The message conveyed by IFRS-compliant information: a South African perspective
Van der Zwan, Pieter
Van der Merwe, Nico
MetadataShow full item record
South African companies must prepare financial statements in accordance with InternationalFinancial Reporting Standards (IFRS) or other reporting standards modelled on IFRS. Literature suggests that the complexity of IFRS, which stems from detailed rules-based principles in these standards, may harm the ability of users of financial statements to understand financial information in a meaningful way. The primary objective of this study was to evaluate whether selected users and preparers of financial statements in South Africa interpret selected IFRScompliant information prepared in accordance with rules-based principles in the manner intended by the standard-setters. The results of the study, which are based on data gathered by administering a questionnaire that contained selected IFRS-compliant note disclosures to accounting practitioners, accountancy students, and non-accountants in business, suggest that the participants of the study did not understand such IFRS-compliant information as intended by the standard-setters. Additional disclosure, the adoption of a simplified accounting framework for Small and Medium-sized Entities (SMEs) and the use of an output-based continuing professional education (CPE) system are identified as areas that warrant further research to overcome the threats posed by rules-based principles in IFRS.