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The interpretation differences of verbal probability expressions in principles-based accounting standards: evidence from China

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  • Fengchun Tang
  • Ling Yang

Abstract

This study examines whether verbal probability expressions (VPEs) in principles-based accounting standards are understood and interpreted consistently by Chinese accounting professionals and students. We gathered data from auditors working in Chinese public accounting firms, accounting professionals not employed by Chinese public accounting firms, and Chinese accounting students. The results indicate that Chinese auditors exhibit a high degree of consensus in their VPE interpretations. However, preparer and student interpretations tend to vary more and exhibit lower levels of consensus. In addition, there are evidences showing that small differences in the translation of VPEs can have a significant unintended impact on the interpretations of these expressions in accounting standards.

Suggested Citation

  • Fengchun Tang & Ling Yang, 2016. "The interpretation differences of verbal probability expressions in principles-based accounting standards: evidence from China," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 12(3), pages 287-312.
    • Handle: RePEc:ids:ijaape:v:12:y:2016:i:3:p:287-312
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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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