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FRS36 and post‐transition compliance quality among Singapore firms

Author

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  • Tyrone M. Carlin
  • Nigel Finch
  • Khairil Faizal Khairi

Abstract

Purpose - The purpose of this paper is to contemplate the degree to which Singaporean firms comply with the highly technical disclosure requirements required under International Accounting Standards (IAS) IAS 36 specific to goodwill impairment testing. Design/methodology/approach - The adoption of IAS in Singapore from 1 July 2004 introduced a highly technical standard (financial reporting standards – FRS 36) which has challenged many preparers. While it is generally accepted that accounting compliance may be suboptimal in transition periods as preparers accommodate change, it is assumed compliance quality improves with the passage of time. This study examines compliance of the largest 168 Singaporean goodwill‐intensive firms over a three year period, 2005‐2007, to interrogate compliance quality post‐transition. Findings - The paper reports distinctly poor compliance systemically over the three years across many facets of goodwill impairment testing disclosures including cash‐generating unit (CGU) definition and goodwill allocation, and key input variables used in estimating CGU recoverable amounts. Practical implications - The results raise questions about the quality of accounting information among goodwill‐intensive firms in Singapore and the robustness of regulatory oversight institutions operating within Singapore. Originality/value - The paper illustrates a novel approach to examining the issue of accounting quality under IFRS by examining compliance quality through large sample time‐series analysis focusing on note‐form disclosures.

Suggested Citation

  • Tyrone M. Carlin & Nigel Finch & Khairil Faizal Khairi, 2010. "FRS36 and post‐transition compliance quality among Singapore firms," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 18(3), pages 221-244, September.
    • Handle: RePEc:eme:arapps:v:18:y:2010:i:3:p:221-244
    DOI: 10.1108/13217341011089630
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    References listed on IDEAS

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    1. Henning, Steven L & Shaw, Wayne H, 2003. "Is the Selection of the Amortization Period for Goodwill a Strategic Choice?," Review of Quantitative Finance and Accounting, Springer, vol. 20(4), pages 315-333, June.
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    Cited by:

    1. Jonas Oliveira & Graça Azevedo & Bertina Oliveira, 2018. "Impairment Losses: The Impact of First‐time Adoption of the Accounting Standardisation System in Portugal," Australian Accounting Review, CPA Australia, vol. 28(4), pages 556-576, December.
    2. Niclas Hellman & Jordi Carenys & Soledad Moya Gutierrez, 2018. "Introducing More IFRS Principles of Disclosure – Will the Poor Disclosers Improve?," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 242-321, May.
    3. Araceli Amorós Martínez & José Antonio Cavero Rubio, 2018. "The Economic Effects of IFRS Goodwill Reporting," Australian Accounting Review, CPA Australia, vol. 28(3), pages 309-322, September.
    4. Carla Carvalho & Ana Maria Rodrigues & Carlos Ferreira, 2016. "The Recognition of Goodwill and Other Intangible Assets in Business Combinations – The Portuguese Case," Australian Accounting Review, CPA Australia, vol. 26(1), pages 4-20, March.

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