Auditors' sensemaking of other comprehensive income through metaphors

Abstract

PurposeThis paper aims to examine how auditors make sense of the ill-theorized and contentious notion of other comprehensive income (OCI), specifically by uncovering their use of metaphors to make OCI plausible and intelligible.Design/methodology/approachThis interpretative paper draws on a collection of 21 interviews with experienced auditors. The analysis first uncovers metaphors that naturally surface within the talk and sensemaking of auditors about OCI (elicited metaphors). The authors then encapsulate these elicited metaphors into second-order constructs (projected metaphors) to synthesize and further explain auditors’ practical sensemaking.FindingsAuditors conceive OCI as a “safety” that ensures the well-functioning of fair value accounting, metaphorically qualifying this notion as a “necessary evil”, a “passage obligé”, and a “parking lot” resolving fair value-related issues and aberrations. Auditors also metaphorize OCI as a “purifier” that allows “polluted”, “noisy”, and “unloved” items to be “parked” outside net income.Practical implicationsThe study’s findings further the understanding of auditors’ tendency to remain uncritical throughout their sensemaking process. Making sense of professional standards of practice through metaphors indubitably involves shadowing and silencing other worldviews.Originality/valueThis paper extends knowledge of auditors’ sensemaking, specifically showing how auditors easily make sense of complex notions even in the absence of conceptual grounds. This study also highlights that metaphors are a powerful sensemaking device that auditors mobilize to render complex notions intelligible and mitigate IFRS inconsistencies.

Financial Effects of Other Comprehensive Income on Smes in Medellín - Colombia

“…In the context of SMEs, ORI can encompass a variety of elements, such as changes in the fair value of availablefor-sale investments, foreign currency translation differences, current and accumulated revaluation gains and losses on assets, among others. These elements can influence the structure of the statement of financial position and ultimately the company's ability to generate sustainable profits in the long term (Durocher et al, 2023). Proper management of ORI is essential for SMEs because it can affect investor perception, the solvency of the firm and its ability to distribute dividends.…”