Resisting compliance with IFRS goodwill accounting and reporting disclosures

Tyrone M. Carlin · Nigel Finch

45 citations0/0 files storedJournal of Accounting & Organizational Change

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Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting Financial Reporting and XBRL

Abstract

Purpose The purpose of this paper is to report the findings of a study designed to understand the extent of compliance with the goodwill accounting and reporting disclosure requirements under AASB 136 among a sample of goodwill intensive Australian firms over the first two years of their IFRS adoption. Design/methodology/approach Examining the goodwill reporting practices adopted by a sample of 50 large Australian listed firms, which disclosed the existence of goodwill in each of the first two years in which they produced financial statements pursuant to IFRS. The quality and technical accuracy of the goodwill disclosures produced by these organisations together with an assessment of evidence of variation in these over time provides an evidentiary basis for analysis. Findings The paper finds continued high levels of non‐compliance with the goodwill accounting standard suggesting that a viable organisational option in the face of change is to fail to take steps to comply. This organisational response undermines the assumptions of consistency and comparability as key qualitative characteristics under IFRS. Originality/value The focal question pondered pertains to the nature of organisational responses to changes such as those brought about by continued development and reform of financial reporting standards. This is a question with potentially significant implications for a range of stakeholders including auditors, financial analysts, regulators and report users.

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1985Positive Accounting Theory 1985The effect of bonus schemes on accounting decisions 2003Conservatism in Accounting Part I: Explanations and Implications 2011The effects of bonus schemes on accounting decisions 2002The financial numbers game: detecting creative accounting practices 2006Leading Indicators of Goodwill Impairment 1991The accountant as partisan 2006Fair-value accounting: A cautionary tale from Enron

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2014Firms' compliance with the disclosure requirements of IFRS for goodwill impairment testing 2013Disclosure of Goodwill Impairment under AASB 136 from 2005–2010 2011Defining goodwill: a practice perspective 2021Framing accounting for goodwill: Intractable controversies between users and standard setters 2019Disclosure Overload? An Empirical Analysis of International Financial Reporting Standards Disclosure Requirements 2023The quality of voluntary and mandatory disclosures in company reports: a systematic literature network analysis

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