Abstract
The International Accounting Standard Board (IASB) is responsible for developing International Financial Reporting Standards (IFRS) at the transnational level and for promoting their use and application. The IASB produces and modifies IFRS including the Conceptual Framework for Financial Reporting (Conceptual Framework or CF herein). In the 2010 CF, the IASB removed the concept of "prudence", being the inclusion of caution in the exercise of judgement regarding estimates that are needed in areas of uncertainty, so as not to overstate assets or income, or understate liabilities or expenses. In the 2015 CF Exposure Draft, the IASB intended to reintroduce prudence on the grounds that such a reintroduction would in practice clarify a commitment to "neutrality" (avoiding systematic bias). This thesis investigates the politics of the IASB’s discourses surrounding prudence from 2002 to 2018. Their discourses project an ideology of technocratic expertise, which acts to obfuscate the ways in which they control international financial regulatory conversations. This image reinforces its role as a hegemonic agent at the transnational level. The dramatic changes in ways the IASB constructed prudence invite a review of the existing literature on prudence. There are four overlapped but distinct constructs at play in the sparse prudence literature, namely that (i) prudence is a professional attitude; (ii) there is good and bad conservatism (the practice of erring towards understating assets and income in financial reporting); (iii) prudence is a subset of conservatism; and (iv) prudence is related to neutrality either as a measurement device (conservatism) or as avoiding systematic bias (framework neutrality).What is missing in the literature is an in-depth study of prudence at a discursive and qualitative level. Instead of seeing prudence as a fixed objective concept, this thesis employs Laclau and Mouffe Discourse Theory’s inter-subjective objectivity to interrogate the IASB’s discursive constructions of prudence. The discursive approach requires a combination of linguistic and non-linguistic analyses of meanings, practices and subjects. This produces a contextual and relational focus which offers invaluable insights on dislocated moments that threaten, create, and disrupt discursive understandings of phenomena, in this case, the IASB’s changing constructions of prudence.
This thesis combines written discourse emerging from document analysis and interviews with multiple stakeholders to reveal the political formulations of the IASB’s processes of removing and reintroducing prudence. Empirical analysis finds the discursive struggles between two main discourses on prudence being a measurement bias and framework neutrality. Specific signifiers are articulated and re-articulated into different chains of equivalence and difference to create an appeal for each discourse surrounding the IASB’s articulations in prudence. The removal of discourse draws on negated language, using more functional and technical language such as "conflict with neutrality", "earnings management", and "measurement bias". By contrast, the reintroduction discourses draw on disparate language such as "support neutrality", "caution in the face of uncertainty”, "virtue", "counterbalance management bias", "capital maintenance" and "consistent with accounting practice". The IASB’s discourses and decisions with prudence appear to be technical, technocratic and accountable. What underlies their decision-making processes is a more political matter: that of networking with key actors specifically the United States (US), European Union (EU) and United Kingdom (UK) to adapt, reinforce and maintain the IASB’s role as a monopolistic agent in international standard setting. These findings extend previous research and regulatory theory through an examination of the IASB’s self-created image of the technocratic power in international accounting regulation.
| Date of Award | 2025 |
|---|---|
| Original language | English |
| Supervisor | Benedict SHEEHY (Supervisor), Lorne CUMMINGS (Supervisor) & Bruce Baer ARNOLD (Supervisor) |