The Accountability of Municipal Corporations

The popular view that market forces controlled the development of financial reporting practices among nineteenth-century British companies has recently been shown, by Parker (1990), to be an oversimplification. Large companies engaged in the provision of public utilities, transportation and financial services were the subject of close regulation, though not necessarily or only for the purpose of shareholder protection. The nineteenth century also saw the creation of municipal corporations, and their development is marked by a further variation in the process of accounting change. A regulatory structure, including requirements for accountability, was established when the modern municipal corporation was created in 1834, and this broad framework remained in force without major amendment until 1930. The accounting practices employed by municipal corporations underwent fundamental change, however, to accommodate major alterations in the nature of their activities. The process of 'voluntary' change in response to market pressure received reinforcement from recommendations made by the highly active local-authority-oriented professional accounting body.     

'A sort of guide, philosopher and friend': the rise of the professional auditor in Britain

This paper considers the legal and financial context in which professional audit emerged in Britain during the nineteenth century. It concludes that an important contributing factor to the rise of the audit profession was its provision of advice on prudent accounting, which represented a distinctive competence. The capture of a jurisdiction over business advisory services from the legal profession involved, however, a relationship of complicity with management and large insider investors the interests of social capital- to the exclusion of small investors, who were stigmatized as 'speculators'.     

Accounting practices of the St. Joseph Lead Company: 1864-1900

This paper presents the results of an inquiry into the accounting practices of the St. Joseph Lead Company during the nineteenth century. For several decades following its incorporation in 1864 the St. Joseph Lead Company maintained a very crude double-entry bookkeeping system that lacked detailed cost accounting records. In fact, there is little evidence of any type of industrial accounting prior to 1890 when a direct cost responsibility accounting system was established. Thus, the industrial accounting procedures of the St. Joseph Lead Company appear to have lagged far behind the practices of the contemporary British and American mining firms which have been the objects of recent studies. The investigation thereby reveals considerable diversity in the industrial accounting practices of the American mining industry during the second half of the nineteenth century.     

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.     

Firm Size and National Profiles of IFRS Policy Choice

Previous research on the International Financial Reporting Standards (IFRS) policy choices of large listed companies found a very strong association between policy choice and country. Nationally based pre‐IFRS practices largely explain IFRS policy choices. Nevertheless, some of the policy choices appear to be influenced from abroad, perhaps chosen in order to increase comparability. It has been suggested that smaller companies might be less influenced from abroad, and therefore might display even clearer national profiles of IFRS practice. This paper examines the accounting policy choices made within IFRS financial statements by small listed companies in five major countries. We find highly significant differences between the policies of small and large companies. We also find that small companies make more homogeneous choices, within a country, than large companies do. As a result, the previously published national profiles of the IFRS practices of large companies are misleading in the context of smaller ones.     

In pursuit of legitimacy: A history behind fair value accounting

An examination of the history of attempts by regulators, practitioners and scholars from the mid nineteenth century to 2005 to establish an appropriate accounting measurement basis for financial reporting here leads to an evaluation of the likelihood of fair value accounting (FVA) practices becoming fully institutionalised. Using concepts drawn from theories of legitimation, it is shown here that historic cost accounting (HCA) only enjoyed an episodic legitimacy in the 1940s–70s and that prior and after this period mixed measurement incorporating market values is routinised. Although principles of FVA have been legitimised to an extent, it is argued here that this has resulted in the practice of mixed measurement bases being taken for granted.     

IFRS Practices and the Persistence of Accounting System Classification

The earliest paper on international classification of accounting systems is one hundred years old. For about fifteen years from the late 1960s, many papers on the subject were published. One feature of several of the classifications was the dichotomous split of countries into Anglo and continental European. This has been extensively debated. This paper prepares a classification based on the accounting policy choices made by the largest listed companies of eight countries in 2008/9. All the companies were using the same reporting rules, International Financial Reporting Standards (IFRS). This classification by IFRS practices shows the same two groups as a classification of national practices drawn up in 1980, despite 30 years of harmonization. None of the classifications above or the more recent ones was based on the actual accounting practices of companies in annual reports. This has several disadvantages, as the paper investigates. This paper's classification is the first to be based on accounting practices, as well as being the first in the IFRS era. The paper also investigates the implications of the persistent differences in practices for assessing the success of the IASB's whole project on improving comparability of financial statements.     

'Publishing your private affairs to the world': corporate financial disclosures in the UK 1900-24

The main intention of this paper is to consider the disclosure practices of quoted UK companies during an important period of change in financial accounting practice, the first quarter of the twentieth century. The paper focuses in particular on levels of disclosure, as indicated by the volume of information provided, and on more qualitative aspects of disclosure practice. Our knowledge of the patterns of disclosure practices over time is deficient, despite the work of a number of accounting historians, and is based upon a limited amount of primary evidence. The paper reviews current perspectives on the corporate financial disclosures of the period, provides new evidence on disclosure practices in the form of an analysis and comparison of the published and internal records of thirty quoted companies operating in four major industrial sectors in the UK during the period 1900-24 and draws some conclusions.     

Development of accounting regulation in Jordan

This study examines the development of accounting regulation in Jordan with emphasis on the dominant environmental factors that influence it. In order to have a better understanding of Jordan's present accounting practices, and its future development tendencies, we examine the path of accounting in Jordan since the early days of the nineteenth century, and analyze how Jordan's accounting environment — political, economic, legal and cultural — influenced the development of accounting in Jordan. We also examine Jordan's recent move towards full adoption of International Financial Reporting Standards (IFRS) and find that Jordan's colonial past has exerted a strong influence. In addition, we conclude that political and economic factors, through privatization and the resulting accounting reforms, contributed more to the development of accounting practices than other environmental factors. Privatization led to reforming Jordan's disclosure regulation and laying down of the corporate-governance policy framework. Our conclusions could be of interest to other countries, particularly developing countries, who want to improve the quality of their accounting disclosures and practices.     

The impact of national GAAP and accounting traditions on IFRS policy selection: Evidence from Germany and the UK

The adoption of IFRS in the European Union in 2005 aimed to increase the comparability of publicly traded companies’ consolidated accounts. However, previous literature questions whether IFRS are applied consistently across countries with differing institutional environments, and therefore, whether de facto harmony has been achieved. We further examine this question by investigating IFRS accounting policy choices of listed companies in Germany and the UK between 2005 and 2009. We find that most firms, when choosing IFRS options, tend to retain accounting policies required by national rules. We also investigate national accounting traditions in the case of options under national GAAP and find that most companies continue these after adopting IFRS. Moreover, there appears to be little significant change in accounting choices over time from 2005 to 2009. Given the differences in accounting rules and practices that exist across countries, our results suggest that international differences in financial reporting are likely to continue under IFRS.     

宏观审慎管理理论与政策

加强宏观审慎管理已成为后危机时代金融监管改革的重要趋势。国内外的学者对宏观审慎管理的概念、目标、工具等问题进行了深入的研究,但总体看来尚没有形成系统的理论。在借鉴动态随机一般均衡模型的基础上,我们构建了宏观审慎管理政策的模型框架,分析了资本要求和贷款价值比率工具对金融市场的影响,同时一定程度上厘清了宏观审慎管理政策与货币政策的差别。研究结果表明,宏观审慎管理政策与货币政策在目标上具有一定意义上的一致性。单一的政策很可能会损害实体经济,在实践中必须进行动态平衡。因此,必须转变监管理念,着手建立宏观审慎管理框架,发挥中央银行在宏观审慎管理中的核心作用,加强宏观审慎管理政策与包括货币政策在内的各项政策的协调与配合。     

The beginnings of accounting for capital consumption: disclosure practices in the British railway industry, 1830–55

Accounting for capital consumption has been one of the most vexed issues in the history of financial reporting. The early railway companies, whose ability to exploit the commercial opportunities available to them required unprecedented levels of capital expenditure, provided the first real arena for the development of possible solutions to the problem. Although accounting practices in the industry were subject to little regulation, some writers have asserted the existence of regularities in depreciation and replacement accounting practices (possibly driven by economic self-interest), although the evidential basis for these assertions has been slight. This paper provides the first assessment of the capital consumption accounting practices of companies in the railway industry, and of their regularities and patterns of change during the period 1830–55. to be derived from a substantial empirical base.     

A Statistical Model of International Accounting Harmonization

This article shows how the difference between the observed frequencies of accounting policy choice and the outcome of a random policy choice, where each available method has an equal chance of being selected, may be fully explained with a statistical model. The process of harmonization is described in a way that identifies departures from equiprobable accounting policy choice as either: (a) the systematic effects of harmonization, or (b) the effects of systematic divergence from international harmony where the frequency of adoption of differing accounting methods varies across countries, or (c) the effects of company-specific accounting policy choices. The understanding of harmony that underlies previous attempts to measure harmonization is such that, with respect to a particular financial statement item, a situation of maximum harmony is reached when all companies in all countries use the same accounting method. From the standpoint of modelling the harmonization process. however, a different concept of harmony may be more useful. In this article, therefore, we posit a state of distributional harnzony in which, other things being equal, the expected distribution of accounting policy choices is the same in each country. In this theoretical state. the odds of selecting a given accounting method from those available for a particular financial statement item are identical for each country. A major advantage of this benchmark is that it provides a basis for distinguishing between two possibly conflicting components of the international harmonization process: between-country harmonization and within-country standardization. A hierarchy of nested statistical models is then used to describe accounting policy choices made by companies with an international shareholding and registered in Europe, where the European Union has been involved in a program of accounting harmonization. The accounting policies analysed in depth in this article comprise the treatment of goodwill and accounting for deferred taxation. The results are compared with the comparability index method used previously in harmonization research studies.     

Companies,Corporations and Accounting Change, 1835–1933: A Comparative Study

The accounting literature usually associates the development of external reporting in nineteenth century Britain with the emergence of the limited company. Innovation and progress is attributed to pressure from market forces in an unregulated environment. This is an oversimplification, and ignores the process of acccounting change within two important categories of trading organisation. Companies in certain industries—including water, gas, electricity, tramways and railways—were subject to close statutory regulation, while municipal corporations operated within a statutory framework of accountability which left scope for market forces and professional leadership to influence the development of contemporary practices. This paper compares and contrasts the accounting and audit regulations and practices of the three categories of ‘business’ entity. The developmental path is charted and differences are identified. The differential reporting objectives and environmental conditions applying to these entities are acknowledged throughout, and the mechanism by which ideas were transferred between various sectors is considered.     

The Reliability of Reported Profits and Asset Values, 1890–1914: Case Studies from the British Coal Industry

Considering the vital importance of coal to the British economy before 1914, it is clear that accounting practices in the coal industry during the late nineteenth and early twentieth centuries have received too little attention. There is a particular need for studies comparable to the work on railways and iron and steel which has examined conventions for accounting for capital expenditure. Such conventions create serious difficulties in the interpretation of reported profits and asset values for historians of any industry and may also have misled contemporaries. Evidence for the coal industry which has been examined up till now has indicated that standard practice comprised a modified form of the replacement accounting used by railway companies. This paper examines the extent to which this supposition is justified. It concentrates on the accounting policies of five important colliery companies and on the effects of these policies on profits and the book values of fixed assets. Two principal conclusions have emerged. The first is that, although replacement accounting was certainly widespread, accounting policies were more complex and more diverse than has hitherto been suggested. The second is that it is frequently impossible for the historian to determine whether balance sheet values are indicative of capital employed. Both profits and asset values were in most cases highly unreliable.     

Introducing XBRL through a financial statement analysis project

In this project, we introduce business and accounting students to the application of eXtensible Business Reporting Language (XBRL) through the use of interactive data. Students study the basic concepts and potential benefits of interactive data and XBRL. Students learn to extract the financial reports of two companies in the same industry. Then, using traditional financial analysis techniques (ratio analysis) students can compare the performance of these companies. Thus, the project accomplishes two important objectives: it introduces students to the benefits and features of XBRL-tagged financial reporting and interactive data, and it shows how this medium can be used to facilitate the analysis of financial statements. The project uses free, publicly available interactive data tools to accomplish these objectives.This project is appropriate for any level of financial accounting course in which students use public company financial statements to generate financial ratios and conduct analysis on them. We aim the project at MBA-type introductory accounting courses. In addition, we show how it can easily be expanded to be applied to higher level financial statement analysis courses, both at the undergraduate and graduate levels. The project provides some background into how XBRL-tagged financial reporting is generated, while the main focus is on application of interactive data and not the technology itself. Since XBRL is now mandated by the US Securities and Exchange Commission (SEC) for most reporting entities, it is critical for today’s business students to be familiar with this method of communicating financial information.     

THE APPLICATION OF INTANGIBLE ASSET ACCOUNTING AND DISCRETIONARY POLICY CHOICES IN THE UK FOOTBALL INDUSTRY

This paper investigates the use of intangible asset accounting and the selection of accounting policies in the football industry, an environment where discretionary choices were available concerning accounting for transfer fees. Additionally, companies in this dynamic and socially influential industry are unique in recognising investments in human resources on the balance sheet. Proxies representing the level of tax costs, equity depletion, underwriter pressure and auditors used are found to have significant associations with policy selection. This contributes to the debate over the role of discretionary choices, particularly regarding the accounting treatment available for intangible assets, in financial reporting.     

The impact of total quality management adoption on small and medium enterprises’ financial performance

This paper examines whether the management accounting practice of total quality management (TQM) positively impacts on the financial performance of small and medium enterprises (SMEs). While research has investigated the impact of TQM on larger firms, to date, there has been no comprehensive analysis of the impact of TQM on SMEs’ financial performance. Our analysis of Australian Bureau of Statistics financial data for 3776 SMEs found no evidence that TQM improved financial performance after controlling for size and risk. Our results contribute to literature by highlighting that management accounting practices developed for larger companies may not necessarily be transposable to SMEs.     

THE DIVERSITY OF ACCRUAL POLICIES IN LOCAL GOVERNMENT FINANCIAL REPORTING: AN EXAMINATION OF INFRASTRUCTURE,ART AND HERITAGE ASSETS IN GERMANY,ITALY AND THE UK

This paper examines the norms and practices for infrastructure, art and heritage assets in six cities, across three European countries, to determine how the national norms of accrual accounting compared with each other, and with IPSAS, and how the practices in each city compared with the norms. We identify significant diversity between actual practices and the norms imposed by national policy‐makers or set by IPSAS. Given that a longstanding concern of the literature has been on whether these kinds of assets should be included in governmental balance sheets and operating statements at all, it is striking how often the question was settled in practice by excluding art and heritage assets, even when this meant non‐compliance with national norms. In our three countries, it is clear that comparability of the financial statements between countries was not a concern of policy‐makers, and comparability between cities within each country not a concern of preparers.     

Anticipating the Impact of IFRS on the Management of German Manufacturing Companies: Some Observations from a British Perspective

The introduction of International Financial Reporting Standards (IFRS) in 2005 marked a significant departure from Germany's traditional financial accounting practices. This paper questions whether this change may have consequential effects on the distinctive traditional management accounting practices in the field of Controlling. We examine the possible impact on manufacturing companies drawing upon perceptions and expectations of managers in three Bavarian companies and two management consultancy firms. We consider whether financial accounting will assume an increased importance within firms, and whether this may lead to abandonment of some traditional management accounting practices and the adoption of different techniques in internal reporting compatible with the new IFRS regime for external reporting. This prompts consideration of whether such changes would lead to financial accounting domination of management accounting in Germany analogous to that argued by Johnson and Kaplan in 1987 in their ‘Relevance Lost’ thesis. We conclude that, at this juncture in the development of their information systems, German managers face an important choice between integrating external and internal reporting in ways that might fundamentally change established Controlling practices, or of continuing to operate dual accounting systems in much the same way as in the past so that adoption of IFRS is restricted to external reporting.