Proposed international standard on auditing financial statements of less complex entities: IAASB IAAER roundtables—Breakout 2 Design,Structure, and Content

In this commentary, we summarize stakeholder views articulated during roundtables addressing the 2021 International Auditing and Assurance Standards Board's (IAASB) Exposure Draft: Proposed International Standard on Auditing of Financial Statements of Less Complex Entities (ED LCE). In support of its mission, the International Association for Accounting Education and Research (IAAER)—together with the IAASB—organized by-invitation roundtables bringing together audit practitioners, academics, and financial statements users. A structured agenda was followed and addressed some of the topics on which the IAASB sought views. This commentary provides a summary of views heard during the second roundtable breakout session focused on Design, Structure, and Content and provides recommendations to the IAASB regarding the way forward. A paper addressing the first breakout session on Authority and Group is available in a previous issue of the Journal of International Financial Management and Accounting.     

An interview with IASB Chair Dr. Andreas Barckow

This paper provides an overview of two interviews conducted with Andreas Barckow where he reflected on his outlook for the International Accounting Standards Board (IASB) and his role as Chair. The interviews included (1) a discussion of the IASB′s Third Agenda Consultation Feedback Statement, (2) key areas for future collaborations of the IASB and the International Association for Accounting Education and Research (IAAER) directed primarily at building the IASB's Research Capacity, (3) strategic challenges facing the IASB, (4) the formation of the International Sustainability Standards Board (ISSB) including the emerging model for the coexistence of the IASB and the ISSB and (5) the unique position the International Financial Reporting Standards Foundation holds as the only global organization to house both financial accounting reporting and sustainability disclosure standard-setting boards. The interviews also addressed areas where the IAAER can encourage academic research to inform both the IASB and the IAASB and perhaps also the ISSB.     

Imperfect public choice

We model imperfect governments with public choices that are sequential, myopic and not free of error. We first use this framework to explore governmental incremental budgeting. We argue that a model of bounded rationality is required to capture the empirical reality of incremental budgeting. We then provide a model that integrates bounds errors and systematic errors. We argue that the empirical evidence is that bounds errors and systematic errors are inextricably intertwined—some level of bounded rationality is required for systematic errors to emerge. We use this to explore political information lobbying. A testable hypothesis is that lobbyists will focus efforts on policy-makers of low ability. We show that choosing leaders with high ability, that is Madison's wisdom to discern, is important, especially when policy decisions concern dangerous products (rifles) or dangerous environments (pandemics).     

Has Canada's 21st-Century Grand Gender Convergence Stalled? Male and Female Income and Human Resource Stock Distributions Viewed Through an Equal Opportunity Lens

The increasing similarity of male and female labor market roles in advanced economies over the past 50 years, dubbed the “Grand Gender Convergence” by Goldin (2014), appears to have stalled. Given commonality of preferences for work and human resource acquisition across the gender divide, women and men with similar human resources and efforts should have similar income distributions in a non-discriminatory equal opportunity equilibrium. However, income convergence is a necessary but not sufficient condition for a “Grand Gender Convergence” as similarities in incomes could be achieved with differences in human resources and efforts given discriminatory rewards. In this study, using new tools for examining distributional convergence processes, the progress of Canada's 21-st Century “Grand Gender Convergence” is examined in the context of an equal opportunity paradigm. While income convergence is almost universally apparent, human resource stock distributions appear to be diverging, with women having increasingly superior resources to men, evidence that the grand convergence is not progressing.     

Proposed international standard on auditing financial statements of less complex entities: IAASB IAAER roundtables—Breakout 1 authority and groups

This commentary summarizes stakeholder views voiced during roundtables on the 2021 International Auditing and Assurance Standards Board's (IAASB) Exposure Draft: Proposed International Standard on Auditing of Financial Statements of Less Complex Entities (ED LCE). For EDs, IAASB's due process includes seeking stakeholder views in a formal consultation format on a specified number of issues deemed relevant to further improve the proposed standard. Following its mission, the International Association for Accounting Education and Research—together with the IAASB—facilitated roundtables linking audit practitioners, academics, and financial statements users. The three roundtables followed a structured agenda including the same (but not all) topics on which the IAASB seeks views. In this commentary, we summarize views heard during the first roundtable breakout session focused on authority and groups and provide recommendations to the IAASB regarding the way forward.     

Belief adjustment: a double hurdle model and experimental evidence

Experimental Economics - We present an experiment where subjects sequentially receive signals about the true state of the world and need to form beliefs about which one is true, with payoffs...