Regulatory flexibility and management opportunism in the choice of alternative accounting standards: an illustration based on large French groups

Due to the flexibility of domestic accounting regulations, French groups are entitled to refer to international or American standards for their consolidation. The objective of this research paper is to focus on the choices made by the 100 largest French companies during the last 16 years (1985-2000). In practice, apart from the French rules, three “alternative” sets of standards are used: the International Accounting Standards (IAS), “international principles,” and the U.S. GAAP. The percentage of companies referring to alternative (i.e., non-French) standards rose in the first part of the period, then fell. Additionally, while the number of companies choosing U.S. GAAP increased over the period as a whole, the number preferring IAS or “international principles” has been in sharp decline since 1994-1995. Our results show that in this voluntary move towards international accounting harmonization, the choices made by French companies have clearly varied according to developments in French accounting regulations and the changing power balance between the International Accounting Standards Committee (IASC) and the SEC-FASB. This indicates a certain degree of opportunism by the management, who clearly keeps one eye constantly on the cost-benefit trade-off.     

Measurement of formal harmonization progress:: The IASC experience

As a result of globalization, the accounting profession has become increasingly aware of the need to establish a single set of accounting standards that would be valid in the international arena. Recent events highlight the timeliness of this study, which provides an empirical measurement of International Accounting Standards Committee (IASC) progress throughout its harmonization history. The purpose of this article is twofold: first, a new measure of the advances achieved through formal harmonization and second, to use this methodology to evaluate the IASC achievements all through its standard-setting activity. Our results prove that the IASC has made great progress in regard to the level of harmony achieved through the accounting standards it has issued or revised. Nevertheless, we conclude that the IASC needs to continue working towards greater formal harmonization. Our study also indicates research directions that could advance the study of formal harmonization. This specific area of research has generally been disregarded in the existing literature, a trend we would like to see reversed, considering that its application can provide valuable insight for standard-setting processes, especially now that the accounting community is so conscious of the need to advance the harmonization process.     

Evaluating National Capacity for Direct Participation in International Accounting Harmonization: France as a Test Case

This article evaluates national capacity for direct participation in international accounting harmonization through its principal current formal institutional forum, the International Accounting Standards Board (IASB), with France as a test case. The objective is to derive propositions by which individual nation states, their indigenous accounting professions and other significant elements of their institutional framework might: (a) evaluate their present national capacity to contribute to international accounting harmonization; and (b) address policy issues relevant to development and deployment of capacity for effective engagement. The objective of the framework of analysis employed is to infer essential or desirable attributes for direct participation in international accounting harmonization by reference to the observed attributes of the initial IASB appointments. The likelihood and sustainability of direct French participation in the process is then assessed in relation to those attributes.     

中国会计准则国际协调效果的实证研究

自改革开放以来,我国进行了一系列旨在加强会计准则国际协调的改革,会计信息编报者和使用评价者都十分关心会计准则国际协调的效果。本文在借鉴国内外相关研究的基础上,采用实证研究方法从纵向上比较和分析AB股公司的净利润差异与会计信息价值相关性的变化,以期对我国会计准则国际协调的总体效果做出经验性评价。     

Measuring the convergence of national accounting standards with international financial reporting standards: The application of fuzzy clustering analysis

A single set of accounting standards is considered the path to achieving accounting convergence globally. Given the important role that formal harmonization/convergence plays in the accounting profession and global capital markets, this study focuses on the methods and methodology for the measurement of formal accounting convergence. Based on our review and evaluation of the existing methods for measuring the level of harmonization/convergence between any two sets of accounting standards, we propose using a new method of matching and fuzzy clustering analysis to assess the convergence progress of national accounting standards (NAS) with International Financial Reporting Standards (IFRS) from whole and single standards, respectively. Single standards are clustered according to their convergence level, which may indicate further convergence emphasis. As an illustrative example, the achievements made in China are evaluated using this new method. The results reveal that this new method can measure the convergence level of NAS with IFRS more clearly and informatively.     

The Impact of Adopting International Accounting Standards on the Harmonization of Accounting Practices

Over the past few decades numerous organizations have been actively participating in the efforts to improve the comparability of financial reporting. Many studies have discussed the benefits and drawbacks of comparability. This study investigated the affect on the harmonization, or comparability, of accounting practices when a sample of companies choose to use international accounting standards (IASs) when preparing financial reports.This study analyzed trends in the I index, a measure of concentration for the use of a particular accounting practice introduced by van der Tas, to determine if the choice of accounting methods by a sample of Swiss companies became more aligned with a sample of companies from three other countries. The study included a control sample of Swiss companies that did not switch from reporting using local Swiss standards during the same time period, 1988 through 1995. Four accounting practices were included; depreciation, inventory, financial statement cost basis, and consolidation practices. The practices used were compared with a sample of companies from three countries; Japan, the UK, and the US.The results indicated that across the 8-year period, the majority of the I indices comparisons were positive and statistically significant. However, the results did not support that these increases were due primarily to the adoption of IASs.     

Examining the differences between United States Generally Accepted Accounting Principles (U.S. GAAP) and International Accounting Standards (IAS): implications for the harmonization of accounting standards

Current trends indicate continued movement towards the harmonization of accounting standards, but not without difficulty and concern. At times, the political and financial market pressure, push the movement in opposite directions. The paper discusses the conceptual framework used in establishing Global Generally Accepted Accounting Principles (GAAP) (International Accounting Standards, IAS) and U.S. GAAP. Numerous transactional examples are illustrated under both Global GAAP and U.S. GAAP treatment. Several country specific references are presented demonstrating the difficulty in achieving harmonization. Implications for harmonization of accounting standards include arguments “for” and “against” Global GAAP.     

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.     

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

Abstract

Austria and Germany share similar accounting traditions. International harmonization in both countries has mainly focused on group accounting. In contrast, single financial statements give rise to legal and tax consequences and, thus, are still tied to the traditional principles of orderly accounting. Recent regulatory changes confirmed this dual role of accounting in both countries, while moving local accounting rules closer to IFRS, although to different extents. We illustrate how recent regulations in the two countries made reference to IFRS, how IFRS was considered during the law-making process and outline major differences that remain between domestic and international accounting standards.     

The Effect of Regulatory Harmonization on Cross‐Border Labor Migration: Evidence from the Accounting Profession

The paper examines whether international regulatory harmonization increases cross‐border labor migration. To study this question, we analyze European Union initiatives that harmonized accounting and auditing standards. Regulatory harmonization should reduce economic mobility barriers, essentially making it easier for accounting professionals to move across countries. Our research design compares the cross‐border migration of accounting professionals relative to tightly matched other professionals before and after regulatory harmonization. We find that international labor migration in the accounting profession increases significantly relative to other professions. We provide evidence that this effect is due to harmonization, rather than increases in the demand for accounting services during the implementation of the rule changes. The findings illustrate that diversity in rules constitutes an economic barrier to cross‐border labor mobility and, more specifically, that accounting harmonization can have a meaningful effect on cross‐border migration.     

Application of Anglo-American Principles of Consolidation to Corporate Financial Disclosure in Japan

The adoption by Japan of consolidated corporate reporting in 1977 may be viewed as an instance of the international transfer of Anglo-American practices of corporate reporting, and as a step towards international harmonization of accounting. Consolidation practices in Anglo-American nations are based on assumptions about the nature of corporate group associations. This paper examines the applicability of these assumptions to the corporate context in Japan. Personal interviews and analyses of group associations of listed Japanese corporations support three principal findings: (i) that historical and cultural determinants provide significant contrasts between corporate group associations in Japan and Anglo-American nations; (ii) that Anglo-American methods of consolidation fail to reflect adequately the nature of corporate group associations in Japan; and (iii) that the adoption of consolidation in Japan represented a response to situation-specific change stimuli rather than a general acceptance of the intrinsic merit of consolidation. The findings have implications for international accounting.     

Why do national GAAP differ from IAS? The role of culture

In this paper, we investigate the role of culture as an explanatory factor underlying differences between national GAAP and International Accounting Standards (IAS). National GAAP can differ from IAS in two ways: (1) divergence: both national GAAP and IAS cover a specific accounting topic but prescribe different methods; or (2) absence: national GAAP do not cover an accounting issue regulated by IAS. Based on Nobes' [Nobes, C. (Ed.) (2001). Gaap 2001—A Survey of National Accounting Rules Benchmarked Against International Accounting Standards. IFAD.] data, we construct a measure for the level of divergence of national GAAP benchmarked on IAS. We also create a measure (labeled absence) to assess the scope of national accounting rules compared to IAS. Our sample is made up of 52 countries. We show that culture matters more than legal origin (common law/civil-law) in explaining divergences from IAS. This result is robust to two proxies for culture: Hofstede [Hofstede, G. (2001). Culture's Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations. Second, Sage Publications (London).] and Schwartz [Schwartz, S. H. (1994). Beyond individualism/collectivism: New cultural dimensions of values. In U. Kim, H. C. Triandis, C. Kagitcibasi, S. C. Choi, & G. Yoon (Eds.), Individualism and collectivism: Theory, method and applications (85–119). Sage.]. Our findings contribute to the ongoing debate on accounting harmonization. More specifically, they suggest that the technical and/or political dimensions of the debate, although essential, are not the only ones involved. Opposition to IAS is not exclusively driven by contractual motives, a claimed technical superiority, or legal origin, but also by diversity in cultural factors. Another contribution of this paper is the development of a two-dimensional score to measure the differences between national GAAP and IAS.     

International harmonization of Japanese accounting standards

Historically, Japanese accounting standards have been quite distinct from International Accounting Standards (IASs) which have been perceived as being modelled on British-American accounting standards. However, in the 1990s, after the publication of E32 in 1989 and the IASC-IOSCO Agreement in 1995, the Business Accounting Deliberation Committee (BADC), the standards-setting body in Japan, has pursued a policy of harmonization with IASs. Accounting standards relating to consolidated financial statements of companies that make cross-border offerings of securities or operate worldwide are being revised drastically. This paper focuses on the development of international accounting harmonization and its impact on Japan.     

The rise and rise of IFRS: An examination of IFRS diffusion

We seek to understand the ever-increasing push towards the international harmonization of accounting standards and particularly the inexorable rise of standards produced by the International Accounting Standards Board (IASB). While the primary justifications for the increasing recognition given to these standards (IFRS) are economic, we question whether the empirical evidence to date has yielded convincing support for these arguments. We therefore offer an alternative explanation for the origin and diffusion of IFRS that incorporates social and political factors. Outsourcing the manufacture of accounting standards to a single private agency appears to be a rational, lower cost option – lowering both economic and political costs for individual states as long as they continue to retain residual decision rights with respect to the adoption of IFRS. However, such outsourcing must also be perceived to be legitimate. IFRS confer institutionalized legitimacy because they possess three characteristics required of a technology for global governance. These are sponsorship by powerful interest groups/regulators, internationality and plasticity. We therefore conclude that the widespread diffusion today of IFRS can at best be only partially explained as an economically rational phenomenon. Rather, the demand for legitimate action in the face of tightly coupled and complex global markets is at least equally important in generating support for IFRS.     

Harmonization of the auditor's report

International efforts to harmonize the audit report, spearheaded by the International Auditing Practices Committee of the International Federation of Accountants (IFAC), culminated in the issuance of International Standard on Auditing (ISA) 13 in 1983. The stated purpose of ISA 13 was to: “provide guidance to auditors on the form and content of the auditor's report issued in connection with the independent audit of the financial statements of any entity.” The purpose of this paper is to assess whether ISA 13 has resulted in greater international harmonization of audit reports. We assess the level of harmonization both by examining the extent to which countries have adopted ISA 13 and by the extent to which the content of the auditor's report has changed. A survey of IFAC's member organizations in 86 countries netted 50 responses. Eighty-six percent of respondents (and 93% of respondents from developing and emerging economies) said they have achieved harmonization with ISA 13. We compared the auditor's reports (in financial reports) of 450 companies in 33 IFAC member countries on two different dates (a pre-ISA 13 date and a post-ISA 13 date). The results suggest a higher degree of conformity with the standard for the post-ISA 13 reports. Finally, cluster analysis was conducted to explore the dynamics of clustering from pre-ISA 13 to post-ISA 13 regimes. A slight drop in the divisiveness coefficient (DC) was observed for the total audit report elements as well as for the form elements, suggesting a less cohesive cluster structure for the post-ISA 13 regime. The empirical evidence, taken as a whole, shows reduced diversity of practices and standards involving the audit report since the issuance of ISA 13. This conclusion should provide encouragement for international standard-setters.     

论会计准则的国际协调

由于经济发展所处的环境不同，各国制定的会计准则存在很大差异，这种差异赞成的障碍给世界经济带来的困扰日益增加。国际经济愈发展，会计准则的国际协调就愈迫切。本文分析了形成这种迫切性的原因以及促进国际协调所遇到的阻力，阐述了我国参与国际会计协调的思路。     

Using Form 20-F reconciliations to internationalize an accounting course

Accounting courses and textbooks in the United States focus on US generally accepted accounting principles (GAAP). As a result, US accounting students have little exposure to International Financial Reporting Standards (IFRS) and to differences between these standards and US GAAP. To familiarize students with the differences between IFRS and US GAAP, accounting instructors can develop assignments based upon the reconciliation of IFRS to US GAAP net income included in Form 20-F, the annual document submitted to the SEC by non-US firms. The course assignment described in this paper provides students with a “road map” of the differences underlying specific company financial reporting, and helps instructors identify where these differences occur. The assignment represents an innovative way of integrating international financial reporting standards and SEC reporting requirements into a higher level undergraduate or graduate accounting course.     

解读国际会计协调化

国际会计协调化是一个富有弹性的动态概念。本文结合历史发展进程和国际环境因素的变化,阐明国际会计协调化这一概念是随同“会计国际化”与“会计国家化”之争而在国际论坛上亮相的。在“会计协调化”的各家定义中,最基本的共同点是:协调是指限制、缩小和减少会计差异的过程。在20世纪80年代,会计协调化被认为是与“标准化”“统一性”和“可比性”不同但相关的概念。作者援用IASC开发国际会计准则的历史,说明在不同的历史阶段协调化的不同内涵,在世纪之交IASC完成全面重组后,已经创立了可行的机制.使协调化体现为准则化(标准化),表现为高度可比甚至趋向统一的趋同化。当前,国际财务报告的趋同化已成为国际资本市场和货币市场的现实需求,是正在实现的近期目标;国家准则与国际准则的趋同化尚在启动阶段.可以说还只是远期目标,我们对IASB和各国准则机构的协作行动和成果寄予厚望。     

我国会计准则国际协调效果量化研究述评

近年来,检验我国会计准则国际协调效果的量化研究日益增多,但由于研究的切入点、样本、变量及期间的选择和采用的方法不同,结论存在诸多差异甚至相互矛盾,以致这些研究的理论价值和现实意义有待于深入探讨。本文首次系统地分类探讨我国会计准则国际协调效果的量化研究,从我国会计准则与国际会计准则具体条款的协调程度,以及基于我国会计准则和国际会计准则编制的会计报表数据差异、会计信息含量差异和会计盈余质量差异四个方面,对我国会计准则国际协调效果量化研究的文献进行了回顾,最后对全文进行了总结并对后续研究提出建设性意见。     

Discovering the ‘international’ in accounting and finance

As higher education in accounting and finance moves increasingly in the direction of internationalisation of degree programmes and student populations, this paper reflects on the ways in which contemporary research contributes to the academic community's understanding of the rich potential of evidence available on international convergence and diversity.Reviews of research published in recent years have pointed to strong parochiality in the research questions and data choices of many researchers. This paper looks for a meta-structure of cross-sectional international comparisons across a range of papers at one point in time. Research papers of 2005 are selected from eight journals giving a broad coverage of subject matter.A cultural framework is proposed as a basis for an ethnographic view of the data and findings of empirical research papers. Cultural diversity is found as an explicit discussion in some papers but others are silent or even apologetic for cultural differences.Country-specific studies reveal the potential for comparative studies on a wider geographical basis but the achievement of such an aim will require the academic research community (editors, reviewers and authors) to show flexibility in dealing with smaller data sets and greater uncertainty about the nature of accounting information. Most importantly this review shows the considerable wealth of interest waiting for those who take time to peruse academic journals.