The objective of this paper is to investigate the level of harmonisation for IAS 39 Financial Instruments: Recognition and Measurement and to identify if different levels of harmonisation are ...associated with company‐specific factors. Based on Rahman et al. (2002), we used the Jaccard (JACC) index to determine the level of harmonisation between IAS 39 and the financial reporting practice of a broad‐based sample of European‐listed companies in 2005. We applied regression analysis to identify companies' specific characteristics that affect the level of convergence of the reporting practice of financial instruments. The results of this study show a high level of harmonisation between accounting practices of European companies included in our sample and IAS 39.
This study notes that, while the research literature which addresses accounting
change in different countries is preoccupied with issues such as economic and legal
environment, culture and consensus, ...research in accounting history recognizes, in
biographical studies, the role sometimes played by individuals in influencing the
outcomes in moments where change takes place. The article looks at the case of the
creation of the International Accounting Standards Committee and analyses the
evidence concerning the roles of the central individuals, Henry Benson, Douglas
Morpeth and Wally Olson. It concludes that while it is difficult to disentangle the
strands of institutional politics and responses to prevailing policy issues, the
individuals concerned did play major roles and there is a case for the intervention
of individuals to be considered in the international accounting literature as one of
the issues that helps build accounting infrastructure.
Purpose - This paper seeks to examine the risk relevance of fair value income measures under IAS 39 and IAS 40.Design methodology approach - The study sample comprises Jordanian insurance companies. ...Data were collected from two main sources: Jordanian insurance companies' annual reports, and the official website of the Amman Stock Exchange. The study begins by investigating the volatility of four income measures, calculated by including and excluding holding gains or losses of financial instruments and property investments. Then it examines the association between its four income volatility measures and one stock market-based risk factor, in order to provide evidence on the risk-related information content of each income volatility measure.Findings - Income based on fair values reflects income volatility more than historical cost-based income. It is also found that income is (not) more volatile with the recognition of unrealized fair value gains losses on financial instruments (investment property). Results of assessing the relative explanatory power of income volatility measures suggest that not all fair value income volatility measures can be a good proxy of the total risk. On the contrary, none of our income volatility measures provides significant incremental risk-relevant information for total risk.Originality value - Most prior studies have focused on the value relevance of fair value accounting in Western developed countries, and mainly in the banking sector. This study makes a significant contribution to existing knowledge via exploring the applications of fair value accounting by insurance companies and investigating the implications of mark-to-market on risk, instead of share price, in an emerging country - Jordan. The findings of this study are useful to researchers and capital-market participants interested in explaining accounting and market risk measures.
I examine management's investment decision under the traditional amortization rules for intangible assets and that under the new rules such as IAS 36, IAS 38, and SFAS 142 where costs of purchased ...goodwill are subject to periodic impairment tests. I find that under the amortization rules, the manager's hurdle rate to invest in the internally generated asset (IGA) is greater than that of the shareholder. Under the impairment rules, the manager's hurdle rate to invest in the IGA is even greater than that under the amortization rules. However, the manager employs another hurdle rate for a partial investment in the IGA. This is because the IGA may serve as "cushion" and help reduce the impairment charges on the purchased goodwill. I provide the conditions under which optimal (and suboptimal) investment decisions occur. The results overall suggest that firms and standard setters consider the incentive side of the standards in addition to the valuation side which is currently the sole focus. PUBLICATION ABSTRACT
There have been several developments recently, both in the United States (US) and the European Union (EU), which will have consequences in Australia. The two major developments in the US are the ...decision by the Securities and Exchange Commission (SEC) to drop the reconciliation requirement for foreign registrants that adopt International Financial Reporting Standards (IFRS) and the serious consideration that the SEC is currently giving to allow US publicly traded companies to adopt IFRS. The developments in the EU involve its ever‐lengthening endorsement process and the increasing pressure being brought on the International Accounting Standards Board (IASB) and its oversight body, the International Accounting Standards Committee Foundation (IASCF) trustees, to alter their composition and the character of their operations. At the same time, there has been the FASB's appeal to the EU to accept IFRS without any endorsement process.
The developments in the US have been lauded by the IASB and in Europe. They represent an impressive vote of confidence in the IASB and in the efforts being made by national standard setters and securities market regulators around the world. The US has already taken a long stride towards joining the more than 110 countries and other jurisdictions that have committed themselves to allow or require the use of IFRS for some or all reporting entities.
The treatment provided by IAS 8, Accounting Policies, Changes in accounting estimates and errors, is in contradiction with the provisions of referential Regional EU 4th Directive. Romanian accounting ...regulations seek a solution for the conciliation of the two standards, with manifest accent in favor of the treatment prescribed by IAS 8. Thus, in Romania, error correction of the previous periods is carried out on behalf of retained earnings. Only minor errors are allowed to be corrected on behalf of the current account result. Delineation errors as significant or insignificant by applying the principle of materiality is a right and an obligation for accounting professionals. Errors may be caused by many circumstances, examining those related to errors in transactions recording, due to their repetitive nature and to use of computer software, to mathematical calculation errors, to disregard of existing situations on the closing date of the financial year or to the resolution of fraud cases. The nature of these errors involve the use of professional judgments, both for financial reporting and for determining, in some cases, the amount of correction, leading to a permanent casuistry open to professional values application.
“In the Fortune 500 there are thousands upon thousands of statistics that reveal very little that’s meaningful about the corporations they purportedly describe. At least that’s the verdict of a ...growing number of forward-thinking market watchdogs, academics, accountants, and others.”(Fortune, April 2001). In today’s economy value is often created by intangible (intellectual) capital. The accounting profession has not met the challenge of measuring and reporting the results of knowledge-based entities. The Federal Reserve Bank of Philadelphia estimates that in the year 2000 more than US$ 1 trillion was invested in Intangibles. The problems relating to the measurement and recognition of intangibles are international in scope.
This paper reviews existing and recently promulgated US, UK, and IASC accounting standards relating to Intangibles. Inconsistencies in the measurement and reporting of Intangibles under US Generally Accepted Accounting Principles (GAAP) are highlighted, and evidence is provided that suggests that recognition of Intangible (Intellectual) Capital is in accordance with existing accounting principles In particular, the newly promulgated Financial Accounting Standards Statements on Business Combinations, Goodwill, and other Intangibles is reviewed. The objective of the comparisons to UK and IASC standards and the review is to provide evidence that will improve the measurement and reporting of intangible (intellectual) capital and facilitate harmonization. Improving the global financial reporting infrastructure will ultimately lead to the reporting of relevant and reliable quality earnings.
The adoption of international financial reporting standards (IAS or IFRS) in 2005 in Australia and member states of the European Union (EU) represents a major shift in the financial reporting ...environment of public-listed companies. While the adoption of IASB standards has been widespread, it is important to realise that the degree to which IFRS are adopted, and the purposes for which they are used, vary internationally. There are two important capital markets that have not adopted international standards for domestic companies; namely, the United States (US) and Japan. The adoption of IAS 39 by EU companies is examined. A study suggests that while the standard has been controversial, firms have achieved high levels of compliance in the first year of adoption, a favourable signal for successful convergence of accounting in Europe.
This study examines empirically whether financial analysts (users), as well as managers (preparers) and external auditors ascribe different interpretations to the SFAS 5 disclosure criteria. We find: ...(1) financial analysts are, on average, more conservative than managers and auditors in their numerical interpretations of both the ‘remote’ and ‘probable’ verbal phrases; (2) managers and auditors share very similar numerical interpretations of these verbal phrases; (3) audit partners’ numerical interpretations of the ‘remote’ region are between those of managers and users, whereas audit managers align their numerical interpretations with those of managers. One danger is that preparers of financial statements may omit loss contingency information that users consider valuable.
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