http://afr.sciedupress.com Accounting and Finance Research Vol. 8, No. 3; 2019 Published by Sciedu Press 136 ISSN 1927-5986 E-ISSN 1927-5994 Testing the Level of Compliance of International Accounting Standard IAS 38: Evidence from Bahrain Mr. Mohammed Saeed Hassan 1 , Dr Adel M. Sarea 2 & Dr. Gagan Kukreja 3 1 Ministry of Finance, Manama, Kingdom of Bahrain 2 Department of Accounting & Economics, College of Business and Finance, Ahlia University-Kingdom of Bahrain 3 Department of Accounting & Economics, College of Business and Finance, Ahlia University-Kingdom of Bahrain Correspondence: Dr Adel M. Sarea, Department of Accounting & Economics, College of Business and Finance, Ahlia University-Kingdom of Bahrain. E-mail: Adelsarea@yahoo.com Received: June 21, 2019 Accepted: July 24, 2019 Online Published: July 25, 2019 doi:10.5430/afr.v8n3p136 URL: https://doi.org/10.5430/afr.v8n3p136 Abstract This research aims to examine the level of compliance of International Accounting Standard 38 (IAS 38, intangible assets) among the listed companies of Bahrain Bourse. This paper employs the method of equal weighted disclosure index to determine if the listed firms are complying with the disclosure requirements of the IAS 38. The required data for the year 2016 has been obtained from Bloomberg. The research found that firms have a compliance of 35.4%. The regression analysis results showed that there is a correlation between IAS 38 disclosure and the size of audit firms, leverage, profitability and industry type. There is a lack of relationship between IAS 38 disclosure and age & size of the company. This research serves as the basis of a future study on IAS 38 in different countries in emerging markets. In order to assure high performance and implementation of IAS 38, all firms listed in Bahrain Bourse ought to increase the level of compliance. Keywords: intangible assets, disclosure requirements, disclosure index, Bahrain 1. Introduction IAS 38 is one of the standards of the IASB which deals with intangible assets. In the reporting process, the management of the company first convert the values of the intangible assets into a monetary unit and then report it as per the principles stipulated in IAS 38. This standard came into the existence in 1998 and has received gradual updates over the years. Since 2004, there have been no changes in IAS 38 (Gao & Jia, 2016). The key point of IAS 38 is that the value of each intangible asset which can be identified must be identified and mentioned using the amortization model (Deloitte, 2014). The IAS 38 outlines the different aspects of the accounting practices that are included in different organizations in the modern context of the business environment (Clavano, 2014). (IAS 38) deals with the accounting requirements for recording the intangible assets. Some research studies stated that the adoption of IAS may impacts the decision to disclose the information as well as its financial performance. On the contrary, few other studies have also nullified the claim stating that there is no association between some firms’ characteristics and the level of compliance with IAS/IFRS. The level of the compliance the firm listed in Bahrain Bourse is unknown at the current juncture and needed to study. Thus, due to the lack of studies, this study extends to further emphasis on studies by several scholars (Sarea & Al Nesuf, 2013, Sarea & Al Dalal, 2015, Alrawahi & Sarea 2016, Juhmani, 2012, Budaraj & Sarea 2015; Demir & Bahadir, 2014) & examines the level of compliance of listed companies with IAS 38 in order to extend on the previous studies available in the rest of the world & address the issue of compliance. The significance of the study is that it shows the extent of limited and non-compliance behavior of financial reporting standards in the Kingdom of Bahrain. This study will inform various stakeholders about the severity of the issue of failure to comply with the accounting standards. This will also allow the government to take appropriate actions in order to increase the level of compliance by the companies. Moreover, this study can also be used by other scholars in performing further detailed analysis of the topic of compliant behavior, especially in recording intangible assets.