Rajni Mala

Effect of the global financial crisis on accounting convergence

Fair value accounting (FVA) is threatening the convergence of accounting practices around the world. It has been regarded as one of the contributing factors of the recent financial crisis. Given that International Financial Reporting Standards (IFRS) have embraced FVA, this financial crisis raises concerns about their suitability for financial reporting across the world. This study explores important implications of the global financial crisis for financial reporting, in particular seeking to identify whether the trend towards convergence has been impeded by inherent problems in the IFRS. Contrary to our expectations, analyses show that the financial crisis has made the case for global convergence of accounting standards more compelling than before. The majority of countries intending to converge in the near future have not been affected by the global financial crisis and are committed to adopt IFRS as planned. The analyses also show that the International Accounting Standards Board (IASB) has been facing pressure from the financial institutions, regulators, policy‐makers and finance ministers to review its rules on FVA. Consequently, the IASB has been undertaking measures to improve the reporting requirements in the light of the financial crisis.

Judgment and Decision-Making Research in Auditing and Accounting: Future Research Implications of Person, Task, and Environment Perspective

The discipline of accounting and auditing has increasingly recognized judgment and decision making (JDM) as highly important attributes in the profession because individuals such as managers, auditors, financial analysts, accountants, and standard setters make pivotal judgments and decisions. Many studies undertaken in this domain of research also substantiate the significance of JDM in accounting and auditing. This study evaluates all the papers published in 10 accounting journals among the leading ones from 1980 to 2010 that fall within the domain of JDM research. The categorization of the studies reviewed in this paper is based on Bonners (1999) three major determinants of JDM: Person, Task, and Environment variables. The review highlights the progress in the literature over the past three decades and also identifies the methodological limitations of previous research. The identified limitations will be useful for improving the research method of future JDM studies in accounting and auditing. The review also draws inferences on how JDM research in auditing, which is well established, could usefully guide future JDM research in financial accounting.