The Accounting Standard-Setting Process In Australia: A Preparer's Perspective

Preparers of financial statements have a vital interest in the development of the accounting standards which set out the requirements for disclosure. This paper discusses some elements of the standard-setting structure and focuses on the crucial question of international harmonisation of accounting standards.     

Public Choice and Accounting Standard Setting in New Zealand: An Exploratory Study

Recent studies in accounting regulation have used either the capture argument or the pluralistic notion to describe the enactment of accounting regulations. This paper explores the nature of the impact of public choice in accounting standard setting in New Zealand using the pluralistic notion. To provide an insight into the standard-setting process, this paper involves an examination of the establishment, withdrawal and re-establishment of New Zealand's most controversial standard after current cost accounting — the standard on investment property accounting (SSAP 17). The investigation considers the nature of public choice in the agenda entrance, demand and supply factors influencing standard setting in New Zealand. The results indicate that the New Zealand accounting standard-setting process is pluralistic in a limited way. Like most other English-speaking countries, the scope of participation for certain groups has been institutionalized on the supply side by way of membership of standard-setting committees of the New Zealand Society of Accountants. On the demand side, however, consumers of accounting have been provided with only limited scope for participating in the formal process of standard setting. Nevertheless, other means (i.e., exogenous and informal ones) may be used to influence the process. Overall, from both the demand and supply perspectives of regulation, the Big-8 accounting firms (as they were previously known) followed by the preparers of financial statements, seem to have greater participatory capacity in the New Zealand standard-setting process.     

Standard-setting in Australia: Implications of Recent Radical Reform Proposals

We examine the implications of the Howard government's Corporate Law Economic Reform Program as they relate to accounting standard-setting in Australia. A luck of systematic and compelling evidence for wholesale changes to the existing standard-setting process is identified, as is a fundamental shift in the rationale for standard-setting which underlies the proposed changes. We disagree with the main plank of the proposals, that is, that international accounting standards should be adopted in Australia.     

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 Downside of Harmonisation Haste: The Equity Accounting Experience

While the main harmonisation objective of legalising the use of equity accounting in the consolidated financial statements has been achieved to the relief of Australian business, the Australian standard-setting boards have had less success in harmonising the detailed application and implementation rules. With no clear conceptual direction, they appear to have arbitrarily adhered to, and deviated from, international precedents on ancillary issues of significance to the users and preparers of financial statements.     

The standard-setters’ toolkit: can principles prevail over bright lines?

We study lease accounting in an international panel data set to examine how accounting outcomes vary with two features of accounting standards: the emphasis on using professional judgement to apply principles, and the presence or absence of bright-line tests. We study four countries—Australia, Canada, the UK, and the US—and companies in two lease-intensive industries—retail and transportation. Our primary study period spans the time when Australia and the UK switched from domestic to international accounting standards, and in one test, we also consider Canada’s transition to international standards. We find that neither an explicit requirement to apply a principle nor omitting bright-line tests materially increases the use of capital lease treatment among these firms. Overall, we conclude that this financial reporting outcome is relatively insensitive to these standard-setting tools.     

The Setting Of Accounting Standards in Australia: An Evolving Structure

The evolution of the accounting standard-setting process in Australia will bring further significant changes as we move to introduce major features of the structures existing in the United States and the United Kingdom. Those features include an independent standard-setting body, full-time board members and broad-based funding of the process. Similar structural changes can be expected in other countries which have well developed standard-setting activities, and ultimately at the level of the International Accounting Standards Committee. These changes will result from the increasing demands on the standard-setting process and the increasing accountability required by those affected by the output of the process.     

Impetus to the success of harmonization: the case of South Pacific Island nations

Several influential actors and regulators in the standard-setting arena have argued in support of international accounting standards as a basis for bringing consistency to financial statements across nations. The need for harmonization is apparent and the forces pushing for harmonization are irresistible, but it can only become a reality as a result of commitment and concerted effort by the regulators, standard setters, financiers, business community, and most importantly, the accountancy profession.Based on a critical perspective, an alternative rationale has been advanced in this paper, which is premised on identifying the impetus to the success of the process of harmonization, identifying the factors which a country should consider before an attempt is made to adopt/adapt the international accounting standard (IASs). In doing so, the study critically evaluates whether the developing countries do have the necessary resources, skills and appropriate reference points in the capital and other markets to harmonize accounting practices. This paper, therefore, seeks to explain what is needed to adopt/adapt the IASs, rather than considering the relevance/irrelevance of these standards, which other studies have done. To achieve success in the harmonization process this paper has provided five strategic factors (professional expertise, education and training, legal backing, the proportion of MNCs and local companies, and adoption of IASs with amendments) a country can use.     

Trade in Services: Wider Implications for Accounting Standard-Setters and Accountants

This article identifies a source of influence in the international development of biased rules that systematically privilege engagement in PPPs, noting that the use of PPPs was one of several projects. The full set of projects is consistent with a larger agenda, trade liberalisation of services through enforceable rules. Members of an international web of relationships promoting PPPs and, in effect, the rules-based trade liberalisation agenda, include the accounting profession. The profession's active involvement in this web of relationships compromises its legitimacy as a standard-setting body.     

非油气矿产资源会计问题研究

本文采用理论分析的方法,结合现代会计理论和矿产资源权益价值理论的内涵,系统地分析了在我国全新的矿产资源市场化管理模式下非油气矿产资源会计问题研究的必要性,并根据国际、国内会计界的相关研究成果,提出了非油气矿产资源资产的定义,论述了全新的适合我国会计发展现状的非油气矿产资源会计的特有构成内容,期望本文能对我国矿产资源会计理论的研究起到一定的推动作用。     

The Nature and Rationale of a Conceptual Framework for Financial Reporting by Islamic Banks

Islamic banks have to abide by the revealed doctrines in Islam in conducting their business and financial transactions. They employ in-house religious advisers—often referred to as Shari'a Supervisory Board (SSB)—who issue a special report to inform users of financial statements whether or not the bank has adhered to the Islamic principles. Recently, a private standard-setting body—the Financial Accounting Organization for Islamic Banks and Financial Institutions (FAOIBFI)—has been set up to externally regulate the financial reporting by Islamic banks. The FAOIBFI has published two statements on the objectives and concepts of financial reporting to act as a framework in setting accounting standards for Islamic banks. This paper examines the FAOIBFI's approach for developing objectives and concepts of financial accounting and investigates its need for such a theoretical framework. It is argued that the FAOIBFI's objectives and concepts would not be useful in mandating accounting standards on issues that are affected by religious ruling. This does not necessarily mean that such a framework may not be useful in legitimating the FAOIBFI's role and in setting accounting standards for issues that are not governed by revealed moral doctrines although it will be subject to similar limitations to those found by other standard-setting bodies in utilising and applying their framework. However, it implies that the more the FAOIBFI sets accounting standards that incorporate religious ruling, the less it would tend to find its own objectives and concepts useful. The ambiguities that may arise from different interpretations of the religious rules will require resolutions primarily by reference to religious rather than accounting authority.     

The Saga of a Disallowed Accounting Standard

In 2000, the Australian Senate disallowed two paragraphs of the accounting standard AASB 1015 Acquisition of Assets, an unprecedented action that sent shockwaves through the business community. As a consequence, a legal dispute erupted between ASIC and MYOB Limited in relation to the application of the disallowed paragraphs, culminating in a recent decision in the Victorian Supreme Court. This paper describes the circumstances surrounding the Senate's decision and the ensuing legal action taken by ASIC against MYOB. It discusses the implications for accounting standard-setting in Australia, and the process by which an accounting standard is made by the AASB and may be disallowed in whole or in part by parliament.     

THE DEVELOPMENT OF CONCEPTUAL FRAMEWORKS OF ACCOUNTING FOR THE PUBLIC SECTOR

This paper offers a review of the conceptual framework projects that have been done by, or on behalf of, accounting standard-setting bodies, and that have concerned themselves with public sector accounting. Developments since 1966 in North America are the primary focus, although the UK and New Zealand are also explicitly addressed. The major theme identified is the ubiquity of the user/user needs approach, despite the continuing lack of evidence about user needs. The paper tries to explain this and concludes that standard-setting bodies have used these conceptual frameworks to establish their own legitimacy, by appealing to the public interest.     

A European view on the legitimacy of accounting procedures: Towards a deliberative-accountability framework for analysis

Accounting rules affect fundamental areas of social interaction encompassing groups that have diverse and conflicting interests regarding financial reporting. In the absence of a coherent social choice theory, concepts of legitimacy can be used to assess the acceptance of accounting standard-setting processes and their resulting norms. In this paper, we analyze the standard-setting process in Europe. Accounting rules in Europe are developed in a two-stage process involving both private standard-setting and public rule-making. From a structural perspective, the European Union (EU) is well positioned to develop legitimate accounting procedures. However, the original purpose and the ensuing legitimacy of its control mechanism are jeopardized when EU structures are used and sometimes abused for policy formation and the creation of EU-IFRS.     

Litigation environment and auditors’ decisions to accept clients’ aggressive reporting

This study contributes to accounting and auditing literature by addressing two empirical questions: (1) whether litigation environment affects auditors’ decisions to accept clients’ aggressive reporting and (2) whether litigation environment, client business risk, and client retention pressure interact and jointly affect auditors’ decisions to go along with clients’ preferred accounting choices. Fifty-nine (59) US and sixty-one (61) Hong Kong auditors employed by the Big-4 accounting firms participated in this study. The result shows that litigation environment has a significant effect on auditors’ decisions. Auditors who practice in more litigious environments tend to be less willing to go along with clients’ aggressive reporting than those who practice in less litigious environments. This study also confirms that there is a significant interactive effect between litigation environment, client business risk, and client retention pressure on auditors’ decisions to accept clients’ aggressive reporting choices. Implications of the empirical findings for policymakers, standard-setting organizations, and international accounting firms, as well as directions for future studies, are discussed.     

Understanding participation in accounting standard-setting: the case of AASB ED 192 Revised Differential Reporting Framework

This paper explores the motives of participants in the standard-setting process, based on the premise that standard-setters strive for standards that are useful for decision-making by a wide range of financial statement users. Our setting is the development of a contentious but contained Australian accounting standard, Reduced Disclosure Requirements. A consultative process initiated by the Australian Accounting Standards Board to create a specific Australian accounting standard for differential reporting provided an opportunity for interested parties to participate. We analyse the motives of participants through semi-structured interviews with members of the Australian Accounting Standards Board and comment letter writers who responded to the relevant exposure draft. Our findings identify participants’ economic and political motivations and question the ability of the current standard-setting process to extract decision-making requirements from a wide range of users of financial statements and to reflect these in financial reporting standards. We find that the perspectives gathered are homogenised and that the process privileges the voices of powerful elites.     

中外会计信息质量特征比较与借鉴

会计信息从某种意义上讲是一种"商品"。对会计信息有用性的要求是通过会计信息质量来实现的。世界许多国家和国际组织都以不同形式对会计信息质量特征做出规定。我国应建立财务会计概念框架体系,并制定以"受托责任观"为核心的信息质量特征体系,将可靠性作为最重要的质量要求。     

The meaning of a defined accounting concept: regulatory changes and the effect on auditor decision making

Accounting standards exist in an attempt to “standardize” accounting practice. These standards contain definitions of accounting concepts whose function is to guide judgments made in practice. However, such judgments can have a major impact on a firm's externally reported accounting numbers, as their inherent subjectivity and discretion may be lent to the manipulation of earnings. This study provides empirical evidence of the effect of measured meaning on an accounting judgment, in the context of regulated changes to the definition of one key accounting concept used in measuring operating income. The extraordinary items classification decisions made by auditors were found to be systematically associated with differences in measured meaning of the extraordinary items definition. The study has important policy implications for accounting standard-setting.     

The academic community’s participation in global accounting standard-setting

International Financial Reporting Standards (IFRS) are now used in more than 100 countries. In the US, the Securities and Exchange Commission (SEC) is considering a “Work Plan” to allow or require US corporations to use IFRS. Considering the rising importance of IFRS, the International Accounting Standards Board (IASB), the SEC, the European Union (EU), and others have called for broader stakeholder participation in the global accounting standard-setting process. Academicians are seen as one group that has the potential to have a strong positive influence in the shaping of accounting standards.This study investigates the academic community’s participation in the IASB’s standard-setting process through the submission of comment letters for 79 issues. For 55 IASB issues, 90 academics and academic organizations (5.8% of all respondents) provided 153 responses (2.7% of total responses). For 24 Draft Interpretations issued by the IASB’s International Financial Reporting Interpretations Committee (IFRIC), just 17 academics and academic organizations (4.9% of respondents) provided 20 responses (1.9%).Overall, Anglo country writers dominated, with Australia, Canada, New Zealand, the United Kingdom, and the United States together providing a majority of writers and responses. Non-Anglo EU countries provided about a quarter of the writers and responses. While academic interest increased for a few issues, usually discussion papers and substantive issues, the overall response rate remained low. Possible reasons for low participation rates are discussed, as well as some changes that may increase academic engagement with the IASB’s standard-setting process.