Analysis of the Spanish economists about their accounting standards: an opinion from the experience

Marcos Antón Renart Universidad de Murcia

mantonr@um.es

Esther Ortiz Martínez Universidad de Murcia

esther@um.es

Salvador Marín Hernández Universidad de Murcia

salvlau@um.es

Área Temática: A - Normalização Contabilística e Relato Financeiro

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Abstract

The implementation, more than eight years ago, of the new Spanish General Accounting

Plans (the standard one and the other for Small and Medium Enterprises (SMEs)), both

adapted to International Financial Reporting Standards (IFRS), lead us to know the

opinion of professionals related to accounting and financial information on the

incidence that applying these standards has in their daily work. In order to make this,

the Economists were asked one questionnaire in four different years. This allow us to

know about the accounting experience in Spain and also to see how the passage of time

has altered their perceptions about this accounting transformation process and also how

it affects their level of understanding. We conclude that the complexity encountered by

economist-accountants when facing regulatory reform varies significantly over time, as

well as their initial understanding of this regulation.

1. INTRODUCTION

For more than a decade we have witnessed the implementation of International

Accounting / Financial Reporting Standards (IAS / IFRS) and their detailed analysis,

through numerous studies a priori and posteriori, of the impact of implementing such

legislation. In summary, and in general, the analysis of the numerous studies on the

subject has led to the search for conclusions on: a) the clearing of any uncertainty

generated by the application of new regulations regarding their effects on companies, at

an individual level, as well as in capital markets; b) the analysis of the extent of

differences when applying domestic and international regulations c) the positive effect

analysis of the implementation of such international regulations.

From the studies that were analysed, it can be concluded that the adoption of IFRS

generally assumes more advantages for companies (better quality of accounting

information), even though the expert opinion on regulatory changes can vary with the

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understanding and the passage of time, with regard to the diversity of opinions

according to different samples at different times.

All this regulatory change in Europe and Spain led us to consider, following various

authors, such as Carmona and Trombetta (2008); Ewert and Wagenhofer (2012);

Holthaussen and Watts (2001); Trombetta, Wagenhofer, and Wysocki (2012) that

academic research can help regulators and standard setters to assess ex ante and ex post

standardisation and regulatory effects of both financial information and disclosure. But

no form of investigation is sufficient by itself. On the contrary, the understanding of

accounting in its social and institutional context will come from the dialogue between

all of these perspectives, Larrinaga (1999). And so, the central and basic concept of this

work is to be through the transmittance and analysis of the voice of professionals in this

field and incorporating into this analysis and debate the effect of the passage of time and

the influence of the degree of understanding.

In order to do this, we have divided this work, as well as this introduction, into a second

section where we review the literature on this theme at an international level, followed

by all the empirical study and the main results analysis, to end up with the most relevant

conclusions.

2. LITERATURE REVIEW

We agree with García Benau (1997, p.263,276) that one of the most appealing ideas that

can be contemplated in the academic world is to think of the changes that theory and

research have over practice, being complex and dynamic in nature and changing the

analysis of the interrelation between theory and accounting practice.

However, a criticism that can be made to one part of this research that looks at the

changes in regulation and its effects, is that traditionally the focus has been mainly on

the costs and benefits that occur just in the next period of the implementation of the

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regulation, but however, in the following periods, the literature is scarce on the "time

effect", although there is some evidence that the benefits of IFRS implementation

increase over time, ICAEW (2015); Brown (2011). Also, the literature regarding this

subject has been extensive, but its influence on the implementation of standards has

been diminished by not developing a descriptive accounting theory and its subsequent

implementation, Holthaussen and Watts (2001).

In general, at an international level, it seems that the advantages of the European

accounting harmonisation process, seek to achieve a greater financial information

homogeneity and comparability thereof outweigh the drawbacks. It seems however, that

these benefits are distributed unevenly between firms and countries, Aubert and

Grudnitski (2011); Pope and McLeay (2011); Nobes (2013); Estima and Mota (2015),

as it does not seem clear as to what extent the benefits and costs resulting from IFRS

adoption are directly attributable to the financial regulation change, Giner (2015). Also,

professional associations such as ICAEW (2014, 2015) conclude that there is

insufficient evidence on the benefits of mandatory IFRS adoption.

Therefore, among the advantages to which this harmonisation process and IFRS

adoption leads, the following can be highlighted:

a) The differences between domestic regulations and international regulations

are reduced, EFAA (2010); Bae, Tan, and Welker (2008); Chen, Qingliang, Yihong,

and Zhijun (2010); Ball (2006).

b) The harmonisation process of accounting standards improves the

comparability of companies at an international level, European Commission (2015);

Brown, Preiato, and Tarca (2014); Wang (2014); Vergauwe and Gaeremynck (2013);

André, Dionysia and Tsalavoutas (2012); Yip and Young (2012); Latridis (2010);

Carmona and Trombetta (2008).

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c) Considering exogenous shocks, such as the financial crisis, accelerate the

process towards better and more comparable disclosure practices, Vergauwe and

Gaeremynck (2013);

d) Harmonisation provides an improvement in capital market efficiency,

European Commission (2015); André et al. (2012);

e) Being able to have a set of 'high quality' IFRS standards, Ball (2006);

f) IFRS is a real challenge where all the parties involved, (entities, auditors,

regulators) take this very seriously and where users in Europe will benefit from its

adoption, Hoogendoorn (2006);

g) The quality of information needs to be significantly improved and the benefits

resulting from its adoption are greater than the costs, Estima and Mota (2015);

European Commission (2015); Soderstrom and Sun (2007), even though it may not be

fulfilled by firms that do not have incentives to adopt IFRS, Christensen, Lee, Walker,

M. and Zeng (2015).

The main disadvantages are:

a) IFRS effectiveness can be hampered by the existing differences between

countries in the institutional framework within which financial information is produced,

Brown et al. (2014); Yip and Young (2012); Chen et al. (2010); Ball (2006);

b) Mandatory adoption of IFRS is not enough to achieve comprehensive

comparability in the European Union (EU), Wang (2014); Yip and Young (2012); Cole,

Branson, and Breesch (2011); Cole et al. (2011); Hoogendoorn (2006);

c) The transition from national accounting standards to IFRS was complex and

costly, Estima y Mota (2015); André et al. (2012);

d) In some aspects, IFRS does not improve the information when compared to

the domestic standard, Jarva and Lantto (2012).

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e) The concern about cost persists over time. The adoption of DIRECTIVE

2013/34 demonstrates the concern regarding accounting costs and the effect on

companies, especially the smaller ones.

According to a European Commission report (2015), 86% of the samples handled were

of the opinion that the financial information applying IFRS was more transparent; 68%

that IFRS introduction contributed to a better understanding of financial statements;

63% that IFRS introduction contributed to easier access to capital at an international

level; And 71% felt that the introduction of IFRS improved investor protection.

Regarding the benefits/costs of applying IFRS, 60% believe that the benefits of its

application exceed the costs associated to them and states that costs are easier to

quantify than benefits; that the current costs are small when compared to the initial

ones; and that the cost/benefit ratio depends on the company characteristics.

Regarding the duration of the new regulatory approval process, there is a need to have

sufficient time to implement the standards. The fact that they are alien to the accounting

system itself leads to the belief that the process may have been carried out too rapidly

and whether it may have been rushed, Markelevich, Shaw, and Weihs (2011). Such

adoption may constitute difficulties from the cultural idiosyncrasy point of view of each

accounting system, Mukoro and Ojeka (2011). According to the European Commission

(2015), 70%-75% of cases believe that the quality of financial statements prepared

under IFRS is good/very good and that IFRS use has increased their comparability but

also their complexity (Most national public authorities believe that IFRSs are more

difficult to understand).

In Spain, the White Paper on Accounting Reform, ICAC (2002), shows that 53.50% of

the respondents have a high-good understanding of IFRS (7.95% no understanding).

Cóndor et al. (2006) concludes that 71.95% of the companies surveyed claim to know

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the IAS (4.88% in detail). In Navarro, Sánchez, and Lorenzo (2007), 30% of company

financial directors and 92% of auditors, recognise knowing the international standards.

And Gonzalo Angulo (2014), indicates that the accounting profession in Spain can

undertake, with a guarantee of success, these changes and meet the quality standards in

financial information.

If we focus on the uneven impact of the application of new regulations, by area and

accounting concepts, another conclusion that can be drawn from the countless

international studies on the issue, is the effect that the implementation of a new

regulation will have on domestic accounting (EFAA, 2010, 2014). In Spain, the General

Accounting Plan (GAP) launched in 2007 and adapted to the IFRS, represented a major

shift compared to the previous GAP of 1990. As per the areas that have introduced other

major quantitative changes when compared with the previous regulation, and the

concepts that have shown greater operational complications for the adaptation to the

new regulations can be seen table 1 Fitò, Gómez, and Moya (2010).

Table 1. Relevance of changes in the main accounting magnitudes Accounting Magnitudes Relevance of the differences between PGC 90 and PGC 2007

Assets

Fixed assets Significative

Intangible assets Non significative

Property, plants and equipments Non significative

Long term investments in group companies and associates Non significative

Deferred tax assets Significative

Current assets Significative

Long term investments Non significative

Total assets Significative

Liabilities and equito

Net equito Significative

Reserves Significative

Non current liabilities Very significative

Long term provisions Non significative

Long term loans with group companies and associates Non significative

Other non current liabilities Very Significative

Deferred tax liabilities Very Significative

Current liabilities Non significative

Gains and losses

Net revenues Non Significative

Net income Significative

Source Own elaborated from Fitò et al. (2010).

For Herreros and Larburu (2009), the Spanish GAP 2007 incorporates new accounting

policies and measurements, and significantly modifies others, making it necessary to

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perform much more complex analyses, involving specialists from other disciplines or

independent experts. Information users have also made an important effort to update

their understanding as well as their analysis tools. Regarding the degree of

understanding, Milanés and Texeira (2006) analyse whether entrepreneurs who do not

have training to interpret what the official accounts show, are the ones that place less

value on such information, concluding that it is necessary to train the entrepreneur in

order to obtain a return on accounting activity. In Marín, Antón, and Palacios (2008),

Spanish economists evaluated as important / very important the knowledge acquired in

accounting and finance for the development of their professional career and subsequent

performance. In addition, 91.6% of the respondents went on more training courses after

completing their university studies, being useful to 90.42% to find or perform a job.

Nevertheless, the intrinsic difficulties of these rules for SMEs were observed, as well as

the professionals' poor training, Molina (2013). As it is known, the option of adopting

these rules for SMEs was dropped with the arrival of the EU Accounting Directive

(2013) by not adequately serving the objective of simplifying and reducing

administrative burdens, leaving the option of using them open to the member countries

for unlisted companies, European Commission (2013).

In the Spanish case, this simplification came through RD 1515/2007, which was already

adapted to international regulations and its publication coincided with RD 1514/2007.

Subsequently, progress on the transposition in Spain of the Accounting Directive on the

simplification of small company accounting obligations had been made. Two have been

the most significant steps taken: the approval of the Law on Audit of Accounts (Law

22/2015) and a recent RD (Royal Decree) that came to light in December 2016. This

RD will be retroactive and will be applicable from 1st January 2016 and will conclude

the transposition process, Ortiz (2016).

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It seems clear, the important role that the regulator has played and continues to play.

The obligation for EU-listed groups to submit their consolidated information under

IFRS standards as of 2005, led the regulator to design a strategy to adapt the national

accounting model to a new environment, Zorio (2004), so that the desired

harmonisation in European countries could be achieved through their reference to

external rules, since in previous decades it has been very difficult to achieve this

through internal consensus, Gonzalo Angulo (2004).

As for the effect of the passage of time after an accounting standard reform, according

to Navarro et al. (2007), it is not surprising that as the understanding of the new

regulation progresses, users notice certain problems or inconveniences that this new

regulation may bring, so that the generic theoretical acceptance of the new regulations

could decrease as it begins to be applied and translated into new requirements. ICAEW

(2015) reveals one of the main features of any great transition: that professionals learn

as time passes and that teachers, users and investors show signs that it takes time to

learn IFRS, being able to consider two transitions: a) The change from pre-IFRS to

IFRS is gradual and b) professionals gradually learn how to apply IFRS and how to use

IFRS information. It also points out how researchers seem to focus on very short-term

changes, seeing the immediate effects of adopting IFRSs but in practice it does not seem

to have been proven how it works for long periods. Brown (2011) states that since

IFRSs are not static, early results on the implementation of the standard may not be

sustained over time, and that in the face of a complex change in the environment, people

do not adjust their behaviour overnight. In this regard, Estima and Mota (2015) point

out that the consequences of adopting IFRS will probably begin to be identified after

many years of applying these standards.

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Considering what was analysed in the introduction and this literature revision we can

deliver our analysis on the debate topics of this work, which are not other than: general

analysis and opinion on the whole process of IFRS adoption in Spain by accounting

professionals represented by the Accounting Economists (EC-CGE), the relationship

between this adaptation with the accounting research, as well as the effect, above all, of

the passage of time and understanding.

3. EMPIRICAL ANALYSIS

3.1 Methodology

To obtain the results and conclusions of this work, a questionnaire was used in four

different time periods: 2008, 2009, 2012, and 20151. The core element of the

questionnaire is the same as in the previous questionnaires (as can be seen in Table 2),

consisting of three different content categories which include: questions with closed

answer options, answers with dichotomous options, closed possibilities of choice with a

final section where respondents could include another free-form option, but that has

hardly been used, and some questions with an open format. Some questions are asked

where the response involves a rating scale, a Likert scale has been chosen, with answers

ranging from 1 to 5, from lowest to highest value. In all questionnaires, the answers

have been treated in an aggregated and anonymous way, with the last two surveys

having been carried out online, so that the members of Accounting Economists (EC-

CGE) could access it, one time per associate.

Table 2. Parts and questions of the questionnaire

QUESTIONNAIRE 2008 2009 2012 2015

Part 1: Knowledge, information, training and first application of the accounting standards

Have you had enough information and training to cope with the accounting changes? x - - -

What kind of actions have done in this sense your company? x - - -

Degree of undestanding you claim to have regarding the new regulation x x X x

1 This questionnaire has been undertaken in all cases by the members of the specialized body of the

Spanish Consejo General de Economistas which brings together accounting economists.

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You think that the new regulations have introduced… x x X x

To do the adjustments necessaries for the first application… x - - -

Part 2: Main areas in which the new regulations have introduced greater complexity

Areas in which the new regulations introduce the greatest quantitative x x X x

Concepts that have presented major operational complications to adapt to the new regulations x x X x

Concepts that introduce the greatest quantitative changes in net equity x x X x

Concepts that introduce the greatest quantitative changes in the assets x x X x

Concepts that introduce the greatest quantitative changes in the liabilities x x X x

Concepts that introduce the greatest quantitative changes in the income x x X x

Part 3: Perception of the professionals about ICAC, new PGC, IFRS or current situation questions

Whether the ICAC should report on the changes that the new PGC includes in sectorial adaptations and resolutions x x X x

Which sectorial adaptations and resolutions should be urgently published or done x x X x

Whether the ICAC should further reduce the accounting and financial regulations for SMEs x x X x

Whether the ICAC should require that the financial statements were signed by professionals together with the managers x x X x

Whether foundations should disclose financial information with more transparency x x X x

If you would have preferred to apply IFRS directly x x X x

If you would have preferred to use fair value for property, plants and equipments or value asset updates x x X x

If is necessary to carry out value asset updates in Spain each 4/5 years - - - x

Whether there should be only an accounting regulator for every kind of entity, or there should be different ones distinguishing between

SMEs and listed companies - - X x

Whether you deem that have sufficient time to meet the deadlines set by the ICAC befote changes in the regulations x x X x

Whether convenience and opportunity of the creation of Expert Economists in Accounting and Financial Information and the Register

of Experts Accountants x x X x

How the new accounting regulations have affected the different productive sectors of the Spanish economy - - - x

How the new accounting regulations have affected the financial sector - - - x

Source: Own Elaborated

The statistical analysis was performed using SPSS 23.0 for Windows. The differences

considered statistically significant are those where p <.05. For the qualitative variables,

the number of cases shown in each category have been obtained along with the

corresponding percentage; and for the quantitative variables, the minimum, maximum

values, mean and standard deviation.

By having responses to the same questions for 2008 (just at the beginning of when new

accounting regulations came into force), 2009, 2012, and most recently 2015, eight

years after the initial entry, we considered taking into account the course of time in

assessing the answers of the professionals. When the participants are randomly assigned

to each of the samples, we can guarantee statistically that they are independent samples,

Molinero (2001).

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Therefore, the comparison between groups for the qualitative variables was performed

using the Chi-square test and the Z-test for equal proportion of the columns. For the

means comparison between two groups, the t-Student or ANOVA test was used

according to the number of groups, and the normality and homogeneity fulfilment

assumption was verified with the Kolmogorov-Smirnov test and the test of Levene,

respectively, Pagano and Gauvreau (2001), Pértega and Pita (2001).

Moreover, we used a multiple regression model to decide which variables had a

significant effect on the degree of understanding. The methodology followed in the

statistical analysis of the calculated model was as follows: (1) One-off assessment of the

model parameters; (2) Relevance of the variables and constant of the model; (3)

Contrast of the regression (ANOVA) to study the overall validity of the model and

verify that (together) the explanatory variables provide information in the interpretation

of the response. Evaluation of how well the model fits, through the determination of the

coefficient and (4) the hypotheses of the model verification through waste analysis,

Hair, Anderson, Tatham, and Black (1999).

3.2 Sample and Hypothesis

The global population to which the survey has been directed to, was that of all 2,000

economists who are members of EC-CGE, the specialised body of the General Council

of Economists (CGE). The responses received in each of the four years allowed us to

make estimates with a confidence level of at least 90% and with a maximum sampling

error of ±4.7%. The response rate obtained for all the years is above 15% of the

population, with this being a high percentage for the work that use the survey as a basic

tool of its empirical methodology.

In addition, having introduced a variable that is the degree of understanding that

professionals have about the regulations, which they value, and having answered in four

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successive temporal time periods in a sufficiently long time frame and allows us to raise

for its contrast the following two hypotheses, according to the antecedents previously

detailed:

H1: The passage of time significantly influences in the professionals' perception of the

new accounting standards in Spain.

H2: The professionals’ degree of understanding on the new accounting standards in

Spain increases with the passage of time, and in turn significantly influences their

perception of it.

4. ANALYSIS RESULTS

4.1 Analysis of the overall results and the passage of time effect

In this first section, we are going to focus on the overall results obtained in the

professionals' answers, as well as the first hypothetical comparison: the effect of the

passage of time. To do this, we will initially follow the same order as in the

questionnaires.

On the degree of understanding that professionals believe they have regarding the new

regulations, we can highlight that in the first year of its application they believed they

understood the new regulation well. This perception changed after their first experience,

although as the time has passed, the degree of understanding that the professionals had,

soared, so that after the first application of this accounting reform, they believed that

they had strengthened their understanding and that they had a better understanding of

the new PCG, reaching a similar level to the optimistic data obtained from the first

survey (ANOVA: F (3.1185) = 50.92 , P <0.001) (data included in Table 3).

Table 3. Degree of understanding regarding the new regulation

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Source: Own Elaborated

Table 4. The new regulation has introduced…

2008 2009 2013 2015

N (%)

A- Greater costs with few competitive and informative

improvements

106a

(26,8)

139b

(46,8)

71b

(42,5)

126b

(38,5)

B- Little additional costs with few competitive and

informative improvements

158a

(40) 79b (26,6)

48a,b

(28,7)

107a,b

(32,7)

C- Little additional costs with greater competitive and informative improvements

79a (20) 34b (11,4) 28a,b

(16,8) 59a,b (18)

D- Greater costs with greater competitive and informative

improvements

52a

(13,2) 45a (15,2) 20a (12) 35a (10,7)

a-b: different words show differences statistically significative with p <

.05 in test of comparison of column proportions Source: Own Elaborated

With regards to the costs and competitivity and the informative improvements that this

new regulation introduced, the professionals' perceptions are different (Table 4).

However, the results obtained do show in the majority of respondents (A, B and C) that

in the first year of implementation it was clear for companies that little additional cost

would be attracted, with few competitive and informative advantages (40% of the

answers obtained), whereas the perception changes after the experience, becoming for

subsequent years at a greater cost, whereas the competitive and informative

improvement continues to be valued as limited.

With respect to the areas in which the new regulations have introduced greater

complexity for these professionals, it is in Equity where they believe that the

complexity is greater (the highest affirmative percentages are in this area [Table 5]).

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Although the passage of time predetermines their responses in this sense, statistically

significant differences are obtained between the results of the survey until the second

year after the entry into force of the new regulations and the subsequent results, in the

sense that once the first two years of the entry into force of the new GAP have passed,

the perception of complexity increases.

Table 5. Areas in which the new regulations have introduced greater complexity

2009 2013 2015

Equity

No 126a (42,4) 49b (29,5) 105b (32,2)

Yes 171a (57,6) 117b (70,5) 221b (67,8)

Liabilities

No 275a (92,6) 117b (70,5) 249b (76,1)

Yes 22a (7,4) 49b (29,5) 78b (23,9)

Assets

No 193a (65) 104a (62,7) 220a (67,5)

Yes 104a (35) 62a (37,3) 106a (32,5)

a-b: different words show differences statistically significative with p <

.05 in test of comparison of column proportions Source: Own Elaborated

Thereupon we refer to the concepts that have presented major operational complications

to adapt to the new regulations (Table 6). A priori the results obtained are very different.

There are concepts in which the opinion about its complexity is maintained over the

years regardless of whether it is the first year of the new regulations' application, or

more time has passed by, as is the case with the financial investments in hybrids (In

Table 6, it is clear that there are no significant differences between the different years

and the average of responses, with responses higher than 4 and hence quite complex).

While in the other extreme we can find concepts such as sectoral adaptations, which do

not follow any pattern, and present significant differences in the responses between the

years analysed. In the first commented case: hybrids, it is true that they involve a very

important complexity and also their use is not widespread, which is not the case for

sectoral adaptations, although very specific, they are used mostly in those sectors to

which they refer.

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Table 6. Concepts that have presented major operacional complications to adapt to

the new regulations (1. None, 5. A lot)

2008 2009 2013 2015 ANOVA

Average (SD) Average (SD) Average (SD) Average (SD) F(3,1178) p-value

AMORTISED COST 4.34a (0.74) 3.83b (0.69) 3.36c (1.31) 3.28c (1.26) 80.093 < 0.001

OPERATING LEASES 2.33a.b (1.11) 2.50a.b (0.5) 2.25a (1.24) 2.52b (1.09) 4.335 0.005

SECTORIAL ADAPTATIONS 3.50a (1.12) 3.20b (0.89) 2.63c (1.09) 2.95d (1.17) 29.502 < 0.001

FINANCIAL ASSETS 4.00a.b (0.82) 4.16a (0.69) 3.87b (1.1) 3.93b.c (1.02) 5.029 0.002

ANNUAL STATEMENTS 2.33a (1.11) 3.10b (0.7) 2.37a (1.07) 2.89b (1.13) 41.7 < 0.001

FINANCIAL INVESTMENTS IN HYBRIDS

4.17a (0.69) 4.34a (0.75) 4.12a (0.91) 4.16a (1.18) 3.139 0.025

TIE (EFFECTIVE INTEREST

RATE) 3.50a (1.12) 3.64a (0.96) 3.61a (1.05) 3.88b (1.07) 8.045 < 0.001

NEW TERMINOLOGY 2.84a.b (0.69) 2.68a (1.1) 2.63a (1.12) 3.03b (1.19) 8.484 < 0.001

GROUPS 8 AND 9 3.17a (0.9) 3.64b (0.96) 3.60b (1.18) 3.64b (1.43) 15.023 < 0.001

GRANTS 2.66 (1.11) 2.58 (1.11) 2.67 (1.06) 2.78 (1.05) 1.756 0.154

PROVISIONS 2.33a (1.11) 2.86b (0.8) 2.70b (1.06) 2.85b (1.07) 21.069 < 0.001

RELATED PARTIES 3.66a.b (0.94) 3.83a (0.69) 3.54b (1.04) 3.68a.b (1.17) 3.481 0.015

FIRST APPLICATION OF THIS

REGULATION 3.50a (1.12) 3.51a (1.12) 3.13b (1.11) 3.15b (1.22) 9.487 < 0.001

DERIVATIES 4.34a (0.74) 4.32a.b (0.75) 4.08b.c (0.89) 3.89c (1.34) 15.683 < 0.001

FORMAT OF ANNUAL

STATEMENTS 2.66a (1.11) 3.64b (0.96) 2.76a.c (1.1) 3.00c (1.17) 49.584 < 0.001

a-c: different words show differences statistically significative with p <

.05 (Tukey) Source: Own Elaborated

The rest of the concepts, according to the professionals’ opinion, we could have a

complexity determined by the passage of time. In some cases, the key factor in

assessing their complexity is the application of the new legislation in the first year, as

happens in Groups 8 and 9 and with provisions (the first year of the survey is

statistically significantly different from the other three years, according to the results of

Table 6). Increasing in both cases, the complexity perception after its first application,

(groups 8 and 9 went from an average of 3.17 to averages higher than 3.6, and the

provisions from an average of 2.33 to averages higher than 2.7). In this line of results

there are also other concepts in which not only is the first year of application of the new

regulation the one that marks the differences with respect to the later ones, but it is the

first two years of applying the new regulation that statistically show significant results

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to the later years, in terms of an increase in complexity, and also its reduction. This

happens with the first application of this regulation, which seems to reach its maximum

complexity in its second year of implementation and then which descends in the

subsequent years, since the issues that arose in a first application are then solved with

the practice and the passage of time (it shifts from a complexity average of 3.51 in the

second year to averages of 3.13 and 3.15 in later years). Or the amortised cost example,

in which the years after the second year of the implementation of new regulations

implies a perception of reduced complexity. In other cases, the opposite is true, as in the

TIE (effective interest rate) case. It is not the first years of application of the new

regulations that are key in the perception of its complexity, but rather, as time passes

and they are studied in more detail, or these concepts are simply applied to more cases,

the complexity is greater (the first three waves of surveys do not show statistically

significant differences for the TIE (effective interest rate) in Table 6, whereas the most

recent and farthest in the first application of this regulation is clearly different, with a

clearly higher mean of complexity, which goes from being in the range of 3.5-3.64 to

3.88).

As this regulatory change resulted from the IAS/IFRS application in Europe,

professionals were asked if they would have preferred to apply these international

standards directly. The prevailing opinion throughout was that they preferred this

accounting reform (Graph 1). In this case, behavioural patterns of statistically

significant responses have not been found, depending on when the survey was

conducted (χ2 (3) = 5.79, p = 0.122).

Graph 1. If professionals would have preferred to apply IAS/IFRS directly

18

Source: Own Elaborated

The following question is whether the professionals deem that they have sufficient time

to meet the deadlines set by the ICAC before changes in the regulations (Graph 2). The

answers of the professionals are influenced by the passage of time, because when the

new regulations were on trial, most then believed that they have had time, a perception

that was not the same in previous years. This change of opinion is verified statistically

by seeing the differences according to the time at which the survey was conducted

(Graph 2): since there are significant differences between the previous year's

questionnaire, when more time has passed since the new regulations, and the first six

years of its implementation (χ2 (3) = 22.54, p <0.001).

Graph 2. Whether the professionals deem that they have sufficient time to meet the

deadlines set by the ICAC before changes in the regulations

Source: Own Elaborated

We then try to verify if there is a relationship between the answers in the first year after

the new regulations were applied (2008) and eight years later (2015), for the survey

19

questions whose answer was a dichotomous variable. So, in order that we can join these

results to those of the tests carried out taking into account the four different moments in

time in which the survey was performed. In this sense, we find that when the

professionals already had a better understanding of what the accounting reform had

implied, they considered that the timeframes foreseen by the ICAC before new

regulations or clarifications are sufficient. This is the only independence hypothesis that

we can reject among the answers in these two moments of time (χ2 (1) = 4.02, p

<0.045).

In other words, in the answer to this question, there is a decisive role in the moment in

which opinion is obtained, whether in the first year of the new regulations being in

force, or after a sufficiently long adaptation period. Furthermore, this result obtained on

the passage of time effect in the first application of these accounting regulations, leads

the professionals to have a greater understanding of them and, perhaps they can relate to

the regulation more. Noting the output in the contingency table, we can highlight that

67.1% of the professionals who thought that the deadlines foreseen by the ICAC were

not sufficient, now think that they are, so that with the passage of time it is considered

that the deadlines set by the ICAC will be sufficient.

4.2 Statistical analysis of the relationships between the professionals' answers

regarding new regulations and their degree of understanding

In this second section of the analysis we are going to focus on the second stated

hypothesis comparison. To this effect, we are going to study the relationships between

the answers of the professionals to the different questionnaires, and the degree of

understanding they claim to have regarding the new regulation, although the effect of

the passage of time in our study always prevails.

20

The first statistically significant result that we obtained (included in Table 7), tells us

that the professionals who seem to have a little bit more knowledge, consider that it is

not necessary to carry out value asset updates (the knowledge degree average is 4.27 for

not considering necessary the fair value, and somewhat lower, 4.09 for those who do

consider it necessary).

If we increase the degree of significance from 5% to 10%, we also obtain a relationship

between the degree of knowledge that the professionals claim to have, and whether or

not they have preferred to apply IAS/IFRS directly. Those professionals who claim to

have a deeper understanding of the new regulations prefer the way that this has been

used: the adaptation of the regulations themselves and not the direct IAS/IFRS

application (the average level of understanding is 4.2 for not applying directly and

somewhat lower, 4.04 for those who do advocate direct application).

Table 7: Degree of understanding regarding the new regulation and whether or

not to apply IAS/IFRS directly (2015) and whether or not is necessary to carry out

value asset updates (2015)

Min Max Average (SD) T(d.f.) p-value

IAS/IFRS t(315) = 1,84 0,067

No 3 5 4,2 (0,7)

Yes 1 5 4,04 (0,8)

Fair Value t(313) = 1,84 0,019

No 3 5 4,27 (0,6)

Yes 1 5 4,09 (0,8)

Source: Own Elaborated

Table 8 shows the results of the multiple regression models performed for the years

2013 and 2015 to determine which variables influence the level of understanding.

For 2013, (as we have seen previously), the new regulation, according to the

professionals, introduces the greatest quantitative changes in equity, but this perception

is linked to those respondents who have a lower level of understanding. This same

21

relationship is obtained for the quantitative changes that the new regulation implies on

the asset, associated to those professionals who have a lower level of understanding. In

the regression for 2015 this significant relationship disappears, with which once again it

is verified that the passage of time, and therefore the repeated application of this

regulation, implies a less complex interaction, while in lockstep with a greater

understanding.

Out of the concepts that has generated major complications in 2013 as a consequence of

the introduction of the new accounting standards, it is accepted that they are related with

the new accounting management of financial instruments, such as: amortised cost

calculation, financial assets, and the effective interest rate, which generate the biggest

operational complications, and are associated with a lower understanding level of the

respondents. This issue is beyond the operational scope of many SMEs and therefore

also of the professionals, and hence that initial difficulty is associated with the lower

level of understanding. In addition, these are also the only concepts that keep the

significant relationship in the 2015 regression, associating it once again with a lower

level of understanding (the evidence of the relationship is again negative). Eight years

after the first application of this accounting standard, its complexity or understanding

does not depend on the day-to-day operations in this case, but on the type of operations

carried out by the company, which does not use financial instruments, and hence

professionals do not know their accounting treatment.

The same reasoning can be used for the significance obtained in 2013 with regards to

the operational complications introduced by the related parties, which again are

associated with a lower level of understanding. When you master a subject because you

handle it on a day-to-day basis the difficulty it seems to carry is less, and in this case,

22

being familiar with transactions with related parties implies that the company has

reached a certain dimension, which is not the majority in our productive framework.

The same type of relationship is produced in 2013 between the respondents' opinion on

whether it is necessary for the ICAC to analyse the new regulations' effects by

publishing the corresponding adaptations and resolutions, linked to a lesser

understanding of it. After two year, in the regression of 2015, this variable no longer

appears as significant, proving how the passage of time has gradually led to a better

understanding of the new regulation and therefore making this need will no longer be

manifested as such.

And we finally found the respondents' opinion on whether it would have been better to

apply the IFRS directly without going into a reformation of our system. In this case, in

both 2013 and 2015, an affirmative response to the direct adoption of IFRS is associated

with a lower degree of professional understanding. These results are consistent with

what we have already highlighted: that professionals prefer the solution that has been

chosen in Spain, which has been the reform of our system.

23

Table 8: Multiple regression models to determine which variables influence the level of understanding

2013 (n = 116) 2015 (n = 261)

Beta (SE) p Beta (SE) p

Area_greatest_quantitative_changes_NetEquity_2013 -0,301 (0,158) 0,009 -0,102 (0,119) 0,193

Area_greatest_quantitative_changes_Liabilities_2013 -0,063 (0,143) 0,508 0,017 (0,114) 0,803

Area_greatest_quantitative_changes_Assets_2013 -0,216 (0,152) 0,048 -0,009 (0,113) 0,901

Concepts_major_complications_AMORTISEDCOST_2013 -0,145 (0,059) 0,038 -0,032 (0,041) 0,028

Concepts_major_complications_FINANCIALASSETS_2013 -0,095 (0,082) 0,002 -0,059 (0,053) 0,009

Concepts_major_complications_HYBRIDS_2013 -0,01 (0,117) 0,948 0,041 (0,052) 0,625

Concepts_major_complications_TIE_2013 -0,148 (0,079) 0,027 -0,013 (0,055) 0,018

Concepts_major_complications_GROUPS8AND9_2013 -0,176 (0,063) 0,093 -0,048 (0,038) 0,495

Concepts_major_complications_RELATEDPARTIES_2013 -0,39 (0,069) < 0,001 0,072 (0,041) 0,269

Concepts_major_complications_DERIV_2013 -0,08 (0,116) 0,573 0,014 (0,046) 0,865

IFRS_directly_without_PGC_2013 -0,038 (0,124) 0,008 -0,109 (0,101) 0,039

Sufficient_time_2013 0,139 (0,139) 0,180 0,191 (0,096) 0,121

R2 ajusted (%) 29,9 27,9

Model F(15,100) = 2,85*** F(15,245) = 1,93**

Normality† p=0,238 p=0,321

Independence‡ 2,03 1,99

Homocedasticity+ p=0,868 p=0,745

Source: Own Elaborated

24

5. CONCLUSIONS

We have contrasted the starting hypothesis of this paper: the passage of time

significantly influences the perception of professionals before the new accounting

regulations in Spain derived from the IFRS application; As well, the professionals'

degree of understanding on this new regulation increases with the passage of time,

significantly influencing their appreciation of it. All this is endorsed by previous work,

like those of ICAEW (2015); Estima and Mota (2015) and Brown (2011), or Milanés

and Texeira (2006) and Marín et al. (2008).

We must also stress that:

- Professionals go from valuing the new regulations with little competitive and

informative benefits for companies and lower costs, to higher costs and the same few

competitive and informative advantages. This change of opinion is due to the greater

understanding of the regulation once they have already begun to implement it, and

therefore the time has passed since its first entry into force.

- With the new regulations, there are areas that professionals value as more complex,

but whose assessment is conditioned by their lack of understanding. Surely because the

operations carried out by the companies related to these professionals, do not imply an

exhaustive understanding of these issues, since they are simpler, because it is the net

equity area, groups 8 and 9, amortised cost or calculation of the TIE (effective interest

rate).

-Those who use the accounting standard in their daily practice, the accounting

economists, prefer the non-direct IFRS application for all Spanish business typology,

but instead the other format that has been chosen. That is to say, the direct application

of IFRS by Regulations for listed groups, and the reform of our legal system and

25

adapting it to IFRS for the rest of the Spanish companies. This option has also been

even more valued by those who have a greater understanding of this new regulation.

-The feeling of having sufficient time to assume a new regulation is totally a relative

one, because it depends on the moment when you ask: if it is at the beginning, the

perception is that there was not enough time, and if it is after, having made the new

regulations their own, it is considered that there has been enough time, because it is seen

from a different perspective.

Finally, we emphasise that we have had a large and significant sample, which has

allowed us to do this work, without having the limitations of studies that are based on

survey results, besides having been able to have a time series, wide enough to study the

effect of the passage of time from the first implementation of a regulatory reform. This

leads us to consider future studies that add up to the results of another survey in a

broader time horizon, so that it is possible to verify how the professionals' responses

affect this perspective after a longer period of time, since regulatory reform has been put

into practice, and even introduce new variables that provide information on the

application of the new regulations by business sectors of application.

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