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Please use this identifier to cite or link to this item: http://hdl.handle.net/1959.3/190874
- Auditors' perceptions of fair-value accounting: developing country evidence
- Kumarasiri, Jayanthi; Fisher, Richard
- The past decade has witnessed a profound shift in the financial accounting measurement paradigm towards FVA. The transition to FVA has given rise to a range of challenges for financial statement auditors, particularly for those in developing nations. Given a dearth of corresponding empirical research, either in developed or developing nation contexts, the current study sought to explore the issues and challenges confronting auditors in developing countries. Based on a survey of 156 practicing auditors in Sri Lanka, the study gathered evidence on the views of auditors regarding the usefulness of FVA, the issues and challenges associated with the auditing such information, particularly within a developing country context, and their views on potential strategies to mitigate these concerns. The relationship between auditors' awareness of FVA and perceived auditing challenges was also examined, together with the linkage between audit challenges and the perceived usefulness of fair value information. The study found that Sri Lankan auditors were generally supportive of the decision usefulness of FVA, although they perceived specific auditing issues with its implementation in developing countries. These issues included: lack of technical knowledge, the prevalence of inactive markets in developing countries, difficulties associated with the variation in techniques used to ascertain fair values across different industries, general complexities in ascertaining fair values, and the incorporation of future events and conditions into valuations. The provision of adequate training and technical guidance were viewed as the primary means of mitigating these concerns. The study concludes with a number of potential avenues for future research.
- Publication type
- Conference paper
- Paper presented at the 2010 Accounting and Finance Association of Australia and New Zealand (AFAANZ) Conference, Christchurch, New Zealand, 04-06 July 2010
- Publication year
- Asia; Auditing; Auditors; Developing countries; Fair value accounting; Sri Lanka
- Publisher URL
- Copyright © 2010 the authors.
- Peer reviewed