Factors Influencing Accounting Policy Choices in South Asian Countries with Emphasis on IFRS Adoption

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Financial Accounting Theory

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Executive Summary
The present research report is undertaken to examine the factors that influences the
selection of accounting policy changes in South Asian countries emphasizing on the adoption of
IFRS. The critical analysis carried out in the research has identified the factors such as nature of
ownership, size, profitability and cultural factors that are influencing the accounting policy
choices among the South Asian countries. The recommendations that are developed on the basis
of overall research carried out in the report can be stated as follows:
 All the factors influencing the accounting policy choices in South Asian Countries need
to be examined in detail by the developers of the financial statements
 There is need for harmonizing the accounting standards within South Asian Countries for
strengthening their global competitive position

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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Research Methodology....................................................................................................................5
Financial Reporting and accounting policy.....................................................................................5
Factors that impact the choice of accounting policies in South Asian Countries............................7
Research Findings............................................................................................................................9
Conclusion.......................................................................................................................................9
Recommendations..........................................................................................................................10
References......................................................................................................................................11

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Introduction
The evolution of IFRS (International Financial Reporting Standards) developed by the
IASB (International Accounting Standard Board) has caused significant changes in financial
reporting requirements. The development of international accounting standards has caused the
changes in the term financial reporting to become general purpose financial reporting as its
primary purpose is to provide information to the stakeholders for making decisions. International
accounting standards helps reporting entities to produce financial report that can be useful in
making the economic decisions and allows investors to allocate the capital after analyzing the
entity performance in right manner (Ismail, 2017). The International Accounting Standard Board
(IASB) has issued conceptual framework of accounting that has mandated all countries around
the world to apply IFRS in form of their national accounting standards. Following this all
countries in South Asia have make use of IFRS to replace their original GAAP (Generally
Accepted Accounting Principles) (Kuzina, 2013).
The financial reporting requirement was initially governed by Country own GAAP and
after the implementation of IFRS by the IASB, the local GAAP has been replaced by current
IFRS. Some of South Asian countries have fully adopted the IFRS while some of them have
adopted convergence approach to implement the IFRS. IFRS has started gaining its importance
as generally accepted financial reporting accounting standards because of worldwide economic
standardization (Felski, 2015). The purpose of this report is to judge the impact of IFRS on the
South Asian Countries particularly in context to factors that influence the choice of accounting
policies. Accounting policies are chosen on the basis method applied for the recognition of the
various elements of financial statements. After the implementation of the IFRS in South Asian
Countries has drastic impact on the choice of accounting policies as there is no specific rules on
how to choose the accounting policies. This report will provide detailed discussion in form of
critical review regarding the implementation of IFRS has impacted the choice of accounting
policies in South Asian countries