Year

2002

Degree Name

Doctor of Philosophy

Department

School of Accounting and Finance

Abstract

The purpose of this research is to empirically investigate via a questionnaire survey of the need for, economic implications of, possible obstacles to, and how useful the five selected relevant inputs are to harmonization of the Australian accounting standards with IFRSs [International Financial Reporting Standards, which was recently known as the IASs] of the IASB by building on, and extending the research study of Gokam (1984). The relevant inputs of harmonization explored in this study are as follows: funding, adoption criteria, use of an accounting conceptual framework, use of cost/benefit analysis, and administration criteria. For this research study, the three relevant sample groups were accountants in public practice, commerce/industry accountants and accounting academics.

A fortiori, harmonization of Australian accounting standards can be expounded as a process, whereby the Australian accounting standards are brought in concord with the accounting standards of the IASB. Prima facie, harmonization of accounting standards propounds quite substantial economic benefits, implications and importance to Australia. Inter alia, harmonization encourages direct investment inflows via the stock market; increases demand for information preferably by capital markets; truncates financial accounting complications emanating from MNCs/Australian corporations; and enhances uniformity, consistency and comparability of accounting information [to users, investors, financial analysts etc]. On the other hand, harmonization of accounting standards has a number of obstacles. These are cultural, political, administrative and economic obstacles.

The divergence of opinions between and amongst the three accounting subgroups on harmonization issues [e.g. economic implications of, obstacles to, & use of relevant inputs] reveal that it is sine qua non that these discrepancies amongst these groups be examined and evaluated. The statistically significant differences of opinion amongst the three accounting subgroups highlight that more research needs to be carried out on the wider implications of harmonization and its appropriateness - the need for, economic implications of, obstacles to, and use of relevant inputs. Thus, this research investigation provides a useful model for reviewing and assaying the appropriateness of the Australian harmonization program.

Furthermore, the divergence of opinions amongst the three accounting subgroups on harmonization issues underscore the necessity of extensive educational programs and public conferences to disseminate information on the ramifications of the Australian harmonization program. The dissemination of information should be directed to accountants, users of accounting information [e.g. investors, stock market brokers, business firms etc.] and to institutions that use accounting information - as many respondents were not aware of the consequences of the Australian harmonization program. In addition, the Australian accounting standard setting and professional bodies should explore ways of enhancing greater cooperation with leading foreign standard setting bodies (e.g. FASB & IASB). This will ensure that accounting standards released in Australia are not only in consonance with those of the IASB, but also are of high quality.

It is envisaged that this research study on the harmonization of accounting standards will present useful and vital information to the Australian accounting standard setting bodies such as the AASB , Australian Government, professional accounting bodies in Australia [e.g. CPA Australia & ICAA] and so forth - as it will point out contentious aspects of harmonization that need to be addressed and improved. Furthermore, the investigation shows that the demographic profile attributes [e.g. working experience, education levels, professional status & English speaking background] do have some effect on the perceptions of the accountants from the three accounting subgroups.

The questionnaire comprised of five sections. Section 1 requested demographic profile characteristics of respondents. Section 2 investigated the need for harmonization; section 3 examined the economic implications of harmonization; section 4 explored the obstacles to harmonization; and section 5 analyzed the use of the five selected inputs relevant to harmonization of accounting standards. The null hypotheses were developed from the research question and the research objective. Ceteris paribus, the specific research null hypotheses for this empirical investigation can be enunciated, as follows [in abridged form]:

There are no statistically significant differences of opinion in the perceptions of accountants from the three accounting subgroups (public practice accountants, commerce/industry accountants & accounting academics) with regard to: [i] the need for, [ii] the economic implications of, [iii] possible obstacles to, and [iv] the use of five selected inputs relevant to harmonization of Australian accounting standards.

An aggregate of 841 questionnaires was sent to accountants in public practice, commerce/industry accountants and accounting academics. The questionnaires yielded a response rate of 52.4%. Non-parametric tests [e.g. Mann Whitney & Kruskal Wallis tests] were utilized to evaluate and analyze the statistical data. The sets of research null hypotheses were examined in Part B and Part C of chapter 6. In Part B of chapter 6, the research null hypotheses were analyzed amongst the three industry subgroups, using Kruskal Wallis and Mann Whitney tests. The findings [perceptions] of this research accentuate that the three accounting subgroups:

• support the present continuing need for Australia to harmonize its accounting standards with those of the IASB;

• differ on the economic implications of harmonization [on finance & capital markets; and on international trade & investment];

• differ on the obstacles to harmonization [political & administrative obstacles; cultural obstacles]; and

• differ on the use of relevant inputs [funding; use of cost/benefit analysis; and administration criteria].

In Part C of chapter 6, the null hypotheses were the same as those of Part B, except that they took into consideration the demographic profile characteristics of respondents. In other words, the findings of the research investigation in Part C of chapter 6 were based on the demographic profile characteristics of accountants [e.g. education levels, working experience levels, English speaking background, and professional status] with regard to the need for, economic implications of, obstacles to, and the application of five relevant inputs to the Australian harmonization program. Assessing and examining the questionnaire from the aforementioned profile characteristics of respondents gives a better insight and meaningful understanding of the perceptions of respondents on the need for, economic implications of, obstacles to, and on the use of relevant inputs to harmonization of the Australian accounting standards. From the aforesaid demographic profile characteristics of the accountants from the three accounting subgroups, the following were noted:

[1] Education level: For accountants from the three accounting subgroups with less than a Bachelor's degree in accounting, statistically significant difference of opinion was noted only for political obstacles to harmonization. Likewise, accountants from the three accounting subgroups with a Bachelor's degree in accounting displayed statistically significant differences of opinion only for administration criteria. For accountants from the three accounting subgroups with a Grad Diploma in accounting, no statistically significant difference of opinion was observed. Furthermore, for accountants from the three accounting subgroups with a Master's degree in accounting, statistically significant differences of opinion were noted on: (i) the need for harmonization [present continuing need; economic need; corporate cultural need], (ii) the economic implications of harmonization [finance & capital markets; international trade & investment; financial reporting], (iii) possible obstacles harmonization [political & administrative obstacles; cultural obstacles], and on (iv) inputs [funding; use of cost benefit analysis; administration criteria; use of the Australian accounting conceptual framework and adoption criteria].

[2] Working experience: For the accountants from the three accounting subgroups with working experience of 0-2 years, statistically significant differences of opinion were seen for the economic implications of harmonization [international trade and investment].

For the accountants from the three accounting subgroups with working experience of 3-5 years, no statistically significant difference of opinion was noted.

For the accountants from the three accounting subgroups with working experience of 6-10 years, statistically significant differences of opinion were seen for the economic implication of harmonization [finance & capital markets] and on one input [use of administration criteria]

For accountants from the three accounting subgroups with working experience of 11 years and over, statistically significant differences of opinion were noted on: (i) the need for harmonization [corporate cultural need], (ii) the economic implications of harmonization [finance & capital markets; international trade and investment], (iii) possible obstacles of harmonization [political obstacles; cultural obstacles], and on (iv) inputs [funding; use cost/benefit analysis].

[3] Professional status: For the Chartered Accountants (CAs) from the three accounting subgroups, statistically significant differences of opinion were observed on: (i) the need for harmonization [corporate cultural need], (ii) economic implications of harmonization [financial reporting], (iii) possible obstacles of harmonization [political obstacles; cultural obstacles], and (iii) on one input [funding]

However, the Certifying Practising Accountants (CPAs) displayed statistically significant differences on: (i) the need for harmonization [present continuing need; corporate cultural need], (ii) the economic implications of harmonization [finance & capital markets; international trade & investment], and on (iii) inputs [funding; use of cost/benefit analysis; administration criteria].

Interestingly, accountants from the three accounting subgroups who had dual membership [i.e. had CPA & CA status] indicated no statistically significant differences of opinion for any of the hypotheses. In other words, the accountants who had dual membership thought similarly on the need for, economic implications of, obstacles to, and on the use of selected inputs relevant to harmonization of Australian accounting standards.

[4] English speaking background: The accountants from the three accounting subgroups who came from an English speaking background reported statistically significant differences of opinion on: (i) the need for harmonization [corporate cultural need], (ii) the economic implications of harmonization [finance & capital markets; international trade & investment], (iii) the possible obstacles to harmonization [political obstacles; cultural obstacles], and (iv) on the use of relevant inputs of harmonization [funding; use cost/benefit analysis; administration criteria]. Per contra, no statistically significant differences of opinion were noted for the accountants from the three industry subgroups w h o came from a non-English speaking background.

The final chapter presents the summary, inherent limitations of this research investigation, conclusions and recommendations for future studies on the harmonization of Australian accounting standards. Moreover, the final chapter of this study submits that the scope of this research needs to be examined in the context of its miscellaneous limitations.

These limitations encompass: a moderate response rate of the questionnaire survey [a high rate would have been better]; small sample size; limited availability of funds; time constraints; perceptions of accountants may change over time; questionnaire survey limitations [e.g. limited number of issues can be investigated via a questionnaire survey]; and partners of accounting firms' may assert the views of the firm, rather than their individual views.

Finally, recommendations are proposed for future research. These advise for undertaking the same research after a stipulated period [e.g. 3-5 years later]. Future research could also take into consideration - the perceptions of commercial lawyers, retired accountants, government accountants and auditors, and the impact of culture on the harmonization of Australian accounting standards.

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