INTERNATIONALIZATION OF FINANCIAL REPORTING AND AUDITING

The aim of Internationalization of Financial Reporting and Auditing (IFRA) project is to advance our understanding of the changes in global and Norwegian accounting and auditing. A unique feature of our research is the integrated approach which recognizes that changes in accounting standards not only have implications for financial reporting but also for audit processes. We research three related topics to examine the impact of International Financial Reporting Standards (IFRS) on global convergence, quality of financial reporting, and auditing processes. In our research, we focus on whether and how different IFRS adoption approaches impact convergence of national reporting with IFRS as well as the impact of implementation of IFRS on the quality of financial reporting of non-listed companies. To do that, we analyze the nature of IFRS adoption and how differences in the adoption approaches and implementation impact convergence between national and IFRS reporting in various countries. While the need for the auditors to communicate with their clients is widely recognized, there is an ongoing worldwide debate on how to enhance the quality of auditor communication. We examine whether IFRS-related subjectivity in accounting measurements contributes to increased audit risk and how such risks are reflected in the expanded audit report. Our studies have national and international focus and aim to inform academics, practitioners, and regulators regarding reporting in different settings, including African countries, Romania, Russia, and Norway. One of the studies focused on African countries and found that IFRS adoption approaches have implications for the accounting quality. A study of audit in Russia highlights how governmental regulation influences selection of audit firms by clients and impacts multinational audit firms. The examination of the evolution of the audit field in Romania revealed mechanisms that trigger important changes in audit processes. The study of accounting internationalization for SMEs in Norway identified factors preventing such efforts. The data that was collected for the project focuses on Norwegian listed companies and key risks disclosed in the audit report. A number of studies in progress are using the dataset to investigate antecedents and consequences of these disclosures. During the duration of the project, research was presented at international conferences, including: the International Accounting Section of the American Accounting Association, the Annual Congress of the European Accounting Association; World Finance Conference; Interdisciplinary Perspectives on Accounting Conference; British Accounting & Finance Association Annual Conference; African Accounting and Finance Association. Our work on standardization of financial reporting in Norway was invited to be presented at a Research Forum organized by the International Accounting Standards Board in conjunction with the Accounting and Business Research journal. That was an exciting opportunity to share our research with the standard setter responsible for IFRS. Several articles were published in academic journals. Also, a number of articles are under review. Workshops with the researchers involved with the project, as well as with other academics in Norway, were held annually. The aim was to present research and exchange ideas to cooperate and increase research output. On June 2-3, 2022, Regnskapstreff i Sør was held, where academics and leaders from the accounting and auditing professions presented current challenges and upcoming reforms to approximately 70 participants, representing academics, auditors and accounting practitioners. The conference focused on accounting and auditing in Norway and both the directors of Accounting and Auditing Associations, Regnskap Norge (Rune Aale-Hansen) and Revisorforeningen (Karen Kvalevåg), provided updates on the regulatory changes and challenges facing the professions. We add to professional discussions by providing feedback to standard setters on topics under consideration. During the duration of the project, we contributed to the exchange between practice and academia through Norwegian publications and newspapers, including Magma, Revisjon og Regnskap, Dagens Næringsliv and Fædrelandsvennen. With new Norwegian law coming into effect on 1.1.21 and significant upcoming changes in the auditing standard ISA 315 (Identifying and Assessing the Risks of Material Misstatement) we have conducted courses for private and municipal auditing firms. We continue to focus on the development of students in the Master’s in Accounting and Auditing (MRR) program. Students are engaged in master thesis on topics related to the project. A new course was added to engage students with current issues and topics that are challenging the profession.

The aims of the project were to improve research output and to create closer links between academia and the accounting and auditing professions to ensure that research performed is relevant for the practitioners and the students. The focus on the dimensions of accounting and auditing in research allowed us to study in depth how policy impacts financial reporting and auditing. Studies were presented at international conferences where the exchange of ideas helped to create ongoing and future international collaboration with researchers in Canada, Finland, Romania, UK and USA. During the project collaborative workshops took place to establish stronger connections and built research agenda. The researchers and practitioners involved in the project have benefited from the exchange of ideas. During the duration of the project, over 10 research articles have already been published in international academic journals and have been cited by other scholars that focus on research related to accounting and auditing regulation. Further, the studies inform standard setters and regulators about the impact of the standards and intended and unintended consequences. We also contributed to the exchange between practice and academia through Norwegian publications and newspapers, including Magma, Revisjon og Regnskap, Dagens Næringsliv and Fædrelandsvennen. On June 2-3, 2022, at the Regnskapstreff i Sør academics and leaders from the accounting and auditing professions presented current challenges and upcoming reforms to approximately 70 participants representing academics, auditors and accounting practitioners. The conference focused on accounting and auditing in Norway and both the directors of Accounting and Auditing Associations, Regnskap Norge (Rune Aale-Hansen) and Revisorforeningen (Karen Kvalevåg), provided updates on the regulatory changes and challenges facing the professions. Participants learned about the implications of national and international standard changes for the Norwegian companies. The event will continue in the future and will help to establish UiA as an information point for academics and practitioners. The curriculum of the MRR program was modified and additional class titled Accounting Research and Practice is developed to give students an overview of important issues in the field and prepare them for master thesis. This course will have an impact on current and future students. A Post Doctorate student and two Ph.D. students have worked on research focusing on the implications of the accounting and audit regulation for audit fees, auditors' use of experts, accounting quality, and audit reports. All competed their research work and obtained positions to teach and research in accounting and currently contribute to the NLA University College and University of Stavanger in Norway and to the Kwame Nkrumah University of Science and Technology in Ghana.

The accounting and auditing professions are going through many changes and challenges related to the global adoption of International Financial Reporting Standards (IFRS) and increased complexities of modern business. Over the last decade, IFRS have been adopted by over 100 countries and gained a global standing. Significant regulatory changes are expected in accounting and auditing in Norway. Proponents of IFRS argue that the standards serve the public interest through improved transparency, market efficiency, and international comparability. However, there is an ongoing debate as to whether that is being accomplished. As the adoption of international standards expands in Norway and globally, the impact of these changes on the quality of financial reporting and broader convergence efforts needs further examination as proposed in this project. Currently accounting and auditing topics tend to be researched and taught independently. A unique feature of our project is the integrated approach which recognizes that changes in accounting standards not only have implications for financial reporting but also for audit processes. We plan to research three related topics to examine the impact of IFRS adoption on global convergence, quality of financial reporting, and auditing processes. The internationalization of accounting and auditing examined in this project will assist in planning for changes in the profession, student competencies, and curriculum. As part of the project, we also aim to create closer links between academia and accounting and auditing practitioners.