Additional guidance on international financial reporting standards: impact on judgment and confidence of accountants

Purpose: To examine the impact of additional guidance provided on International Financial Reporting Standards (IFRS) (in addition to what is contained in the relevant IFRS) as a decision aid on the accuracy of judgments and the confidence the accountants have on their judgments. Originality: Prior studies in auditing and psychology have considered the effect of decision aids on the accuracy of judgments. However, prior studies in accounting have not investigated the impact of additional guidance provided on IFRS on the accuracy of judgments and the confidence the accountants have on their judgments. Design/methodology/approach: An experiment, using the accountants as the subjects, was undertaken in a CPA meeting held in Malaysia in November 2010. Findings: Those accountants provided with decision aids in the form of additional guidance on IFRS make more accurate judgments than those accountants who are not provided with any additional guidance on IFRS. Furthermore, the additional guidance in the accounting standards increase the confidence the accountants have on their judgments. Research implications: This study will add to the literature on IFRS. Practical and Social implications: The results provide evidence of the importance of the additional guidance on the principles-based IFRS, hence, indicating that accounting regulators, such as the International Accounting Standards Board (IASB), should seriously consider including more guidance on IFRS.