Journal article
The Effects of Out-of-Regime Guidance on Auditor Judgments About Appropriate Application of Accounting Standards
Contemporary accounting research, Vol.34(2), pp.1026-1047
06/01/2017
DOI: 10.1111/1911-3846.12281
Abstract
Accountants making judgments with respect to a particular set of standards are increasingly aware of standards from other reporting regimes that offer additional or conflicting guidance. In fact, IFRS encourages reliance on out-of-regime standards when IFRS lacks guidance. This paper reports the results of two experiments which provide evidence that auditors in such circumstances are vulnerable to contrast effects, whereby reporting judgments under IFRS are systematically influenced away from the accounting treatment supported by standards from another regime (U.S. GAAP). Contrast effects are observed (i) when out-of-regime standards are considered before making a reporting judgment under IFRS, and (ii) when out-of-regime standards are applied as local GAAP for a subsidiary of a foreign parent that reports under IFRS. We also find that contrast effects are reduced when auditors believe IFRS lacks guidance. These results have implications for financial statement preparers and auditors in the current incomplete-convergence environment.
Details
- Title: Subtitle
- The Effects of Out-of-Regime Guidance on Auditor Judgments About Appropriate Application of Accounting Standards
- Creators
- H. Scott Asay - University of IowaTim Brown - Univ Illinois, Urbana, IL 61801 USAMark W. Nelson - Cornell UniversityT. Jeffrey Wilks - Brigham Young University
- Resource Type
- Journal article
- Publication Details
- Contemporary accounting research, Vol.34(2), pp.1026-1047
- Publisher
- Wiley
- DOI
- 10.1111/1911-3846.12281
- ISSN
- 0823-9150
- eISSN
- 1911-3846
- Number of pages
- 22
- Language
- English
- Date published
- 06/01/2017
- Academic Unit
- Accounting
- Record Identifier
- 9984380557602771
Metrics
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