Unlocking compliance: assets impairment disclosure

Purpose The purpose of this study is to analyze the disclosure compliance level of Accounting Standards and Financial Reporting (NCRF) 12, “Impairment of Assets,” in the financial statements of the hundred largest Portuguese companies. Design/methodology/approach An index of disclosure was calculated based on NCRF 12 requirements for each company. This study examines various characteristics of these companies and develops explanatory hypotheses regarding compliance using variables such as size, profitability, leverage level, internationalization, type of auditor and industry. Findings The results indicate that the average disclosure compliance level with NCRF 12 was 86%. The degree of disclosure showed a significant relationship with leverage level and industry, suggesting these factors play a key role in influencing compliance with NCRF 12. Research limitations/implications The study’s focus on the top 100 Portuguese companies limits generalizability. Expanding the sample and exploring other jurisdictions in future research could enhance relevance, helping regulatory bodies and standard setters address areas requiring further guidance on compliance drivers. Practical implications The findings provide valuable insights for auditors, regulatory authorities and companies, highlighting that leverage level and industry are significant factors in NCRF 12 compliance. Companies and auditors may leverage these insights to enhance their disclosure practices, ensuring greater adherence to accounting standards and potentially improving financial transparency. Originality/value This study initiates the discussion on compliance levels with NCRF 12 among Portuguese companies, identifying key explanatory factors that influence adherence to this accounting standard, thus contributing to a deeper understanding of compliance.