Determinants of IFRS compliance in Africa: analysis of stakeholder attributes

Purpose: This paper examines the drivers of companies’ compliance with IFRS using the stakeholder salience theory. Research Methods: We have used panel data from 205 companies to examine the IFRS compliance level across 13 African countries. Our study has also established the relationship between stakeholders’ attributes and firms’ compliance with IFRS. Findings: On IFRS compliance, we found that the average compliance score among the companies over the period was 73.09% with a minimum score of 62.86% and maximum of 85.61%. We found a significant positive association between audit committee competence (ACC) and compliance and found the same for chartered accountants on board (AOB). There is less compliance with the latest standards, such as IFRS 3, 7, and 13. Also, IAS 17, 19, 36, and 37 are problematic across the sample. We also found that compliance has been increasing over the years. Practical implications. For companies, our studies provide empirical evidence on the importance of having chartered accountants’ corporate boards as well as competent audit committees involved in ensuring high compliance with IFRS. Our findings also provide valuable information for professional accounting organizations on the role of its members (chartered accountants) in the effectiveness of IFRS compliance. Value/Contribution: This study complements and updates prior studies on IFRS compliance with findings from Africa, a region that has been neglected in the literature. It provides empirical evidence on the importance of chartered accountants sitting on corporate boards in ensuring high compliance with IFRS

International Standards on Auditing in the International Financial Services Centres: What Matters?

Purpose- This paper aims to (1) investigate the position of International Financial Services Centres (IFSCs) in the International Federation of Accountants’ countries’ status on International Standards on Auditing’s adoption and (2) assess the factors influencing ISA adoption in these Centres. Design/methodology/approach- This research drew its data from various sources, including the World Economic Forum dataset, the World Bank Report on Observation of Standards and Codes, the World Development Indicators and the Economic Intelligence Unit Report on Democracy Index on fifty countries classified as IFSCs. The adoption status is then regressed on a number of variables of interest. To establish that our results are robust, we used a combination of different regression techniques comprising OLS, multinomial and logistic regressions. Findings- In addition to GDP growth and education level, this paper adds new evidence to the literature by reporting the positive association between the level of democracy and the enforcement of securities’ regulation on ISA adoption. It argues that political, economic, social and legal factors impact on ISA adoption in the IFSCs. Research limitations/implications- The sample size is limited to 50 from a population of 99 IFSCs because of lack of data. Some of the independent variables are basically archival data. Reliance is placed on WEF with regard to the measurement of protection of minority interest, securities and exchange regulations, and on Economic Intelligence Unit for democracy index. Practical implications- This paper stresses the importance of ISAs in IFSCs and the role of political power and the enforcement of securities laws on the adoption of ISA. Originality/value-This study fills the research gap relating to the absence of empirical studies on ISA adoption and its drivers in IFSCs.N/

Threats to auditor independence: Evidence from Iran

This paper aims to examine threats to auditor independence in Iran. A mixed questionnaire, including both quantitative closed-ended questions and an open-ended qualitative question, is developed to investigate threats to auditor independence. Moreover, thematic analysis is used to triangulate the results against financial media articles throughout 1994 – 2014. Findings suggest that while bribery, non-audit services, and economic condition are key threats to auditor independence in Iran, gifts and presents do not compromise independence given the Iranian culture. This study contributes to a better understanding of auditor independence in Iran, which may apply to other regional settings. Moreover, it provides some suggestions to improve the current Iranian Audit Organisation’s auditor independence framework. (JEL M32)N/

The Perceptions and Determinants of Auditing and Reporting Quality in the Asia-Pacific Region

A country’s institutional environment significantly influences perceptions of auditing and reporting quality (ARQ) at the national level. Relying on a relatively unique measure of ARQ, collated by the World Economic Forum (WEF), we evaluate the influence of nine key isomorphic pressures on the ARQ in 26 Asia-Pacific countries. The results suggest that six of these (the efficacy of the corporate board, securities exchange regulations, reliance on professional management, protection of minority interests, adoption of international financial reporting and prevalence of foreign ownership) have a highly significant influence on the perception of ARQ whereas adoption of international standards on auditing is only moderately significant. However, contrary to expectations, our findings do not support the argument that the efficiency of legal frameworks and political systems significantly influence the perceptions of auditing and reporting quality in the Asia-Pacific region. These results should be of use to investors and the accounting profession in evaluating economic environments

The adoption of IPSAS (accrual accounting) in Indonesian local government: a neo-institutional perspective

This study investigates the speed and drivers of IPSAS adoption in Indonesia. Using data from 205 local government entities, the results show while the interaction between auditors and representatives of opposition on the council has more impact on the speed of adoption than with the councillors representing the government, the timing of the council meeting has delayed the adoption of IPSAS accrual. Government grant, Supreme Audit Office, councillors and religious beliefs are the isomorphic drivers of IPSAS adoption. Our results support the hypotheses that the three institutional pressures (coercive, mimetic and normative) influence the speed of IPSAS adoption.N/

International Standards on Auditing (ISAs): conflicting influences on implementation

This chapter sets the scene for further research and empirical forays on the adoption and use of auditing standards generally, and ISAs specifically, by providing (i) a review of the (limited) academic literature on ISAs, (ii) a broad picture of ISA ‘implementation’ (or the apparent variations or lack of implementation) in developing and emerging economies and (iii) a specific illustration of how ISAs have permeated a developing economy (Egypt)

Corporate governance compliance and disclosure in the banking sector: using data from Japan

Using regression model this study investigates which characteristics of a bank is associated with the extent of corporate governance disclosure in Japan. The findings suggest that on average 8 banks out of a sample of 46 disclose optimal corporate governance information. The regression model results reveal in general that non-executive directors, cross-ownership, capital adequacy ratio and type of auditors are associated with the extent of corporate governance disclosure. Of these four variables, non-executive directors have a more significant impact on the extent of disclosure contrary to total assets and audit firms of banks in the context of Japan. The findings of this paper are relevant for corporate regulators, professional associations and developers of corporate governance code when designing or updating corporate governance code

Accounting developments in Africa: a study of the impact of colonisation and the legal systems on accounting standards in sub-Saharan African countries

This article studies the impact of colonisation and the legal systems on the accounting standards in Sub-Saharan Africa (SSA). The countries are grouped according to their colonies and legal systems in order to identify as to under which jurisdictions the adoption of IAS is more common. Consequently, the study reveals that the majority of the countries which were under the British colonisation and legal system, either fully or partly, adopt the IAS contrary to the ex-French colonies. However, Kenya and Mauritania use the IAS although they are administered under the Islamic law

Corporate governance in the financial services sector of small island economies: a case study of Mauritius

This study investigates the practices of corporate governance in the financial services sector of small island economies with special reference to banks and insurance companies in Mauritius with a view to assess the level of compliance. The financial sector is today an important economic pillar on which the government is relying given the imminent recession in the sugar industry. In this respect financial institutions play a key role because they are the core set of the financial sector. It is therefore important for people to have confidence in both banks and insurance companies of their country. This is possible by ensuring compliance with good governance. In Mauritius, the Central Bank has issued its guidelines on good corporate governance for banks and this guide is made in line with the Corporate Governance Code issued by the National Committee on Corporate Governance. Banks are also required to comply with the codes as per the Banking Act 2004 and the Financial Reporting Act 2004. In a similar vein insurance companies should comply with the National Code on Corporate Governance and relevant laws related to good governance of insurance business, such as the Insurance Act 2005, the Financial Services Commission guidelines on Corporate Governance and the Financial Services Development Act 2002. In addition insurance companies should also comply with the Companies Act 2001 and the Financial Reporting Act 2004. This paper initially reports on the practice of corporate governance in the financial services sector of small island economies by drawing data from the Financial Sector Assessment Programme of the International Monetary Fund. A content analysis of the annual reports of companies in the sector is used to assess the level of compliance to corporate governance code in Mauritius and concludes that compliance rate is above 70% as regards board’s composition, audit committee, disclosure of policies and practices. This study reports that there are few cases of noncompliance with the National Code but good governance is necessary in the financial services sector to inspire stakeholders confidence.Full Tex

Lifting the veil of GDP and re-defining the concept of development in the context of accounting

The paper entitled 'Lifting the Veil of GNP and Redefining Developing Countries in the Context of Accounting' discusses that the level of GDP per head or other general economic indicators may not be the most relevant factors to define a developing economy. 29 countries are redefined in the accounting context and then ranked. This study reveals that a few countries, which are developing countries in the eyes of economists, are in fact classified as developed countries in the context of accounting and financial reporting. Further accounting indicators provide more relevant and specific indicators for the purpose of accounting