The Accounting Profession’S Engagement With Accounting Standards: Conceptualizing Accounting Complexity Through Big 4 Comment Letters

Keywords

Accounting complexity; Accounting profession; Comment letters; Content analysis; Discursive engagement

Abstract

Regulators, standard setters, and the accounting profession maintain that complexity in accounting standards is a significant issue. However, it is unclear what complexity means in the context of accounting standards. This study examines, via comment letter submissions, the accounting profession’s engagement with complexity in accounting standards. We analyze comment letters submitted to the Financial Accounting Standards Board (FASB) over a 12-year period and find the profession characterizes complexity through three dimensions-multiplicity, diversity, and interrelatedness. We examine the Big 4’s discourse on these dimensions and observe consistency between audit firms in their discourse on several features. For instance, we find that firms primarily oppose proposed FASB changes when firms perceive those changes to increase rather than decrease complexity. Additionally, firms perceive proposed changes to affect financial statement preparers more often than other stakeholders. However, the Big 4 do not hold universal opinions as to the root causes of complexity. At the crossfirm level, we find inconsistencies that imply heterogeneity in the Big 4’s discourse on root causes. Such inconsistency may, in and of itself, construct accounting complexity. Ultimately, we maintain that the Big 4’s engagement with accounting standards has consequences for how complexity is thought about and acted upon in accounting standards.

Publication Date

5-1-2018

Publication Title

Auditing

Volume

37

Issue

2

Number of Pages

175-196

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.2308/ajpt-51898

Socpus ID

85047934669 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/85047934669

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