Convergence Of Accounting Standards Research Articles

СООТНОСИМОСТЬ РОССИЙСКОГО ПОДХОДА К СТАНДАРТИЗАЦИИ УЧЕТНО-ХОЗЯЙСТВЕННОГО ПРОЦЕССА И ЕГО ЗАРУБЕЖНЫХ АНАЛОГОВ (МСФО И USGAAP)

The article examines the process of development of the modern Russian system of accounting and economic activity in the context of the influence of Western (primarily North American - US GAAP and international – IFRS) accounting practices on it; substantiates the expediency of a deeper perception of the ideas of accounting correlation with the managerial nature contained in the concept of IFRS. The author states the existence of structural problems in the process of reforming accounting in Russia in connection with the chosen course of convergence of federal accounting standards (FSB) with international ones and indicates ways of possible solutions to these problems, including through the creation of a system of domestic standards (by analogy with the FSB) in the field of management accounting

Assessing the countries’ convergence to IPSAS from a cultural perspective

PurposeThis paper aims to assess the factors that may explain the International Public Sector Accounting Standards (IPSAS) convergence, considering Hofstede’s cultural dimensions as the theoretical reference for the cultural approach proposed. Additional factors include countries’ contextual and macroeconomic characteristics.Design/methodology/approachLogistic and probit regression models were used to identify the factors that may explain the IPSAS (fully or adapted) use by countries, including 166 countries in this assessment (59 for those whose cultural dimensions are available).FindingsThe findings consistently indicate collectivism and indebtedness levels as explanatory factors, providing insights into cultural dimensions along with macroeconomic characteristics as a relevant factor of countries’ convergence to IPSAS.Research limitations/implicationsThere are different levels of IPSAS convergence by countries that were not considered. This aspect may hide different countries’ characteristics that may explain those options, which could not be distinguished in this paper.Practical implicationsAs a result of this paper, the International Public Sector Accounting Standards Board may gain insights that can be applied within the IPSAS due process to overcome the main challenges when collaborating with national authorities to achieve a high level of convergence. This analysis may include how to accommodate countries’ cultural differences as well as their contextual and macroeconomic characteristics.Social implicationsThere is a trend of moving toward accrual-based accounting standards by countries. Because the public sector embraces a new culture following the IPSAS path, it is relevant to assess if there are cultural factors, besides contextual and macroeconomic characteristics, that may explain the countries’ convergence to those standards.Originality/valueTo the best of the authors’ knowledge, this is the first cross-country analysis on the likely influence of cultural dimensions on IPSAS convergence as far as the authors’ knowledge.

A Study of Recent Accounting Trends in India's Corporate Sector with Special Reference to International Financial Reporting Standards

Accounting is the process of keeping track of monetary transactions and data in a structured, consistent, and understandable style so that stakeholders in a business or organization may make informed economic decisions. Early forms of accounting used clay tokens to keep track of products and livestock, but the discipline has since evolved into a sophisticated system for recording a wide variety of financial transactions and details. The first step toward IAS, or International Accounting Standards, was done in 1959. Since then, accounting groups and others have collaborated to form the International Accounting Standards Committee. In 1997, the IASC was restructured to better enable the convergence of various national accounting standards and practices toward a single, high-quality set of global accounting standards. Established in 1973, it issued the foundational documents for what is now known as International Accounting Standards until the year 2000. As the International Accounting Standards Committee (IASC) was abolished in 2001, the International Accounting Standards Board (IASB) was tasked with publishing international accounting standards. The integration of global financial markets and the need of investors for more uniformity in the financial reports of multinational firms both demand the globalization of IFRS.

Does the adoption of Ind AS affect the performance of firms in India?

The increasing prevalence of IFRS adoption has resulted in enhanced transparency, accounting quality, and comparability of financial information among firms, especially in emerging markets worldwide, including India. Nonetheless, the question of whether the adoption of IFRS has led to improved firm performance persists. To address this question, this study examines the impact of transitioning from India’s GAAP-based accounting standards to IFRS-converged standards (Ind AS) on non-financial firms’ performance from 2013 to 2022. The empirical findings reveal that the convergence of Indian accounting standards with IFRS significantly improves firm performance, as demonstrated by a positive coefficient of 0.0166 for Ind AS in the fixed-effect model. The study also validates the original empirical findings using the return on equity (ROE) measure of firm performance, which yielded a coefficient of 0.0197, further confirming that the adoption of Ind AS leads to an increase in the performance of Indian firms. These results contribute new insights to the existing IFRS literature and have implications for policymakers and managers.

The principle of prudence applicable to tangible assets

The article discusses the specifics of applying in practice the principle of prudence provided for by both international and Russian accounting standards, which consists in the fact that the value of assets and the amount of income should not be overstated, and the amount of expenses and liabilities should not be underestimated. The practical development of this principle occurred when the new FSB 5/2019 “Stocks” and the updated PBU 16/02 established the rules for assessing material assets recovered during the dismantling, modernization and repair of fixed assets, as well as depending on their further use or sale to the side. Despite the declaration of convergence of Russian federal accounting standards with International Financial Reporting Standards on the application of the principle of prudence in accounting, practical recommendations are generated mainly by the domestic non-state accounting regulator. During the research, such methods as analysis and synthesis, comparison, grouping, analogy, logical and systematic approaches were used. The research results obtained in this article can be applied in the practical work of accounting departments of modern organizations, in the educational process of higher educational institutions and in the development and reform of regulatory documents on accounting and reporting. The results presented in this paper will also be useful to a wide range of readers interested in modern problems of accounting and reporting at the domestic and international level (including accounting problems in healthcare organizations).

The possibility and necessity of deviation from the requirements of accounting standards

The article considers the specifics of the practical application of the possibility of deviations from their requirements provided for by both international and Russian accounting standards in extremely rare cases, the range of which is not outlined by these standards, which may include global and local financial crises, political instability and hostile actions, sanctions against individual legal entities, etc. The peculiarity is that even in conditions of market instability, volatility of observed market indicators, significant uncertainty of economic activity of Russian enterprises and organizations,deviation from the current accounting rules will lead to worse consequences than their strict compliance. Despite the declaration of convergence of Russian federal accounting standards with international Financial Reporting Standards on the issue of deviation from the established accounting rules, practical recommendations are generated mainly by the domestic nonstate accounting regulator. During the research, such methods as analysis and synthesis, comparison, grouping, analogy, logical and systematic approaches were used. The research results obtained in this article can be applied in the practical work of accounting departments of modern organizations,in the educational process of higher educational institutions and in the development and reform of regulatory documents on accounting and reporting. The results presented in this paper will also be useful to a wide range of readers interested in modern problems of accounting and reporting at the domestic and international level (including accounting problems in healthcare organizations).

Evidence of fixed assets by Brazilian subnational governments

Objective: To analyze the evolution of the accounting treatment given to fixed assets by Brazilian public sector entities in the face of the process of convergence of Brazilian Accounting Standards to international standards.
 Methodology: Descriptive, qualitative and with the use of bibliographic and documentary survey through the examination of financial statements and explanatory notes of all states of the Brazilian region in the period between 2015 and 2019.
 Results: Were considered few satisfactory in relation to the items surveyed due to low adherence (55%) and non-adherence (33.33%) of the data analyzed to the standards examined, demonstrating that informational asymmetry persists to stakeholders, so harmful to public transparency and accountability. The lack of information regarding depreciation methods, fixed assets offered as collateral, contractual commitments in the acquisition of assets and indemnification of third parties for asset items were noted.
 Study Contributions: To know the main changes and gains in the convergence process, with the standardization of accounting procedures in relation to the standards examined those deals with fixed assets, as well as the results of the evolution of the evidence process and the main challenges in meeting this standard.

Capital investments acquired under a barter agreement

The article discusses the features of the evaluation of capital investment objects in the case when the acquisition, creation, improvement and restoration of such objects occurs under a barter agreement. The peculiarity is that the costs forming the object of capital investments should be assessed at fair value, depending on the situation — transferred or received property, property rights, works and services. Despite the declaration of convergence of Russian federal accounting standards with International Financial Reporting Standards on the valuation of capital investment objects under a barter agreement, there are discrepancies between the requirements of IFRS (IAS) 16 “Fixed Assets” and FSB 26/2020 “Capital Investments”. The article uses examples to reveal discrepancies in the estimates of capital investments in future fixed assets. The article uses examples to reveal discrepancies in the estimates of capital investments in future fixed assets. During the research, such methods as analysis and synthesis, comparison, grouping, analogy, logical and systematic approaches were used. The research results obtained in this article can be applied in the practical work of accounting departments of modern organizations, in the educational process of higher educational institutions and in the development and reform of regulatory documents on accounting and reporting. The results presented in this paper will also be useful to a wide range of readers interested in modern problems of accounting and reporting at the domestic and international level (including accounting problems in healthcare organizations).

Relevance of Earnings Value, Book Value, and Operating Cash Flow in Manufacturing Companies in Indonesia

Research aims: This study examines the value relevance of accounting information consisting of earnings information, book values, and operating cash flows after Indonesia uses the full convergence of IFRS Financial Accounting Standards.Design/Methodology/Approach: The value relevance test was conducted using Ohlson's (1995) pricing model and Easton and Harris' (1991) return model. The valuation model test employed two regression equations, i.e., testing the relationship between earnings information and book value with stock prices and then testing the relationship between earnings information, book value, and cash flow with stock prices. In addition, the return model testing was performed to examine the relationship between earnings information and earnings changes with stock returns and the relationship between cash flow and cash flow changes with stock returns. The research sample was 105 manufacturing companies, with a research period from 2016 to 2019.Research findings: The test results with the pricing model approach revealed that earnings and cash flow had value relevance, while book value had no value relevance. This study’s results suggest that earnings and cash flow information are helpful for investors in making investment decisions. Moreover, the test results with the return model approach also uncovered those earnings, changes in earnings, and changes in operating cash flows had value relevance while operating cash flows, on the other hand, had no value relevance.Theoretical contribution/Originality: The utilized two models complement each other, and this study provides empirical evidence for standard setters who can renew beliefs about how much accounting information is reflected in stock prices in Indonesia, especially the manufacturing sector, after the full convergence of IFRS Financial Accounting Standards is applied.

Comparative Study on Quality Characteristics of International Accounting Standards and Chinese Accounting Standards

Whether accounting information can meet the needs of users depends on the quality of accounting information. The internationalization level of accounting standards reflects the degree of integration of a country's economy with the world. With the development of economic globalization and rapid progress of science and technology, the market economy is becoming more and more active. Meanwhile, the trade between various countries is becoming more and more frequent, which promotes the economic and trade cooperation between various countries. The demand for international convergence of accounting standards is becoming increasingly strong, and the relevant concept arises at the historic moment. In order to make the cooperation between countries more convenient and fast, countries began to integrate into the financial regulatory framework reform process of cooperation, and strive for the global unified high-quality accounting standards can be completed in a timely manner. This paper compares and analyzes the differences between Chinese and international accounting standards in terms of information quality characteristics from two aspects of content and level, summarizes the convergence and development trend of international accounting standards, and puts forward some suggestions for China to formulate accounting standards.

Convergence of Chinese Accounting and Reporting Standards with IFRS: Particularities, challenges, and prospects

Subject. This article analyzes the reasons why China chooses convergence with international accounting standards, as well as the problems arising in the transition to the internationalization of the Chinese accounting standards, and the prospects for further development of the Chinese accounting. Objectives. The article aims to analyze the reasons for the internationalization of the Chinese accounting standards and offer recommendations on the problems that can be encountered in this process. Methods. For the study, I used analysis, synthesis, and other general scientific methods. Conclusions. In the process of convergence of the Chinese accounting standards with the international ones, experts proceed from national conditions, learning new things, acquiring advanced knowledge. The convergence of China's accounting standards with international practice is currently undergoing continuous improvement and development. In order to stimulate exchanges, raise capital and reduce communication costs, China must keep pace with the development of the world situation and establish solid market economic and corresponding accounting systems.

The problem of assessing the liquidation value for the depreciation accounting

The transformation of accounting standards in 2022 is aimed at the convergence of domestic accounting standards with international financial reporting standards, changes the composition of fixed assets and the accounting procedure for depreciation of fixed assets. The study examines the issue of assessing the liquidation value of an object of fixed assets for the purposes of reproduction of fixed assets at the expense of depreciation charges. The object of the study is the objects of fixed assets for accounting. The subject of the study is the liquidation value of an object of fixed assets for the purposes of accounting for depreciation charges. The purpose of the study is to present the procedure for assessing the liquidation value of an object of fixed assets for accounting purposes. Research objectives: 1. Theoretical analysis of scientific literature and publications; 2. Study of normative, methodological and legislative acts of the subject area of research; 3. Formulation of objective and scientifically based research results. The research methodology is a subject–conceptual approach based on general scientific accounting methods. Research results: 1. The types of cost of fixed assets are disclosed; 2. The content of the liquidation value of the fixed assets is disclosed; 3. The concept of depreciation as a source of reproduction of fixed assets is disclosed; 4. The method of assessing the liquidation value of the fixed assets is presented.

Asymmetric financial reporting quality and firm size: conditional evidence from an emerging market

PurposeThe mandatory adoption/convergence of IFRS has increased the information quality of reported earnings in equity markets across the globe. The purpose of the study is to explore whether the mandatory convergence of Indian Accounting Standards (Ind AS) with International Financial Reporting Standards (IFRS) affect the financial reporting quality of listed firms in India.Design/methodology/approachThe sample includes 355 non-financial publicly listed firms on National Stock Exchange (NSE) of India with 1,065 firm-year observations. The authors use models similar to Jones (1991), and DeFond and Jiambalvo (1994) to investigate value relevance in the period “1st January 2017 to 31st December 2019”. The study uses the quantile regression (QR) analysis to verify our hypothesis.FindingsThe findings suggest that IFRS convergence process adds value to accounting quality of reported earnings in Indian stock market. The authors' QR estimations produce collaborating evidence on the uneven impact of IFRS across quantiles and the financial reporting quality skewed in favour of investors of high-valued firms.Research limitations/implicationsThe effects of convergence with IFRS in value relevance of financial statements could be reinforced by considering alternate accrual models and incorporating more accounting measures on an expanded sample of stocks from several global markets.Practical implicationsPresently, convergence of local accounting standards to IFRS in India is only partial. The findings may produce useful insights for regulators and standard setters to further increase the value relevance of financial reports whilst they move towards full convergence.Originality/valueThe study explores the information quality of reported earnings of Indian listed firms in post-IFRS convergence period, which is not properly investigated in the literature. Moreover, the research is unique in terms of applying QR estimations to examine the value relevance of IFRS-converged financial reporting from the emerging market perspective.

Implementation of Federal Accounting Standards – Capital Investments and Fixed Assets – in the internal rules of accounting for fixed assets

Subject. This article discusses the issues related to the reflection of capital investments and fixed assets in the accounting (financial) statements of economic entities during the transition to the new domestic (Russian) accounting standards – Fixed Assets and Capital Investments. Objectives. The article aims to reveal the consequences of changes in the current practice of accounting for fixed assets and capital investments in the internal rules of commercial organizations. Methods. For the study, we used the methods of generalization, comparison, primary observation, cost measurement, and grouping. Federal Accounting Standards and International Financial Reporting Standards were the basis for methodological justification of changes in the accounting practice of transactions with fixed assets and capital investments. Results. We offer certain records to reflect information on capital investments in the transition to the new Federal Standard – Capital Investments in accounts. We also offer a procedure for classifying low-value fixed assets in the inter-reporting period and a correspondence of accounts reflecting impairment loss on fixed assets. Conclusions and Relevance. The procedure for convergence of domestic accounting standards with International Financial Reporting Standards necessitates the introduction of significant changes in the process of reflecting transactions with fixed assets and capital investments. The modified procedure for reflecting records for accounting for capital investments, low-value fixed assets, losses from impairment of fixed assets in the intra-company rules for accounting for economic entities becomes relevant. The results of the study can be used when accounting for transactions with fixed assets and capital investments of commercial organizations in the practice of financial accounting.

On the Necessity of Convergence of Chinese Accounting Standards towards Internationalization

At present, the trend of economic globalization is in full swing, the trade exchanges between countries around the world are deepening, and the international financial capital market is booming. At the same time, the world’s scientific and technological revolution is changing with each passing day, and the productivity level of each country has developed rapidly, thus driving the rapid growth of the world economy. In this case, if the accounting standards of countries around the world, which reflect the processing means of economic information, are unable to converge with the international community, in the long run, It will inevitably lead to great international trade barriers, which will make the transaction costs remain high, and the transmission of key economic information lags behind slowly, eventually resulting in unnecessary waste of means of production, thus making it difficult to promote the coordinated progress of the economies of various countries efficiently. Therefore, in order to establish a good financial capital market order, maintain a stable and positive world economic level, and improve the happiness index of people all over the world, it is particularly necessary to call on all countries in the world to build international convergence of accounting standards. As the mainstay of world trade, China is obliged to improve its own accounting system and adapt to the global economic development. Therefore, its accounting standards will strive to converge with internationalization in the future, which is not only just needed by China’s own economic development. At the same time, it is also of great practical significance for the development of the world economy. However, due to the influence of specific factors such as national conditions, economic environment and historical issues, the internationalization route of China’s accounting standards has a long way to go. Based on this, we should rationally analyze the background and initial intention of the convergence of China’s accounting standards to international accounting standards, and deal with differences and consequences according to China’s accounting treatment and international standards brought by specific business environment. Then, proceeding from China’s national conditions, combining with the differences in the above accounting standards, objectively analyzing the problems and the deeper reasons behind the internationalization of China’s accounting standards by combining quantitative and qualitative methods, finally, prescribing the right medicine, proceeding from reality, taking the basic principle of Marxism-materialist dialectics, and realistically making targeted suggestions on the internationalization convergence of China’s accounting standards, aiming at making a modest contribution to the academic development of accounting standards by taking China as a reference.

Does IFRS convergence improve earnings informativeness? An analysis from the book-tax tradeoff perspective

Exploiting the convergence of tax-based accounting standards to the judgement-based International Financial Reporting Standards (IFRS) as an information shock, this study examines whether the decrease in book-tax conformity improves earnings informativeness in China from the book-tax tradeoff perspective. Using A-share firms which experience this drastic regulatory change as the treatment firms and B-share firms which are not subject to such change as the benchmark firms, we find a significant decrease in the earnings informativeness for A-share firms but not B-share firms, and that the decrease is most pronounced for firms with strong financial reporting incentives. Additional analyses reveal that the decreases in earnings informativeness are due to financial reporting changes rather than changes in economic conditions. Our results shed light on the importance of considering underlying institutional factors in assessing the impact of changes in financial reporting on earnings quality.

Can mandatory dual audit reduce the cost of equity? Evidence from China

In China, a mandatory dual audit system for domestic A-share firms cross-listed on the Hong Kong stock market (i.e. AH companies) was abolished in 2010. Since then, AH companies have been allowed to choose to have a dual audit or a single audit. We find that the mandatory dual audit regime before the deregulation is associated with a lower cost of equity than voluntary dual audit after the deregulation. Furthermore, the lower cost of equity under the mandatory dual audit regime is greater in companies exposed to stronger financial constraints and with higher agency costs, and is not attenuated by alternative voluntary audits. Our results are not affected by accounting standards convergence and audit quality, and are robust to various model specifications. Our results suggest that the role of mandatory dual audit in mitigating agency costs and information asymmetry is not replaceable by voluntary dual audit.

Convergence of Indian Accounting Standards to IFRS: Impact on Quality of Financial Reporting of Indian Industries

Convergence of Indian Accounting Standards to IFRS: Impact on Quality of Financial Reporting of Indian Industries

МСФО И РСБУ: МЕЖДУНАРОДНАЯ ГАРМОНИЗАЦИЯ И СТАНДАРТИЗАЦИЯ УЧЕТА И ФИНАНСОВОЙ ОТЧЕТНОСТИ В УСЛОВИЯХ ГЛОБАЛИЗАЦИИ МИРОВОЙ ЭКОНОМИКИ

The article examines the significant changes that have occurred in the Russian practice of accounting and financial reporting, which are caused by the processes of globalization, digitalization of the world economy, convergence of Russian accounting standards (RAS) with international financial reporting standards (IFRS). The problems of reforming the system of legislative and legal acts of accounting, financial reporting in Russia during the transition to IFRS. The analysis of the key principles of efficiency, according to which modern Russian accountants work, is carried out.

Convergence of Indian accounting standards to IFRS: impact on quality of financial reporting of Indian industries

This paper assesses whether the mandatory implementation of IndAS (IFRS converged Indian accounting standards) will result in higher financial reporting quality. Particularly, it studies the effect of adopting IndAS by Indian companies on earnings management, earnings persistence, and value relevance of the reported financials. The study contributes to existing body of literature by being a pioneer study for Indian industries, signalling areas of concern for regulators in India and global investors interested in Indian markets. Research findings indicate some improvement in the quality of reported financials after implementation of IndAS. Research output reveals enhancement in market-based measures. However, accounting-based attributes yield mixed findings. While no statistically significant difference is reported by earnings management metrics, the earnings persistence measure shows distinct improvement.