Practitioners' participation in the accounting standard-setting process

Abstract

Constituents' participation in standard-setting processes is seen as a key indicator of a standard setter's legitimacy. While previous research has mainly examined corporate economic determinants of participation, limited evidence exists on practitioners' motivations to become involved in developing accounting standards. This study uses expectancy theory to explain practitioners' intentions to participate in the standard-setting process in the context of the development of financial reporting standards for private enterprises in Canada. The results suggest that the variables of the expectancy valence model are determinant of the attractiveness of becoming involved in the standard-setting process by submitting a comment letter, and the variables of the expectancy force model are determinant of a practitioner's behavioural intentions to participate in the standard-setting process.

IFRS FOR SMEs: THE IASB'S DUE PROCESS

“…Studies of constituent participation and lobbying in accounting standard setting in Australia (Tutticci et al 1994; Ryan et al 1999), Canada (Durocher and Fortin 2011), New Zealand (Baskerville and Newby 2002; Bradbury and Van Zijl 2006), and the US (Johnson and Solomons 1984; Tandy and Wilburn 1992; Beresford 2001) have identified preparers as the most active participants in the due process of developing a standard, while users tend to be as under‐represented. Studies of constituent participation in the International Accounting Standards Committee's (IASC) standards have found a wider range of interest groups participating, including national standard setters, multinational organisations and other international organisations (Kenny and Larson 1993, 1995; Larson and Brown 2001).…”

FASB's Not-for-Profit Financial Reporting Project: Analysis of Letters to ASU 2016-14 Exposure Draft

“…Written submissions to the rule-makers are one way in which lobbying takes place. The analysis of comment letters to accounting standard-setting bodies is the most frequently used approach to examine attempts to influence the standard-setting process (e.g., Allini, Aria, Macchioni, and Zagaria 2018;Bline and Skekel 1991;Durocher and Fortin 2011;Durocher, Fortin, and Cote 2007;Georgiou 2002Georgiou , 2010Holder, Karim, Lin, and Woods 2013;Kidwell and Lowensohn 2018;Saemann 1999;Schalow 1995;Tandy and Wilburn 1996;Yen, Hirst, and Hopkins 2007). Sutton (1984) reasons that the cost/benefit calculation prompts the decision to lobby rule-makers.…”

“…Economic reasons have been widely cited as motivation to participate in the accounting standard-setting process (Dechow, Hutton, and Sloan 1996;Schalow 1995). Moreover, Durocher and Fortin (2011) conclude that two factors impact the decision to participate in the standardsetting process through comment letters. First, having available time and resources to participate and, second, the expectation that there is a legitimate opportunity to influence the result.…”

Lobbying on the IASB Standards: An analysis of the Lobbyists’ Behaviour over Period 2006–2014

“…by inviting them to participate in the preparation phase of new standards. Active participation of interested parties is a necessary condition for legitimacy of the due process and its quality (Durocher, Fortin 2011). The degree of activity also indicates the importance and expected impact of a new standard on benefits of affected parties.…”