• Interpretation of Uncertainty Expressions in Financial Accounting Standards

Abstract

in accordance with International Financial Reporting Standards (IFRS). The first issue facing this policy is the translation of English IFRS into Chinese. Prior research indicates that variations exist among auditors when interpreting English uncertainty expressions. But the extent of variations in interpreting Chinese uncertainty expressions has not been extensively examined. Using 158 experienced auditors (partners, senior managers and managers) as participants, this study finds that variations in interpreting 14 uncertainty expressions exist at the individual and audit firm levels. Extending prior research, this study finds that communication can mitigate such variations and audit structure can improve consensus, but only limited to three uncertainty expressions. Finally, education level is negatively associated with the variations for some uncertainty expressions.

Keywords: Uncertainty Expressions, Financial Accounting Standards, Interpretation of Uncertainty Expressions, Audit Structure