Audit Fees under Alternative Goodwill Accounting Approaches: Evidence from the Adoption of the Impairment-Only Approach in Australia

43 Pages Posted: 24 Oct 2019

See all articles by Humayun Kabir

Humayun Kabir

Auckland University of Technology

Asheq Rahman

Auckland University of Technology - Faculty of Business & Law

Date Written: October 12, 2019

Abstract

The International Accounting Standards Board (IASB) constituents expressed concerns about the cost of the impairment-only approach for goodwill accounting under International Financial Reporting Standards (IFRSs). Considering these concerns, the IASB is now reviewing the approach. Motivated by this debate, we examine the association between goodwill and audit fee under two alternative goodwill accounting approaches in Australia – the dual approach under pre-IFRSs Australian Generally Accepted Accounting Principles and the impairment-only approach under IFRSs. We find that goodwill does not have an audit fee-increasing impact under the impairment-only approach than under the dual approach. This result is robust across alternative variable measurements, alternative samples and alternative models. The result is of potential interest to the IASB and its constituents.

Keywords: Goodwill impairment; goodwill accounting approaches; IFRS; audit fee

JEL Classification: G34, M41, M42,

Suggested Citation

Kabir, Humayun and Rahman, Asheq, Audit Fees under Alternative Goodwill Accounting Approaches: Evidence from the Adoption of the Impairment-Only Approach in Australia (October 12, 2019). Available at SSRN: https://ssrn.com/abstract=3468640 or http://dx.doi.org/10.2139/ssrn.3468640

Humayun Kabir (Contact Author)

Auckland University of Technology ( email )

AUT City Campus
Private Bag 92006
Auckland, 1142
New Zealand
+64 21 08309355 (Phone)

Asheq Rahman

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

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