are also applicable to the challenges faced in implementing new and significantly revised IFRSs.     

Implementing IFRS: A Case Study of the Czech Republic

This empirical paper presents a study of the implementation process for International Financial Reporting Standards (IFRS) in one of the accession countries, the Czech Republic. Based upon a review of the legislation, institutional framework and context, and drawing upon recent interviews with Czech companies required to prepare IFRS accounts, auditors and institutional players in the Czech Republic, the paper highlights some of the key issues that are arising with the move to the implementation of IFRS reporting for listed group companies and other enterprises in the Czech Republic.

The paper considers the issues that arise when implementing new accounting regulations, some of which are not new and have been well covered in the literature, but others of which are particular to the implementation of IFRS reporting. The method of implementation, the scope of IFRS, particular issues with local accounting practice and IFRS, the issue of enforcement of compliance with IFRS and its relationship with audit, the link between IFRS reporting and taxation and the provision of education and training are all considered. There is also a review of the state of preparedness of local group listed entities with respect to the implementation of IFRS reporting.

There are many potentially rich areas for accounting research where the work could also inform the practice of IFRS accounting. The paper provides a contribution by highlighting how one country has moved to implement the requirement for group listed enterprises to prepare IFRS accounts and the issues that then arise for legislators, preparers and users.     

Integrating a virtual learning environment into a second-year accounting course: determinants of overall student perception

Rapid acceptance of, and changes in, information technology are revolutionizing the way educators teach and students learn. This study reports on the use of Blackboard as a tool for creating a virtual learning environment (VLE). Responses from undergraduate accounting students in New Zealand provide data on the use of the VLE as a learning aid. Findings suggest that the students have openly embraced the VLE and support its adoption by faculty members in other courses. However, students appear unwilling to actively participate in two-way online activities. This has implications for faculty contemplating the adoption of a VLE in their courses.     

Transitioning to IFRS in Japan: Corporate Perceptions of Costs and Benefits

This paper examines the ongoing transition to International Financial Reporting Standards (IFRS) in Japan with a particular focus on recent institutional developments and corporate concerns. While Japan has committed to the convergence of Japanese generally accepted accounting principles (J‐GAAP) with IFRS it has not as yet formally adopted IFRS. This paper reports on Japanese corporate perceptions of the likely costs and benefits of adopting and implementing IFRS using survey data collected from senior financial executives of 292 Japanese listed companies in 2013–14. Our findings reveal that Japanese companies identify a number of major areas of general concern with the adoption and implementation of IFRS. Most importantly, uncertainty regarding the interpretation of standards followed by staff training, IT systems, technical knowledge and differences between J‐GAAP and IFRS were reported as major concerns. Our survey also highlights that revenue recognition, depreciation, consolidated financial statements, financial statement presentation and the retrospective application of IFRS were viewed as key IFRS accounting issues. While the large majority of companies expected a moderate degree of benefits to arise from IFRS, substantial benefits were perceived more likely to apply to large and overseas listed companies mainly arising from improvements in the international comparability of financial statements.     

Student perceptions of the effects of classroom assessment techniques (CATs)

Recent efforts to improve accounting education challenged professors to shift their focus from what they teach, to what their students learn. Along with changing course content and instructional methods, professors have placed greater emphasis on assessment. Many have added Classroom Assessment Techniques (CATs) to their classes, and literature on the subject is emerging.This paper makes two contributions. First, it introduces a unique CAT, the Feedback Form. Professors can use this single CAT to assess different aspects of learning without confusing or overloading students. Second, it reports on a study that measured students' perceptions of Feedback Forms. The results suggest that students perceived Feedback Forms to complement, rather than substitute for, a traditional approach to assessment. Students found added value in Feedback Forms, even when they used them all of the time. There are several promising areas of future research, including following up on gender differences observed in this study.