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Disclosure of the impacts of adopting Australian equivalents of International Financial Reporting Standards

Jumat, 20 Mei 2011 | No Comments | Labels : ,

Disclosure of the impacts of adopting Australian
equivalents of International Financial Reporting Standards


Philip D. Palmer
Flinders Business School, Flinders University, Adelaide, 5042, Australia

Abstract
This study investigates two disclosure variables (Extent and Quality) in relation to compliance with paragraph 4.1 (b) of AASB 1047 Disclosing the Impacts of Adopting Australian Equivalents to International Financial Reporting Standards. Using a sample of 150 Australian listed firms, I find that the extent and quality of disclosure is influenced by firm size, leverage and auditor firm size, with the latter variable being the most significant. In general, the results suggest that many
companies might have relied on sample disclosures provided by their auditors, perhaps limiting both quality and intent. Additionally, the ultimate usefulness of broad and imprecise standards might be questionable. Smaller companies might also require more guidance and assistance with their preparation for the adoption.
Key words : Voluntary disclosure; Mandatory disclosure; Agency theory; International accounting standards
JEL classification : M41

1. Introduction
This paper investigates the quality and quantity of disclosures made in compliance with AASB 1047 Disclosing the Impacts of Adopting Australian Equivalents to International Financial Reporting Standards (Australian Accounting Standards Board, 2004). As a means of keeping stakeholders informed of the likely impact of adoption of Australian Equivalents of International Financial

The author would like to thank Peter Gerhardy, Bruce Gurd, Matthew Tilling, Carol Tilt, Bryan Howieson, Ian Zimmer (Deputy Editor) and an anonymous referee for their helpful
input, comments and feedback on this paper.

Reporting Standards (AIFRS), the AASB released AASB 1047. The standard applied to annual and interim reporting periods ending on or after 30 June 2004 to first time adoption of AIFRS. AASB 1047 was of major significance as it required companies to disclose their level of preparedness leading up to the adoption of AIFRS, and what they consider the impacts of adoption to be. The objective of the standard was to ensure users of financial reports have information about the impact of adoption, as well as information concerning how companies
are preparing for adoption.

The scope of the present study is limited to paragraph 4.1 (b) of AASB 1047, which requires a narrative explanation of the key differences in accounting policies that are expected to arise from adopting AIFRS. An explanation of how the transition to AIFRS is being managed, required under paragraph 4.1 (a) of AASB 1047, is therefore not considered in the current study.

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