The Impact of Adopting International Financial Reporting Standards (IAS/IFRS) on Mitigating Negative Curbing Accounting Practices An Exploratory Study of the Views of Faculty Members at Universities and Higher Institutes in Libya

Abstract

This study aims to identify the impact of adopting International Financial Reporting Standards (IFRS/IAS) on limiting the adverse practices of creative accounting in the Libyan environment. It seeks to determine this impact through the academic perspectives of faculty members in the financial disciplines at Libyan universities and higher institutes, as to whether the transition to these standards has an effect on improving the quality of accounting information and on narrowing the loopholes exploited by accountants to embellish the image of management and to manipulate accounting information. To achieve these objectives, the study adopted the descriptive-analytical approach, as the method appropriate to the exploratory nature of the study. A questionnaire was distributed to a sample of faculty members at Libyan universities and higher institutes in order to ascertain their opinions and orientations and to describe and analyse them statistically, thereby inferring and determining the impact and its nature: whether direct (i.e. absolute), conditional, or neutralised. The Statistical Package for the Social Sciences (SPSS) was used to analyse the data and test the hypotheses. The study concluded that the majority of the sample, at 77.1%, agreed that International Financial Reporting Standards (IFRS/IAS) have a direct impact on limiting the adverse practices of creative accounting, while 22.9% considered that these standards do limit creative accounting practices but that this impact is conditional upon other factors, including stringent legal legislation and a sound governance environment. The study recommended attending to corporate governance rules in order to deter the adverse expansion of creative accounting practices, together with the necessity of a legal mandate for the adoption of International Financial Reporting Standards (IFRS/IAS) as a mechanism for limiting the adverse practices of creative accounting.