The Effects of Accounting Standards – A Comment

Abstract

This paper brings together the comments made by the European Accounting Association's Financial Reporting Standards Committee to a discussion paper (DP) issued by European Financial Reporting Advisory Group/UK Accounting Standards Board (ASB). It analyses the content of the DP and then discusses what effects should be considered. It considers that all effects should be evaluated, irrespective of whether they normally fall within the standard-setter's purlieu, and provides a taxonomy of effects. It illustrates the difficulty of determining what effects should be considered by the standard-setter. The paper then discusses when effects should be reviewed. It agrees with the DP that effects need to be considered from inception of the project. It disagrees that the standard-setter should necessarily be responsible for all of the effects analysis. It argues that effects are likely to be different by geographical region and industry sector, and recourse should be had to national standard-setters and other organisations. While preparers may make representations about effects during the due process, these are not likely to be a representative sample. The paper suggests that in particular post-implementation reviews are better carried out independently. It observes that the DP does not address the practicalities of carrying out research in this area.

The Usefulness of Academic Research in Understanding the Effects of Accounting Standards

“…How do methods and data differ for ex ante and ex post research? Our paper complements the analysis presented in the related paper by Haller et al (2012) which directly addresses the 19 questions that the DP poses.…”

“…Consistent with Haller et al (2012), we use the term 'effects analysis' in a broad sense to encompass the many possible costs and benefits realized by a wide range of stakeholders from the regulation or standardization of firms' financial reporting and disclosure activities. While it can be challenging to undertake full cost -benefit analyses of proposed regulations or standards (see, e.g.…”

Financial Accounting Standards for Micro, Small, and Medium Entities (SAK EMKM) in Indonesia: Factors, and Implication

“…This shows that SMEs with small assets are increasingly compliant with SAK EMKM, facilitating access to the financial industry. This is by the opinion of King (2003) and Haller et al (2012) that the costs allocated for compliance with regulatory compliance will benefit the company.…”

Effects of the implementation of IFRS 16 leases in companies listed in the Colombian Stock Exchange

“…To do so, one must understand that the standards can produce different variations in different groups (efrag, 2011). In this regard, Haller et al (2012) show that the effects associated with a new standard may differ based on geographic region or industrial sector. Therefore, it is essential to identify the possible effects of ifrs 16 on leases in Latin American adopters, since there are no known previous studies that investigate the possible impacts on these entities, and it is essential to establish if the effects given in the literature in external contexts are replicated in this case in Colombian entities listed on the Stock Exchange.…”