The accounting reform in Spain. An analysis form the point of view of time and degree of knowledge of accountants.
| Autor | Ortiz-Martinez, Esther |
1 Introduction
For more than a decade we have been witnessing the international implementation of International Financial Reporting Standards (IFRS). The adoption of these standards is directly through the European Regulation in the case of listed European business groups. Elsewhere, the decision lies with each Member State.
In Spain, it was decided to adapt our regulations to IFRS, so all financial information published by Spanish companies, whatever their type and size, is homogeneous, comparable and in accordance with IFRS. Thus, in 2007, a new General Accounting Plan (GAP) was published (in fact, there were two, as there was also one adapted to SMEs), in which our accounting regulations are reformed and the requirements contained in IFRS are introduced for all our companies. This large regulatory change in Europe has been carried out through an adoption mechanism in which all the potential actors take part - one of them the professionals - and in which they play an important role (Mourik and Walton, 2018). In Spain, we are also involved in our own adoption process, for the type of business to which the successive reforms of our accounting system are directed, and which is carried out by our regulator, although it seems that the capacity of influence of professionals is more limited (Mora, 2017). This is why we are addressing accountancy professionals in Spain following this regulatory change that had to be applied for the first time in the financial statements on business information as of 1 January 2008, and which entailed important changes in some accounting concepts and problems that had not previously been included in our legal system.
Some research has analyzed different aspects of the adoption of IFRS, whether mandatory or voluntary, in Europe or in specific countries, studying the effects on the choice of auditor (Wieczynska, 2016); on the information analyzed by analysts (Kim, Kim, and Kwon, 2016); directly on the relevance of the information published by companies (Kouki, 2018); the costs and benefits of its implementation (Fox, Hannah, Helliar, and Veneziani, 2013) and only in some cases the opinion of accounting professionals (Fox et al. (2013), Lang and Martin (2016) and Lang and Martin (2017)), which is the focus in this paper. To this we add the answers of a questionnaire carried out among Spanish accounting professionals at four different moments, starting from the first year of application, such that this study develops and expands over time. There are precedents that distinguish between different time periods in this process of adoption and adaptation to IFRS, e.g., Kim, Kim, and Kwon (2016), Wieczynska (2016), or Kouki (2018), but none with four different time periods that range from the first application of the new regulation to eight years later, as is our case.
Hence, we analyze the results obtained in order to check whether the moment influences the perceptions of accounting professionals and, at the same time, whether their degree of knowledge about this new regulation relates positively with the moment at which they evaluate it or whether it depends on the specific accounting problem in question. This should mean that the results of this research are useful for regulators, accounting professionals or any other stakeholders.
The paper is structured as follows. After this introduction, section two offers a review of the literature on this subject, followed by a complete empirical study and analysis of the main results, before ending with the most relevant conclusions.
2 Literature Review
There are antecedents on how accounting professionals have approached the normative changes, and their opinion of them, since in our subject the analysis of the interrelation between theory and practice is fundamental, and determinant in the evolution and the passage of time (Garcia Benau, 1997, pp. 263-276). Professionals play a vital role in accounting harmonization processes, as Ding, Ole-Kristian, Jeanjean and Stolowy (2007) argue, since even the reduction in differences between domestic regulations and IFRS is associated with the level of economic development and the importance of the accounting profession. Those who apply IFRS in their daily work must be directly involved in these processes, as they are users of the standard and will benefit from the advantages of its adoption (Hoogendoorn, 2006). Accounting professionals are one of the most important stakeholders, both in the process of preparing IFRS and in the process of their adoption by the European Union, and their voice is listened to in the mechanisms established for this purpose (Mourik and Walton, 2018). Hence, it is their opinions that we gather through a questionnaire, specifically those on the huge change that the adaptation of our regulations to IFRS has meant in Spain as a consequence of this European harmonizing process.
There are studies analyzing the costs and benefits of this accounting reform, as there are studies analyzing the effects of the adoption of IFRS (Preiato, Brown, and Tarca 2015) and the implications for the accounting profession (Carmona and Trombetta, 2008), concluding that there are more advantages than disadvantages (in the case of Spain we would highlight Callao, Jarne, and Lainez (2007), Castillo-Merino, Menendez-Plans, and Orgaz-Guerrero (2014), Gonzalo (2014) and Doadrio, Alvarado, and Carrera (2015)), or that the costbenefit function of applying IFRS continues to be generally positive, even when considering the cost of training professionals, since IFRS have increased the complexity of preparing financial statements (European Commission, 2015). There are, however, also works like Fox et al. (2013), which through interviews with accountancy professionals from several European countries verify that the costs for these interest groups have exceeded the benefits and that the regulators need to be aware of them.
Faced with a regulatory reform of this magnitude, the degree of knowledge of professionals is a variable that will initially come from training, and will subsequently evolve with the practice and application over time of the new regulations. In this sense, there are precedents that focus on the importance of training accounting experts, e.g., Arquero (2000) who analyses the deficiencies that can be found in training for the practice of this subject. Milanes and Texeira (2006) relate the training of entrepreneurs with the value they give to financial information, concluding that their training is necessary to obtain returns from accounting. In an earlier study these same authors (Milanes and Texeira, 2006) point to managers as being responsible in part for the non-compliance with the objectives of accounting information in SMEs, since they consider accounting an expense and, therefore, so is training in this field. Marin, Anton, and Palacios (2008) conclude that Spanish economists evaluated as important or very important the knowledge acquired in accounting and finance for the development of their profession and subsequent performance. Kouki (2018) does refer specifically to the fact that professionals have had to improve their training and knowledge in the face of the normative change implied by IFRS. Implementing a new standard that is foreign to the accounting system in some concepts, may lead to the question of whether the process has been overhasty (Markelevich, Shaw, and Weihs 2011). Such an adoption may pose difficulties from the point of view of the cultural idiosyncrasy of each accounting system (Mukoro and Ojeka, 2011). So, finally, we must introduce the moment at which we analyze the degree of knowledge of professionals about this change in accounting regulation.
In the case of Spain, and with regard to the degree of knowledge of professionals about the requirements of IFRS, the White Paper for the accounting reform by ICAC (Spanish Institute of Accounting and Account Auditing) (2002), shows that 10.51% of those surveyed have a high level of knowledge; 42.99% a good knowledge; 38.55%low knowledge, and 7.95% none at all. Condor et al. (2006) also conclude that 71.95% of the companies surveyed claim to know International Accounting Standards (IAS) (4.88% in detail). In Navarro, Sanchez, and Lorenzo (2007), 30% of the financial managers of the companies and 92% of the auditors acknowledge knowing the international standards. Millan (2007) points out, with regard to the report, how with the entry into force of the Spanish PGC of 2007, its contents would be substantially expanded in view of the obligations derived from IAS/IFRS; and in Gonzalo Angulo (2014), it is indicated that the accounting reform carried out in Spain has changed the cardinal rules of the existing regulations and has shown that the accounting profession can successfully assume these changes and quality requirements in financial information. "Therefore, although there are studies that analyze the effects of a change in accounting standards, they focus on short-term changes (ICAEW, 2015) and do not check in practice how it works over long periods. One of the main characteristics of any transition is that professionals learn with time (ICAEW, 2015), even though they were initially trained and, in addition, IFRS are not static, and therefore early results on the implementation of the standard may not be sustained over time, since, in the face of change, behavior does not adjust so quickly (Brown, 2011).
Estima and Mota (2015) point out that the consequences of the adoption of IFRS will probably begin to be detected after many years of their application. This progress is linked to the degree of knowledge that professionals have about all aspects of the new standards. It is not surprising that although the degree of knowledge of the new regulations advances over time, there are certain problems whose theoretical acceptance begins to decrease and translates into a need for new regulations (Navarro et al., 2007). Two...
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