The interpretation differences of verbal probability expressions in principles-based accounting standards: evidence from China

Tang, Fengchun; Yang, Ling

doi:10.1504/ijaape.2016.077893

Cited by 2 publications

(4 citation statements)

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“…Moreover, Salleh et al (2011) compare native Chinese speaking and native English-speaking accounting students in UK universities and found that native culture and language are not important factors in the explanation of differences between accounting students in their interpretation of verbal probability expressions (VPE). However, a more recent study by Tang and Yang (2016) reports a high degree of consistency in the VPE interpretations among Chinese auditors, while students' interpretations tend to exhibit lower levels of consensus.…”

Section: Impact Of Conservatism and Secrecymentioning

confidence: 90%

“…Moreover, Salleh et al (2011) compare nativeChinese speaking and native English-speaking accounting students in United Kingdom universities and found that native culture and language are not important factors in the explanation of differences between accounting students in their interpretation of verbal probability expressions (VPE). However, a more recent study byTang & Yang (2016) reports a high degree of consistency in the VPE interpretations among Chinese auditors, while students' interpretations tend to exhibit lower levels of consensus. Moreover, our use of the latest available version of the VSM (2013) for determining the cultural scores for Tunisia and Egypt follows the same pattern as the extension of the IBM model by M. Bond in China called the Chinese Value Survey (CVS) based on students' responses and…”

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confidence: 87%

“…The ongoing concern about the financial statements' comparability and the actual debate of whether a common set of accounting standards could be interpreted consistently by accountants from different countries have triggered the attention of different scholars to gather some international evidence about the impact that cultural attributes may have on financial reporting. For instance, in an attempt to evaluate the accurate understanding and interpretation of the verbal probability expressions (VPE) by Chinese accounting professionals and students, Tang and Yang (2016) examine whether the VPE in principles-based accounting standards are understood and interpreted consistently. Data is gathered from auditors working in Chinese public accounting firms, and Chinese accounting students and the results specify that Chinese auditors exhibit a higher degree of consensus in their VPE interpretations than the preparer and student.…”

Section: The Effect Of Culture On the Ifrs Interpretationmentioning

confidence: 99%

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The impact of conservatism and secrecy on the IFRS interpretation: the case of Tunisia and Egypt

Eljammi

Damak-Ayadi

Hussainey

2020

JFRA

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Purpose The effect of culture, through the accounting values of conservatism and secrecy, on accounting judgments is an area of research extensively studied in developed countries. However, little research has focused on this issue in developing countries, specifically Arab countries. Thus, this study aims to fill this gap by investigating the impact of the combined effect of the culture/accounting dimensions on the interpretation of the probability expressions used in the international accounting standards/international financial reporting standards (IFRSs) in two North African/Arab countries: Tunisia and Egypt. Design/methodology/approach In the first place, this study determines Hofstede’s cultural index scores for Tunisia, ignored in his original model and updates those related to Egypt, which provides a more relevant understanding of the cultural effect. Then, the study relies on the Hofstede/Gray cultural accounting model to examine the extent to which the accounting values of conservatism and secrecy may affect the recognition of the increase and the decrease of income and the disclosure of this information in the financial statements by postgraduate accounting student in both countries. Findings The results provide evidence of the generalizability of Gray’s conservatism hypothesis in the North African/Arab countries (i.e. Tunisia and Egypt), at least in the context of income recognition. Moreover, the findings demonstrate that culture, through its influence on the accounting value of secrecy, affects the interpretation of probability expressions used in the IFRSs to establish disclosures. Research limitations/implications This study calls for more attention from the standard setters to provide further guidance related to the consistent and accurate numerical value that needs to be assigned to the probability expressions to reduce the ambiguity related to their interpretation. The international accounting standards board (IASB) should pay greater attention to the use of vague probability expressions in developing the IFRSs to promote the true comparability of financial reporting worldwide. Like with any research, this study implies certain limitations specifically related to the sample selection, a sample size, which may affect the generalizability of the results. Thus, future research may rely on a larger sample combining and cover other cultural areas. Practical implications The results of this study may give insights into the practical issues faced by the accounting practitioners and which are related to the interpretation and the application of the IFRS including probability expressions. This may trigger their attention toward this issue to reduce the occurrence of these expressions in the revised and newly released standards to guarantee homogeneous financial reporting practices across countries and enhance the IASB’s objective of international accounting harmonization. Originality/value This study might be the first one that investigates the issue of the IFRS interpretation in two North African and Arab countries: Tunisia and Egypt. It also provides an original investigation of the cultural effect on accounting judgments based on the actualized Hofstede’s cultural indexes, especially for Tunisia which is ignored in the original country classification.

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Section: Impact Of Conservatism and Secrecymentioning

confidence: 90%

mentioning

confidence: 87%

Section: The Effect Of Culture On the Ifrs Interpretationmentioning

confidence: 99%

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The impact of conservatism and secrecy on the IFRS interpretation: the case of Tunisia and Egypt

Eljammi

Damak-Ayadi

Hussainey

2020

JFRA

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“…Other studies refer to the various national accounting standards (Chesley, 1986;Amer, Hackenbrack and Nelson, 1994;Simon, 2002). The interpretation of VPEs used in IFRS has also been discussed in several studies Richter, 2003, 2004;Doupnik and Riccio, 2006;Teixeira and Silva, 2009;Salleh et al, 2011aSalleh et al, , 2011bChand, Cummings and Patel, 2012;Tang and Yang, 2016;Huerta, Petrides and Braun, 2016).…”

Section: Review Of Prior Researchmentioning

confidence: 99%

The Interpretation of "in Context" Verbal Probability Expressions Used in International Financial Reporting Standards - Evidence from Poland

Gierusz¹,

Koleśnik²,

Gembka³

2019

EFAJ

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The objective of this paper is to specify in which way Polish accounting professionals manage to interpret "in context" verbal probability expressions (VPEs) from IFRS. Taking into account the Polish accounting professionals attachment to the prudence principle and the Polish mindset, we research here whether they have a conservative approach when interpreting those expressions. For the purpose of our study we distributed a questionnaire and asked a sample of accountants and auditors from Poland to interpret the term "probable" used in IFRS to establish the threshold for recognition of various accounting elements. Our findings provide evidence that the differences in interpretation of "in context" VPEs by Polish accounting professionals exist. We also find that the level of conservatism shared by Polish accountants and auditors affects their individual accounting judgment.

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The interpretation differences of verbal probability expressions in principles-based accounting standards: evidence from China

Cited by 2 publications

References 0 publications

The impact of conservatism and secrecy on the IFRS interpretation: the case of Tunisia and Egypt

The impact of conservatism and secrecy on the IFRS interpretation: the case of Tunisia and Egypt

The Interpretation of "in Context" Verbal Probability Expressions Used in International Financial Reporting Standards - Evidence from Poland

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