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Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
Introduction to International Accounting Why accounting ...
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Introduction to International Accounting Why accounting ...

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  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2006
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2005
  • Acct 561 05/13/10 Fall 2006
  • Transcript

    • 1. Introduction to International Accounting Why accounting differs from place to place
    • 2. Clusters of Accounting Models Mixed Economy Model South American Model British-American Model Continental Model
    • 3. Forces toward differences
      • Political and economic ties with other countries
      • Economic system
        • Relationship between business and the providers of capital
        • Capital markets vs. large banks
          • Numerous or few investors
          • How well developed are the stock exchanges and bond markets
      • Existence of a conceptual framework
    • 4. Forces toward differences
      • Legal System
        • Legislative orientation (Common Law)
          • Laws establish limits beyond which it is illegal to venture
          • Considerable flexibility within the limits
          • Judgment permitted and encouraged
          • Tend to have accounting practices established by accountants rather than national legislators
        • Legalistic orientation (Code Law)
          • Laws stipulate minimum standards
          • Citizens must comply with letter of the law
          • Accounting is “codified” much like US tax code
        • Reporting regime
    • 5. Forces toward differences
      • Level of Inflation
      • Status of the accounting profession
      • Culture
      • Other
        • Size & complexity of business enterprises
        • Sophistication of management & financial community
        • General level of education
    • 6. D’Arcy 2001 paper
    • 7. Usefulness of Classifications
      • Classification or clustering groups countries according to distinctive features of their financial accounting systems
        • Pedagogical demand
          • Simplifies enormous amount of detail
        • Informational demand
          • Countries in a cluster may react to new circumstances in similar ways
        • Justification demand
          • Aid in standard setting (IASB, etc.)
    • 8. The Drivers for Harmonization
      • Growing cross-border economic transactions
      • Globalization of capital markets
      • Developments in telecommunications and the internet
        • Access to financial statements from anywhere in the world
      • Investors and creditors needs – financial reporting that is
        • Comparable
        • Transparent
    • 9. HISTORY - IASC
      • 1973 - IASC formed
            • Australia, Canada, France, Germany, Japan, Mexico, The Netherlands, the United Kingdom & Ireland, U.S.
      • 1974 - First Exposure Draft published
        • IAS 1 Disclosure of Accounting Policies
      • 1977 - Revised constitution adopted
        • Board expanded to 11 countries
        • Reference to 'basic' standards removed
        • Link to IFAC established
    • 10. HISTORY - IASC
      • 1987 - IOSCO joins Consultative Group
      • 1988 - FASB joins Consultative Group and joins Board as observer
      • 1990 - European Commission joins Consultative Group and joins Board as observer
      • 1995 - Agreement with IOSCO to complete core standards by 1999 - on successful completion IOSCO will consider endorsing IASs for cross-border offerings
        • First German companies report under IASs
        • European Commission supports IASC/IOSCO agreement and use of IASs by EU multinationals
    • 11. HISTORY - IASC
      • 1999
        • IOSCO review of IASC core standards begins
        • IASC Board meetings opened to public observation
        • IFAC commits to support the use of IASC standards as the minimum benchmark worldwide
        • IASC Board unanimously approves restructuring into 14-member board (12 full-time) under independent trustees
      • 2000
        • IASC Board approves a new Constitution as part of restructuring
        • IOSCO recommends that its members allow multinational issuers to use 30 IASC standards in cross-border offerings and listings
        • IASC member bodies approve IASC's restructuring and the new IASC Constitution
        • European Commission announces plans to require IASC standards for all EU listed companies from no later than 2005
    • 12. HISTORY – IASC -> IASB
      • 2001
        • Trustees announce members of the International Accounting Standards Board
        • European Commission presents legislation to require use of IASC Standards for all listed companies no later than 2005
        • April 1, 2001
          • IASB assumes responsibility for setting accounting standards, designated International Financial Reporting Standards (IFRS)
    • 13. IASB Structure
    • 14. Recent developments
      • On January 1, 2005 companies listed on a European Union Stock Exchange were required to adopt IFRS resulting in a radical change in the way that many companies reflect their asset values on their balance sheet
      • The most important single innovation of IFRS is to move away from historical cost
        • Companies now have the option to carry their long-term real estate and other assets based on their original cost or at “fair value”, which typically equates to market value
    • 15. Recent developments
      • Companies listed on North American exchanges are still governed by t FASB in the U.S. and the AcSB” in Canada
        • FASB & IASB working toward harmonization
        • Timeline 2007-2009
        • Major philosophical difference = rules-based vs. principles-based approach
      • November, 2007 – SEC allows foreign companies to use IFRS instead of reconciling to US GAAP.
    • 16. Major Differences (PwC Report)
      • Framework
        • Allows fair value accounting for intangibles, PPE, financial instruments, and investments.
        • Requires ‘retrospective application’ in the first year a company uses IFRS
      • Financial Statements
        • No set format for I/S, B/S or SCF, just form basic guidelines
        • Extraordinary items are prohibited
        • SPEs are included when company has substantial control
        • Consolidated entities methods are adjusted to match the investor’s methods
        • Other issues
        • Development costs can be capitalized
        • Impairment estimates are a one-step process instead of a two-step process
        • Prohibits LIFO
        • Contingent liabilities are more common (lower threshold)
    • 17. 2002 Survey by Big CPA firms
    • 18. 2002 Survey
    • 19. 2002 Survey
    • 20. 2002 Survey
    • 21. Other International Organizations
      • IOSCO - The International Organization of Securities Commissions
      • IFAC – The International Federation of Accountants
      • IAASB - International Auditing and Assurance Standards Board
      • PIOB - Public Interest Oversight Board
      • IPSASB - International Public Sector Accounting Standards Board

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