Australia's switch to international financial reporting standards: a perspective from account preparers

This study reports the findings of a structured telephone survey on adoption of international financial reporting standards (IFRS) from 60 firms drawn from among Australia's top 200 corporations. Although we find evidence of strong systematic variation in survey responses with factors such as firm size, industry background and expected impacts on financial performance, the general results indicate that many respondents have not been well prepared for the transition and are generally very sceptical about the claimed benefits of IFRS as enunciated in the government's Corporate Law Economic Reform Program. The results have implications to other international reporting jurisdictions, particularly the European Union, where adoption of IFRS is already underway.     

IFRS framework-based case study: Barrick Gold Corporation—Goodwill for Gold

The case of Barrick Gold Corporation: Goodwill for Gold utilizes a framework-based approach to examine the objectives, underlying concepts, and relevant IFRS guidance applied to goodwill. The questions presented in the case study progressively lead from the broad concepts underlying the preparation of financial data, in general, to the International Accounting Standards concerning recognition, measurement, and subsequent treatment of goodwill, specifically IFRS 3, IAS 36, and IAS 38. It challenges you to determine if these standards are consistent with the underlying concepts set forth in the IFRS’s conceptual Framework. This case illustrates the importance of professional judgment in the standard setting process by requiring you to examine the IASB’s published supporting documents including the Board’s Basis for Conclusions. In addition, the case includes a practical application problem that requires you to determine the financial statement effects of the subsequent treatment of goodwill.     

Cultural differences and judgment in financial reporting standards

This instructional resource provides you with the opportunity to explore how cultural differences can impact financial reporting outcomes through the judgments accountants make when interpreting and applying accounting standards. It is intended to draw your attention and awareness to culture’s impact on financial reporting judgments since financial reporting is becoming increasingly international in scope. The instructional resource begins by discussing financial reporting standards and cultural differences and then moves into presenting three accounting scenarios. The three scenarios (lease classification, contingent liability, and revenue recognition) examine how applying accounting standards requires judgment and how cultural differences can influence accountants’ judgments and the resulting financial reporting outcomes. In each scenario, you have the opportunity to identify and consider how different cultural dimensions could impact cross-cultural financial reporting outcomes. The instructional resource content allows you to consider the challenges in using and applying a uniform set of global accounting standards that require judgment across cultures.     

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.     

An analysis of the factors affecting the adoption of international accounting standards by developing countries

The purpose of this study is to identify the factors that could explain the adoption of international accounting standards by developing countries. The following factors have been selected: economic growth, education level, the degree of external economic openness, cultural membership in a group of countries, and the existence of a capital market.Our results indicate that developing countries with the highest literacy rates, that have capital markets, and that have an Anglo-American culture are the most likely to adopt international accounting standards.     

The Commercialization of Government's Departmental Accounting (AAS 29): Quasi Rents and Public Welfare

In the Australian public sector. departmental administrative reform is intent on producing lean. efficient. commercially orientated government entities. An accounting regulatory response is AAS 29. Financial Reporting for Governtizetzt Departments. which requires all government departments as reporting entities to adopt in principle much of the whole corpus of private sector accounting standards and statements including. importantly, current cost accounting. This paper explores the proposition that the commercialization of departmental accounting through AAS 29 or similar pronouncements is directly associated with a significant reduction in social and public welfare accountability. Accounting processes are powerful. value-laden agents of social change. Benston (1980) states that 'benefits (net of costs) of accounting standards to society' cannot be measured but can be specified for individuals. Here. accounting outcomes are identified to be the residuals of economic policies to eliminate quasi rents in government. Standardization in AAS 29 rests on the assumption that rights and obligations being equities of generations of participants can be periodically measured as A -L = E at current factor prices. This economic notion lacks cultural heritage in financial disclosure of continuing equities in government and may, for any generation of consumers. induce an excess of social costs over social benefits for the accounting standardization process under prevailing managerialist philosophies.     

Trends in research on international accounting harmonization

International harmonization of financial accounting standards has been the goal of many professional and academic accountants during the last 40 years. As of January 1, 2005, international accounting harmonization entered a new and perhaps decisive phase. From that date, all companies domiciled in the European Union with shares listed on securities exchanges are required to prepare their consolidated accounts in accordance with International Financial Reporting Standards (IFRS). This landmark event presents an opportunity for accounting researchers to assess the status of research on international accounting harmonization. In this paper, we review articles published in major English language accounting journals during the period from 1965 through 2004 in order to trace thematic and methodological trends in this line of research and to assess where the research may evolve from here.     

Financial statement effects of adopting international accounting standards: the case of Germany

Using a sample of German firms, we investigate the financial statement effects of adopting International Accounting Standards (IAS) during 1998 through 2002. We find that total assets and book value of equity, as well as variability of book value and income, are significantly higher under IAS than under German GAAP (HGB). In addition, book value and income are no more value relevant under IAS than under HGB, and HGB (IAS) income is highly persistent (transitory). Finally, we find weak evidence that IAS income exhibits greater conditional conservatism than HGB income. Our results are consistent with the fair-value (income smoothing) orientation of IAS (HGB).

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.     

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.