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The interpretation differences of verbal probability expressions in principles-based accounting standards: evidence from China

The interpretation differences of verbal probability expressions in principles-based accounting... This study examines whether verbal probability expressions (VPEs) in principles-based accounting standards are understood and interpreted consistently by Chinese accounting professionals and students. We gathered data from auditors working in Chinese public accounting firms, accounting professionals not employed by Chinese public accounting firms, and Chinese accounting students. The results indicate that Chinese auditors exhibit a high degree of consensus in their VPE interpretations. However, preparer and student interpretations tend to vary more and exhibit lower levels of consensus. In addition, there are evidences showing that small differences in the translation of VPEs can have a significant unintended impact on the interpretations of these expressions in accounting standards. Keywords: verbal probability expressions; principles-based standards; International Financial Reporting Standards; IFRS; China. Reference to this paper should be made as follows: Tang, F. and Yang, (2016) `The interpretation differences of verbal probability expressions principles-based accounting standards: evidence from China', Int. Accounting, Auditing and Performance Evaluation, Vol. 12, No. pp.287­312. L. in J. 3, Biographical notes: Fengchun Tang obtained his PhD from Washington State University. His primary research interests include judgement and decision making in accounting information systems, managerial and financial accounting. He has published articles in academic journals including Behavioral Research http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

The interpretation differences of verbal probability expressions in principles-based accounting standards: evidence from China

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Publisher
Inderscience Publishers
Copyright
Copyright © 2016 Inderscience Enterprises Ltd.
ISSN
1740-8008
eISSN
1740-8016
DOI
10.1504/IJAAPE.2016.077893
Publisher site
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Abstract

This study examines whether verbal probability expressions (VPEs) in principles-based accounting standards are understood and interpreted consistently by Chinese accounting professionals and students. We gathered data from auditors working in Chinese public accounting firms, accounting professionals not employed by Chinese public accounting firms, and Chinese accounting students. The results indicate that Chinese auditors exhibit a high degree of consensus in their VPE interpretations. However, preparer and student interpretations tend to vary more and exhibit lower levels of consensus. In addition, there are evidences showing that small differences in the translation of VPEs can have a significant unintended impact on the interpretations of these expressions in accounting standards. Keywords: verbal probability expressions; principles-based standards; International Financial Reporting Standards; IFRS; China. Reference to this paper should be made as follows: Tang, F. and Yang, (2016) `The interpretation differences of verbal probability expressions principles-based accounting standards: evidence from China', Int. Accounting, Auditing and Performance Evaluation, Vol. 12, No. pp.287­312. L. in J. 3, Biographical notes: Fengchun Tang obtained his PhD from Washington State University. His primary research interests include judgement and decision making in accounting information systems, managerial and financial accounting. He has published articles in academic journals including Behavioral Research

Journal

International Journal of Accounting, Auditing and Performance Evaluation – Inderscience Publishers

Published: Jan 1, 2016

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