A Study on the Relevance of the Goodwill Impairment in Context of Audit Partner`s Rotation
Author:
Univ. Lecturer Mihaela DUMITRAŞCU, Ph.D., Radu Daniel LOGHIN, Ph.D. Student
JEL:
M41, G34, C30
DOI:
10.20869/AUDFIN/2016/133/88
Keywords:
IFRS, goodwill, relevance, stock exchange
Abstract:
Currently accounting is in the process of harmonization between the two referential, one issued by the FASB (Financial Accounting Standards Board) - IFRS (International Financial Reporting Standards) and another one by US GAAP (United States General Accepted Accounting Principles/GAAP). This paper analyzes the advantages of adopting corporate governance practices, appropriate to take into account the need to ensure investor regarding the quality of financial information. Research methodology involves analysis of the main studies on adoption of IFRS-IAS in the emerging markets, using qualitative research techniques, research carried out on the basis of specialized literature. The purpose of this article is to present an overview of the implementation of International Accounting Standards, illustrating the relevance of goodwill in the context of audit partner’s rotation. The implementation of IFRS arose from the need to align with EU regulations, while opening access to international capital markets and enhancing the comparability and transparency of information in the financial statements. The data were extracted from the financial statements of the companies under investigation. To meet the objectives of the research were selected and analyzed, in addition to articles that form the basis of the literature, a number of 262 companies. The results show that the difference between the ability to explain the two models to test the impact of rotation of audit partners on the relevance of annual financial statements, one with AR variable included, one in which AR variable is excluded, is that the rotation of audit partners has a distinct impact on the relevance of financial statements in relation to other variables included in the model, including those relating to gross goodwill and to its impairment. One may observe the lack of a significant interaction between the impairment of goodwill and investors` perceptions, due to the quality of audit engagement in emerging markets analyzed.
Article(393KB)