Judgments of professional accountants in Fiji: implications for convergence of accounting standards

The implicit assumption in convergence of accounting standards is that greater comparability will result in financial reports across countries if they adopt the International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs). This study questions the validity of this assumption of comparability in financial reports, particularly where the countries differ significantly in terms of both the size and structure of the underlying economies, and the capabilities of the accounting institutes and regulatory bodies. Our primary objective in this study is to test whether there are differences in judgements of the big 4 and non-big 4 professional accountants in Fiji when applying the selected IASs/IFRSs. This research is important because significant within-country differences in judgements of professional accountants will have serious implications for convergence of accounting standards. We find strong support for differences in judgements of big 4 and non-big 4 professional accountants when provided with ‘new’ accounting standards that require complex judgments. An important implication of this study is that if professional accountants in emerging economies are not adequately trained and experienced in applying IFRSs, then standard setters of these countries may consider mandating a set of accounting standards with a greater focus on rules as opposed to principles that require the exercise of professional judgements.