The Transition to the K3 Framework -An examination of possible effects on the accounting profession

Abstract

Background and problem discussion: The Swedish accounting framework is currently in a transition stage. The Swedish Accounting Standards Board has since 2004 been working on a project that aims to reform the standard setting for what is generally accepted accounting principles in Sweden. The purpose is to simplify the regulatory requirements and to develop an overall framework for four categories of companies. The so-called K3 framework, which will become the main framework replacing the current standard setting within a few years, is under construction and is essentially based on IFRS for SME. This main framework will be less detailed and contain fewer examples than today's framework and may therefore include some adjustments for the accounting profession in Sweden. This study will investigate how the transition to the K3 framework and the change that this means, will affect those working with accounting in Sweden. Aim of the thesis: The aim of this study is to identify possible effects on the accounting profession with the introduction of the K3 framework. The study will be performed by investigating the expectations on what a shift from a more detailed framework to a regulatory framework that is more driven by the prevailing principles means to the accounting profession and the existing accounting culture within the profession. Method: The empirical data is gathered through personal interviews with knowledgeable persons within the accounting profession in Sweden. The interviews were conducted with three different groups; experts, accounting experts and accountants, in order to get a broader view of the problem area. Conclusion: The study indicates that the transition to the K3 framework will mean that the accounting profession must make more judgments and adapt a new way of thinking. It has also emerged that not only the transition to the K3 framework will impose demands on the profession but also the change by itself; change is always difficult and requires an effort. The transition by itself will also require some education for the practitioners to learn the framework. Proposals for future studies: During the study several areas for future studies has been identified; what the implementation will actually mean, what the K3 framework will provide for the accounting and the outcome of the financial statements, and if the company's method of reporting will distinguish itself more with the introduction of the K3 framework since the framework is more flexible than the current regulations. In addition, it would be interesting to investigate how the accounting profession will be affected by the fact that Sweden will have both regulatory frameworks based on principles and based on rules.