Goodwill Accounting in Malaysia and the Transition to IFRS – A Compliance Assessment of Large First Year Adopters

Abstract

2014),"Firms' compliance with the disclosure requirements of IFRS for goodwill impairment testing: Effect of the global financial crisis and other firm characteristics"If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.Prior to the adoption of an IFRS based reporting framework in Malaysia, no binding standard governing goodwill had ever been implemented. After several decades in which a laissez faire approach to the problem represented the dominant paradigm, the highly prescriptive and technical provisions of FRS 136 -Impairment of Assets represent a very substantial variation from past practice. This in turn gives rise to questions about the extent to which Malaysian companies and their auditors have fared during the process of transition to a complex new reporting regime and in consequence to the quality and consistency of reports produced pursuant to that new regime.Thus, FRS 136 presents an opportunity to interrogate the level of compliance and disclosure quality exhibited by first-time reporting entitiesand by extension, yield insights into the implications of and challenges associated with transition to new and complex reporting regimes. Focussing specifically on compliance and disclosure quality relating to the highly detailed requirements set out in FRS 136, this paper finds evidence that the quality of the responses by large listed Malaysian firms has indeed been mixed, with many firms producing financial reports that have failed to meet the mark of the new standard. While the move by MASB to adopt IFRSs is a reflection of Malaysia's commitment to align with global accounting standards in order to achieve harmonization with international practice, these findings suggest that continued

Swedish and Dutch listed companies’ compliance with IAS 36 paragraph 134

“…On average, only 61.9 per cent of the disclosure requirements were met in 2008. The low level of disclosure compliance supports prior studies (Frost and Kinney, 1996;Street et al, 1999;Street and Bryant, 2000;Street and Gray, 2002;Glaum and Street, 2003;AlShammari et al, 2008;Carlin et al, 2009;Ballas and Tzovas, 2010;Carlin and Finch, 2010). …”

“…However, because of the documented countryspecific patterns of accounting within the standards issued by the IASB (Kvaal and Nobes, 2010) and a traditionally relatively low level of accounting compliance (for example, Frost and Kinney, 1996;Street et al, 1999;Street and Bryant, 2000;Street and Gray, 2002;Glaum and Street, 2003;Al-Shammari et al, 2008;Carlin et al, 2009;Ballas and Tzovas, 2010;Carlin and Finch, 2010), it is questionable whether current standardisation leads to more comparable information in the financial reports. The lack of comparability may in turn have negative impacts on the decision usefulness of accounting information in financial reports.…”

IFRS Disclosure Compliance in Malaysia: Insights from a Small‐sample Analytical Study

“…We use total assets as the proxy for size, as compliance with accounting standards by Malaysian publicly listed companies is positively influenced by size (Carlin et al. ; Akhtaruddin and Haron ). The final sample comprises nine GLCs and nine matched non‐GLCs from the following industries: chemical, automobiles, telecommunications equipment, diversified operations, airlines, construction, agriculture and properties (see Table ).…”

“…Also, following Nobes and Stadler (), we have selected standards relevant to sampled firms (Carlin et al. ; Akhtaruddin and Haron ). In sum, we have carefully selected eight standards (IFRS 8 Operating Segments ; IAS 2 Inventories ; IAS 12 Income Taxes ; IAS 17 Leases ; IAS 18 Revenue ; IAS 21 Effects on Changes on Foreign Exchange Rates ; IAS 37 Provisions, Contingent Liabilities and Contingent Assets ; and IAS 38 Intangible Assets ) that we are confident are relevant to all companies in our sample.…”

“…(), Carlin et al. () and Carlin and Finch (, 2011). Using key word searches, the contents of the 18 annual reports, including introductory material, the financial statements, footnotes and the auditor's report were examined thoroughly prior to undertaking data classification.…”