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Assessing financial reporting comparability across institutional settings: The case of pension accounting

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  • Gordon, Isabel
  • Gallery, Natalie

Abstract

The drive for comparability of financial information is to enable users to distinguish similarities and differences in economic activities for an entity over time and between entities so that their resource allocation decisions are facilitated. With the increased globalisation of economic activities, the enhanced international comparability of financial statements is often used as an argument to advance the convergence of local accounting standards to international financial reporting standards (IFRS). Differences in the underlying economic substance of transactions between jurisdictions plus accounting standards allowing alternative treatments may render this expectation of increased comparability unrealistic. Motivated by observations that, as a construct, comparability is under-researched and not well understood, we develop a comparability framework that distinguishes between four types of comparability. In applying this comparability framework to pension accounting in the Australian and USA contexts, we highlight a dilemma: while regulators seek to increase the likelihood that similar events are accounted for similarly, an unintended consequence may be that preparers are forced to apply similar accounting treatment to events that are, in substance, different.

Suggested Citation

  • Gordon, Isabel & Gallery, Natalie, 2012. "Assessing financial reporting comparability across institutional settings: The case of pension accounting," The British Accounting Review, Elsevier, vol. 44(1), pages 11-20.
    • Handle: RePEc:eee:bracre:v:44:y:2012:i:1:p:11-20
    DOI: 10.1016/j.bar.2011.12.005
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    References listed on IDEAS

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    1. Francis, Jere R., 1987. "Lobbying against proposed accounting standards: The case of employers' pension accounting," Journal of Accounting and Public Policy, Elsevier, vol. 6(1), pages 35-57.
    2. Isabel Gordon, 2001. "Pension Accounting: How Large Australian Companies are ‘Paying Up’ for Superannuation," Australian Accounting Review, CPA Australia, vol. 11(23), pages 52-61, March.
    3. David Alexander, 1999. "A benchmark for the adequacy of published financial statements," Accounting and Business Research, Taylor & Francis Journals, vol. 29(3), pages 239-253.
    4. Zeff, Stephen A., 2007. "Some obstacles to global financial reporting comparability and convergence at a high level of quality," The British Accounting Review, Elsevier, vol. 39(4), pages 290-302.
    5. Geoffrey Whittington, 2008. "Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View," Abacus, Accounting Foundation, University of Sydney, vol. 44(2), pages 139-168, June.
    6. Christopher Napier, 2009. "The logic of pension accounting," Accounting and Business Research, Taylor & Francis Journals, vol. 39(3), pages 231-249.
    7. Revsine, Lawrence, 1985. "Comparability: An analytic examination," Journal of Accounting and Public Policy, Elsevier, vol. 4(1), pages 1-12.
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    Cited by:

    1. Diana MureÅŸan, 2012. "Retrospective Of Financial Reporting On Capital Market," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(14), pages 1-8.
    2. Luca Larcher & Francis Breedon, 2020. "Discounting and the market valuation of defined benefit pensions," Working Papers 932, Queen Mary University of London, School of Economics and Finance.

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