Empirically Investigating Saudi Arabian Accountants’ Readiness to Implement IAS 2

Abstract

This study focuses on practicing accountants in Saudi Arabia to examine their readiness to adopt the mandatory International Financial Reporting Standards (IFRS). More specifically, it investigates the International Accounting Standard for Inventories, an indicator for accountants' understanding of IFRS requirements. To do so, we conduct an online questionnaire survey, which reveals that 52.27% accountants may not be ready for IFRS implementation. The lack of knowledge about certain IAS 2 requirements raises further concerns about accountants' readiness to implement more complicated IFRS, some of which have no comparable local financial accounting standards. These findings draw attention to the effectiveness of IFRS training courses. Further, 57.20% accountants, all of whom reviewed the Saudi Organization for Certified Public Accountants' (SOCPA) website, provided appropriate answers, indicating SOCPA's significant contribution toward the spreading of awareness and knowledge about IFRS. Our findings have implications for practitioners and accounting regulators as well as bodies responsible for standardizing accounting practices in Saudi Arabia. In particular, they suggest steps necessary to increase accountants' readiness for IFRS adoption, which became mandatory since January 1, 2017, for all listed companies. In conclusion, this study serves as a foundation for future research on the topic, which can be extended to the realm of auditors, and obstacles confronting accountants in IFRS implementation.

Cultural challenges for countries implementing International Financial Reporting Standards without contributing to their creation

“…The accounting literature, however, discusses the challenges confronting the determination of countries that are willing to converge with the IFRS [e.g., Odia and Ogiedu, (2013), p.394;Al-Mousa and Al-Adeem, 2017]. Since culture is 'accounting's medium' (Belkaoui, 1995) and because a comprehensive conception of accounting considers the culture (Lehman, 2005), its effects need to be understood when the IFRS are being adopted globally (Black, 2012).…”

The Importance and Adoption of International Financial Reporting Standards (Ifrs) in Saudi Arabia

“…In "Madsen's" (2011) study, which investigates the link between implementing IFRS and risk, he demonstrates there is a strong and favourable association between accounting standardization and minimizing legal risks, reducing complicated tasks, and enhancing professional credibility (Al-Mousa & Al-Adeem, 2017). He goes on to say that "IFRS" has a significant impact on financial accounting.…”