tailieunhanh - IFRS compliance in the year of the pig: Hong Kong impairment testing

IFRS compliance in the year of the pig: Hong Kong impairment testing. Several studies have assumed that the implementation of IFRS can enhance the quality of financial reports, in turn improving their reliability and usefulness (Wyatt, 2005; Barth et al., 2008). However, such studies generally suggest that the introduction of IFRS guarantees consistency and compliance in practice. | Journal of Economics and Development, , , April 2014, pp. 23-39 ISSN 1859 0020 IFRS Compliance in the Year of the Pig: Hong Kong Impairment Testing Tyrone M. Carlin The University of Sydney Business School, Australia Nigel Finch The University of Sydney Business School, Australia Dung Manh Tran National Economics University, Vietnam Email: tmdungktoan@ Abstract Several studies have assumed that the implementation of IFRS can enhance the quality of financial reports, in turn improving their reliability and usefulness (Wyatt, 2005; Barth et al., 2008). However, such studies generally suggest that the introduction of IFRS guarantees consistency and compliance in practice. Given that goodwill impairment testing under IFRS presents a technically challenging task (Hoogendoorn, 2006; Wines et al., 2007) that can materially impact the determination of economic profit, this study focuses on assessing the compliance quality of a large sample of Hong Kong listed firms that are mature IFRS adopters. By examining the detailed disclosures made by 264 large listed firms in 2007, three years after Hong Kong’s implementation of IFRS, an alarmingly high rate of non compliance with HKAS 36 still exists among these goodwill-intensive firms, casting doubts over the hypothesis that lax compliance is a characteristic associated solely with early adoption. Keywords: Goodwill, impairment, financial reporting standard, HKAS 36, Hong Kong. Journal of Economics and Development 23 Vol. 16, , April 2014 1. Introduction represents a precondition to the achievement of harmonisation and unification of practice, yet in much of the accounting and reporting literature, this dimension of practice has been overlooked. The globe’s financial reporting landscape has undergone dramatic change over the course of the past decade. A key driving force for this has been the rapid uptake of IFRS in substitution for localised accounting This trend has been highly evident .