Transcript Document

Environmental Drivers and Obstacles for the
Introduction of the
International Financial Reporting Standards
(IFRS)
in the Arab world
The researcher
Muiz Alia
Erasmus Mundus program
The promoter
Prof. Joel Branson
7/21/2015
Accounting harmonization
Financial information prepared according to a
national accounting system may no longer
satisfy the needs of users whose decisions are
more and more international in scope.
The tendency for uniformity of accounting
standards is one of the global integration
manifestations.
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Benefits of harmonization
The quality of financial information.
1.
comparability, reliability and transparency
2.
The movement of capital and the financial operations.
3.
Developing countries:

strengthening integration and competitiveness in financial markets;

reduce the setup and production costs of accounting standards and reduce monitoring
costs for regulators;

join the international harmonization drive;
high-quality, well-established and codified accounting standards

facilitate the growth of foreign investment; and

legitimize its status as a full-fledged member of the international community;
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International Financial Reporting
Standards (IFRS)
A set of accounting standards developed
by the International Accounting Standards
Board (IASB) that is becoming the global
standards for the preparation of financial
statements.
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International Accounting Standards
Board (IASB) and its objectives
An independent private-sector accounting
standard-setting body.
Producing a single set of high-quality,
understandable and enforceable International
Financial Reporting Standards (IFRS) and
encouraging global convergence on these
standards taking into account the special needs of
emerging economies.
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IFRSs around the world
 More
than 12,000 companies have adopted
IFRS.
 More
than 110 countries require or permit the
use of IFRSs or are converging with the
(IASB) standards.
 IFRS
have been accepted or recommended
by the majority of stock markets.
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Arab World
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The Arab countries have many commonalities in their societal
norms and practices, reflecting their historical, religious, and sociocultural characteristics.
1)
The Arab countries are all predominantly
Muslim.
The acceptance of Islam has influenced the social values and practices as
well as the legal systems of the countries in the Arab world.
Prohibition of Riba (interest)
Loyalty to the religion, the family and the traditions
2)
language
3)
Legal systems
Code law systems , Islamic ‘Sharia’
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4)
Past colonialism.
Europe and Ottoman Empire
5)
Closed and a highly concentrated political
systems.
6)
The economies of the Arab countries are
varied.
The Arab countries have special environmental
circumstances which differ from other countries.
- Culture
- Economic, legal and political aspects
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Arab countries and IFRS
Arab countries vary in terms of degree of
the adoption of the IFRS. Eleven Arab
countries adopted the IFRSs, the rest of
the Arab countries; either adopted these
standards in part or rejected them.
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The research problem
Disagreement regarding the IFRSs’ applicability in
the developing countries. This disagreement is based
on significant differences between environmental
characteristics in developing countries and those in
developed countries.
Arab counties have special environmental circumstances.
The suitability of IFRS for application in the Arab
World from the perspective of environmental factors.
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Research topics:
1- Environmental factors.
2- The neutrality of the IASB.
3- The environmental factors explaining the
decision of Arab countries to adopt the
IFRS.
4- The obstacles / initiatives.
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1- Environmental factors
Economic
Imported & imposed
accounting
environment
Political
environment
Legal
Legal
environment
Level of
education
environment
Environmental
Environmental
The taxation
factors
factors
Culture
system
The financing
Accounting
profession
system
Capital
markets
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Size&&ownership
ownership
Size
of business
of business
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2- The neutrality of the IASB
The neutrality of the IASB in issuing
accounting standards.
Archival data , results of previous studies
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3- The environmental factors explaining
the decision of Arab countries to adopt
the IFRS
Identify the environmental factors that could
explain the adoption of the IFRS by Arab countries.
Arab countries differ among themselves in terms of
the degree of the adoption of the IFRS.
Publicly available data
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4- The obstacles of applying the IFRS
in the Arab countries, and needed
initiatives to overcome them.
Survey - questionnaire
Study population: Accountants, investors,
companies, banks, financial markets,
professional bodies, universities’ professors and
taxation and other government departments.
- Geographically dispersed
- Huge number
Jordan- case study
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Benefits and reasons of focusing
on Jordan as a case study

Reinforces the possibility of obtaining data
-The response rate.
-The quality of the data.

The possibility to enter Jordan
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Outputs and future work
1- Environmental factors:
This part of the study was already accomplished and the
affective environmental factors were determined.
2- The neutrality of the IASB:
To complete this topic, part of the required work has been
accomplished, since previous studies were compiled and
read, as well as obtained some of the data required.
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Outputs and future work
3- The environmental factors explaining
the decision of Arab countries to adopt
the IFRS:
Most of the needed data regarding this topic have been
collected. Statistical analysis is needed in order to complete
it. I expect that this part will be finished at the end of next
December.
4- The obstacles / initiatives:
The questionnaire was prepared and accepted by the
supervision commission. It is expected that it will be
distributed at the beginning of next year.
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