Challenges in the convergence of international financial reporting standards (IFRS): a comparative study of Indonesia and Australia

The increasing popularity of International Financial Reporting Standards (IFRS) over the last few years has led to a growing number of IFRS adopters around the world. As of 2016, more than 130 countries have adopted the IFRS, with many other countries stating a commitment to support the global accounting convergence initiated by the International Accounting Standards Board. The worldwide adoption of IFRS is believed to result in a greater cross - national comparability of financial information which, in turn, will benefit the global economy. This thesis aims to undertake a comprehensive examination of the conceptual and practical issues associated with the adoption of IFRS in both developed and developing economies. Specifically, this thesis seeks to answer the question of whether convergence in accounting standards will necessarily lead to comparability of financial reporting practices, and to propose possible ways to improve consistencies in the interpretation and application of the IFRS within and across countries. To address this issue, the thesis undertakes four research projects with the following objectives: (1) to critically analyse the process of convergence in a developing country and to identify the critical issues in that process; (2) to examine whether cultural and personal factors cause differences in the judgements made by professional accountants across countries when interpreting and applying the IFRS; (3) to examine the extent and the cause of differences in the ethical decisions between professional accountant s across countries when applying the IFRS; and (4) to examine the perceptions of professional accountants towards the skills and competencies that are essential for applying the IFRS. The findings of this thesis suggest that there are intense challenges f acing the adoption of IFRS in different countries, which hampers the comparability of financial reporting practices under the standards. In particular, this study demonstrates that the measurement and recognition criteria contained in the IFRS are not interpreted and applied in a consistent manner across and within countries due to differences in cultural, organisational, personal, and ethical characteristics. The findings of this thesis also show that even when the IFRS are adopted, accounting practitioner s might not have adequately developed certain skills that are crucial for the consistent application of the standards. Overall, the results of this thesis raise questions regarding the assumption that the global adoption of IFRS will necessarily lead to co mparable financial statements across countries.