拉筹伯winter school 代写 International Accounting
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拉筹伯winter school 代写 International Accounting
International Accounting
Difference & Classification
Advanced Topics in International Accounting
§Different accounting systems
§Problems created for users.
§Problems generated for corporations
Structural Influences on systems of Corporate Accounting
§
§Political system
§Legal system
•Common law: small amount of statute. Judge seeks to find an answer to the specific case rather than formulate a rule for the future. UK, US, Australia etc modelled on common law approach. Accounting in common law systems is not determined by the law. Accounting bodies develop accounting practice.
•Roman Law: rules are linked to ideas of justice and morality. Accounting rules are essentially an extension of company law. e.g. Germany.
§Enterprise ownership
Germany, France & Italy capital provided by banks. In the UK and the US shareholder equity is more important. In Germany, France and Italy the banks or the state will nominate directors and thus be able to obtain information and affect decisions
§Accounting regulation/accounting profession
Size and influence of the accounting profession. This may be linked to ownership. The profession may have a limited influence where there is a lack of publicly owned companies (for example France).
§Taxation
§
§
Different National Accounting Systems.
Cultural Influences
What is culture?
§“the collective programming of the mind which distinguishes the members of one human group from another ....Culture, in this sense, includes systems of values; and values are among the building blocks of culture”
Hofstede (1984, Based on 100 000 IBM employees)
Hofstede’s Cultural Values
§large v small power distance
§strong v weak uncertainty avoidance
§individualism v collectivism
§masculinity v femininity (or low v high nurturing)
§long-term v short-term orientation
拉筹伯winter school 代写 International Accounting
Hofstede (1984)
Accounting Values
S J GRAY (1988)
§Gray suggests that Hofstede’s model explains why different accounting systems develop.
§
§Draws on the model to develop the following pairs of contrasting accounting values
•professionalism v statutory control
•uniformity v flexibility
•conservatism v optimism
•secrecy v transparency
CLASSIFICATIONS
§Mueller (1967)
§Nobes (1983; 1998)
§Gray (1988)
§Nair and Frank (1980)
§Alnajjar (1986)
§Puxty et al (1987)
§Roberts (1995)
Mueller's Approaches to Accounting Development
§Macroeconomic approach
•accounting develops in conjunction with economic policy. Eg Sweden
§Microeconomic approach
•accounting reflects economic reality in its measurements and valuations.
§Independent discipline orientation
•Accounting more independent, from government and economics. Eg UK and US
§Uniform accounting.
•accounting as part of the administrative control of business. Eg France.
§Implication - Accounting rules are a product of economic, political and other environments, which have determined the nature of the system.
•One countries rules may not be appropriate for another country.
Puxty et al
The Regulation of systems of corporate accountability
Puxty et Al
§At the liberal end, regulation is provided exclusively by the market.
•If you you don’t conform to market expectations and requirements, no one will invest in your corporation.
§At the other, state legalism forces companies to disclose.
§
§Associationalism:
•regulation is accomplished through the development of organisations formed to represent and advance the interests of their members.
§Corporatism:
•The state develops the organisation of interest groups and incorporates them into it’s own system of hierarchical control.
§What system of global regulation do IFRS’s fit into?
Why Classify?
§Comparison of patterns of development and potential for change
§Reasons for dominant influence of some national system
§Predictions of problems and identification of solutions
§Problems and prospects for international harmonisation
§Indicates that there is a choice of systems
§FDI decisions
§Help accountants and auditors operate internationally
Broader Lessons From Accounting Diversity.
§The essentially socially constructed nature of accounting systems.
§The power of accounting in supporting a particular social system.
§Accounting reflects the socio-political environment and helps to construct it
Multinational Corporations
§Some trends
•Transition to a global economy.
•50 of the top 100 economies in the world are corporations.
•expanded influence of western European MNCs in western Europe and North America
•US MNCs have reached a plateau in global expansion
•expansion into LDCs
§overall increased global expansion has come from:
•smaller MNCs
•service sector
•MNCs from NICs and central and eastern Europe
Pause for Reflection
§Accounting has contributed towards globalisation but it also inhibits further development.
Problems of Accounting Diversity
Main Areas of Difference
Some of the history behind the problem
Quantifying diversity. (Weetman et al, 1998)
Quantifying diversity. (Weetman et al, 1998)
Major International Differences
§The Audit Opinion
§Accruals & Prudence
§Valuation Bases
§Consolidation
§Presentation
Problems of Accounting Diversity
An Investors Perspective
Problems of Accounting Diversity
User Perspectives
§The importance of financial statements.
§The Problems of language & interpretation
•Hanson Case
§The (mis)use of ratio analysis to analyse foreign financial statements. (Choi et al, 1983).
§Corporate responses to foreign users' needs. (Meek & Saudagaran, 1990, Section 4.1; Adams et al, 1993.)
Hanson Plc case study - Terminology
British
tangible fixed assets
stocks
debtors
listed investments
debenture loans + bank loans and overdrafts
trade creditors
other creditors
creditors - due after one yr.
provisions for liabilities
capital and reserves
profit and loss account
American
property, plant and equipment
inventory
accounts receivable and prepaid expenses
marketable securities
loans payable
accounts payable
taxation & accrued expenses
long-term debt
deferred & other taxation + other liabilities
shareholder’s equity
income statement
The importance of financial statement information
(Chang, Most and Brain, 1983, JIBS pp 63 - 84)
Studied the utility of corporate annual reports to investors in the US, UK and NZ
Findings:
§Financial statements are the most important source of information on which investment decisions are based.
§Differences exist between the 3 countries on the importance attached to various parts of the corporate annual report.
(Mis)use of ratio analysis to analyse foreign financial statements
Choi et al, 1983
Compares accounting ratios of US, Japanese and Korean companies using financial statements converted to US GAAP
Findings:
§ There were significant country differences in some ratios as a result of differing cultural, institutional, economic, legal and social environments
Corporate Responses to Foreign User Needs
§None
§Additional notes
§Foreign currency translation ('convenience statements'/'convenience currency translations')
§Language translation
§Restatement of results
§Secondary statements
§Limited restatement拉筹伯winter school 代写 International Accounting
Effects of Accounting Diversity
Choi and Levich, 1991
Research questions:
§
§Is accounting diversity perceived to be a problem?
§What attempts are made to cope with national accounting differences and are they successful?
§Do problems associated with accounting diversity lead to capital market effects?
Choi and Levich, 1991
Findings:
§“We find that accounting diversity is a problem that affects the capital market decisions of roughly one-half of the participants in our study. Thus, we cannot rule out the possibility that international accounting diversity is a barrier whose presence may affect the pricing of securities and the composition of international portfolios.”
Choi and Levich, 1991
Findings:
Coping mechanisms include:
restatement of foreign financial statements
familiarisation with foreign accounting principles
use of information less sensitive to accounting treatment
Restatement of foreign financial statements was insufficient to remove the problems of accounting diversity
Problems of Accounting Diversity
The Corporations Perspective
Accounting implications of exporting
§problem of determining credit worthiness of foreign firms:
§may not be listed in international credit rating directories
§financial statements difficult to interpret
•different currency
•foreign language
•unfamiliar accounting policies
•unfamiliar business environment
§possibility of exchange rate changes
Accounting implications of licensing
need to:
analyse the reliability and capability of potential licensees
develop an accounting information system to monitor:
•contract performance
•tax and financial statement implications of foreign money flows
•
Accounting implications of FDI
§Need an m.i.s. to monitor, control and evaluate foreign subsidiaries
§Need systems to consolidate foreign subsidiary results and accounting policies for:
consolidation FCT
goodwill inflation
§Must prepare subsidiary financial statements according to host country laws/accounting rules
§Interpreting financial statements of foreign competitors
§Assessing financing opportunities:
•interest rates
•exchange rates
•tax and accounting implications
Foreign listing - Access to capital
Disclosure and regulatory costs
§Financial disclosure regulations
§frequency of financial reporting
§additional disclosures required
§differences in audit practices
Volvo: listing pattern
Stockholm 1935
London 1972 size, cheapness of listing,
needed finance not available in Stockholm
Germany 1974 publicity, market (luxury consumer good)
Norway publicity, geographical proximity
France 1984 publicity
US 1985 very expensive to list
Belgium 1985 publicity
Japan 1986 large market
Switzerland 1987 publicity, market
Saudagaran & Biddle 1995
§Examines foreign SE listings of 459 internationally traded firms from 8 countries
§1992 data
§Financial disclosure index obtained by using 142 experts actively involved in the foreign listing process
§Findings: SE listing choices influenced by:
•Financial disclosure levels
•Level of exports to a given country.
Benefits of foreign listings
§increase in share price (reduced risk benefits to investors with internationally diversified portfolios)
§access to more capital
§local ownership requirements easier to meet
§publicity
§increased employee motivation
§political benefits
Notice how pervasive the impact is on corporations
Problems of Accounting Diversity
What do you do about it?
Introducing the IASC
Adams, Weetman and Gray (1993)
IASC OPTIONS:
Reconcile domestic financial statements to IFRS’s
Present full financial statements in conformity with IFRS’s
Bhushan and Lessard, 1992
Research question:
What impact would
more uniform comparable
disclosure across countries;
reconciliation to US GAAP; and
harmonisation
have on your investment practices?
Bhushan and Lessard, 1992: Findings
Suggestions form IASC (and IOSCO)
§Full secondary f/s and reconciliation of profit and shareholders’ equity.
§Full disclosure of IAS policies followed.
§Disclosure of differences between IASC standards and national GAAP.
§Explanation of magnitude and direction of adjustments.
§Standard format for reconciliations of profit and shareholders’ equity.
§Adherence to materiality limit.
Weaknesses of Reconciliations to IASs: sample of Finnish companies
§Accounting policies inadequately explained. Not clear which IAS policy had been followed.
§Adjustment labelled ‘other’.
§No adjustment made, or not possible to tell if adjustment made, where FAS and IAS policies differed.
§In some cases there were a number of differences between FAS and IAS policies which would affect one adjustment item and it was not possible to tell which had been adjusted for.
§Lack of consistency of presentation.
拉筹伯winter school 代写 International Accounting
