International accounting standards are deliberately designed to be principles-based (ie. “substance-over-form”). With Australia’s recent adoption of international accounting standards a relevant question is, do substance-over-form accounting standards lead to biased financial reporting? The paper describes a study which analysed the consolidation judgments of senior accounting officials from Australian listed companies. Subjects made consolidation judgments based on AASB 1024 Consolidated Accounts. While AASB1024 is not identical to IAS 127 Consolidated and Separate Financial Statements, there are many similarities and both follow a substance-over-form approach. In aggregate, the study found that substance-over-form accounting standards do not necessarily lead to biased financial reporting.
AFAANZ 2005 Annual Conference. Proceedings of the AFAANZ 2005 Annual Conference (Melbourne 3 - 5 July, 2005)