Open AccessVarying the Quality of Business Communication Caused by Compliance of Different Accounting Rules
Author(s) -
Agus Setyadi,
Rusmin Rusmin,
Greg Tower,
Alistair Brown
Publication year - 2009
Publication title -
issues in social and environmental accounting/issues in social and environmental accounting (isea)
Language(s) - English
Resource type - Journals
eISSN - 2460-6081
pISSN - 1978-0591
DOI - 10.22164/isea.v3i1.36
Subject(s) - accounting , sanctions , compliance (psychology) , business , indonesian , depreciation (economics) , quality (philosophy) , corporate governance , financial accounting , accounting information system , finance , economics , psychology , social psychology , linguistics , philosophy , capital formation , epistemology , financial capital , political science , law , economic growth , human capital
This study examines the extent of Indonesian companies‟ compliance with the Indonesian accounting regulations (IARC) of inventory, fixed assets, and depreciation by analyzing 160 Indonesian listed companies‟ 2006 annual reports. This study also looks at potential factors that explain the level of this compliance. Analysis reveals a high level of 71.63% inventory compliance, 51.13% fixed assets compliance, and 99.69% depreciation compliance with accounting rules. T-test and regression analysis show that firm size is a significant predictor of accounting compliance. Importantly, ownership and governance structures do not influence the level of compliance. Although Indonesian firms complied with more than 50% of the key accounting rule provisions, regulatory intervention appears needed to improve compliance. Such regulation might include sanctions as promulgated by multilateral financial organizations (World Bank 2005).