Posted: May 25th, 2022

Accounting standards and IFRS adoption

Accounting standards and IFRS adoption in Cambodia and Thailand

The significance of accounting standards

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Accounting may be considered as a business language through which the statistical results can be acquired which help in analyzing how well the firm is functioning. They give out timely statements of these statistics and help the stakeholders get all the information they need. Accounting is like a separate language which has its own grammar and these outlines and rules are referred to as the accounting standards. The main aim of the accounting standards is the threefold. This method is very useful when it comes to setting a certain standard for the various policies involved and diminishing the failure to compare the financial reports with the numerous entities involved. Another role they play is that of the facilitation of the depiction of the quality of the firm and its performance as the statements reveal the relevant data in a clear and distinct manner. The entire information is revealed in a manner where the subjective elements are greatly eliminated and they reveal the picture pretty clearly (Alali and Cao, 2010).

Standards of deriving the global financial reports:

The process of globalization in the financial markets has led to a growing emphasis on the standards that are to be maintained in the global market in accounting terms and has made increased efforts to acquiring the best standards which go along with all the internationally approved standards. The statements that are made in each country differ from each other according to certain laws, rules, standards, etc. because the analysis and assessments about each transactions differ. Hence, this sometimes becomes very difficult to interpret because the methods of analysis are different which makes comparison, analysis and assessment quite difficult among different countries (Baker, 2008).

The system and procedures of reporting these statements has a basis of excellent governing, the best quality and standard and lastly a structure upon which to work on for the process of economic development. The standards for the reports however form a basis for the investors and stakeholders to build a sense of trust in the analysis of these reports which therefore play a significant role in the contribution to development of the nation as a whole. It is also obvious that the globally acceptable standards therefore play an important part in the whole procedure (Epstein, 2009).

In relation to this, the significance of an entity like International Accounting Standards Board (IASB) which plays the role of a separate internationally recognized entity automatically increases. The main roles and motives that the IASB holds are the following (Epstein, 2009):

a. IASB, a body for setting standards, will be responsible for developing a single set of IFRSs (International Financial Reporting Standards) that will be globally accepted, shall be enforceable, easy to understand, and of high quality (Epstein, 2009);

b. usage of those standards shall be encouraged (Epstein, 2009);

c. SMEs, medium sized organizations, and emerging economies are characterized with certain financial reporting needs, which will be highlighted (Epstein, 2009);

d. High quality solutions shall be provided by converging IFRSs and national accounting standards (Epstein, 2009).

It will be easy to compare different organizations having varied accounting standards if global accounting standards are converged under IFRSs. The cost of compliance and capital for the industry will be reduced as organizations will not be required to have multiple accounting standards for judging their organizations. It is very expensive and time consuming when organizations convert to a single standard during group reporting. Moreover, as there will be no friction in capital inflows and investor’s confidence would increase in global accounting standards, cost of generating foreign capital will decrease while investment will increase (Tribunella, 2009).

The future for IFRSs is promising since many economies are looking forward for converging with or adopting IFRSs. Hence, the route towards IFRSs is quite smooth. Furthermore, various stakeholders of IASB, such as personnel from academics, auditors, regulators, national standard setters, and investors; along with IASB itself are engaged in promoting such global standard of high quality (Tribunella, 2009).

Lessons from the financial crisis

Pro-cyclical amplification that occurred in the form of various financial shocks throughout financial markets, banking system, and an economy as a whole, were regarded as the basis of global financial crisis. Numerous channels are identified as a source for pro-cyclical amplification, like consumers, firms, and financial institutions witnessed leverage; margining prices; accounting standards that were developed for held-to maturity loans and mark-to-market assets. In addition to this, other destabilizing elements were the ignorance of exposures related to derivatives, and other on- and off-balance sheet risks (Sunder, 2009).

The points outlined in the IAS 39-Financial Instruments-Recognition and Measurement which was devised by the International Accounting Standards Board (IASB) lays out the main points that are to be kept under consideration while gaining a recognition and measuring the company’s assets and liabilities in financial terms. The results of these derivations are very important for the banking institutions and the NBFCs which focus on these tools used to make statistical analysis. The IAS 39 focuses on classifying the various financial tools, their methods of measuring the elements and thus the process of derecognizing. The points discussed under IAS 39 can be applied internationally to a variety of financial tools (Sunder, 2009).

After this crisis situation, it brought about varied opinions where some people were very critical of the standards adopted and suggested that the fair value accounting had a heavy impact on the financial crisis overall and in some ways exaggerated the situation and increased the intensity which eventually led to the failure and the markets becoming illiquid and the sales dropping down (Sunder, 2009).

The team G. 20 which was working on the “enhancement of the sound regulations as well as strengthening the levels of transparency” suggested that there was a need for the loans loss suggestions to be strengthened and the makers of these provisions should actually consider devising some alternate methods in order to recognize and measure the losses brought about by the loans which bring about more options available for credit. The G. 20 group also went on to suggest that the International Accounting Standards Board (IASB) should pay more attention towards the move to regulate the global turn towards single sets of accounting techniques which meet high standards by bringing together and learning from the exposure gained by the other countries who have already used this process and are able to extend some form of technical help and assistance. Another suggestion that they made was about the attempts to make these standards a bit easier and less complex so that the tools can make the presentations better off and make it easier for the statements to be analyzed and assessed and attain a clear view and evaluation of the financial tools (Catty, 2010).

The Requirement of Adopting International Accounting Standards

The newly established markets generally face limited opportunities where they have to stick with what they get. They usually have to join into the process of globalization in order to pace up their trade processes and become fully involved in that. The main aim that they enter the market with is usually that of speeding up the industrialization process in order to make up and mould their financial institutions. To make this possible, it is essential for them to acquire funds from external sources whereby they can pool in investments to build up on the infrastructure facilities and establish a well networked system of manufacturing and producing according to what their capacity allows them (Major and Marques, 2009).

The newly established markets hence get a limited frame of choice and have to collect their funds from external source that would be willing to link these financial institutions and the capital markets to the rest of the world. They have to be quite competitive and be focused if they wish to remain in the market along with numerous other markets that are entering and competing for the capital from abroad. Hence if they want to stay in the market, they have to adopt all the internationally recognized standards that have been specified by the International Financial Reporting Standards (Major and Marques, 2009).

If one carefully studies and look into the capital standards which were derived by the committee working under the Bank of International Settlement, we can notice that none of the nations were forced to adopt these standards and ideas but even so all of them were quite eager to adopt them. This came as a huge shock to those who were actually a part of the making process too. The countries started recognizing the fact that if they failed to abide by the standards and did not adopt the BIS capital standard, then their locals would obviously face drawbacks by having less trading limitations. They would also have a limited borrowing line and it would generally cost them more if they want to engage in any work internationally. Hence, most of the countries end up adopting the standards in order to ease things down for themselves (Ball, 2009).

There are certain issues that are brought about by having globally accepted standards. Some of these patterns may be applicable to the newly established markets but do not go along with developed and well established markets. These key factors and specifications may influence the accepted patterns and standards and make them difficult to be accepted in the newly formed markets or may in turn lead to varied results which are not required by those who set up the standards. It can still be questioned however whether those who set these standards considered and revised all the issues that may arise in accordance with the newly formed markets and whether all the key points apply to them or not (Ball, 2009).

Lack of Involvement by Developing Economies

The developed markets, which consist of those who have the money or those that can operate as financial centers that collect the money, govern the international standard setting bodies as indicated by the researchers (Jones, 2010).

The money is then distributed throughout the world by the international financial institutions and fund managers in the developed markets, who in other words, act as investors. The developed market to govern the international rule setting process should be anticipated primarily due to the fact that they bear all the risks associated with these money and have a right to demand standards and systems in order to assist them in administering this process safe and sound (Jones, 2010).

As the rules that are declared relate to all countries, therefore ways to lobby the changes in rules or amendments should be discovered by the countries themselves who have problems with these rules later on. Consideration is required on this absence of participation by international bodies in the rule setting process (Jones, 2010).

Specific issues with the IFRS in Thailand

Researchers in Thailand outlined some definite problems about the IFRS. Debt restructuring in IAS 39 covers the first instance. Debt restructuring occurs when banks reschedule the payment terms or have a renegotiation with its debtors that are not performing since long time. The debtor will be given more time in the future and thus loan terms revised to pay off the loan installments greater period of time, say 7 years, as per the new term.

The calculation of the value of restructured loan so as to identify the loss is the main problem here. The new cash flow should be discounted using the interest rate that existed when the original contract was signed or agreed, as stated in the IAS 39. The interest rate that existed when original loan was signed or agreed should be considered in order to determine the interest forgone, as the loss will usually be calculated in association to the interest forgone (Fitzpatrick and Frank, 2009).

Nevertheless, if interest rate goes through a paradigm shift then it is likely to have some sea change on the emerging market’s financial environment. Such phenomena has been observed in Thailand too (Fitzpatrick and Frank, 2009).

For a longer time before 1997, Thailand enjoyed more investment funds than saving amount. However, the dawn of 1997 brought about major financial crisis in Asian countries that badly shook the banking sector particularly. Interest rate sharply fell down from 12% to 6% a year. It was a historical downturn for loans, which called for abrupt restructuring. This deterioration led to reduced level of domestic investment, which in turn increased liquidity in financial sector. It appeared to be a big challenge for the economy of Japan while somehow Thailand succeeded to sustain it. With the passage of time, the things improved and paved the ways for recovery (Fitzpatrick and Frank, 2009).

A sustainability measure adopted by Thai government was the launch of national asset management entity. It worked in close coordination with banks to share losses and improve interest rate on loans. However, the discounted level of 12% is still difficult to offer and maintain, which is presently IAS 39 requirement. The loan market is concentrated towards 6% interest rate of discounting while altogether doubled rate may lead to increased losses for banking industry (Fitzpatrick and Frank, 2009).

The change in interest rate has led to complete reshaping of financial sector where by standardization has become a challenge. The net present value calculation in case of restructured loan and the value of interest rate to be used in calculation is still a burning question (Whittington, 2008).

The investor needs data about cost, revenue and profit margin of individual segments of the business industry. This information is used in forecasting future gains out of each individual segment. It is also the requirement of IAS 14 to maintain data in this particular heads (Whittington, 2008).

With us, is a case of a firm, who manufacture and exports training shoes as a parts of operations. The company sells all the shoes to only one customer, which is one of the biggest American-based brands. After company disclosed its profits, it complained that, due to high profits shown in the statement, there was a pressure of customers to lower its prices. This firm end up showing its result out in open whiles both competitors outside as well as inside the country, continued its operation keeping low (Whittington, 2008).

Because of the reason above, many researchers supports the argument that, standard should give exemption to those firms, that have only few buyers, imposing that they are no obligated to report segmented results (Whittington, 2008).

Our third example is related to goodwill. The study clearly mentions that, according to revised IFRS 3, Business Combinations, treatment of goodwill is changed, that is, it is to be tested annually for impairment as guided by IAS 36, Impairment of Assets, rather than going through amortisation (Taylor, 2009).

As far as developed countries are concerned, this treatment for goodwill is fine, because affects on goodwill in developed countries is predictable and is quite free. But this is not the case in emerging markets. Goodwill in emerging market may be affected by number of factors. Technology is one of these factors. Technological changes could easily change the goodwill of a firm as service and good are less technologically complex. Another factor is political change and instability. Changes in rights in context to commercial market could also have adverse affect goodwill (Taylor, 2009).

In the same way, in developing countries, when a market is dominated by one brand or product whereas overall market is small, entrance of new firm will negatively affect the market share. There would be a sudden impairment in goodwill for firm in emerging market, as compared to markets which are developed. In view of this case, many researchers suggest that standard should allow an option of using amortisation where there is high risk of sudden impairment (Taylor, 2009).

Introduction of IFRS in Thailand:

In near future, there would be no alternative to IFRS. Similar is the case with Thailand. According to the authorities, they are willing to adopt IFRS by end of the upcoming year. Nevertheless, it will only apply to the firms that are in capital market. As for the firms that are outside capital market, they will have to follow local standard. In case of Thailand, this is necessary because, set standards are treated as law and violation results in criminal punishment (Pounder, 2011).

Forcing companies to follow IFRS, would be unfair for those firms, which may not go by the law just because of misunderstanding, and also firms which are of no interest have to bear large cost to prepare reports according to IFRS (Pounder, 2011).

Researches believed that this approach, that is restricting IFRS to those companies only which are part of capital market, makes sense and they also recommend this approach to other countries. As far as Thailand is concerned, there is a plan to make some changes in provisions for non-public companies and also keeping in view the local markets. It is up to the firms, which are part of capital market, to follow IFRS completely or to follow few alternatives that had been provided by the carve-outs for better representation of Thailand local environment. It had been made clear that, companies have to mention if they are not completely following IFRS. And they also have to mention that they have followed carve-outs which were provided by Standard setting authority of Thailand (Pounder, 2011).

The approach which has been used by Thailand could be called IFRS minus. Thailand will, however, announce complete adoption, but few alternative treatments would be available. As companies are to state, in case, they have used carve-outs and then it is up to the investor to decide whether or not to invest in that company (Pounder, 2011).

Need for Regional Representation:

Indeed, no substitute is available for emerging market to find ways of representing in the rules setting process. The second best option for a country is to adopt IFRS but specifying few carve-outs which would better represent the countries environment. However, these specificities could be subject to debate and discussion by authorities setting standards (Langmead and Sorrosh, 2010).

However, to make this happen it is necessary that representative of emerging markets are in all decision making bodies. Selection could be done on regional bases so that representative of different regions could be involved. This will help bring up those specific situations to discussion and examination, even though; there would be no change to the final outcome (Langmead and Sorrosh, 2010).

Present Status of adopting accounting standards:

It is true that, great efforts had been made by Thailand, in last ten years, for improving the quality of financial reporting of corporations. Significant developments have been made in various fields, so that institutional framework could be strengthened. These steps are taken so that, Thailand could convert it’s auditing and accounting standards according to international benchmark (ROSC, 2008).

Federation of Accounting Professions (FAP), which is a self-regulatory body and also member of International Federation of Accountants, is one of the standard setting bodies. Few of its responsibility of FAP is to review and develop not only accounted standards but also ethics and auditing standards so that it could be according to the international best practices (ROSC, 2008).

The legislation involving the development and accountabilities of entities employed in commercial activities like the Accounting Professions Act, the Public Limited Companies Act and the Accounting Act have been in place in Thailand. With the aim to minimize the gap between Thai Accounting Standards and international standards, the Accounting Standard-Setting Committee through government process, assesses international standards and sets them as national standards. In order to improve practical compliance and implementation of standards, and specifically to assist execution of Thai accounting and auditing standards, an improvement in the institutional framework, creation of a standard-setting strategy and execution plan is required. The Securities and Exchange Commission Accounting Supervision Department and the Federation of Accounting Professions jointly work on the assessment of the auditors’ quality. Thus a monitoring and enforcement method has been instituted by the SEC (ROSC, 2008).

Challenges in the adoption of IFRS in Cambodia

Despite of the presence of institutional flaws in compliance, regulation, and enforcement of standards, the Cambodia is establishing an institutional framework in relation to auditing, accounting, and financial reporting practices. The national auditing standards and accounting standards are outdated and are comparatively inferior to international equivalents, despite the fact that they are supported by ISA, and IFRS. Thus contradictions with different laws exist in the accounting and auditing statutory framework. Different compliance gaps exist in both auditing and accounting practices (ROSC, 2007).

The gaps exist due to the lack of implementation guidance, insufficient technical capacities of the regulators, professional accountants not possessing a clearer understanding, inadequacy in professional training and education, and absence of auditing professional’s independent oversight. Audit practice is considered to be of little value in Cambodia. The quality of financial information is not adequately considered. Financial reporting is merely carried out with an aim to fulfill shareholders’ requirements, satisfying tax regimes and acquiring bank loans. Standards to be used in conducting audits are not highlighted by the law. The members of Association of Chartered Certified Accountants of the United Kingdom are found in a majority of Cambodia’s accounting offices, serving in government organizations there as well (Langmead and Soroosh, 2009).

Furthermore, IFRS is a principles-based framework where other than under the present Cambodian GAAP, there are less rules and added alternatives. In order to conclude the most appropriate alternative for accounting treatment, considerable judgment may be needed. Therefore, challenges in understanding will be carried by the execution of new accounting system frameworks, but occasionally these challenges would be encountered in unpredicted areas. The reader usually decides about the details of the matter and guidance is hence generalized thereof, depsite the fact that the strutcure allows IFRS to follow a principle-based frameowrk. A particular issue might contain many alternative solutions instead of a solitary answer (Langmead and Soroosh, 2009).

Researchers suggest that the IFRS education should be provided with sufficient resources which should be owned ans supported by the organization, and the education should go outside the finance function, thus including the board (Langmead and Soroosh, 2009).

Planning basically involves a schedule of time available to collect the necessary information and opinions i.e. find options and particular implications and reach a decision according to which an alternative should be preferred (Bolt-Lee and Smith, 2009).

Information about how several policy alternatives may affect the originations should be demanded by the board and cautious review of policy options on shift to IFRS should be carried out. Alternative opted must be supported by adequate documentation (Bolt-Lee and Smith, 2009).

In addition, the role of IFRS over a firm is all-encompassing. Ironically, the areas which are most affected by shifting onto IFRS are actually not related to accounting. These areas could be system requirements, controls, training, resource, market impacts and ‘flow-on’ effects, for instance, banking covenants, legal agreements, compensation arrangements, etc. To have an overhaul in the financial reporting method requires a high level of financial knowledge. But the issue here is that financial statements cannot be created without the assistance of a management team. A lot of subjective opinions of the management team are required for the IFRS to work and produce reports that are acceptable. The shift towards IFRS can be taken as a part of project management and necessitates the contribution of both internal, as well as external professionals such as tax, treasury, valuators, advisers and contracted resources (Haverty, 2006).

Researchers suggest that to have a successful transformation over to IFRS, there needs to be a set of researched and proven results backed by expert knowledge. It is the duty of the board to judge whether departments apart from finance are also involved or not and whether there is coordination between all the stakeholders of this transition. Special attention must be given to assess if alterations are needed in departments of controls and procedures so that compliance with IFRS is successful (Haverty, 2006).

Moreover, the focus of the management should be diverted away from the significance of systems. This shift onto the IFRS framework may necessitate new systems and processes to gather information so that it is aligned with the recognition, calculations and disclosure statements of IFRS. There is a chance that methods of collecting and disseminating information will have to change for the new framework (Haverty, 2006).

Researchers suggest that the system should work in such a way that there are no quick-fire kind of reports and sheets to conform to a heavy schedule. The manner of alignment to IFRS should be such that is incorporated into the present system. The firm needs to understand that this kind of investment to shift over to the IFRS framework, highly skilled and knowledgeable employees and fixing reporting schedules is not money spent in vain, rather it is necessary for the system to work. A successful move over to the new framework should include expert opinions from all angles. The management team of the firm can utilize this transformation to improve their own data collection and reporting methods (Haverty, 2006).

Similarly, the move over to IFRS is different because the requirements for disclosure in IFRS are much higher that the Cambodian GAAP. This variation is because IFRS is based more on ideologies while the added disclosures are created in place of the smaller number of regulations. Instead of burdening the firm with more information, these new disclosures will give a clearer picture to potential financiers. The management can also create basic reports that refine important facts and figures (Dzinkowski, 2007).

The implications for this are that there is a chance that the new framework could be a little complex for everyone – except financial experts, mature investors and relevant stakeholders – to comprehend. There is also a possibility that reports created by experts might concentrate on the position of cash flow instead of covering every aspect of the financial statement (Dzinkowski, 2007).

Researchers suggest that ahead of the date for the changeover, the rough version of the financial reports along with the previous year’s figures should be transferred over so that there is enough time for all the stakeholders and external auditors to study the data. This will assist the firm assessing the disclosure needs of the new framework well before the firm shifts over to IFRS. It is the duty of the management to make sure that every stakeholder is aware of the situation and that risk of unpredictability under IFRS if it is taken into account. It is imperative for the management to communicate with the market forces so that accurate information is distributed and incorrect reports on the possible adverse affects of shifting over to IFRS can be efficiently avoided (Dzinkowski, 2007).

Another observation made by researchers is that in light of the move over to IFRS, some Cambodian companies might find it difficult to find the human resource that is well versed in the required standard. One implication of this observation is that without the transition in place, the possibility of gaining financial literacy is almost impossible. On the other hand, there is still a lot of time before the actual implementation takes place. This time can be utilized to develop education plans so that the problem of financial literacy does not become a major hurdle (Hung and Subramanyam, 2007).

Researchers suggest that companies should assess and renovate their current system of education through which directors can be well-educated on the issue of IFRS. The difference in educating directors is that one does not need to train them extensively, but just create an understanding of important corporate matters (Hung and Subramanyam, 2007).


When it comes to financial regulations, it is a unanimous observation by all members of the global financial groups functioning in Cambodia that the following of international codes and principles is very important in reinforcing local as well as foreign financial structures in the country. As the financial world is dependent on each other, a financial calamity in any single region can cause trouble for the whole world. Such internationally accepted regulations bring an added impartiality. Also, these regulations can assist in identifying the frailties that could adversely affect finances all over the world, improve market performance, which will definitely lead to a world where economies are less susceptible. Locally, following globally accepted regulation will help set the overall standards which can help in defining local policies. However, in order to fully capitalize on these guidelines, the implementation needs to be conducted according the requirements of the particular country after evaluating specific issues (ROSC, 2007).

Time Horizons and Research Type

The main purpose of the research is an investigation of the IFRS adoption in Cambodia and Thailand. But with that it’s a cross-sectional study as well. The factor that makes it a cross-sectional study is that, we are going to be focusing on the variables that have an effect on the present interlinked issues which have been observed through all the data collected through the surveys and semi-structured interviews and also the relationship between these variables that are effecting all these issues. In a more formal way the cross-sectional study can also be defined as the way a specific situation/phenomenon is described at some particular point in time.

To enable the researcher to get all the necessary information needed to make the conclusions, this research study has a very exploratory nature and because of this exploratory nature of the study the researcher will be able to separate and combine different questions which will ultimately enable him to get all the information that he requires to make the appropriate conclusions.

Saunders et al. (2003) has explained that it’s of great importance when and if a researcher encounters some unexpected and unpredictable new data while conducting the research as it forces him to not only understand and find the answers to these unexpected results but also adapt to them quickly. Although a very common misconception regarding the researcher coming across the unpredictable data is that in this way the study starts lacking direction and focus, but the truth about this is that something like this actually helps broadening the horizon of the research and it becomes more encompassing and as the research study moves forward it helps in narrowing down the objectives and the primary aim of the research.

Data Collection Methods

According to Bouma (2003), what the qualitative research does is, it helps the researcher figure out and understand the thoughts, beliefs, norms and principles found in a social setting as well as characteristics of social setting, Bouma (2003) further says that the qualitative research has the advantage that it provides the researcher with the option of analyzing the data while collecting it and he/she could even make changes in it during the whole research process. Also, the researcher gets a chance to know the reasons for the way the sample/respondents react to the research as he/she is in contact with them closely and in this way the researcher can pay more attention and further analyze the issues that he/she didn’t notice before (Bouma, 2000).

Whereas, what Saunders et al. (2003) says about the qualitative research is that, it helps and allows the researcher to find and understand what the judgements, outlooks and preferences of a sample are based upon. Also, in their opinion with the help of this approach the researcher gets the freedom to imagine different factors having informal links among them (Saunders et al., 2003).

According to Yin (1994) the qualitative approach towards a research is of great importance as the quantitative research approach can’t explain the overall inclinations, decisions and approaches that are made by the institutions especially in the new social settings, hence, the qualitative approach can help the researcher to understand these things in a better way (Yin, 1994).

In order to help the researcher decide what is the best way to carry out the research, this research study will also discuss the previous theories, related to the topic under discussion here, that were made and agreed upon by other researchers. Therefore, in this way the researcher carrying out this study will know the best way to carry out the research, analyze the data collected and make the conclusions.

According to many researchers interviews are your best option if you are looking for in-depth and detailed information and they also help the researcher get a more honest response from the respondents as he/she is in a closer contact with them, whereas in the questionnaires the respondents usually tend to become less responsive due to the lack of close interaction between them and the researcher. Therefore, all the important data that is necessary to achieve the major aims of the research will be collected through interviews of exploratory nature. According to a study conducted by Easterby-Smith et al. (2002), in which they have supported the structured and semi-structured format of the interviews in three types of researches which are as follows:

1. The type of research having a large number of open-ended questions.

2. The type of research in which the basic judgement or idea behind each question will definitely vary from person to person.

3. The kind of research which has a large variety of questions (Saunders et al., 2003).

According to Yin (1994), the most important advantage of the interview format is that it allows one on one interaction between the researcher and the respondent and due to this close interaction its easier for the researcher to stay focused on the major categories and subtopics within the main central topic. Interview format gives the researcher a better idea about the respondent’s take on the topic of concern as he can see how respondents respond to the questions and what their body language says about the questions being asked.

However, Yin (1994) says that there are some major disadvantages of the interview format as well, for example; it is possible that the question are designed by the researcher in such a way that they force the respondent to answer in a certain way or the respondent might give answers to the questions asked by the researcher in a way that he/she thinks the researcher wants to hear them, therefore, telling what they think the researcher wants to hear and not what they actually feel about that question and there is also the chance of the researcher forgetting the answers of the respondents when he/she finally sits down to write them, that is why it is recommended for the researcher to record the interview so that he would be able to recall it later on (Yin, 1994).

Primary data collection

There are basically three dimension of the main aim of the interview process, these are:

1. As Tuckman (1972) pointed out that an interview enables the researcher to directly collect the statistics and data from the respondent and along with that he/she is also able to have the experience of witnessing the respondent’s reaction, thoughts and opinions about the topic under discussion very closely.

2. Through the interviews the researcher can get to know, authenticate and also test the conclusions or theories that have been made before by other researchers as well as present new ones on the topic being discussed.

3. According to Kerlinger (1970), interviews are very useful as they help the researcher to analyze the topic under discussion in more detail as well as study the already present theories on the topic from different angles. The interviews are very easy to use as a researcher can use them along with the other research methods.

From the above mentioned reasons it’s obvious that the use of interviews in this study is essential as it will help the researcher in getting to know exactly how a respondent reacts to the questions asked and why he reacts that way. Therefore, we will be using structured as well as semi-structured interview format as the data that we will get with the combination of these two formats will be more detailed and flexible, which won’t be achievable with the use of only the structured or unstructured interview format. Structured format will be used to get all the statistical data.

We can find many definitions of semi-structured interview format that will help us understand in a better what they are, how they work and what their advantages are. According to Yin (1994), the researcher while conducting his research in the semi-structured interview format can ask the respondent about his/her point-of-view on the topic and the hard facts regarding it. Riley (1996) once explained it in his research that the semi-structured format rather than just getting the statistical data about some research topic helps the researcher by building its way towards realizing the aims and objectives of the research and finding out about the actual basis of the topic of concern. According to the research study by Saunders et al. (2003), the semi-structured interview format allows close interaction between the researcher and the respondent during which the researcher/interviewer asks questions from the respondent regarding his/her research topic. Over the last few years the semi-structured interview format has become very popular and the main reason for their popularity is that through this format the researcher and respondent can freely interact with each other and share their point-of-views about the topic of concern. Also, in this format it’s very easy to go from formal to informal style or vice versa without bringing about a lot of changes in the setup (Saunders et al., 2003).

In order to get the overall structure follow coherent, free flowing and rational instructions that will be derived from the literature review, we have divided the framework into subcategories.

Prior to the interview, copies of all the questions that the interviewer/researcher is going to ask will be given to the respondents, so that they get some time to know about the nature of the questions and become comfortable. The nature of the format won’t be very strict/severe as we want the respondents to share their point-of-views freely. Interview can also be recorded in the form of audio or video tape, but this should only be done after the respondents agreement to it, as their might be some people who won’t be comfortable with the idea or their conversational skills might not be very good (Saunders et al., 2003).

It’s very important for the interviewer to record the interview in some way so that later on he/she won’t have any problems in remembering the answers given by the respondents. The recording will also help the researcher in analyzing his/her research with the previous studies and find new dimensions that haven’t been covered before. Once the interview is completed its strongly suggested for the researcher to compile a report as soon as he can in order to do unbiased evaluations. Also, the researcher must ensure complete privacy to the respondents who ask for it and keep their personal information confidential as the nature of the topic under discussion is very sensitive (Saunders et al., 2003).

Sample Description

According to Saunders et al. (2003), when you are conducting a research study on the background or context of some particular situation/phenomenon it is better to select a sample size for the research that is not very large. For this reason we are going to be conducting the interviews with a very small number of people.

One of the limitations caused by the qualitative research is that, they limit the type of sampling processes that can be adopted as it basically deals with the understanding of some situation/phenomenon at a particular point in time (Bouman, 2000). A lot of research studies that are done on the social situations/phenomenon are done through non-probability sampling, as Saunders et al. (2003) have mentioned in many of their research studies. The reason for preferring the non-probability sampling is that, based on the subjective reasoning it can offer a variety of different methods. Therefore, since through the topic under discussion here, we are trying to study the background and context of a specific situation/phenomenon, we are going to be using a small sample size (n= 4-10). Another advantage of using a small sample size is that we will be able to find answers to our research questions as well as cover the objectives of this study as smaller sample will give a much better chance to the researcher to observe and study the sample group in more detail. Thus, the sample will be selected while keeping all these purposes in mind.

According to Saunders et al. (2003), as there are some purposes that the researcher will have in mind while selecting the research sample, he/she will select the people who will be most appropriate and helpful in covering all the aims of the study and solving all the questions regarding the research study. Although it is thought that the sampling of this kind helps in diversifying the collection of information, but Saunders et al. (2003) said that, one can’t suppose all the population to be representing the statistical data that the subjects in the research sample show.

The interviews will be of great importance to the research study as the data collected through them will be used to support the finding of the research. Therefore, the respondents will be selected with great care to ensure that they understand the research topic as their opinions and take on the questions will be seen as how the general population would react to those questions and research topic. Hence, the interviews will be conducted to give a descriptive outline of the usual response to the research topic rather than a definitive one.

A non-random sample of respondents can be selected, as it is often very difficult to find the suitable people for the research interviews and those that are suitable enough might have issues with giving interviews, another problem that the researcher faces is the limitation of budget and time. So, it is suggested that the sample should be selected through personal connections in order to save time as well as money.

The researcher has narrowed his research focus to privately-held companies or Small and Medium Enterprises. As Cambodia and Thailand are largely dominated by SMEs, The researcher would like to compare how privately-held companies/Small and Medium Entities in Cambodia/Thailand prepare their accounts and financial reporting statements; whether the company follows any specific standard (IFRS for SMEs or local standard for SMEs); have their financial reporting practices changed over the years since the introduction of international accounting standards (IFRS/IAS) into the local standards.

Data Quality Issues

According to Saunders et al. (2003), if you want to reduce the risk of getting incorrect answers you should pay specific attention to the reliability as well as validity of the design of your research study.

What reliability is basically concerned with are the chances of other researches coming to same conclusion as ours when they use the similar devices to analyze the data collected. Bouman (2000) says that, what reliability actually means is that your data isn’t very accurate, that you have made some mistakes while calculating/analyzing it or that you haven’t calculated the result correctly.

Regarding this perception of reliability Saunders et al. (2003) said that there are two types of biases that the reliability can be caused by:

1. In the first kind of bias the interviewer’s body language, tone of voice or the way he/she ask the questions can force the respondent to respond in a specific manner (Saunders et al., 2003, p.252). Therefore, it will be made sure in this research study that the questions prepared for the interview have a completely neutral tone and that they won’t, in any way reflect the opinions or beliefs of the researcher/interviewer. Also, to make the respondent become comfortable with the environment and the interviewer, the interviewer will make sure that he/she reacts in such a way that the respondent trusts them.

2. The second type of bias is the one in which the interviewer is forced to ask the respondent questions about his/herself and do an investigation about him/her. What happens in this kind of event is that, although afterwards the interviewer or the researcher tries a lot to gain the trust of the interviewee before conducting the interview but now the respondent becomes doubtful because of all the questions that he/she was asked before. It has been observed that an event like this can affect the interview in such a way that the interviewee might not give replies to the questions asked as neutrally as he/she would have if the investigation hasn’t taken place, in fact the respondent tries to answer the questions by giving them a very positive angle.

According to Bouma (2000), validity basically deals with the fact that how correctly does the variable fits some concept. During the formulation of the questions for the interview in order to observe the values, beliefs and behaviours of respondents this phenomenon further intensifies (Bouma, 2000, p.85). What Yin (1994) says about the validity is that generalizing the case studies into hypothetical propositions is much easier. Also, the aim of a researcher is not to publicize the frequencies, rather he/she is suppose to relate and form theories. The researcher also believes that it is not possible for the new and upcoming researches to give the same results as his/her research might do since there are a lot of variables that can change the final outcome of a research study even if it is conducted on the same topic. Hence, the results acquired from this research study will not be generalized.

Analysing the Data

Although there are a lot of common research procedures and strategies through which the data in qualitative research is gathered but there is no standard procedure for collecting the data in qualitative research as there is in quantitative research (Saunders et al., 2003). The strategy used in this research to analyze the data is dependent on the hypothetical propositions to a great extent. Therefore, original propositions that were used to design the two important steps of the research study will be used to move the study forward. Following are those two points:

1. Aims and objectives.

2. Case study’s design and the method of data collection (Yin 1994).

Afterwards, the researcher in the hopes of analyzing data accurately and successfully, will evaluate and classify the survey results in exactly the same order as in the literature review the theories will be done. After that the researcher will try to explain the facts that changed and transformed the concentration of his research and try to answer the questions about it (Saunders et al., 2003).

After completing the above mentioned steps the researcher will put the data in the theoretical format and will try to evaluate how well all of that data relates to each other. During or after completing these steps the researcher might come across some theories/proposals that he/she notices have not been explained in the already present theories regarding the topic being researched. Therefore, the researcher must try to explain those proposals/theories and see if they could be adjusted in anyone of the already existing theories. Also, data analysis will be carried out during as well as in the end of the data collection process during this research (Saunders et al., 2003).


The main aim of the research study is to further explore the topic under discussion here but at the same time respect human dignity and try to not only cover the areas of interest for the researcher in this topic but also try to provide justice by creating further awareness about the topic through this study. While, at the same time respecting the values of the practitioners’ work. Hopefully this study will help in increasing knowledge, creating awareness and motivating others to further research this topic.


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