Measuring the Impact of Lease Accounting in Accordance with IFRS 16 on Enhancing the Quality of Accounting Information in the Financial Statements of Economic Entities.

Abstract

The research aims to study the impact of applying the IFRS 16 standard on the quality of accounting information by analyzing the financial data of two companies listed on the Iraq Stock Exchange, belonging to two different sectors (Insurance - Services), for the period between 2016 and 2023. This is achieved by comparing the financial statements of the two sample companies before and after the implementation of IFRS 16. The standard has reflected the recognition of the right-of-use asset in the statement of financial position, along with the corresponding lease liabilities. At the level of the income statement, operating lease expenses have been reclassified to appear as depreciation and interest expenses on lease liabilities, which has affected the structure of profits and operating expenses. The research examines the impact of these changes on the quality of accounting information by measuring the quality of disclosed accounting information using the Kothari model. This is done by calculating discretionary accruals (DA), which are derived by subtracting non-discretionary accruals (NDA) from total accruals (TA). The research concludes that the application of IFRS 16 has significantly contributed to enhancing and improving the quality of accounting information, as evidenced by the reduction in discretionary accruals for the two sample companies.