European Accounting Research Articles

Intangible capital and productivity at the firm level: a panel data assessment

The econometric literature on measuring returns on intangible capital is vast, but we still know little about the effects on productivity of different types of intellectual capital (R&D and patents) and customer capital (trademarks and advertising). The aim of this paper is to estimate the marginal productivity of different types of intangibles by relying on the theoretical framework of the production function, which we apply to a large panel of Italian companies. To this end, the European accounting system makes it possible to compare the impact on productivity of intangibles measured from expenditures (as usual in Anglo-American studies) with the impact of intangible assets reported by companies in their balance sheets (a measure which is available in the Italian context, for example, but less common in the literature). Our results contribute two main findings to the literature. First, among the intangible components, the highest marginal productivity is that of intellectual capital, customer capital and intangible assets. Second, the use of accounting information on intangible investments is crucial to find high effects of intangible assets on productivity, while intangibles measured from expenses seem to play a more limited role. Preliminary results obtained from sub-samples mimicking the presence of spillovers deliver higher effects of intellectual capital on productivity, suggesting that intangibles’ social value is larger than the part we can estimate with individual firm data.

Implementation of IFRS for SME in Agricultural Enterprises in the Czech Republic

With the growing importance of small and medium-sized enterprises there is also need to harmonize their financial statements. In this connection IFRS for SME has been developed but currently, it is not part of Czech or European accounting legislation. However, there are some countries in the world that have already adopted this standard and incorporated it in their national legislation. The aim of this paper is to identify the advantages and disadvantages associated with the implementation of IFRS for small and medium-sized enterprises involved in agricultural activities and operating in the Czech Republic. This paper is based on existing experience with implementation of the standard in some countries of the world and a questionnaire survey which was carried out on a sample of agricultural enterprises in the Czech Republic. From the survey it is evident that the representatives of the accounting units interviewed are concerned predominantly about greater administrative burden, which is already now considered to be a major obstacle in the business of small and medium-sized enterprises in the Czech market, and a number of them are also concerned about high implementation costs connected with the adoption of IFRS for SME.

A European-Wide Preservation Order: How the Common Law Practice Can Contribute

Preservation orders are used in different legal systems to freeze a party’s assets preventing that party to evade a judgment. This paper first comments on the problems that arise when litigants want to obtain a cross-border preservation order within the European Union. It then analyses the issue of harmonisation of European Civil Procedure, and its connection with preservation orders and the European Commission’s proposal for a European Account Preservation Order. Finally, it examines the provisions of the European Commission’s proposal on a European-wide preservation order and makes suggestions, stemming mainly from the common law tradition, which could benefit the new procedural device. It concludes by suggesting that the incorporation of common law features will be advantageous in different ways.

Early European accounting theory: Sir William Petty's contributions to accounting

Accounting and auditing are frequently cited as culprits in the current economic crisis. Traditional practices (including academic rationales) are coming under increased scrutiny. This paper proposes a way of beginning to reinvigorate the subject by returning to the classics. Accounting, as a social science has several origins. This paper explores these diverse origins of accounting starting with the work of one of the ‘Fathers of Accounting’, Sir William Petty, the first general comptroller of England. Petty lived during the 17th century and published a variety of works on political economy that extended into accounting of the period.

Efficiency of Demand Shocks in Order to Reduce Current Account Imbalances in the EMU

With the current European sovereign public debt crisis and current account imbalances difficulties in the EMU, many papers now underline that the problem of the European construction is its lack of institutional framework and common economic governance necessary to make a monetary union viable. According to these papers, the solution would lie in a stronger economic cooperation, with the Northern European countries contributing to lighten the burden of the Southern debtor countries. In this context, our model shows that a symmetric positive demand shock in the EMU could only slightly reduce the external indebtedness of the Southern European countries but would efficiently reduce their public debt levels. To the contrary, an asymmetric positive demand shock in the creditor Northern European countries (e.g., an increase in German wages) could reduce the current account deficits of the Southern European countries, in particular for countries with the highest openness to trade. Nevertheless, it would worsen the indebtedness levels, and it would also increase the recessionary risks in these countries.

Business Involvement in Accounting: A Case Study of International Financial Reporting Standards Adoption and the Work of Accountants

Although Byrne and Pierce [(2007) Towards more comprehensive understanding of the roles of management accountants, European Accounting Review, 16(3), pp. 469–498] found that an increasing regulatory burden may decrease accountants' chances of getting involved in business, little is known about corporate reporting practice and whether, and if yes how, regulation impacts on accountants' work. In order to fill this gap, the paper provides a case study analysis of International Financial Reporting Standards (IFRS) adoption and its impact on and implications for an accountant's role, positions, practices and work in a continental European context. This study describes how IFRS expect information preparers to take more responsibility for reporting than domestic accounting standards. Thus, the present study contributes to the literature by arguing that it depends on the set of accounting standards how they impact on accountants' work. The study shows why and how especially IFRS' requirement of ‘business involvement’ in accounting revolutionises accountants' work and how it has implications on their roles, practices and positions in the case firm. Finally, the paper explains how learning and knowledge creation required by IFRS adoption was made possible through communities of practice and hence how it was possible to clarify the responsibilities of divisional and group accountants in the case firm. Thus, the present study enhances our understanding of reporting activity by describing actual practices of and mechanisms used in corporate reporting.

Enhancing the Accessibility of Accounting and Business Archives: The Role of Technology in Informing Research in Accounting and Business

The application of advanced digitization technologies to accounting and business archives has created new opportunities for accounting and business historians. The joint American Accounting Association and European Accounting Association Task Force (2006–2010) that examined digitization confirmed this. This paper explores these opportunities, along with some attendant challenges and cautions, with reference to the digitization of two significant archives located in Australia. The first is the archive of CPA Australia, a professional accounting association that has its beginnings in 1886 and which today has over 132,000 members. The second is the archive accumulated by the pre-eminent accounting scholar Raymond Chambers during his long and extraordinarily productive tenure at the University of Sydney. Studies of surviving business records, biography and institutional history provide examples of scholarship that is enabled by digitization technology and which has the capacity to inform contemporary issues and debates.

Is fair value currently in compliance with the principle of true and real reflection in the Czech accounting?

Information value of data provided by the accounting is in significant extent dependent on the method of valuation used in accounting of individual economic operations especially on the method of valuation of individual items in the financial statements. Financial expression of the individual value of assets and liabilities of the company (including the balance sheet of the company), as well as the amount of equity, depend just on specific method of valuation of assets and liabilities that each entity used in the accounting system. This fact has also a crucial influence on the overall level of financial analysis since mostly aggregated data in the appropriate valuation gained from various parts of the financial statements are the input data for financial analysis.Certain items of assets and liabilities are valued at fair value at the balance sheet day in the Czech accounting in compliance with the global developments. The concept of fair value in Czech accounting is regulated by Czech Accounting Act in § 27 paragraph 4 and 5. The Czech regulation of the concept of the fair value is based on its detailed definition of the IAS / IFRS, including cases of practical use.The aim of this paper is to answer the question whether currently the fair value in the Czech accounting reflects the reality, based on definition of its content in accordance with applicable legal regulation. Partial aim is to identify specific cases of its application in the accounting of various types of business entities in the Czech Republic in existing practice. The paper also identifies methodological procedure of recording changes resulting from the valuation or revaluation of various types of assets at fair value, including their impacts on the financial statements. An integral part of the paper is the perspective of IAS / IFRS on fair value in accounting, so the definition of the fair value and also there is historical development of valuation of assets according to IAS / IFRS. The concept of fair value as a possible method of valuation of assets in European accounting law is also mentioned.

Range of data reported to the requirements of the IAS 12 and impact of the IFRS adoption for tax purposes in the tax collection of the Czech Republic

An issue of relationship between corporate income tax and accounting is one of the most discussed at present. Until recently the tax base was derived from the accounting profit defined in the Czech accounting law. But from 2004 there are companies which have to use IFRS in bookkeeping and financial reporting and from the perspective of the Czech accounting law they do not care about Czech accounting regulation. On the other hand Czech tax regulation has not accepted this change in the field of European accounting harmonization and still directs to pay tax on the basis of Czech accounting regulation for all entities. Fear of adverse change in tax collection is one of the main reasons why the Czech Tax Administration does not allow to pay income tax under profit or loss patterned on IFRS. The most important goal of this work is to characterize the relationship between accounting profit or loss under IFRS and the tax base of income and to find out the impact of taxation under profit in accordance with IFRS in total tax collection. Basic sample of all analyses consists of 35 accounting entities which mandatorily use IFRS and this sample was also confronted with a list of 106 major payers of income tax published yearly by the Ministry of Finance of the Czech Republic for the needs characterization of the relationship of profit under IFRS and the tax base of income.

Are companies in the Czech Republic ready to implement IFRS for SMEs?

The process of integration and globalization is closely related to the need for harmonization of accounting at international level. In this connection International Financial Reporting Standards (IFRS) have been developed, which are primarily designed for companies whose securities are traded on regulated markets of the European Union. However, as the importance of small and medium-sized entities has been recently on the increase, the International Accounting Standards Board (IASB) also issued after five years of effort in July 2009 the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). At present, there is no legislation for the application of this standard in the Czech Republic or any other state of the European Union. Each jurisdiction must determine whether to adopt IFRS for SMEs, to what extent and for which entities the standard is mandatory and for which it is not. Already in previous years the European Commission analyzed data from surveys on this new standard and discussed its advantages and disadvantages. To date, however, it has not taken a single decision on whether to adopt and incorporate the standard into the European accounting legislation. The question also remains what attitude towards IFRS for SMEs companies operating in the Czech Republic will take. That is why this paper analyzes the opinions of some Czech companies belonging to the group of SMEs on the potential adoption of this standard.

Invotec Group appoints Monique Berckvens as European Sales Support and Account Manager

Invotec Group appoints Monique Berckvens as European Sales Support and Account Manager

TU-A-116-10: Dosimetry Approach for a Retrospective Epidemiological Study On Eye Lens Dose to Interventional Cardiologists and the Occurrence of Radiation-Induced Lens Opacities

Purpose: Using whole body dosimetry data to carry out an epidemiological retrospective study on the relation between eye lens dose and lens opacities for interventional cardiologists. Methods: In the framework of the European ELDO project, a method was developed to estimate cumulative eye lens doses for past practices based on whole body doses measured, for routine occupational dosimetry, above the lead apron. The investigation focused on identifying the ratio between eye lens dose and whole body dose measured with APDs at different positions on a Rando‐Alderson phantom in realistic clinical settings. Besides, Monte Carlo simulations were performed to determine the variation of eye lens and whole body dose with tube configurations and with the use of ceiling shields and lead glasses. Another approach was also suggested to estimate eye lens dose when whole body doses above the apron are unavailable. It consists in using the European ORAMED eye lens doses database and accounting for the evolution of the X‐ray systems and procedures over the last 50 years. Results: First, ratios between eye lens doses and whole body doses (at different locations) were determined for procedures without the use of protective equipments. These ratios included different tube projections, tube configurations, beam energies and operator positions. Although eye lens dose correlated best with collar left dose, chest left measurement remains exploitable. Secondly, Monte Carlo simulations provided the necessary coefficients to correct the obtained ratios when protection equipments are used. Meanwhile, for the second approach, information was collected from the manufacturers on the evolution of X‐ray systems to adjust recent eye lens dose values for procedures performed before the years 2000; a correction factor of 2 to 4 was thus identified. Conclusion: This work suggests two methods to assess eye lens dose for retrospective epidemiological studies connecting lens opacities to eye exposure. Research funded by the DoReMi Network of Excellence. No Discolusres.

Changes in EC Directives and Impact on Presentation of Financial Statements in the Czech Republic

The EC 4th Directive has been in force since 1978, at least till 2001 without fundamental changes. Nearly the same history concerns the EC 7th Directive, firstly issued in 1983. Then new requirements, such as new disclosures and valuation rules, including provisions on fair value accounting, have been added. Less attention has been paid to considering whether existing requirements could be simplified or removed. Research studies confirm that amendments have tended to ignore the comparability and usefulness of the financial statements, increased reporting requirements and the number of Member State options. All these facts have ultimately, in the long run, led to increased complexity and regulatory burden for all companies. European Commission proposed to simplify the 4th and 7th Council Directives as regards financial information obligations and to reduce administrative burdens, in particular for SMEs. This article investigates impact of new Directives' financial reporting requirements on presentation of financial statements of companies those use local regulatory rules, which should comply with the Directive of June 26, 2013 repealing the 1978 and 1983 Directives and their subsequent amendments, in the Czech Republic. Conclusion from this article might be useful for practice as for the potential future changes in presentation of financial statements or researchers who find out similarities or differences between European accounting systems.

Holding to Account a Possible European Public Prosecutor Supranational Governance and Accountability Across Diverse Legal Traditions

The Lisbon Treaty provides a legal basis for the Member States of the European Union (EU) to establish a European Public Prosecutor (EPP) with competence to prosecute, in the courts of the Member States, crimes against the financial interests of the Union. Article 86 of the Treaty on the Functioning of the European Union, provides that the Member States may unanimously, or through flexible cooperation where nine Member States agree, establish such a European-level prosecution body, with the possibility for its powers to be extended by unanimity to include serious crime having a cross border dimension or affecting more than one Member State. Within the legal traditions of the Member States, means of holding prosecution authorities to account vary considerably. Probably the strongest form of accountability exists in the civil law tradition of Member States that permit appeals to judicial bodies for decisions not to prosecute, which contrasts with the traditional common law reluctance to even give reasons for not prosecuting. Similarly, the ways in which prosecution authorities interact or overlap with police functions, and thus with general mechanisms of police and/or bureaucratic accountability, differ. Some of the particular features of EU cooperation suggest additional accountability issues, notably, questions concerning competence spill-over and problems of remoteness. This paper seeks to address how to conceptualise governance and accountability of a possible EPP outside of the context of a trial (the latter entailing a type of open legal accountability that can be studied in its own right) and including the question of the definition of competences.

An Economic Analysis of the European Commission's Proposal for a European Account Preservation Order

This paper performs an economic analysis of the European Commission’s proposal for a European-wide preservation order. Bentham’s utilitarianism theory suggests that legislators must take into mind the pleasures and pains associated with any legislation and to form laws in order to create the greatest good for the greatest number. These ideas are reflected in the modern economic theories of welfare economics. But are these principles sufficient to create effective legal rules and achieve justice? Section 2 of this work analyzes the difficulties in obtaining a provisional measure to preserve another party’s assets in another Member State of the European Union (“EU”). Section 3 sets out the Commission’s proposal for a European Account Preservation Order (“EAPO”). Section 4 applies welfare economics principles in order to identify the effect of legal rules related to this proposal, while it proposes an alternative approach to these principles. Lastly, section 4 makes suggestions on the proposal based on this alternative approach.

Continental European accounting model and accounting modernization in Germany

Classification techniques based on one or few dimensions are widely used in research studies and textbooks to explain and predict the development of accounting systems internationally. However, their usefulness in international accounting has been limited in today's globalized world. For example, in the context of the EU, IFRS are required for consolidated accounting, while national accounting systems continue to be the dominant system for unconsolidated accounting in many countries. Using Germany as a case study, the objective of this paper is to examine whether Germany can still be classified within the Continental European model of accounting following the Act to Modernize Accounting Law (Bilanzrechts-modernisierungsgesetz — BilMoG), which was promulgated on May 29, 2009. This Act introduced some major reforms to the German Commercial Code (Handelsgesetzbuch — HGB), such as removing the close connection to tax rules and introducing new recognition and valuation regulations, which changed traditional principles of orderly accounting (Grundsätze ordnungsmäßiger Buchführung). As a result, the current German approach of financial reporting separates Germany from the traditional Continental European model of accounting and moves it somewhere on a spectrum between the traditional Continental European model of accounting and the Anglo-American model of accounting.

Towards European Accounting Law

In this paper the development of EU IFRS within the European Union is discussed. Listed companies based in one of the European Member States are to apply the IFRS as approved by the European Commission in their consolidated annual accounts. These accounting standards – the EU IFRS – form part of the European legal structure and are directly binding on such companies. But can they also be deemed to constitute accounting law? This may be questioned when testing the drafting process of the EU IFRS against the constitutional framework. Furthermore, there is a fragmented picture regarding the supervision and enforcement of compliance with the EU IFRS. There is room for improvement on both points.

European cities in the modern era, 1850-1914

In European Cities in the Modern Era, 1850-1914 Friedrich Lenger offers the first truely European account of Europe’s major cities in a period crucial for the development of much of their present shape and infrastructure.

An economic analysis of the European commission’s proposal for a European account

This paper performs an economic analysis of the European Commission’s proposal for a European-wide preservation order. Bentham’s utilitarianism theory suggests that legislators must take into mind the pleasures and pains associated with any legislation and to form laws in order to create the greatest good for the greatest number. These ideas are reflected in the modern economic theories of welfare economics. But are these principles sufficient to create effective legal rules and achieve justice? Section 2 of this work analyzes the difficulties in obtaining a provisional measure to preserve another party’s assets in another Member State of the European Union (“EU”). Section 3 sets out the Commission’s proposal for a European Account Preservation Order (“EAPO”). Section 4 applies welfare economics principles in order to identify the effect of legal rules related to this proposal, while it proposes an alternative approach to these principles. Lastly, section 4 makes suggestions on the proposal based on this alternative approach.

The Effects of Accounting Standards – A Comment

This paper brings together the comments made by the European Accounting Association's Financial Reporting Standards Committee to a discussion paper (DP) issued by European Financial Reporting Advisory Group/UK Accounting Standards Board (ASB). It analyses the content of the DP and then discusses what effects should be considered. It considers that all effects should be evaluated, irrespective of whether they normally fall within the standard-setter's purlieu, and provides a taxonomy of effects. It illustrates the difficulty of determining what effects should be considered by the standard-setter. The paper then discusses when effects should be reviewed. It agrees with the DP that effects need to be considered from inception of the project. It disagrees that the standard-setter should necessarily be responsible for all of the effects analysis. It argues that effects are likely to be different by geographical region and industry sector, and recourse should be had to national standard-setters and other organisations. While preparers may make representations about effects during the due process, these are not likely to be a representative sample. The paper suggests that in particular post-implementation reviews are better carried out independently. It observes that the DP does not address the practicalities of carrying out research in this area.