Insights on CFOs’ perceptions about impairment testing under IAS 36

Mazzi, F., Liberatore, G. and Tsalavoutas, I. (2016) Insights on CFOs’ perceptions about impairment testing under IAS 36. Accounting in Europe, 13(3), pp. 353-379. (doi: 10.1080/17449480.2016.1244341)

Abstract

We survey CFOs of Italian listed companies and examine their views on the complexities involved in implementing IAS 36 requirements and the perceived usefulness of national guidelines aiming at assisting preparers in this respect. We find that IAS 36 is perceived as an atypical standard among IFRS, it demands subjective interpretation, its requirements can be made adaptable to managerial needs and do not limit creative accounting. Further, respondents do not see a strong link between IAS 36 disclosure requirements and market variables, except for stock returns. Moreover, the impairment testing process became more difficult during the recent financial crisis and guidelines issued by the Italian authorities do not appear to assist in implementing the recoverable amount estimation process or compliance with mandatory disclosure. The respondents explicitly call for a revision in IAS 36 and/or issuance of separate guidance. These findings inter alia respond directly to the IASB’s current quest on financial statements preparers’ concerns about the application of the IAS 36 requirements.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Tsalavoutas, Professor Yannis
• Authors: Mazzi, F., Liberatore, G., and Tsalavoutas, I.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Accounting in Europe
• Publisher: Routledge
• ISSN: 1744-9480
• ISSN (Online): 1744-9499
• Published Online: 24 October 2016
• Copyright Holders: Copyright © 2016 European Accounting Association
• First Published: First published in Accounting in Europe 13(3):353-379
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher