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Are accounting standards understandable?

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  • Bryan Howieson
  • Janice Loftus
  • Sabine Schührer

Abstract

There is concern that accounting standards are difficult to understand by those who use them. We investigate factors that enhance and inhibit the ability of the standards' users to comprehend their meaning and requirements. Readability statistics reveal that Australian accounting standards are difficult or very difficult to read. Interviews with experienced financial statement preparers and auditors from the for‐profit, not‐for‐profit private, and public sectors reveal that ‘understandability’ is a function of many inter‐related factors, only some of which relate to how standards are written and presented. We offer recommendations to standards‐setters about how the understandability of standards could be improved.

Suggested Citation

  • Bryan Howieson & Janice Loftus & Sabine Schührer, 2024. "Are accounting standards understandable?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 1083-1109, March.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:1:p:1083-1109
    DOI: 10.1111/acfi.13173
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