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Small and Medium Sized Entities Management’s Perspective on Principles-Based Accounting Standards on Lease Accounting

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DOI: 10.4236/ti.2015.61007    6,149 Downloads   6,903 Views   Citations
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ABSTRACT

Lease accounting is viewed as one of the top priorities for the International Financial Reporting Standards (IFRS) convergence. Small and medium sized entities are an important part of the economy, and this research investigates the management’s perspective on the adoption of principles-based IFRS about lease accounting. This researcher interviewed four managers from three different small and medium sized entities, and found the management to be more concerned about their long-term business success than the change of accounting standards. Only when the entities have a loan with the bank, then the management focuses on the lease classification. The interview also suggests that the managers and business owners in the small and medium sized entities have limited knowledge and skills in accounting reporting standards. These firms outsource their accounting needs to local accountants rather than having their own in-house departments. The other aspect of focus for management of these firms is tax consequence of IFRS adoption. The research suggests other regulatory agencies, i.e., Internal Revenue Service, should also be involved in enhancing financial statement transparency and usefulness after the adoption of accounting standards.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Cheng, J. (2015) Small and Medium Sized Entities Management’s Perspective on Principles-Based Accounting Standards on Lease Accounting. Technology and Investment, 6, 71-76. doi: 10.4236/ti.2015.61007.

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