Accounting practice is regulated by law. Firms must comply with the local regulatory requirements on accounting practice and reporting. The world is moving toward IFRS standards. At firm level, the question is moot. However, if asked what factors influence regulators to adopt IFRS for their jurisdiction? The answer could be found in each jurisdiction's legislative intent (which should be a public record) and could be compared with the general objectives of IFRS. Where firms are allowed to select IFRS or other comparable standards, that is a matter of the country's state of readiness or institutional preparedness to adopt the standards.

Paul Louangrath Thank you very much for your answer.

The application of IFRS for SMEs in Sri Lanka is not a mandatory requirement but permitted. Moreover, there are no regulations that directly require SMEs to comply with accounting standards in the preparation of financial statements, and therefore, the application of certain accounting standards in the preparation of financial statements merely depend on voluntary choice. But it is known that almost all SMEs prepare financial statements and apply accounting standards up to a certain extent. Therefore, I think that there should be certain factors that influence the heterogeneity of application of IFRS for SMEs in Sri Lanka.

As you suggested, the organizational preparedness may be one of the factors that results in heterogeneity of application of IFRS for SMEs. Is it worthwhile to examine the determinants of organizational preparedness and its impact on the actual adoption?

Please educate me on this.

doi:10.1016/j.accfor.2007.11.001

Hi, If you take respondents as CEO or top managers of the SMEs the personal factor of the decision maker influence the choice making in adoption of IFRS for SMEs. As per the question you posed that SEM to use. yes you can. I suggest that use exploratory study design.

Dear Prageeth Roshan Weerathunga

Yes, I believe there will be no problem to use SEM to test your model. But since you have a specific case in mind (SMEs in Sri Lanka), it might be better to use a mixed-design, starting with a qualitative study... Think about it.

Notably, I would be careful while integrating those frameworks together especially the TPB and IT. Because first, they pursue different levels of analysis (institutional level vs. individual level); also (objective coercive pressures vs. subjective attitudinal variables), and second, they share certain similarities, for instance, the normative (Injunctive and Descriptive norms) in the TPB and "normative" pressure in the IT.

Please take my speculations with caution, they might be wrong..

Good luck.

Naeem Hayat Sayed Elhoushy Thank you

Dear Prageeth,

You can also look into the MS thesis related to the adoption of IFRS by SMEs. The link is http://www.diva-portal.org/smash/record.jsf?pid=diva2%3A326064&dswid=-5841

If the application of IFRS in the country is not mandated by law, one should look to the fationale in other countries for adopting IFRS by law. However, even if in Sri Lanka where it is not mandated by law, one should look to the regulatory body of the accounting profession to determine what is the fundamental guiding principle for accounting report ghen compare them to the policy rationale of IFRS (mzy be found in IFRS documents), this exercise will lead you to relevant factors. In a subject that deals with standards and transparency requirement, such as accounting, there might be little room left for creativity or innovation in thinking ... same principle applies to research in this field. Motivation of individual firm may not be as relevant as the dicttate of industry or market demand for standards, accuracy, and reliability.

https://onlinelibrary.wiley.com/doi/full/10.1111/acfi.12917