Property, Plant and Equipment disclosure requirements and firm characteristics:  the Portuguese Accounting Standardization System

Portugal has been recognised as a code law country, with weak legal enforcement mechanisms and conservative accounting practices. However, since 2005, Portuguese companies have been changing their financial reporting practices to those based on common law institutional logic. In 2010, unlisted Portuguese companies began to apply a new set of accounting standards called the Accounting Standardisation System (Sistema de Normalização Contabilística -SNC) based on International Accounting Standards/International Financial Reporting Standards (IFRS). This paper seeks to analyse the impact of the first-time adoption of the SNC with regard to the accounting treatment of impairment losses. It is found that, to mitigate political costs associated with their public visibility, larger companies present more credible financial statements that reflect their overall true financial and economic condition. This study is a valuable contribution to both users of financial information and domestic standard setters to help them understand and improve the impact of accounting standards. Consistent with Khalil and Simon (2014), it also contributes to the debate on the optimal flexibility permitted by IFRS to improve reporting quality and reduce earnings management.

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“…; Botelho et al. ). Regarding the innovative aspects of the SNC, such as fair value, Oliveira et al.…”

Section: Literature Review and Development Of Hypothesesmentioning

confidence: 97%

“…); analysis of the degree of compliance with NCRF 7 Property, Plant and Equipment (Botelho et al. ); the development of a fair value model for the dairy sector (Oliveira et al. ); and first‐time adoption effects of the SNC in the olive and cork tree industries (Oliveira et al.…”

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confidence: 99%

Impairment Losses: The Impact of First‐time Adoption of the Accounting Standardisation System in Portugal

Oliveira

Azevedo

Oliveira

2018

Australian Accounting Review

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“…Namely, larger companies disclose more information in comparison with medium and small-sized companies. On the other hand, Gastón, García, Jarne, and Gadea (2010) and Botelho, Azevedo, Costa, and Oliveira (2015) found no association between the company's size and the number of disclosures. Aljifri (2008), Morais and Fialho (2008), and Oliveira et al (2006) found that there is no or very low association between the company's profitability and the number of disclosures in the notes to the financial statements.…”

Section: Disclosure Requirements Related To Determination Of Fair Value and The Application Of The Revaluation Modelmentioning

confidence: 97%

Revaluation as a Model of Subsequent Measurement of Property, Plant, and Equipment – Case of Croatia

Hladika

Gulin

Bernat

2021

CES

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Accounting standards allow the application of two models for subsequent measurement of property, plant, and equipment, and those are the cost model and the revaluation model. The application of a certain model depends on the manager’s choice of accounting policy. The main goal of this paper is to investigate the application of the revaluation model for subsequent measurement of property, plant, and equipment in Croatian companies. Further goals are to examine how the fair value for revalued assets is determined, and what the level is of disclosed information about the determined fair value and the revaluation. The theoretical part of the paper analyzes different models for measurement of property, plant, and equipment, the issue of determining fair value, and disclosure requirements according to national and international accounting standards. The empirical part of the paper is conducted on 500 large and medium-sized Croatian companies from the service (utilities), production, and tourism sectors. Particular attention is placed on the notes to the financial statements of these companies. The research covers the period from 2014 to 2018. Collected data are analyzed by using descriptive statistics methods, point-biserial correlation, and Pearson correlation coefficient.

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“…Of the research conducted, findings suggest that the dominant code-law institutional logic has hindered adoption of the SNC (Guerreiro et al, 2012a(Guerreiro et al, , 2015. Company age and type of auditing firm exert significant influence on levels of compliance with the disclosure required by NCRF 7: Tangible Fixed Assets (Botelho et al, 2015). Oliveira et al (2015) reported that after the adoption of the SNC, the fair value-based valuation criteria for biological assets of Portuguese dairy farms, reduced the comparability of financial statements across the sector.…”

Section: The Portuguese Institutional Frameworkmentioning

confidence: 99%

Barriers to institutionalization of an IFRS-based model: perceptions of Portuguese auditors

Fontes

Rodrigues

Marques

et al. 2021

MEDAR

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Purpose In 2010, Portugal’s newly implemented Accounting Standardization System (SNC - Sistema de Normalização Contabilística) aligned Portuguese accounting standards for unlisted companies with International Financial Reporting Standards (IFRS). The purpose of this paper is to explore the influence of the local context and the role of auditors in the institutionalization of this IFRS-based model in Portugal. Design/methodology/approach Drawing from an institutional theory framework, the authors interviewed 16 Portuguese auditors in 2017 (seven years after formal implementation of the SNC) to determine their perceptions on whether barriers to the IFRS-based model persisted. Findings The authors reveal that the code-law institutional logic embedded in the Portuguese context is hindering full institutionalization of the new accounting model. Some persisting barriers to implementation reflected a decoupling between formal requirements and actual practices. Despite these barriers, there has been an encouraging institutionalization of SNC. The authors reveal a high level of commitment of auditors. They draw attention to the engagement of auditors in the institutional work that is intended to assist in SNC implementation, and their role as promoters of a power-knowledge discourse in propagating IFRS institutional logics at the national level, namely, through the justification and rationalization of the reported institutional contradictions. Practical implications The highlighting the authors provide of problems related to accounting change should assist international regulators, the Portuguese standard-setter and professional accounting associations to devise appropriate strategies to promote IFRS-based accounting systems implementation. Originality/value The authors contribute to the skimpy literature on micro institutional analysis and encourage further exploration of the dynamics between the micro and macro levels of analysis in institutional research.

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Property, Plant and Equipment disclosure requirements and firm characteristics: the Portuguese Accounting Standardization System

Cited by 4 publications

References 49 publications

Impairment Losses: The Impact of First‐time Adoption of the Accounting Standardisation System in Portugal

Impairment Losses: The Impact of First‐time Adoption of the Accounting Standardisation System in Portugal

Revaluation as a Model of Subsequent Measurement of Property, Plant, and Equipment – Case of Croatia

Barriers to institutionalization of an IFRS-based model: perceptions of Portuguese auditors

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