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Additional Guidance Provided on International Financial Reporting Standards and its Impact on the Judgments and Confidence of Accountants

2012; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.1983199

1556-5068

Rajni Mala, Parmod Chand,

Financial Reporting and Valuation Research

Using an experiment, this study extends prior research on accounting judgment and decision-making by examining the impact of additional guidance provided on International Financial Reporting Standards (IFRS) (in addition to what is contained in the relevant IFRS) as a decision aid on the accuracy of judgments and the confidence the accountants have on their judgments. Unlike earlier studies, this study also examines the interactive effects of task complexity and additional guidance on the judgments of accountants. The results provide evidence that those accountants who are provided with decision aids in the form of additional guidance on IFRS make more accurate judgments than those accountants who are not provided with any additional guidance on IFRS. Additionally, the results show that the use of decision aids in the form of additional guidance on the accounting standards increases the confidence accountants have on their judgments. The results provide evidence of the importance of the additional guidance on the principles-based IFRS in addition to what is currently being provided in IFRS and by the International Financial Reporting Interpretations Committee (IFRIC). Additionally, the results of this study are of importance to the preparers of financial reports as it shows that the confidence on the judgments and decisions made can be increased by using decision aids in the form of additional guidance on IFRS when undertaking complex accounting tasks. This also suggests that accountants should exploit any guidance which is currently provided in IFRS and by the IFRIC.