The discipline of accounting and auditing has increasingly recognized judgment and decision making (JDM) as highly important attributes in the profession because individuals such as managers, auditors, financial analysts, accountants, and standard setters make pivotal judgments and decisions. Many studies undertaken in this domain of research also substantiate the significance of JDM in accounting and auditing. This study evaluates all the papers published in 10 accounting journals among the leading ones from 1980 to 2010 that fall within the domain of JDM research. The categorization of the studies reviewed in this paper is based on Bonner's (1999) three major determinants of JDM: Person, Task, and Environment variables. The review highlights the progress in the literature over the past three decades and also identifies the methodological limitations of previous research. The identified limitations will be useful for improving the research method of future JDM studies in accounting and auditing. The review also draws inferences on how JDM research in auditing, which is well established, could usefully guide future JDM research in financial accounting.Les disciplines de la comptabilit e et de l'audit reconnaissent plus que jamais l'importance capitale des attributs de la profession que sont le jugement et la prise de d ecisions, compte tenu de l'incidence d eterminante des jugements que portent les gestionnaires, les auditeurs, les analystes financiers, les comptables et les autorit es de r eglementation, ainsi que des d ecisions qu'ils prennent. Maintes etudes r ealis ees dans ce champ de recherche confirment aussi l'importance du jugement et
Fair value accounting (FVA) is threatening the convergence of accounting practices around the world. It has been regarded as one of the contributing factors of the recent financial crisis. Given that International Financial Reporting Standards (IFRS) have embraced FVA, this financial crisis raises concerns about their suitability for financial reporting across the world. This study explores important implications of the global financial crisis for financial reporting, in particular seeking to identify whether the trend towards convergence has been impeded by inherent problems in the IFRS. Contrary to our expectations, analyses show that the financial crisis has made the case for global convergence of accounting standards more compelling than before. The majority of countries intending to converge in the near future have not been affected by the global financial crisis and are committed to adopt IFRS as planned. The analyses also show that the International Accounting Standards Board (IASB) has been facing pressure from the financial institutions, regulators, policy-makers and finance ministers to review its rules on FVA. Consequently, the IASB has been undertaking measures to improve the reporting requirements in the light of the financial crisis.
The ‘critical bite’ in this paper lies in providing evidence to challenge the continued and uncritical application of translation and back-translation methodology by the global standard setters and researchers. We applied a within-subject experimental design to examine the influence of translation and back-translation methodology on subjects’ judgments on the key conception of control when preparing consolidated financial reports. Semi-structured follow-up interviews were also conducted with randomly selected participants in the experiment. China provides a particularly appropriate national context for this study because Simplified Chinese is one of the most complex languages. Importantly, control, as the consolidation criterion, may be linked to the ‘invisible power’ of the Chinese government’s authority in the process of social control. The results show that subjects made inconsistent judgments on control in the research instrument in English and the same instrument translated into Simplified Chinese. Additionally, subjects expressed a preference for the legalistic approach, which concentrates on providing specific quantitative criteria and requires little exercise of preparers’ judgments. We suggest that the global accounting standard setters and accounting researchers may consider developing more holistic methodologies for translation. Possible Anglo-American biases, simplistic assumptions and marketing claims by the global accounting standard setters need to be critically examined.
We conduct an experiment that investigates confirmation bias in the reporting judgments of accountants when applying International Financial Reporting Standards (IFRS) for small and medium‐sized enterprises (SMEs). The results indicate that accountants’ judgments are biased towards the recognition and measurement principles of full IFRS when applying IFRS for SMEs. The results also suggest that confirmation bias in judgments can be mitigated by increasing accountants’ awareness of justification requirements and by using appropriate decision aids. These results are likely to be of interest to the 70‐plus countries that have adopted the SME standard and countries that continue to contemplate its adoption.
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.
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