Doctor of Philosophy
Department of Accounting and Finance
Chapple, Sandra, Adoption of International Financial Reporting Standards in Australia: structure, agency and unintended consequences, Doctor of Philosophy thesis, Department of Accounting and Finance, University of Wollongong, 2014. http://ro.uow.edu.au/theses/3984
Purpose: This thesis explores the adoption of International Financial Reporting Standards (IFRS) as one of the most significant decisions in the history of standardsetting in Australia. Although Australian standard setters were actively engaged with the notion of global harmonisation or convergence, their strategy in the early 2000s reinforced domestic discretion in respect of accounting standards. In 2002, however, the Financial Reporting Council (FRC) made a ‘sudden’ decision to adopt the complete suite of IFRS promulgated by the International Accounting Standards Board (IASB). The Australian financial reporting system was transformed from one controlled by a national regulator to one controlled by an international private sector body, negotiating multiple demands from a range of interest groups. A layered theoretical approach is used to explore the context of the decision, and in doing so, a number of unintended consequences are identified.
Approach: The thesis presents a critical history of the Australian adoption decision and its consequences. The primary theory used is Structuration Theory as advocated by Giddens (1976, 1979 and 1984) and modified by Stones (2005). To extend the examination beyond a typical structuration study, the thesis draws selectively from the work of Castells (1996, 1997 and 1998) and his exploration of the globalisation phenomenon. This layered theoretical approach underpins a series of steps (Stones, 2005) which direct the research from an analysis of the broad context of globalisation to the micro context of the FRC members, and which accommodate the complexities and the time/space sensitivities of the transformation of the system of financial reporting.
Conclusions: The globalisation phenomenon of the late 20th century generated radical transformations in the global society, including widespread acceptance of neoliberalist philosophy as the foundation for Western economic, political and cultural practices. The new global society featured the emergence of a network of supranational governance organisations, including the IASB, with the consequent loss of sovereignty for many nation-states. Manifestations in the Australian context extended to a raft of economic policy changes, such as reform to corporate regulation that mandated a move towards a single set of worldwide accounting standards. The FRC was charged with this endeavour, and when faced with the crisis of corporate collapses, acted expeditiously to initiate changes to the financial reporting system in Australia.
The decision was an ‘in-principle decision’, and in the absence of detailed standards, set the scene for the emergence of consequences which were not, and could not be, anticipated at the time of the decision. Significantly, the subsequent role of the US Financial Accounting Standards Board (FASB) in the IASB standard-setting process, along with the considerable political influence of European interests, has served to blur the ‘principles-based’ approach to standard-setting envisioned by Australian standard setters at the time of the decision. Further, the decision has limited the ability of Australian standard setters to shape standards in accordance with domestic requirements. On a practical level, the IASB emphasis on the development of standards for large profit making entities has been problematic in the application of IFRS to the reporting practices of a variety of not-for-profit entities.
Research contributions: The thesis furthers the critical enquiry into histories of accounting, by contributing to a richer understanding of the Australian deference to IFRS. The layered theoretical framework offers a novel approach with which to analyse broad historical contingencies, the relevant institutional relationships and the agency of the FRC. The findings of this study also offer insight for other jurisdictions that are considering the adoption alternative.
Research limitations/future research: The analysis in this thesis is broad and retrospective, necessitating discretion while leaving open the possibility for a more comprehensive study into one or more elements of the structuration process. The research has provided an interpretation of IFRS adoption using publicly available information, however, an alternative account and different perspectives could be given with reference to actual recollections of FRC members, or by participant observation of the standard-setting process. While the thesis focuses on only one process of structuration, the existence of a multitude of complex and competing structuration processes, each contingent on relevant contexts of action, provide possibilities for future research.