Understanding participation in accounting standard‐setting: the case of AASB ED 192 Revised Differential Reporting Framework

Abstract

This paper explores the motives of participants in the standard‐setting process, based on the premise that standard‐setters strive for standards that are useful for decision‐making by a wide range of financial statement users. Our setting is the development of a contentious but contained Australian accounting standard, Reduced Disclosure Requirements. A consultative process initiated by the Australian Accounting Standards Board to create a specific Australian accounting standard for differential reporting provided an opportunity for interested parties to participate. We analyse the motives of participants through semi‐structured interviews with members of the Australian Accounting Standards Board and comment letter writers who responded to the relevant exposure draft. Our findings identify participants’ economic and political motivations and question the ability of the current standard‐setting process to extract decision‐making requirements from a wide range of users of financial statements and to reflect these in financial reporting standards. We find that the perspectives gathered are homogenised and that the process privileges the voices of powerful elites.

Grouping of Major Changes in Conceptual Framework of Financial Reporting and Analysis of New Challenges

“…As the reviewed studies showed some gaps and disadvantages in the Conceptual Framework 2018, in this article it was decided to group all changes in the Conceptual Framework into four categories (RQ №2): a) filling gaps that existed before 2018 -in the -Filling gaps‖ group, b) clarification of uncertainties in past concepts (1989) or return them without any changes, which is assumed to be the main advantage of the Conceptual Framework IASB 2018 -in the -Clarifying‖ group, c) changed priority concepts -in the -Priority‖ group, d) updates that did not exist in none of the Conceptual Framework versions previously -in the -Updating‖ group. Fourth, the studied motives of the participants in the process of standard-setting (Handley et al, 2020) provide conclusions that this development process is managed by a certain elite close around the IASB. The exciting research made by Сade et al (2019) in terms of questions about an asset and a liability was found despite the data used by 2016.…”

“…This is especially the case when some rules are not prescribed by IFRS, and national rules contradict international ones. Second, there is growing interest in the revised Conceptual Framework for financial reporting due to the consistent understanding by standard-setters and practitioners (Cordery and Sinclair, 2016); Tokar, 2018; Handley et al, 2020). The Conceptual Framework is the necessary foundation on which all IFRS accounting philosophy is built and is an integral part of standards.…”