International accounting books: Publishers' dream,authors' nightmare and educators' reality

Abstract

The emergence of International Financial Reporting Standards (IFRS) as the required convention for reporting to stock exchanges in the European Union (EU) and other important markets, together with the convergence programmes of major standard setters, has accelerated the reduction in differences in financial reporting between countries. The education of potential accountants would be expected to respond to these changes and, indeed, there is evidence that the teaching of accounting techniques now frequently draws on both IFRS and local GAAP. Perhaps a greater shift has been in the discipline of International Accounting (IA), which has moved from being an optional subject to being core to most programmes and an increasingly popular choice for more specialised degrees at both undergraduate and Master's levels. This article surveys the books that are available to support educators and learners in IA building on the analysis and classification of Laidler and Pallett (1998) Laidler, J. and Pallett, S. 1998. International accounting: a review of books available to support UK courses: a teaching note. Accounting Education: an International Journal, 7(1): 75–86. [Taylor &; Francis Online] , [Google Scholar] Accounting Education: an international journal, 7(1), pp. 75–86. A range of IA textbooks is examined in detail, along with a more general review of reference works. The analysis finds that there has been a growth in the number, breadth and depth of texts serving the IA market. Authors have fallen upon a number of devices in their battle to keep their materials up to date in this dynamic environment. Some of Laidler and Pallett's (1998) Laidler, J. and Pallett, S. 1998. International accounting: a review of books available to support UK courses: a teaching note. Accounting Education: an International Journal, 7(1): 75–86. [Taylor &; Francis Online] , [Google Scholar] criticisms of the writing and coverage of IA texts have been addressed, although not necessarily in the way that they envisaged. In spite of the growth of this section of publishers' catalogues, there remain a number of areas given scant coverage, notably enforcement and audit, and countries outside of the EU and US. The article concludes with recommendations for publishers, authors and educators to enhance the teaching of IA and the resources needed to support it.     

Accounting Education at a Crossroad in 2010 and Challenges Facing Accounting Education in Australia

Of the various reports released in 2010, two purport to examine the state of accounting education in Australia. These are Accounting Education at a Crossroad in 2010 and Challenges Facing Accounting Education in Australia. Both were released as collaborations of the leading academic organisation, the Accounting and Finance Association of Australia and New Zealand (AFAANZ) or professional accounting bodies in Australia including the Institute of Chartered Accountants in Australia (ICAA), the Institute of Public Accountants (IPA),1 Prior to April 2011, the IPA was known as the National Institute of Accountants (or NIA). and Certified Practising Accountants of Australia (CPA Australia). As their titles imply, the main thrust of these reports is to examine the challenges facing accounting education in Australian universities and, as such, they act as the input for this AE Briefing. The main challenges articulated in these reports portray a sector suffering from the combined pressure of a large international student enrolment, high student-to-staff ratios, an inadequate funding model, and an ageing academic staff profile. By way of commentary, we suggest that, if these gloomy circumstances continue to develop unabated, then the future for the sector will play out as a ‘perfect storm’2 Reference to the state of accounting education as moving toward a ‘perfect storm’ is an analogy that has been widely used in the higher education press in Australia and in dialogue at the local level. with the sector suffering on-going troubled development.     

Do Goodwill Impairments by European Firms Provide Useful Information to Investors?

In 2004 International Accounting Standards Board. (2004). International Accounting Standard (IAS) N°36: Impairment of assets. London: Author. [Google Scholar], the IASB adopted the mandatory annual impairment-test-only of goodwill (IAS 36) instead of amortization of goodwill. We present and discuss the academic literature regarding the association between the goodwill impairment, under this new standard, and the revision of investors’ expectations about a company’s future cash flows. The academic literature highlights that, in some specific cases, IAS 36 may help investors to revise their expectations. More precisely, goodwill impairment seems relevant when: (a) there is strong asymmetry of information between managers and investors, (b) managers disclose detailed information in the notes regarding their own assumptions about future cash flows, and (c) managers do not manage earnings and provide reliable information to investors. In many cases, goodwill impairment is probably useless for investors because they are able to revise their expectations based on public information, or because they cannot trust the accounting numbers and additional information in the notes about the impairment test, which are provided by (undisciplined) managers. More research is, however, needed to understand in which circumstances impairment-test-only is more useful, as well in which cases it is less adequate. Our analysis relates to the current post-implementation review and should be useful to standard-setters. Before any modification, we argue that standard-setters should carefully consider the economic and the institutional contexts when issuing a new accounting standard.     

A Rejoinder to ‘Professionalizing Claims and the State of UK Professional Accounting Education: Some Evidence’

Abstract

In response to the nine Commentaries on our original paper (Sikka et al., this issue Sikka, P. this issue. Professionalizing claims and the state of UK professional accounting education: some evidence. Accounting Education: an international journal, 16(1): 3–21.  [Google Scholar]), this Rejoinder responds to two themes: the politics of professional education, and accounting ethics. We argue that the contents of accounting education are shaped by a particular kind of politics, which privileges technicist rationality. In addition, we pose some questions about the accountancy profession's claims to be advancing ethical conduct by briefly focusing upon its own domestic and foreign interventions.     

Comparing Professions in UK and German-Speaking Management Accounting

This paper studies professional education in management accounting and the ways in which management accounting professions establish jurisdictional claims about management accounting work in the UK and German-speaking countries, respectively. We adopt a comparative approach drawing on the framework of systems of professions and the distinction between public, legal and workplace jurisdiction [Abbott, A. (1988 Abbott, A. (1988). The system of professions: An essay on the division of expert labor. Chicago, IL: University of Chicago Press.[Crossref] , [Google Scholar]). The system of professions: An essay on the division of expert labor. Chicago, IL: University of Chicago Press]. Our findings highlight some notable differences between the UK and German-speaking countries with respect to professional management accounting education, the jurisdictional claims that the professions make as well as the establishment and history of professional institutes for management accounting. Based on this analysis, the paper identifies a dilemma or at least a challenge for policy-makers with respect to balancing the need for a context-dependent model of professional education with a need for comparability and convergence.     

Teaching resources

In June 2004, the International Association for Accounting Education and Research (IAAER) in cooperation with the Southern African Accounting Association (SAAA) and the International Federation of Accountants (IFAC) hosted a Globalization Roundtable in Durban, South Africa, on the theme of Implementing International Education Standards: The Global Challenges. This was supported by the KPMG Foundation. The Roundtable was held to familiarize members of the international academic community with the International Education Standards (IES) developed and released by IFAC to provide quality and consistency in global accounting education. Attendees at the Roundtable were asked to discuss the IES, identify implementation challenges, particularly in emerging countries, and resources to meet those challenges, including any additional implementation guidance or assistance. This report summarizes the deliberations.     

Understanding accounting as a career: an immersion work experience for students making career decisions

This paper reports on a project which is designed to increase the participation of high school students in accounting work experience placements. The focus of the paper is on an Australian-based project which overcomes the identified barriers to offering high school accounting work experience placements with a resultant increase in the number and quality of placements offered. The research project responds to a decline in both the number and quality of students enrolling in accounting degree programmes in Australia. The paper draws on the work experience, social psychology, careers, and accounting education literatures to design a ‘connective’ model (Guile &; Griffiths, 2001 Guile, D., &; Griffiths, T. (2001). Learning through work experience. Journal of Education and Work, 14(1), 113–131. doi: 10.1080/13639080020028738[Taylor &; Francis Online] , [Google Scholar]) of accounting work experience for high school students. The project adopts an action research methodology which engages professional accounting practice, high school career advisors, and the university sector to deliver a structured work experience programme which addresses barriers to participation in accounting work experience and improves the quality of the work experience ‘experience’ for both employers and students.     

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Romania

Abstract

Romanian accounting rules (RAR) had followed a convergence process with International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) since 1999, and the level of convergence has increased over time. The Romanian accounting regulator continues to follow IAS/IFRS in internalizing the Accounting Directive 2013 Directive 2013/34/EU. Directive 2013/34/EU of the European Parliament and of the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, Official Journal of the European Union, L 182/19. [Google Scholar]/34/EU. Only a few major differences still exist (some of them due the restrictions in the Accounting Directive 2013 Directive 2013/34/EU. Directive 2013/34/EU of the European Parliament and of the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, Official Journal of the European Union, L 182/19. [Google Scholar]/34/EU) between RAR and IFRS. However, RAR lack the level of detail existing in IFRS, and IFRS cannot be used in practice as a source of guidance and interpretation. While major stakeholders have a positive attitude towards the convergence with IAS/IFRS, the Romanian accounting regulator intends to keep the control over RAR and avoid differences in interpretations that might have tax consequences. Despite the good level of convergence of RAR with IFRS, practitioners tend to continue to utilize the tax approach as a source of guidance and interpretation.     

Food for Thought? A Rejoinder on Peer-review and RAE2008 Evidence

This Rejoinder responds to criticisms made by Simon Hussain (2011) Hussain, S. 2011. Food for thought on the ABS Academic Journal Quality Guide. Accounting Education: an international journal, 20(6), : 545–559. [Taylor & Francis Online] , [Google Scholar] about the construction and operation of the Association of Business Schools' (ABS) Academic Journal Quality Guide. In this paper the broad purposes of journal lists and guides are outlined before an account is given of the long history and multiple forms of these lists, particularly in the field of Accounting. Having described the main features of different types of journal list, the advantages and benefits of the approach adopted in the compilation of the ABS Journal Quality Guide is outlined. The paper then ends by noting that one of the copy-editing mistakes identified by Dr Hussain has been rectified, but the remaining concerns about the rating of accounting education and accounting history journals reflect the absence of these titles from journal citation reports and international journal lists. Furthermore, the lower rating of Accounting & Finance research in the RAE2008 in comparison with Business & Management Studies research in the same year and Accounting & Finance research in 2001, has more to do with the way in which the Accounting & Finance Panel calibrated and normalized its judgements than with the ratings contained within the ABS Guide.     

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Turkey

Abstract

As it is not a member of the European Union, Turkey has not yet adopted EU accounting directives by law. Instead, Turkish standard setting authority adopted International Financial Reporting Standards for entities that have public accountability and has recently prepared the draft Turkish financial reporting standard for non-publicly accountable entities that are subject to independent audit: Framework for Local Financial Reporting. This national standard is influenced by European accounting directive 2013/34, international financial reporting practices and UK experience in addition to national accounting rules.     

IES 4 — Ethics Education Revisited

In 2003, the International Federation of Accountants (IFAC) issued a set of International Education Standards (IES). IES 4 Professional Values, Ethics and Attitudes aims to equip candidates for membership of an IFAC member body with the appropriate professional values, ethics and attitudes to function as professional accountants. This paper explores the implications of IES 4 and analyses some of the challenges arising from an international professional accounting body prescribing ethics education. It concludes with an overview of considerations to be addressed to ensure that the implementation of IES 4 is successful .     

Comments by the European Accounting Association on the International Accounting Education Standards Board Consultation Paper ‘Meeting Future Expectations of Professional Competence: A Consultation on the IAESB’s Future Strategy and Priorities’

On December 2015, the International Accounting Education Standards Board (IAESB) issued a consultation paper entitled ‘Meeting future expectations of professional competence: A consultation on the IAESB’s future strategy and priorities’. Its aim is ‘to obtain public comment on its vision for the next five years and the strategic priorities it believes need to be addressed in serving the public interest’ [International Accounting Education Standards Board [IAESB]. (2015a). Meeting future expectations of professional competence: A consultation on the IAESB’s future strategy and priorities. Consultation paper. Retrieved from https://www.ifac.org/publications-resources/consultation-paper-meeting-future-expectations-professional-competence, p. 3]. This article reports the answers of the European Accounting Association to the questions asked in the consultation paper. The comments suggest a reinforcement of the entry requirements that would include a proper education background, advanced levels of both some technical competences and interpersonal/communication skills as well as a very strong ethical commitment. They also recommend a more thorough development process for the continuous education of accountants, a stronger link between practitioners and academia, insights for new IESs and more effective communication strategies about IAESB activities.     

Discourse Surrounding the International Education Standards for Professional Accountants (IES): A Content Analysis Approach

The development and implementation of the International Education Standards (IES) for professional accountants is currently an important issue in accounting education and for educators interested in a shift toward international education standards more broadly. The purpose of this study is to investigate professional and research discourse regarding the IES by identifying and analysing articles in accounting publications. Two research questions were formulated to explore the topics in the publications and the opinions expressed towards the IES. Several electronic databases were used to access the articles and a content analysis approach was used to examine 110 articles published in English during the period from January 2003 to August 2011. The relatively small number of publications addressing the IES is surprising and possible reasons for this are discussed. The majority present a positive picture of the IES, however the analysis highlights key themes in mixed opinion and more critical articles and also reviews the challenges to IES implementation that are dominant in the discourse. The findings of this study suggest further discussion and professional debate of issues surrounding the accounting IES is needed. Reflection on the discourse can inform further implementation of the international standards in accounting and also developments in international education standards for other professions.     

Accounting Education: The Impact of Globalization

This report investigates the impact of globalization on accounting education as set forth by members of a panel at the annual meeting of the American Accounting Association held in New York in August 2009. It addresses the work of the International Federation of Accountants (IFAC) and the International Accounting Education Standards Board (IAESB) in coordinating accounting education globally, research by the International Association for Accounting Education and Research (IAAER) in support of the IAESB, the work of the International Accounting Standards Committee Foundation (IASC Foundation) and its impact on accounting education, and the impact of globalization on accounting education in Japan.     

Risk Perception and Demand for Risk Mitigation in Transport: A Comparison of Lay People,Politicians and Experts

This paper aims at examining risk perception, worry and demand for risk mitigation in transport and to compare judgements made by lay people, politicians and experts. The results are based on three questionnaire surveys carried out during autumn and winter 2004. The first study involved a representative sample of the Norwegian population (n = 1716), the second sample a group of Norwegian politicians (n = 146) and the third a group of experts on transport safety (n = 26). Studies carried out previously (Sjöberg, 1998a Sjöberg, L. 1998a. Worry and risk perception. Risk Analysis, 18(1): 85–93.  [Google Scholar], 1999 Sjöberg, L. 1999. Consequences of perceived risk: demand for risk mitigation. Journal of Risk Research, 2(2): 129–149.  [Google Scholar]) have given support to the idea that consequences are more important for demands of risk mitigation than probability assessments. In the present study it is hypothesised that this may be because they are associated with worry and it is also proposed that worry relates more strongly to demands for risk mitigation than evaluation of consequences. The results of SEM‐modelling showed that worry was a stronger and more significant predictor of demands for risk mitigation compared to consequences and worry mediated the effect of consequences. Probability assessment was a totally insignificant predictor. In accordance with previous studies, the results showed that experts demanded less risk reduction than lay people and politicians. The results indicate that this is because they stress the probability more than the other two groups.     

Investor relations,information asymmetry and market value

Evidence to date on the market value of investor relations (IR) strategies is limited. We test the market relevance of IR activity directly employing a proprietary database measuring IR quality across all firms listed on NYSE, Amex and NASDAQ. Although, in theory, ‘repackaging’ and communicating existing information should have no market impact, we find that firms with higher quality IR strategies are rewarded with significantly higher valuation multiples. In addition, increase in IR quality is associated with increases in analyst following and liquidity. Overall, our findings are generally stronger for small firms which are more likely to be ‘neglected’. Our evidence is consistent with effective IR successfully raising firm visibility leading to enhanced recognition and reduced information asymmetry in line with Merton (1987 Merton, R., 1987. A simple model of capital market equilibrium with incomplete information. Journal of Finance, 42 (3), 483–510. doi: 10.1111/j.1540-6261.1987.tb04565.x[Crossref], [Web of Science ®] , [Google Scholar]) and thus ‘fairer’ firm valuation as argued by IR professionals.     

Physiological Age,Health Costs,and Their Interrelation

We demonstrate the impact of an observable health-related quantity on the evaluation of individual physiological ages by extending the phase-type aging model proposed by Lin and Liu in 2007 Lin, X. S., and X. Liu. 2007. Markov Aging Process and Phase-Type Law of Mortality. North American Actuarial Journal 11: 92–109.[Taylor &; Francis Online] , [Google Scholar]. In their model, an individual of a given calendar age has a determinable distribution of his or her physiological age. In our article, we use observable information to refine this distribution, thereby better connecting physiological age with the health of the individual. We illustrate our model using health cost data, and we investigate the impact of an observed health cost on the distribution of an individual’s physiological age. We also explore the impact on the expected present value of future health costs.     

The mixed attribute model in SFAS 133 cash flow hedge accounting: implications for market pricing

In this study, we examine the pricing of cash flow hedge adjustments reported in other comprehensive income (OCICF), under the mixed attribute model in SFAS 133 Accounting for Derivative Instruments and Hedging Activities. Our OCICF pricing investigation integrates empirical research on the derivatives use that gives rise to such mark-to-market adjustments with the accounting information pricing literature. Based on this integration, we generalize mispricing theory for the SFAS 133 mixed attribute model and predict both the direction and magnitude of OCICF pricing. Screening on U.S. multinationals with ex ante exposure to currency risk, we provide evidence of OCICF mispricing in the expected direction, consistent with the notion that SFAS 133 cash flow hedge accounting results in a mixed attribute problem (Gigler et al. in J Account Res 45:257–287, 2007). Moreover, we find that both OCICF gains and losses are inversely related to future cash flows and of the expected magnitude, consistent with our predictions based on valuation theory (for example, Ohlson in Rev Account Stud 4:145–162, 1999). Our results support the Financial Accounting Standards Board’s concern that the SFAS 133 mixed attribute model does not provide the information necessary for investors to understand the net economic effects of derivatives use (FASB in Accounting for financial instruments and revisions to the accounting for derivative instruments and hedging activities. FASB, Norwalk, 2010).     

Political influences on the costs of banking crises in emerging market economies: testing the U-shaped veto player hypothesis

While there has been considerable research on the consequences of financial crises, there has been little empirical research on the possible effects of the role of domestic political institutions that influence a government's ability to implement crisis management policies. This paper investigates the impact of domestic institutions, characterized by a U-shaped veto player framework, on the output costs of banking crises. The analysis extends MacIntyre's qualitative study (2001 MacIntyre, Andrew. 2001. Institutions and investors: The politics of the economic crisis in Southeast Asia. International Organization, 55(1): 81–122. [Crossref], [Web of Science ®] , [Google Scholar]) of the relationship between veto players and policy risks in the Asian financial crises. For a large sample of emerging market economies, we find support for McIntyre's hypotheses that both too few and too many veto players are associated with greater costs of banking crises.     

Pricing and capital requirements for with profit contracts: modelling considerations

The aim of this paper is to provide an assessment of alternative frameworks for the fair valuation of life insurance contracts with a predominant financial component, in terms of impact on the market consistent price of the contracts, the embedded options, and the capital requirements for the insurer. In particular, we model the dynamics of the log-returns of the reference fund using the so-called Merton (1976 Merton, RC. 1976. Option pricing when underlying stock returns are discontinuous. J. Finan. Econ., : 125–144.  [Google Scholar]) process, which is given by the sum of an arithmetic Brownian motion and a compound Poisson process, and the Variance Gamma (VG) process introduced by Madan and Seneta (1990 Madan, DB and Seneta, E. 1990. The variance gamma (VG) model for share market returns. J. Bus., 63: 511–524. [Crossref], [Web of Science ®] , [Google Scholar]), and further refined by Madan and Milne (1991 Madan, DB and Milne, F. 1991. Option pricing with VG martingale components. Math. Finan., 1: 39–45. [Crossref] , [Google Scholar]) and Madan et al. (1998 Madan, DB, Carr, P and Chang, E. 1998. The variance gamma process and option pricing. Eur. Finan. Rev., 2: 79–105. [Crossref] , [Google Scholar]). We conclude that, although the choice of the market model does not affect significantly the market consistent price of the overall benefit due at maturity, the consequences of a model misspecification on the capital requirements are noticeable.