IAS/IFRS in Jordan: Adoption, Implementation and Determinants

Abstract

This study examines the current status of accounting standards among Jordanian firms. In particular, it examines the adoption level of IAS/IFRS. In addition, it examines the implementation process in terms of difficulties and challenges. Further, the study tests empirically the effect of international institutional pressures, local legal enforcement bodies and accounting education level on accounting standards adoption level. The results of the study are based on the descriptive and multiple regression analysis technique. Based on 62 usable responses, the study reveals that the adoption level of IAS/IFRS among Jordanian firms is moderate. For example, IFRS 7 (Financial Instruments: Disclosure) is the most adopted standard. This is followed by IAS 32 (Financial Instruments: Presentation) and IFRS 15 (Revenue from Contracts with Customers) respectively, while IFRS 2 (Share-based Payment) is the least adopted standard. In general, the study reveals that the implementation process of some standards is easy such as IFRS 7 (Financial Instruments: Disclosure), while others such as IAS 36 (Impairment of Assets) and IFRS 13 (Fair Value Measurement) need additional efforts to properly implement. In addition, several challenges were detected, which could prevent the proper implementation of some accounting standards such as the shortage in the governmental and IT supports. Further, the study shows that international institutional pressure and local legal enforcement bodies have a positive and significant relationship with the adoption level of accounting standards, while the effect of accounting education level is insignificant. JACPA should coordinate and collaborate with IASB and the government to offer all the necessary financial, technical and legal support for Jordanian firms to fully adopt and apply accounting standards. Several recommendations were offered for future research to enrich this vital topic in Jordan and other developing countries.

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