Networks of interpretation: An ethnography of the quest for IFRS consistency in a global accounting firm

Kohler, Hervé; Pochet, Christine; Gendron, Yves

doi:10.1016/j.aos.2021.101277

Cited by 14 publications

(13 citation statements)

References 56 publications

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“…When using judgment to value, financial accountants often preserve distance, based on a rationale that “the more personal financial accounting is the less reliable it will be and then it will not engender trust and comfort” (Huikku et al 2017, 69). In a further example of IFRS implementation in a Big 4 audit firm, Kohler et al (2021) draw attention to the diminished capacity of “local” field auditors to exercise professional judgment due to the advent of more “globally grounded” groups of experts both within and outside the firm. Yet valuers are found to approach valuation in the exact opposite manner: proximity to the valuation is key to the use of judgment by valuers.…”

Section: Discussionmentioning

confidence: 99%

The Production of Value Opinions by Specialized Valuers: Practical Sense and the Enactment of Judgment*

Plante

Maire

Pucci

2022

Contemporary Accting Res

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This article explores how valuers construct value opinions. Although some implications of outsourcing valuation to valuers for accounting purposes have been highlighted in the literature, we add a valuer perspective complementing the accountant's standpoint in order to obtain a fuller picture of these ramifications. Drawing on 62 interviews, we study the role of judgment in valuation and find that judgment is largely tied with the sensemaking of valuers. By examining the valuation activities of art and real estate valuers, we show that these specialized valuers follow a similar valuation process which allows them to grasp how to go on with valuation. This four‐phase process starts and ends by situating the opinion in its specific valuation context and is centered on iterations between researching, analyzing, and relativizing comparable data that may be adjusted to connect with a sense of what the value should be. Overall, judgment is shown to be enacted based on a practical sense of conducting valuation that includes a “gut feeling” of what represents a plausible value. This study suggests that the valuer's input should be recognized as situated, sense‐contingent, and vulnerable to the underlying politics and risks tied to providing an opinion. Our results also point to stark differences between how valuers approach the use of judgment compared to how judgment is typically exercised by accounting specialists.

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Section: Discussionmentioning

confidence: 99%

The Production of Value Opinions by Specialized Valuers: Practical Sense and the Enactment of Judgment*

Plante

Maire

Pucci

2022

Contemporary Accting Res

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“…More recently, IFRS adoption has sparked new interest in the structure-judgment tension. Kohler et al (2021) examined such tension in the context of IFRS interpretation within the audit process, illustrating how newly established professional practice functions (PPFs) play a key role in addressing the increased demand for both structure and judgment that complex accounting issues pose in global accounting firms. Kohler et al show that as global firms strive to control local practice, PPFs enable greater global consistency by intensifying structure while also promoting the relocation of judgment from the local to the global level.…”

Section: Technological Innovation and The Structure-judgment Tension ...mentioning

confidence: 99%

“…Questions on the interplay between technology and professional judgment are related to the long‐standing tension between the trend for increasingly formalized and structured approaches on the one hand and the desire to uphold audit as a domain requiring individual discretion and subjective judgment on the other (Cushing & Loebbecke, 1986; Dirsmith & McAllister, 1982; Kohler et al, 2021; Power, 1992, 2003). The history of audit is marked by the growing “importance of procedural efficiency in the light of the difficulty of observing the output of audit” (Power, 2003, p. 388) and by the ongoing attempt to “balance … expert discretion and impersonal rules” (Power, 1996, p. 8) in the search for standardization, so as to make professional judgments replicable and thus defendable in court.…”

Section: Prior Literaturementioning

confidence: 99%

“…The structure‐judgment debate in auditing has persisted for decades and is often given new life when audit embraces new technology. However, it is curious that few studies have sought to empirically unpack the dynamics of this interrelationship (Kohler et al, 2021). Building upon conceptual work on habit (Camic, 1986; Crossley, 2013; Turner & Cacciatori, 2016), we explore the ways in which audit judgment is both shaping and being reshaped by the advent of audit technologies.…”

Section: Introductionmentioning

confidence: 99%

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Auditor judgment in the fourth industrial revolution

Samiolo,

Spence,

Toh

2023

Contemporary Accting Res

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Discourse proclaiming the advent of a fourth industrial revolution predicts significant disruption to various work domains in the near future. Auditing is one of the domains where bold claims about the potential of technology are being made, with technology expected to augment auditors' judgments and, in time, possibly automate them. Drawing on 44 in‐depth interviews with auditors, regulators, and emergent artifical intelligence software providers, we question the prevailing narrative around technological change in auditing which suggests that ostensibly simple, low‐level technical tasks are areas where little judgment is at play and thus are ripe for automation. We show that significant elements of deliberation, sensemaking, and reflexivity, arguably critical for the socialization of early career auditors into the profession, may be lost when automating areas of work perceived as low value, leading us to question what it means to apply judgment in auditing. Conversely, higher‐level aspects of the audit process may be assisted by technology and augmented in different ways, yet new technological structures generate new areas of indeterminacy which pose new and yet unresolved demands on auditors' judgment. Overall, the paper shows how auditor habits are changing and highlights the risks posed by new technologies to the acquisition of practical knowledge by auditors.This article is protected by copyright. All rights reserved.

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“…More and more investments take place on a global level for expansion of businesses and set up new partnerships. This has been given impetus to increasing the debate on whether there is a need to be a global set of accounting standards like IFRS or not (Evans Ocansey et al, 2014;Kohler et al, 2021;Minga Negash, 2008). The differences in accounting reports do create problems of misunderstandings, inefficiencies, and uncertainties to participants in the global economy, accounting diversity can be a barrier to cross-border investment (Siregar et al, 2020;HABTOOR, et al,2020).…”

Section: Introductionmentioning

confidence: 99%

Impact of The Quality of Financial Reporting Environment on the Organizational Foreign Direct Investment in the Arab Countries

Mohamed

Bekkay³

2021

IJIHRM

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The study aimed at revealing the nature of the relationship between foreign direct investment and the quality of the Arab financial reporting environment after adopting IFRS during the period 2007 - 2018. To study this relationship, the paper uses panel cointegration with a corresponding vector error correction model (VECM) to investigate in three main areas: Business impact of rules on FDI, FDI based on technology transfer, Prevalence of foreign ownership, by using the Eviews.7 program. The results showed a long-run relationship between the quality of the Arab financial reporting environment and the foreign direct investment in all indicators and the same period. This is the first study that we are aware of to directly examine this relation in Arab Economies, thus, this paper provides new empirical evidence in Arab Economies for increased resource allocation efficiency.

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Networks of interpretation: An ethnography of the quest for IFRS consistency in a global accounting firm

Cited by 14 publications

References 56 publications

The Production of Value Opinions by Specialized Valuers: Practical Sense and the Enactment of Judgment*

The Production of Value Opinions by Specialized Valuers: Practical Sense and the Enactment of Judgment*

Auditor judgment in the fourth industrial revolution

Impact of The Quality of Financial Reporting Environment on the Organizational Foreign Direct Investment in the Arab Countries

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