On the Myth of “Anglo-Saxon” Financial Accounting

The term “Anglo-Saxon accounting” (ASA) is used by a number of academic writers on the subject of International Accounting to refer to an approach to financial accounting and reporting that is supposedly common to the UK and Ireland, the USA and other English-speaking countries including Canada, Australia, and New Zealand. While most of the writers we cite as using this term are continental Europeans, they also include an Englishman, J. Flower. The term is typically used to imply not just similar conceptual and technical approaches, but also a hegemonic alliance in the international politics of accounting regulation.This article seeks to establish that ASA in this sense is a myth. We do this first by critically examining four putative commonalities that are frequently attributed to the UK and USA approaches to financial accounting and that form the basis of the myth, and second by indicating the unfeasibility of such a hegemonic alliance within the IASC. A myth may have some factual foundations, but belief in it rests also on bases that are non-factual. So it is with ASA. In particular, analysis of the terms “true and fair view” (TFV) and “fair presentation (FP) in accordance with generally accepted accounting principles (GAAP)” shows that, far from their possessing a semantic equivalence that constitutes a commonality between UK and US financial reporting, their interpretation indicates a profound difference between the UK and US approaches. What UK and US financial reporting have historically shared is a micro- and capital market orientation that lends itself to international accounting regulation in a context of global capital markets. But with such an orientation now being generally accepted internationally, the differences between UK and US financial reporting are taking on an increased significance that this article seeks to highlight.     

(No) Limits to Anglo-American accounting? Reconstructing the history of the International Accounting Standards Committee: A review article

The development of the current International Accounting Standards Board (IASB) from the earlier International Accounting Standards Committee (IASC) provides insight into many issues of international financial reporting, among them the characteristics of international accounting standards themselves. This article reviews Camfferman and Zeff’s [Camfferman, K., & Zeff, S. A. (2007). Financial reporting and global capital markets. A history of the international accounting standards committee 1973–2000. Oxford: Oxford University Press] volume on the organizational development of the IASC and contextualizes it in the broader literature of cross-border standardization in accounting. While having produced a seminal piece, the authors take a clear Anglo-American perspective. The downsides are insufficiencies regarding a simplistic understanding of experts and expertise, a neglect of the role of auditing firms, and only an imbalanced integration of different stakeholders.     

Profit Measurement and UK Accounting Standards: A Case of Increasing Disharmony in Relation to US GAAP and IASs

UK accounting practice differs from International Accounting Standards (IASs) particularly with regard to amortisation of goodwill, provision for deferred taxation and the accounting treatment of pension costs. Under the core standards programme of the IASC the IASs have emerged closer to US practice. This paper evaluates the profit of those UK companies reporting to the Securities and Exchange Commission (SEC) in 1988 and 1994, spanning a period which saw the establishment of the ASB and the implementation of the IASC's comparability project. An increasing gap was found between the reported profit under UK accounting principles and that restated under US GAAP. The difference lay most frequently in accounting for goodwill, provision for deferred tax, and the accounting treatment of pension costs, with accounting for goodwill showing a particularly significant impact in 1994. Notwithstanding the introduction of FRS 10, an overall impression of increasing disharmony could continue to cause reconciliations to be required of UK companies seeking full listing on a US stock exchange, with consequent disadvantage relative to companies in other European countries seeking international capital in the US.     

Communists Among Us in a Market Economy: Accountancy in the People's Republic of China

China is undergoing a unique experience. Its strategy to move the country to a market economy is based on “marketization” instead of “privatization.” The state-owned enterprises (SOEs) are intended to continue to be the mainstay of the economy. The recent accounting reform, a 16-point economic stabilization policy, and the decision to maintain the dominance of the SOEs were all promulgated in the same month. To put the recent accounting reform in perspective, four stages in the development of accounting theory since the Communist Revolution are identified. The first stage is Mao Tse-Tung's initial society, where the control function of accounting, in its narrowest sense, was emphasized. The Counter Revolution with the Post-Revisionist Era relaxed, at the macroeconomic level, the notion of control. The third stage of opening up the Chinese economy to outside capital combines allocative techniques, albeit limited, with Western accounting concepts, all blended with Chinese cultural values. The current stage of macroeconomic liberalization of state enterprises, which accompanied a major macroeconomic stabilization program, is a result of a number of demonstration effects that has further exposed the Chinese economy to various outside factors. Accordingly, such recent accounting reform introduces the concept of equity capital, provides a relatively sharper distinction between product cost and period cost, realistically incorporates the capital maintenance concept and allows a limited number of Westernized accounting standards, mostly adapted to accommodate traditional Chinese values. Accounting forms an indispensable component of an overall economic policy.     

Discourses of transparency in the intellectual capital reporting debate: Moving from generic reporting models to management defined information

In the last decade, transparency has become a necessary mantra for both publicly listed companies and government institutions. Intellectual capital reporting is often related to this goal of enhancing the transparency of business and public institutions. In this paper we emphasize that a movement is seen in the intellectual capital reporting debate, which we argue can be approached as two different discourses of transparency, namely one discourse based on generic reporting versus a second discourse based on management driven information. In other words, one discourse highlights as much information to stakeholders as possible, but seems to be in the process of being substituted by another, which emphasizes reporting what is seen from the perspective of management, namely the “right” information, and only that. The argument for the latter discourse is that it will make intellectual capital reporting more transparent, because of users’ bounded rationality and other constraints such as time. This, however, has the implication that users of intellectual capital reporting may become victims of management's selected “right” information, by [Strathern, M. The tyranny of transparency. British Educational Research Journal 2000;26:310–32] designated as the “tyranny of transparency”. Also, we emphasize the problems of perceiving transparency as a goal and not a means.     

Bridging the divides of online reporting

This paper looks at the possibilities of improving online reporting by closing the ‘digital divide’ through a ‘digitalised revolution’ and by narrowing the ‘accounting divide’ through the sharing of power and the expansion of membership in the International Accounting Standards Board (IASB). Paradoxically, whilst the IASB may have contributed to the ‘accounting divide’ it may very well possess the potential to close it and thus improve online reporting. The potential to bridge the ‘accounting divide’ rests with the greater participation by developing country members to exert influence and ownership of the accounting standards setting process.     

The FASB exposure draft on accounting for business combinations and intangible assets: an instructional assignment

Accounting standards are constantly evolving to meet the needs of a rapidly changing business environment and changes in accounting theory. Accounting students need to be familiar with the content of Exposure Drafts, since these documents reflect the Financial Accounting Standards Board's (FASB) position on current financial reporting issues. Students are generally not well versed on the standard setting process and how contextual factors affect this process. The purpose of this instructional assignment is to enhance students' understanding of how contextual factors affect the standard setting process within the context of the Exposure Draft on “Business Combinations and Intangible Assets.” The assignment requires that students examine the Exposure Draft and answer questions designed to elicit responses as to why the FASB is considering a new standard and the impact the standard would have on current accounting procedures and financial statements.     

The Conceptual Framework as a Coherent System for the Development of Accounting Standards

The Financial Accounting Standards Board (FASB) visualized a conceptual accounting framework as a 'coherent system of interrelated objectives and fundamentals that can lead to consistent standards that prescribes the nature, function, and limits of financial accounting and financial statements' (FASB, 1976). To Australian standard setters, the primary purpose of the conceptual framework (CF) was only to be used as a 'guide' in developing and reviewing accounting standards (AASB, 1995, para. 5). The International Accounting Standards Committee (IASC) diminished the role of a conceptual framework even further by openly acknowledging that some standards are inconsistent with the guidelines offered by the framework (IASC, 1989 para. 12). Even though the Australian Accounting Standards Board (AASB) supposedly pursues a policy of harmonization of conceptual frameworks and accounting standards, there are also acknowledged inconsistencies in the conceptual frameworks of the IASC.
The aim of this article is to assess the coherence of the Australian (and IASC) conceptual framework. This analysis identifies confusion in drafting or construction of the conceptual framework, internal inconsistencies, and inconsistency with the legal framework within which business entities operate. Accordingly it is suggested that the adoption of a conceptual framework will not lead to consistent accounting standards, and inevitably the conceptual framework will lack credibility so long as it is inconsistent with legislation.     

Lobbying of the International Accounting Standards Committee: The Case of Construction Contracts

Many cultural, political, economic and other environmental factors have been suggested as impediments to the efforts of the International Accounting Standards Committee (IASC) to harmonize international accounting standards. We investigate the relationship between lobbyists’ position, and: (1) their home countries’ financial accounting standards; and (2) their home countries’ tax rules. The factors are tested both separately and jointly to increase our understanding of lobbying and obstacles to harmonization. Long-term construction contracts are used as our case study. Construction contracts were traditionally accounted for by either the completed contract method (CCM) or the percentage of completion method (PCM). Originally, the IASC’s Standards (IASs) allowed both CCM and PCM. Thus, most countries’ accounting standards complied with IASs. However, the IASC’s Comparability Project, beginning with Exposure Draft (ED) 32, proposed to eliminate CCM. Thirty-nine comment letters submitted on ED 32 contained specific references to long-term construction contracts. Although almost 60% opposed the complete elimination of CCM, the IASC eliminated it. However, in many ways, the IASC co-opted lobbyists by allowing the Zero Profit Method, which may effectively result in the same timing of profit recognition as CCM. Support is found for a strong link between respondents’ lobbying position and both their home country’s accounting standards and tax laws. Each factor may hinder the harmonization process. A high positive correlation also exists between the accounting standards and tax laws of lobbyists’ countries. Beyond the possible importance of the tax and financial reporting linkage affecting harmonization, the issue of multicollinearity should signal caution when interpreting the results of lobbying studies that simultaneously include highly correlated variables in the same model.     

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.     

The IASC And Japan

The support of Japan, as a powerful nation and world leader, will be critical to the International Accounting Standards Committee (IASC) in its aim of promoting the harmonisation of international accounting standards. Japan represents a substantial challenge to the IASC objective; cultural and institutional factors have been regarded as impediments to its preparedness to adopt IASC standards. As deputy chairman of the IASC, the co-author of this paper, Michael Sharpe, has been involved in a number of seminars and discussions in Japan relating to the IASC activities and aims. This paper draws on those discussions, and on recent events and developments in Japan, to suggest that relations between the IASC and Japan are heading in the right direction and to make some prognoses about the acceptance of IASC standards by Japanese regulatory bodies.     

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.     

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.     

THE SUBSTANCE OF ACCOUNTING FOR PUBLIC‐PRIVATE PARTNERSHIPS

This article evaluates Public‐Private Partnerships (PPP) accounting practice and the related financial accounting and reporting requirements. Governments across the world are seeking to access private finance to improve public infrastructure. Accounting for PPPs has encountered many difficulties, one of which is the practice by which PPPs are not accounted for as fixed assets on the balance sheet of either the public sector client or the private sector operator. Accounting for PPPs has grown in importance at a time of transition from national Generally Accepted Accounting Practice (GAAP) to International Financial Reporting Standards (IFRS). Under UK GAAP, both client and operator accounting adopt the reasoning – familiar from leasing standards – of the allocation of risks and rewards between the parties to determine the party which should recognize the fixed asset on its balance sheet. The gap in IFRS with regard to operator accounting has been filled by the interpretation IFRIC 12 on service concession agreements: this moves the reasoning from risks and rewards to control, familiar from consolidation standards. The UK Treasury and the International Public Sector Accounting Standards Board (IPSASB) have required/proposed the adoption of the mirror‐image treatment of IFRIC 12. In most, but not all, cases, control will be assessed to rest with the client, which will recognize property, plant and equipment, and not with the operator, which will recognize either a financial asset or an intangible asset on the basis of an assessment of which party bears the majority of risks and rewards. Under both UK GAAP and IFRS, accounting policy choices are strongly influenced by, for the client, governmental control frameworks, and for the operator, by the implications for the profile of distributable profits and for taxation. An important public policy issue is that the national accounts, which for European Union member states must comply with European System of Accounts 1995, will remain on a risks and rewards basis. It is these numbers that will be used in assessments of macro‐fiscal policy and fiscal risks, notwithstanding that the Eurostat version of risks and rewards is even more open to manipulation than were the national financial reporting standards.     

Discussion of “economic analysis of accountants’ ethical standards: the case of audit opinion shopping”

In his paper, Cushing (Cushing, B.E., (1999). Economics analysis of accountants’ ethical standards: The case of audit opinion shopping. Journal of Accounting and Public Policy 18 (4/5)) argues for an increasing role of “laissez-faire” approaches to professional accounting ethics. To formally present his argument, Cushing (1999) employs a classic auditor–client dispute over a financial reporting issue; the dispute’s resolution is framed within a prisoner’s dilemma game. Three increasingly sophisticated models are used to examine both strict (explicit rules and monitoring) and laissez-faire (moral training and leadership) approaches to induce ethical auditor play within the prisoner’s dilemma game.My comments are an effort to consider if Cushing's (1999) arguments for a laissez-faire approach are practicable. To do this I first relate Cushing's (1999) arguments to the theoretical attributes of a profession. Second, I extend his arguments to include ethical disposition. Two bases of ethical disposition are discussed, moral reasoning theory and the persona of individuals. I conclude that a movement toward a laissez-faire approach to ethics is a strategy the profession should not ignore.     

会计改革与会计信息质量——来自中国证券市场的经验证据

本文以股份公司会计制度改革为例 ,从会计改革的目标出发 ,运用会计信息的市场反应 ,分别从信息观和计量观的角度 ,就会计信息的质量进行定量研究 ,对其改革效果做出实证性的评价 ,籍此观察《企业会计制度》改革的合理性。研究表明会计信息质量的提高不仅有赖于会计改革建立高质量的会计准则 ,而且离不开执行机制的改革提供有效的准则执行支撑系统。《企业会计制度》面对缺乏效率的准则执行机制 ,出台尽可能回避按“公允价值”计价的改革政策 ,无疑是考虑会计准则与经济环境的融合性而做出的明智之举     

抓住机遇 巩固成果 全面推进我国的会计改革

近十年来，我国的企业会计改革取得了重大进展，在国际上得到了广泛认可，与国际会计准则委员会所倡导的会计国际化的宗旨是一致的。然而，从目前情况看，会计人员整体素质尚不能完全适应会计改革的要求，《企业会计制度》及相关会计准则的实施范围还不广泛，还存在一些执行中的问题。面对加入ＷＴＯ，我们应当抓住有利时机，巩固成果，全面推进我国的企业会计改革。     

什么决定了利润差异:会计准则还是职业判断?——来自中国A、B股市场的初步证据

我国资本市场有少量的公司同时发行A股和B股,这部分公司需要提供两套财务报表,分别遵循了国内会计准则和国际会计准则。我们以我国会计制度改革的特定时期(1998-2000)为背景,以同时发行A、B 股的公司为样本,经过研究发现,那些同时发行A、B股公司所报告的净利润差异,主要不是来自会计准则,而是来自于会计职业判断;而会计职业判断背后的经济动机在于上市公司为了达到保牌的目的。我们的研究丰富了有关会计准则与会计信息质量之间关系的研究。