Effects of familiarity, task complexity, and preparer experience on revenue recognition

This study examines how familiarity with accounting standards, task complexity, and preparer experience influence accountants' judgment and decision-making (JDM) regarding the accounting for revenues from contracts with customers. Recognizing the impact of familiarity with standards and experience on accounting decisions enables organizations to invest in preparer training and development, ensuring preparedness for new standards and complex tasks. Understanding how familiarity with accounting standards and preparers' experience influence accounting decisions improves the transparency and reliability of financial reports, which benefits investors, regulators, and stakeholders by reinforcing corporate governance and market stability. The experiment employed a 2x2 design that manipulated familiarity with accounting standards (International Accounting Standard [IAS] 18 vs. International Financial Reporting Standards [IFRS] 15) and task complexity. Financial statement preparers completed a revenue accounting task. We compared the participants' decisions using an analysis of variance and variance ratio tests to measure noise in judgments between participants in the four groups. Additionally, we measured the preparer's experience based on their length of experience in the accounting profession. The results indicate that familiarity with the standards and task complexity did not significantly affect decision-making. However, greater familiarity with a standard led to more varied decisions. Interestingly, even in complex tasks, familiarity with a standard increased decision variability. Moreover, less experienced preparers exhibited greater variability in their decisions between complex and non-complex tasks than more experienced preparers did. These findings suggest that financial statement preparers in Brazil are adapting to new standards and highlight the impact of experience on the effect of task complexity on accounting judgment.

Keywords:
accounting; revenue recognition; IFRS 15; judgment heuristics; standard complexity