International Accounting and Auditing Standards Adoption in Non-EU Eastern European Countries: Review of Regulations and Literature

Abstract

In this paper, we review the regulations and research on the adoption of international accounting and audit standards in eleven Eastern European countries outside of the European Union. We find many regulatory commonalities among these jurisdictions related to their Communist-bloc heritage. The state remains the most important stakeholder and tax accounting dominates financial reporting. The work of local auditors is considered less reliable than that of their Big 4 counterparts. International organizations and the Big 4 auditors provide stimuli for and assistance with international standards’ adoption. Accounting and audit research is limited. The scarcity of data forces most authors to focus on the qualitative evaluation of accounting and audit reforms. Some opt for surveys. Few papers include empirical analyses. Our review covers jurisdictions, which have received limited attention in prior literature. We inform future empirical work and speak to the generalizability of previous research findings to this set of countries.

International Standards on Auditing (ISAs) Adoption: An Institutional Perspective

“…The finding is consistent with numerous other studies that have confirmed that foreign corporations and international accounting firms have a substantial influence upon regulators and governments in the shaping of regulatory frameworks so that they represent the interests of the firms; see the work of (Chand and White 2007;Bhatia and Makkar 2019;Abdullatif and Al-Rahahleh 2020;Rykaczewski et al 2022). As Humphrey et al (2009) argued, major international accounting firms can potentially become involved in and responsible for setting global auditing standards.…”