10.3.5 Projecting Gramscian ideas into the current international financial reporting
10.3.5.4 Do inconsistencies in the impact of IFRSs serve challenge the status quo? . 216
Despite the fact that qualitative characteristics, whether comparability or transparency, have not been fully attained since their inception as objectives of financial reporting, the interviewees do not appear to be concerned about not achieving them, nor do they challenge the rationale behind the way economy is structured and functions. Deviations become the subject of justifications rather than locating the matter as an issue associated with the capitalist mode of production. Accounting quality effects are considered to have been overwhelmed by institutional and regulatory features that are unique to particular national settings. IFRSs are described as the perfect financial reporting system and are centuries ahead, or the IFRSs standard setters are described as geniuses. IFRSs are described as an ideal accounting framework, on the condition they are ‘appropriately’ and ‘objectively’
implemented. For example, regarding the valuation of fixed assets, IFRSs and the use of fair values show a more accurate value of the assets than the historic costs method used under the GGAP.
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Confronted with deviations between the benefits supported by IFRSs supporters and the actual effect from the existence of higher quality financial statements prepared in accordance with IFRSs users and preparers makes sense of the situation by mobilising certain explanations. Aside from the challenges faced during the transition and first period of adoption of standards, many of the inconsistencies were found to relate to lack of training and learning constraints ensuing from the new set of standards issued by both users and preparers.
New concepts, measurement methods reporting requirements, such as the use of fair values, deferred taxation and the preparation of actuarial studies necessitates experience that preparers were lacking. For example, there is lack of official qualifications on IFRSs expertise from certified institutions. The inherent complexity that characterises accounting, and particularly IFRSs requirements, according to some respondents, technical and advanced knowledge applies not only in accounting theory and practice but also to finance. Technical justifications also include a lack of guidance by the state and inconsistent translation and interpretation of IFRSs into Greek, which have deterred the smooth transition to IFRSs and their implementation. Others argue there is confusion about the role ascribed to accounting as it is perceived as ‘book-keeping’ or as a ‘coding exercise’ influenced by previous accounting standards. Accountants’ roles and responsibilities are sometimes, reduced to dealing with the tax authorities and similar bureaucratic procedures or to discovering loopholes in accounting regulations, in order to avoid high tax payments. However, a number of respondents mentioned that such constraints are diminishing, and it is anticipated that over time, familiarity with the IFRSs will fix current problems.
A number of users and preparers rationalised variances in IFRSs implementation that have adverse results on the comparability of financial reporting information. They highlighted flexibility in a number of IFRSs and the principle-based nature underlying the accounting framework. The accounting treatment of financial instruments, intangible assets, employee retirement benefits, income taxes and provisions on assets and liabilities involve judgments, assumptions and options that impair representational faithfulness, transparency and comparability. The continuous amendments of standards are causing further perplexity and confusion.
Another justification invoked by interviewees related to the predominance of local practices and environmental factors over appropriate implementation of IFRSs. Some raised concerns about the methodology used by preparers and audit firms that prepare and audit companies’
economic transactions accordingly. Instead of keeping books and adapting their accounting
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software programmes according to IFRSs requirements, preparers are following former book- keeping methods based on the previous accounting system, and converting financial information independently of accounts. The prevalence of the tax mentality and the interference of the state through tax regulations that affect the appropriate implementation of IFRSs are assumed to be having undesirable effects on the quality of financial reporting information. Another important explanation, provided in order to rationalise aberrations in the superiority of IFRSs and their ability to ensure high quality financial reporting, is the lack or failure of powerful actors to legally enforce the new standards at the local level (such as the ELTE) and internationally. The existing institutional and legislative framework is not developed enough to allow unified application of IFRSs.
Consistent, also, with the globalisation arguments publicly promoted by national and international institutions and authorities, accounting harmonisation and the claims for high quality standards can be achieved by the elimination of local economic, social, cultural and institutional peculiarities. ‘All countries will eventually operate in the same manner’, an interviewee claims. Placing responsibility on local actors with self-driven interests but at the same time preserving the belief in the actuality of globalisation preserves and perpetuates the idea of the superiority of IFRSs.
Finally, the extent to which financial reports correspond to the ideals promoted by IFRSs supporters is attributed to the self-interested behaviour of companies’ managers. Economic uncertainty provides more incentives and increases the risk of ‘creative’ accounting, while the complexity of standard setting makes potential misbehaviours difficult to identify. From a users’ perspective the permitted options, flexibility, and use of fair values allows more for the manipulation of financial accounts, and is perceived as problematic, since they serve to diminish users’ confidence in financial statements, challenge their usefulness and transparency; meanwhile comparability is put under question.
Users’ and preparers’ acceptability of the gap between the hegemonic ideals of IFRSs, and the qualitative characteristics of financial reports should not therefore be regarded as resulting entirely from the direct influence of disciplinary apparatuses in society (this is in line with Durocher & Gendron (2011)). Nevertheless, contradictions between the values that reflect universal values and the actual experience of the application of the IFRSs by users and preparers has not led to a challenge of the basic assumptions and hegemonic structures in the domain of accounting and capital markets.
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