IFRS Accounting Research Articles

Changes in IFRS accounting policies in the European Union: a count data approach data approach

Changes in IFRS accounting policies in the European Union: a count data approach data approach

Inventories Accounting under US-GAAP and IFRS Standards: The Differences That Hinder the Full Convergence

This study purposes of understanding the existing differences between US-GAAP and IFRS accounting treatments of inventory. Given the 2015 FASB update, aimed at simplifying and aligning inventory accounting with IFRS standards, the research explores the introduced innovations. More specifically, the study, starting from a literature review and standards analysis, designs a theoretical framework aimed at facilitating the understanding of the differences still existing between the two accounting principles. Different from the prior works, we focus on the complex determination of the net realizable value in the case of input (e.g., raw materials) write-down. In particular, we show how the net realizable value (NRV) changes according to the value taken as a reference. The results of this analysis suggest that, based on a prudential valuation logic, the replacement cost is the best estimate for NRV.

원칙중심 IFRS와 규정중심 일반기업회계기준 특성: 차입원가 기준서를 중심으로

원칙중심 IFRS와 규정중심 일반기업회계기준 특성: 차입원가 기준서를 중심으로

Examination and control of the efficiency of enterprises operating within the health care sector

In the scope of our research, the efficiency of companies operating in the health care sector and the correlation between efficiency indicators and macroeconomic indicators were examined. One of the research questions is how the efficiency indicators of companies applying IFRS will develop during the analysed period. The other research question is whether and to what extent changes in individual macroeconomic indicators affect the efficiency of companies. It was an important consideration regarding the analysed companies that their consolidated annual statements are prepared in accordance with International IFRS. In addition, the selected sample was narrowed to companies of 5 countries within the European Union. The efficiency indicators of the companies were presented by creating quartiles and preparing descriptive statistics. When presenting the efficiency indicators, specifics of the IFRS accounting system depending on the content of the indicator were highlighted. Then it was examined, whether and to what extent the efficiency indicators are affected by the changes in macroeconomic indicators. This analysis was conducted using the Stata statistical system and applying random linear panel regression. As a result of the study, it can be concluded that the development of macroeconomic indicators has no effect on the efficiency indicators, their impact can only be measured in a complex sense.

The International Standards on Auditing as a convergence parameter between US GAAP and IFRS

The present study involves the US GAAP and IFRS accounting frameworks, and how these are evaluated by accounting professionals in four (4) European countries, two of which have been severely impacted by the global economic crisis (Greece and Portugal) and two that remained relatively strong during the period of the European economic crisis (France and Germany). The main purpose of the study is to point out that the economy of a country does indeed affect the perception of listed companies towards a potential convergence. The issues that arise are of interest of the global accounting and auditing community, as well as this study. Academic literature has not shown much interest in recent years. In contrast, the professional bibliography is very rich and has greatly enhanced the bibliographic review. The results of the quantitative study reveal that there are differences between the factors affecting a potential convergence at a country level, as well as at an economy level. Stronger economies seem to pay more attention to economic and regulatory factors, and weaker economies seem more reluctant towards coordination and cooperation in order for the convergence to be achieved.

International Differences in IFRS Policy Choice and the Persistence of Accounting Classification: The Case of China

This paper focuses on the application of IFRS standards in China. The research is mainly conducted on the basis of Kvaal and Nobes’s studies (2010) regarding the different ways that various countries apply IFRS and Nobes’s IFRS accounting classification system (2011). For companies that issued B shares, the use of IFRS in China lasted only until the 2006 ASBE (Accounting Standards for Business Enterprises) reform. The present study examines IFRS overt options in an attempt to 1) review the choices made by Chinese companies to discover – in light of the applicable PRC GAAP (Chinese Local Standards) requirement of that time – whether they were more or less likely to choose an option than the other countries analysed by Nobes & Kvaal; 2) rank China’s place within Nobes’s accounting classification system; and 3) rank China’ place, again in the Nobes’s model but also in light of a recent study based on BRICS (Note 1)countries (Sarquis, et al. 2014). The results of the statistical analysis confirm that Chinese financial statements display a “local” nature in their use of IFRS and that in its accounting tendencies, China belongs to the Continental European group rather than with the other BRICS countries.

Determinants of failure in Greek manufacturing SMEs

The globalization and the global financial crisis provide a new extremely competitive environment for small and medium sized enterprises (SMEs). During the latest years, the increased number of firms’ default has generated the need of understanding the factors of firms’ default, as SMEs in periods of financial crisis suffer from lack of financial resources and expensive bank lending. We use a sample of 3600 Greek manufacturing firms (9 Sectors), covering the time period of 2003-2011 (9 years). We run a panel regression model with correction for fixed effects in both the cross-section and period dimensions using as dependent variable the calculated Z-Score of each firm, and as independent variables several financial ratios, as well as the exporting activity and the use of International Financial Reporting Standards (IFRS Accounting Standards).We find that firms presenting higher performance in terms of ROA and sales and higher leverage levels that enhance their liquidity as well are healthier in terms of Z-score than their less profitable counterparts and acquire lower rates of probability of default: in other words, less risk. The results of the study can lead to policy implications for both Managers and the Government in order to enhance the growth of Greek manufacturing sector.

International Differences in Accounting Practices under IFRS and the Influence of the USA

This paper expands prior IFRS accounting systems’ classifications to a broader set of 27 countries where the IFRS adoption is a widespread practice, plus the United States of America (USA). The results suggest a classification distinguishing between three groups of countries, based on the similarity of their accounting practices: 1) Australia and New Zealand, 2) USA-influenced countries, and 3) South Africa, Oman and European countries. This study contributes to the literature not only by providing evidence of differences in accounting practices to a broader set of countries, but mainly by suggesting an economic explanation to the existence of accounting choices. In particular, the economic proximity to the USA may be an important factor influencing accounting practices in some countries even after the IFRS adoption.

Valuation: The State of the Art

There is a pervasive skepticism about formal valuation models, so much so that practitioners often discard them, preferring rough-cut methods such as pricing on the basis of comparables or simple P/E ratios. This paper provides a critique of standard valuation models, identifying what is being captured (and what is not being captured) in these models. The paper then strives to develop an agenda towards more robust valuation. It stresses three points. First, any valuation must be in accord with the well-established theory of finance. However, second, the valuation must also be practical. Both are important wedges in driving a solution. Third, valuation is a matter of accounting; a valuation model is only as good as the accounting that it involves. The last point is the basis for a critique of IFRS accounting.

Extending the Classification of European Countries by their IFRS Practices: A Research Note

This paper expands the IFRS accounting systems’ classification proposed by Nobes [(2011). IFRS practices and the persistence of accounting system classification. Abacus, 47(3), 267–283] to a broader set of European countries. The results suggest a classification distinguishing between four groups of European countries, and add to the evidence, reported by Kvaal and Nobes [(2010). International differences in IFRS policy choice. Accounting and Business Research, 40(2), 173–187] and Nobes (2011)., that pre-IFRS accounting differences influence the options adopted by firms. This study contributes to the literature suggesting that the widespread adoption of IFRS has not eliminated the differences between national accounting practices and that accounting systems classification did not lose its relevance.

The Case of Alcoa, Inc. (As of 2014).

Although Alcoa had various and better strategic options, its strategy during 2010-2013 was sub-optimal and didn’t result in sustainable growth. Alcoa’s decisions and misconduct could have resulted in Deadweight Losses (in both the prices of Aluminium and in Alcoa’s stock prices) and reduced Social Welfare (in terms of increased uncertainty; adverse effects of the stock market; prices of Aluminium; employee morale; and the adverse effects of Alcoa’s litigation strategy on its customers, suppliers, shareholders and employees). This article: i) reviews the earnings management, asset quality management and poor strategic decision making perpetrated by Alcoa during 2010-2013; ii) provides evidence of Regulatory Failure (Alcoa’s corporate governance problems illustrate the weaknesses of “Fair value” accounting, IFRS accounting standards, the Sarbanes Oxley Act, the US FSOC’s “Non-financial SIFI criteria and the Dodd Frank Act); and iii) introduces new theories; iv) summarizes key factors that may affect companys’ receptiveness to corporate venturing proposals.

PROBLEMATICKÉ ASPEKTY UKAZATELE EKONOMICKÉ PŘIDANÉ HODNOTY V PODMÍNKÁCH ČR

The EVA indicator has been constructed in the recent past as a reaction to requirements of the new economic environment. As the EVA indicator has been introduced by Stewart Stern & Co. in the early nineties, past two decades many economists have been discussing the pros and cons of EVA application as well as various adjustments needed to calculate some relevant result. A range of attitudes to the adjustments to accounting data towards economic data exist there. As the indicator of economic value added is considered to be a criterion of company’s real economic performance it is necessary to be very careful at applying encouraged adjustments. In this article, the authors compare and discuss these adjustments advised in order to reach some ideal number. Accounting differences of US GAAP, IFRS and Czech Accounting Standards are taken into consideration.

IFRS framework-based case study: DaimlerChrysler – Adopting IFRS accounting policies

Abstract This instructional case applies a framework-based approach to explore the concept of comparability in financial reporting and retrospective application of new accounting policies. The DaimlerChrysler (DC) case provides an opportunity for you to research key financial reporting concepts, analyze accounting policy differences between U.S. GAAP and IFRS, determine adjustments necessary to convert financial statements from U.S. GAAP to IFRS, and compute and discuss key ratio impacts following financial statement conversion. This case demonstrates that transitioning to IFRS is more than an accounting issue; it provides opportunities for financial restructuring (e.g., Daimler’s amendments to pension plans and its 2007 sale of Chrysler). It also illustrates the importance of professional judgment when initially adopting IFRS accounting policies. Also, despite FASB and IASB convergence efforts, you learn that most of the key differences between U.S. GAAP and IFRS identified in DC’s reconciliations continue today. This case helps you to: (1) develop skills to interpret and apply the requirements on first-time adoption of IFRS to a real-world setting; (2) research key differences between U.S. GAAP and IFRS and their effects on the financial statements and ratios; and (3) understand significant impacts of the transition to IFRS on businesses and financial statements. Completing the case develops your critical thinking and research/technological skills.

Accounting principle choice by ADR firms and auditors' fees

This paper examines whether ADR issuers, selecting US GAAP, IFRS, or home-country accounting principles for the preparation of financial statements accompanying the Form 20-F filing, are paying different auditors’ fees. We employ the Heckman Probit decision choice model and two-stage OLS correction to estimate the impact of selection of Form 20-F accounting standards upon ADR firms periodic auditors’ fees. We find that firms choosing to present US GAAP financial statements incur the highest auditors’ fees, while firms choosing to present IFRS financial statements accompanying the Form 20-F filing incur the second largest auditors’ fees. They also find that ADR firms incur significantly greater costs (associated with Form 20-F filings) than non-US firms opting not to list on the major US stock exchanges in order to improve comparability with other firms listed on the major US exchanges.

US GAAP Conversion To IFRS: A Case Study Of The Cash Flow Statement

International Reporting Standards (IFRS) has become the required framework for most of the world financial market economies as of January 1, 2011. This includes, in a non-comprehensive listing, the many European Union countries - Canada, Australia and New Zealand. In the United States, US Generally Accepted Accounting Principles (GAAP) is still required. However, plans are presently in place by the SEC to abandon US GAAP and to adhere to IFRS requirements by as early as for the period ending December 31, 2014. As such, it is important to introduce IFRS accounting rules in the college curriculum and make it a major component of accounting classes. This case study takes a US GAAP Prepared Cash Flow Statement and, based on the facts of the case, requires students to prepare an IFRS-based Cash Flow Statement. The need to understand both US GAAP and IFRS rules is required to adequately address this case study, which is most suitable for an Intermediary Accounting, Accounting Theory and a Financial Statement Analysis class, as well as an Investment Finance course, at the graduate level.

Новые балансовые уравнения учёта по МСФО и РСБУ

Новые балансовые уравнения учёта по МСФО и РСБУ

A Comprehensive Case Study: US GAAP Conversion to IFRS

International Reporting Standards (IFRS) has become the required framework for most of the world financial markets effective on January 1, 2011. The United States is in a transformation stage, and it has not yet been determined when the US will adopt IFRS. The introduction of IFRS accounting rules into the curriculum is valuable because it presents an alternative method of accounting which can be used to heighten students understanding of GAAP. At present, the CPA Uniform CPA exam is testing IFRS and its testing content is increasing with each current test. Additionally, the CFA exam tests IFRS exclusively and has eliminated US GAAP from its curriculum, basing its action on the fact that the CFA examination is a global based exam. This case requires students to critically read authoritative accounting literature and apply their understanding in preparing IFRS statements by preparing an IFRS based statements from a US GAAP prepared income statement and balance sheet. This case study can be used at the undergraduate or graduate level. It is most suitable for Intermediate Accounting 2, Accounting Theory, International Accounting, Financial Statement Analysis, or an Accounting Capstone classes. Students must have or develop a solid understanding of both US GAAP and IFRS rules is required to adequately address this comprehensive case study.

Determinants Influencing the IFRS Accounting Policy Choices of European Listed Companies

In this paper we investigated whether or not European listed companies make use of the options offered by the IFRS and if so, which determinants influence these choices and how this affects the de facto comparability of European IFRS financial statements. We analysed the choices of 197 companies from Belgium, Denmark, Finland, France, Germany, the Netherlands and the UK operating in the industries industrial goods and services, financials or technology. We investigated the effect of country, industry, company size, capital structure and the type of auditor on 31 options offered within the IFRS. We found that nine options are rarely used differently. Most options (22 out of 31), however, are used differently. The accounting choices are predominantly influenced by the country of origin, followed by industry and type of auditor. Company size and capital structure do not seem to play an important role. Overall, we found that the European IFRS financial statements are not de facto comparable yet. The contribution of the study is threefold: we identify the options that are not or rarely used and thus could be removed in order to simplify the IFRS, we offer insight into the determinants affecting accounting policy choices made by companies, and we mitigate the idea of de facto comparability of European IFRS financial statements.

Relevance of Differences Between Net Income Based on IFRS and Domestic Standards for European Firms

We find that the adjustments to net income resulting from mandatory 2005 adoption of IFRS in Europe are relevant to investors in financial as well as non-financial firms. However, we find differences in value relevance of the aggregate net income adjustment and adjustments relating to several individual IFRS standards for these two types of firms and across major country groups, which suggests that differences in institutional features or domestic standards can affect investors’ assessment of the relevance of IFRS accounting amounts. Despite these differences, we find that investors in all firms, except French/German non-financial firms, view net income measured in accordance with IAS 39 Financial Instruments: Recognition and Measurement as more value relevant than net income measured in accordance with domestic standards, which is notable because IAS 39 was highly controversial in Europe.

Stock market synchronicity – an alternative approach to assessing the information impact of Australian IFRS

AbstractHow has the mandatory adoption in 2005 of International Financial Reporting Standards in (IFRS) affected information flow for investors in Australia? This paper investigates impact by examining synchronicity issues. Morck et al. (2000) label the degree to which stock prices depend upon market and industry wide information as market synchronicity, and the degree to which they reflect firm specific information as idiosyncratic dependency. Increased synchronicity can signal several events, including a loss of confidence in firm specific accounting data, reduced transparency, or evidence of a greater degree of cross sectional comparability. We develop and test three theoretical models on the impact of IFRS and find a general decrease in synchronicity in the first two post‐IFRS years, followed by a reversion to a significantly higher level in later years. Further tests reveal lower analyst forecast earnings errors post‐IFRS. Results provide restrictive support for the International Accounting Standards Board contention that IFRS accounting provides higher specific and comparable information content – at least for sophisticated financial analysts.