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Is there a Conflict between Principles-based Standard Setting and Structured Electronic Reporting with XBRL?

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  • Dirk Beerbaum
  • Maciej Piechocki
  • Christoph Weber

Abstract

National standard setters and external accounting observers continue to express concerns over a principles-based developed IFRS taxonomy. Considering the anticipated but unexpected SEC decision on March 3rd 2017 to adopt the IFRS taxonomy for electronic filings for Foreign Private Issuers by 2018 and the announcement of ESMA on December 22nd 2016 to base electronic filings in Europe on the IFRS taxonomy by 2020 signal that national regulators, external accounting observers and international regulators have a dissent. This paper reflects the expressed concerns by national standard setters. Applying a scientific approach, a comprehensive literature review is performed. The research question is if the rules-based IFRS taxonomy implies a conceptual conflict with the principles-based IFRS. This paper concludes considering the academic literature although there is conceptual conflict between a principles-based accounting standard and the template-based taxonomy, from a normative perspective the IFRS taxonomy improves comparability and transparency supporting true and fair view. Our study also contributes to the principles-based vs. rule-based debate in the academic literature. The new aspect is the role of IT with structured electronic reporting, which requires detailed and specific requirements, for which rule-based accounting has advantages over principles-based accounting.

Suggested Citation

  • Dirk Beerbaum & Maciej Piechocki & Christoph Weber, 2017. "Is there a Conflict between Principles-based Standard Setting and Structured Electronic Reporting with XBRL?," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2017(3), pages 33-52.
    • Handle: RePEc:prg:jnlefa:v:2017:y:2017:i:3:id:186:p:33-52
    DOI: 10.18267/j.efaj.186
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    References listed on IDEAS

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    1. Diego Valentinetti & Michele A. Rea, 2013. "XBRL for Financial Reporting: Evidence on Italian GAAP versus IFRS," Accounting Perspectives, John Wiley & Sons, vol. 12(3), pages 237-259, September.
    2. Bonsón, E. & Cortijo, V. & Escobar, T., 2009. "Towards the global adoption of XBRL using International Financial Reporting Standards (IFRS)," International Journal of Accounting Information Systems, Elsevier, vol. 10(1), pages 46-60.
    3. Tinker, Anthony M. & Merino, Barbara D. & Neimark, Marilyn Dale, 1982. "The normative origins of positive theories: Ideology and accounting thought," Accounting, Organizations and Society, Elsevier, vol. 7(2), pages 167-200, April.
    4. Roger Debreceny & Carsten Felden & Bartosz Ochocki & Maciej Piechocki & Michal Piechocki, 2009. "XBRL for Interactive Data," Springer Books, Springer, edition 1, number 978-3-642-01437-6, September.
    5. Carmona, Salvador & Trombetta, Marco, 2008. "On the global acceptance of IAS/IFRS accounting standards: The logic and implications of the principles-based system," Journal of Accounting and Public Policy, Elsevier, vol. 27(6), pages 455-461.
    6. Dominic Deller & Michael Stubenrath & Christoph Weber, 1999. "A survey on the use of the Internet for investor relations in the USA, the UK and Germany," European Accounting Review, Taylor & Francis Journals, vol. 8(2), pages 351-364.
    7. Bradbury, Michael E. & Schröder, Laura B., 2012. "The content of accounting standards: Principles versus rules," The British Accounting Review, Elsevier, vol. 44(1), pages 1-10.
    8. George J. Benston & Michael Bromwich & Alfred Wagenhofer, 2006. "Principles‐ versus rules‐based accounting standards: the FASB's standard setting strategy," Abacus, Accounting Foundation, University of Sydney, vol. 42(2), pages 165-188, June.
    9. Roger Debreceny & Carsten Felden & Bartosz Ochocki & Maciej Piechocki & Michal Piechocki, 2009. "XBRL Taxonomy Engineering," Springer Books, in: XBRL for Interactive Data, edition 1, chapter 6, pages 113-127, Springer.
    10. Valentinetti, Diego & Rea, Michele A., 2012. "IFRS Taxonomy and financial reporting practices: The case of Italian listed companies," International Journal of Accounting Information Systems, Elsevier, vol. 13(2), pages 163-180.
    11. Paul M. Healy & Krishna G. Palepu, 2003. "The Fall of Enron," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 3-26, Spring.
    12. Alles, Michael & Piechocki, Maciej, 2012. "Will XBRL improve corporate governance?," International Journal of Accounting Information Systems, Elsevier, vol. 13(2), pages 91-108.
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    Cited by:

    1. Jerzy Gierusz & Katarzyna Kolesnik & Sylwia Silska Gembka, 2019. "The Interpretation of "in Context" Verbal Probability Expressions Used in International Financial Reporting Standards - Evidence from Poland," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2019(1), pages 25-45.

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    More about this item

    Keywords

    IFRS taxonomy; Principles-based; XBRL;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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