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A commentary on accounting standards and the disclosure problem: Exploring a way forward

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  • Elkins, Hamilton
  • Entwistle, Gary

Abstract

The ‘disclosure problem’ continues to pose a challenge to the accounting standard setting community. To help confront this problem, in this commentary we present an exploratory approach for the review and evaluation of note disclosure standards rooted in the conceptual framework’s enhancing qualitative characteristics of comparability, verifiability, timeliness, and understandability. In our approach, note disclosure – an enhancement – is necessary and justified when it rectifies a material information deficiency in the primary financial statements. Our approach requires that the information deficiency, the traceable enhancing qualitative characteristic, and the materiality rationale, are each clearly evident in the written accounting standard. We demonstrate an application of our approach with a case study using the International Accounting Standard (IAS) 1 disclosure guidance on capital structure.

Suggested Citation

  • Elkins, Hamilton & Entwistle, Gary, 2018. "A commentary on accounting standards and the disclosure problem: Exploring a way forward," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 33(C), pages 79-89.
    • Handle: RePEc:eee:jiaata:v:33:y:2018:i:c:p:79-89
    DOI: 10.1016/j.intaccaudtax.2018.11.003
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    References listed on IDEAS

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    10. Hamilton Elkins & Gary Entwistle & Ganesh Vaidyanathan & Ilona Bastiaansen, 2017. "Investigating capital structure through IAS 1: variations in disclosure and measurement," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 7(3), pages 209-233.
    11. Richard Barker & Elisabetta Barone & Jacqueline Birt & Ann Gaeremynck & Anne Mcgeachin & Jan Marton & Rucsandra Moldovan, 2013. "Response of the EAA FRSC to the EFRAG/ANC/FRC Discussion Paper: Towards a Disclosure Framework for the Notes," Accounting in Europe, Taylor & Francis Journals, vol. 10(1), pages 1-26, June.
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    Cited by:

    1. Rep Ana, 2021. "Notes to the Financial Statements: Current State and Improvement," Business Systems Research, Sciendo, vol. 12(2), pages 60-78, December.
    2. Gordon, Elizabeth A. & Gotti, Giorgio & Ho, Joanna H. & Mora, Araceli & Morris, Richard D., 2019. "Commentary: Where is International Accounting Research Going? Issues Needing Further Investigation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 37(C).
    3. Amitav Saha & Sudipta Bose, 2021. "Do IFRS disclosure requirements reduce the cost of capital? Evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4669-4701, September.
    4. Gunn, Anna F. & Koch, Dirk-Jan & Weyzig, Francis, 2020. "A methodology to measure the quality of tax avoidance case studies: Findings from the Netherlands," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 39(C).
    5. Elkins, Hamilton & Entwistle, Gary & Schmidt, Regan N., 2021. "The influence of opportunistic capital structure disclosure in international financial reporting on nonprofessional investors," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).

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