International Standard Setting Research Articles

FATF and Lawyers’ Obligations under the AML/ATF Regime in Malaysia

Abstract The Financial Action Task Force (FATF) as an international standard-setter and an inter-governmental body established in 1989 and has set various measures consisting of legal, regulatory and operational ones in governing money laundering and terrorism financing. Given the threats of such crimes and the vulnerabilities of some professions and businesses to such crimes, in 2003 the FATF included them under the AML/CFT regime. Since then, those professions and businesses became the gate-keepers and known as the designated non-financial business and professions (DNFBPs). As a consequence of such inclusion, several mandatory obligations were imposed on these gate-keepers, involving customer due diligence, record-keeping, reporting obligation, the compliance function and training programme for employees. It is within this context that the objective of this paper is to examine the extent to which the FATF is moulding the AML/CFT regime in Malaysia, which in turn, is shaping the compliance of legal profession, who now have to “police” their clients for evidence of money laundering and terrorist financing. The authors contend that the gate-keeping role of the legal practitioners inevitably raises controversial issues involving the violation of ethical conduct, professional legal privilege and also the independence of the legal profession.

Studying information content of operating cash flow in disclosure method

Disclosure of operating cash flow in different ways (direct and indirect ways), there has always been a contradiction between the standard policy makers and academic literature on the one hand and the practice of the accounting profession on the other hand. Iran's Accounting Standard No. 2, consistent with SFAS 95 in the U.S., IAS 7 in sets of international accounting standards and standard of FRS 1 in the UK, considers direct way disclosure of operating cash flow the most useful method. However, the accounting profession and in practice, the indirect method is the predominant method. In this study, we tried to compare the informative content of both disclosure of cash flow method using data for 14 member companies in Tehran Stock Exchange (the period of 1998 till 2011). Hypothesis test results showed that in general the direct method can better predict future operating cash flow. However, the indirect method of regression model in firms that have low debts have a better predictive power, On the other hand, companies with high organizational complexity, companies with a high return on assets and also companies with increased liabilities, the information content of both direct and indirect regression

Regards and Views toward International Accounting Standards Setting: A Critical Examination and Discussion

Accounting information is the basis for the stakeholders who take different economic decision time to time by assessing those accounting information reported by the business organization. That’s why; international accounting standard setting committee aims to protect the interest of the stakeholders by formulating a high-quality reporting standard. But this standard setting process is hindered by many external lobbying groups like government, political, economic and corporate group because there are the agency and other problems. This study aims to examine and discuss the theoretical and conceptual frameworks like different approaches and theories like a free market and regulatory approach. Moreover, it is still a debate whether free market or regulatory approach ensures the interest of the stakeholders more. However, this study identifies that standard setting process should be a holistic approach that should protect the interest of not only the stakeholders but also the organization.

An analysis of the determinants of corporate governance disclosure policies in multinational enterprises: A multi- medium study

This research aims to identify the factors underlying the corporate governance disclosure policies of the world’s largest multinational companies (MNCs) based on the following: (1) national factors related to the MNCs’ home countries (2) governance factors related to their governance systems and (3) operational factors arising from the operational characteristics of the MNCs. Methodology – Our sample includes 159 MNCs from 24 countries representing three geographic regions. The corporate governance disclosure policy is examined in terms of level and quality of disclosed information in two different mediums (traditional i.e .paper vs. websites). Results – Multiple linear regressions indicate that national factors, especially cultural ones, are important determinants of MNCs corporate governance disclosure policy in the traditional print mediums. National factors, however, seem to play no part in governance disclosures on the internet but can rather be explained by the international MNCs listing status. Practical implications – This study could guide the harmonization efforts of international standard setters in identifying factors leading to different governance disclosure behaviors and the disclosure medium most influenced by these factors.

Standard Essential Patents on Low-Cost Mobile Phones in India: A Case to Strengthen Competition Regulation?

The realization of the promise of the sub hundred dollar mobile device as a facilitator of access to knowledge is contingent inter alia on its availability in the market place. In turn, the market availability of the sub hundred dollar mobile device is influenced by the existence of an enabling environment for producers to produce, and consumers to consume. From a regulatory perspective, the enabling environment itself is a function of existing laws and policies, and the ‘developmental effects’ of certain laws and policies (Saraswati, 2012). This article seeks to examine one such legal and policy lever and the role of a regulator in the development of an enabling environment for access to sub hundred dollar mobile devices. This paper is founded on four assumptions: first, that access to sub hundred dollar mobile devices is influenced by their price; second, that the question of access necessitates conversation between the intellectual property regime and several other actors, sites and tools; third, that one of the fundamental goals of regulatory reform is the creation of a ‘stable, open and future- proof environment’ (Guermazi and Satola, 2005) that encourages access to these devices; and fourth, that there exist public law implications of intellectual property that justify the involvement of State actors and regulators in matters that may arise out of private transactions. This article will examine whether there is a role to be played by competition law in this narrative of innovation, intellectual property and access to sub hundred dollar mobile devices. In light of increasing litigation around standard essential patents, and the inability of FRAND and International Standard Setting Organizations to find a comprehensive solution, this paper will question the efficacy of competition law as an ex post solution to a problem that might be better addressed by ex ante regulation from a specialized body. In an attempt to address these questions, this article will examine the role of the Competition Commission of India and the Indian Judiciary. Orders of the Competition Commission will be studied from its inception till March, 2015, in order to draw conclusions about the role that the Commission identifies for itself and the nature of disputes it adjudicates. This article will also examine the role of similarly placed institutions in the United States of America as well as some member states of the European Union. It will be argued that while Competition Law might address some of the issues arising out of litigation around standard essential patents, and might be a tool to increase access to sub hundred dollar mobile devices, its efficacy as a long term solution in light of its nature as an ex post solution, is questionable. Consequently, it might be prudent to have a conversation leaning towards exante regulation of the market place by a specialized regulator.

Complex Fair Value Measurements and Material Weaknesses: It's Not All Bad News

U.S. and international regulators and standard setters have criticized companies and audit firms for failing to establish and audit internal controls for complex fair value measurements (FVMs). In this study, we examine the association between FVMs and the likelihood of reporting a material control weakness, as well as settings in which this association may be reduced. We find that companies with FVM portfolios concentrated in Level 2 and Level 3 FVMs are more likely to report material weaknesses, confirming regulators’ concerns that the FVMs are associated with lower financial reporting quality. However, we do not find this association for large companies, clients of audit firm industry experts, or clients of audit firms with FVM-specific expertise. These results suggest that despite the inherent complexity of Level 2 and Level 3 FVMs, company- and auditor-specific characteristics can impact companies’ abilities to create an effective internal control structure around some FVMs.

Into the Abyss of Standard-Setting: An Analysis of Procedural and Substantive Guarantees within ISO

Continuous innovation and a growing consumer demand for better and safer products has led to an increase of technical standards in recent years. The World Trade Organization (WTO) exercises a high level of deference towards international standards, requiring their use. However, practice shows that several international standards are adopted through opaque and exclusionary processes. In line with this observation, in its recent US-Tuna II ruling, the Appellate Body adopted a more critical approach regarding international standards. Against this backdrop, this paper focuses on an analysis of the properties and mechanics of international standard-setting processes within the International Organization for Standardization (ISO), discussing procedural and substantive guarantees regarding transparency, openness, deliberation and participation. As the WTO becomes the de facto arbiter of the legitimacy of international standards, much-needed institutional reform in international standard-setting is bound to occur, in line with emerging demands for a more inclusive global legal order.

Comments on “The Regulation of the Banking Sector in Developing and Emerging Countries”

Thank you for the opportunity to comment on this interesting paper by Mr. Michel Camdessus, the former managing director of the International Monetary Fund (IMF). His paper reviews the financial regulatory response to the emerging market crises of the 1990’s, culminating in the creation of the Financial Stability Board in the late 1990’s, and the role of the Bretton Woods institutions in fostering global financial stability through international coordination and standard setting. He then draws lessons learned from this regulatory response for financial reform today and identifies shortcomings of the existing regulatory framework. In particular, he draws three lessons from the emerging market crises:

Mining-induced displacement and resettlement: a critical appraisal

Abstract Physical displacement, relocation and resettlement are widely acknowledged as posing enormous social risk. For over four decades, scholars, campaigners and project-affected people have sought to highlight the effects of development-induced displacement and resettlement (DIDR). Increasingly, the generic set of international standards that are used to manage cases of DIDR are being tested by the unique challenges posed by mining-induced displacement and resettlement (MIDR). In this article the authors provide a critical appraisal of current thinking and practice relating to MIDR. Findings indicate that MIDR is largely characterised by factors that occur in 'brownfield' project scenarios; even when the initial displacement commences in otherwise 'new' mining developments. The article identifies five critical and distinguishing factors associated with MIDR. These factors are explored in light of contemporary policy debates surrounding the mining industry, including 'consent', 'negotiated agreements' and overall effectiveness of existing social safeguards in regulating industry practice.

Feature-Weighted Local Support Vector Machine of Particle Swarm Optimization

Local support vector machine gives the feature same weight in classification. In fact, many datasets have some weak or irrelevant features related to the classification. Thus giving features same weight may reduce the classification accuracy of local support vector machine.This paper puts forward a new local support vector machine that the feature weight is optimized by PSO (Particle Swarm Optimization), it is tested on the international standard UCI data sets and the images of tree taxonomy data sets, the results show that the accuracy of the algorithm we proposed is better than the general local support vector machine.

Relevant International Standardss and Recognized Standardization Bodiess under the TBT Agreement

Owing to innovations and a growing consumer demand for better and safer products, the number of technical standards has been steadily increasing in recent years. As standardization is a major catalyst to global commerce, The World Trade Organization (WTO), a typical consensus-driven organization, exercises a high level of deference towards technical rationality as expressed through international standards. The WTO Agreement on Technical Barriers to Trade (TBT) even requires WTO Members to use relevant international standards and presumes compliance with the TBT when such standards are used. Nonetheless, practice shows that several international standards are adopted through processes which do not appear to respect the fundamental tenets of transparency and due process. Representativeness and inclusiveness are not guaranteed in several international standard-setting bodies (ISSBs) and power politics seem to prevail over good governance practices. Through recourse to negotiating history and case-law, this paper aims to analyse the origins of the WTO approach vis-a-vis standards and examine, from a normative perspective, what procedural and substantive guarantees an international standard and an international standard-setter will have to comply with in a era of increased legalization of international rule-making. Conceptually, the paper aims at the tentative identification of an analytical framework that would lead to a gradual democratization of international standardization.

CHALLENGES IN COMBATING THE CYBER CRIME

The modern society today faces with the greatest achievements of technical and technological development, associated by rapid expansion of information technology and automation of work activities in all social life spheres. Such development in modern society has brought a large number of facilities on one side while, on the other side the presence of deliberate misuse of this technological achievement has also created a number of problems and risks towards individuals and groups in the society in general and national safety in particular. The approach how criminals (offenders) commit crimes has changed. Digital general approach has opened new opportunities for unscrupulous behavior. Millions of euros have been lost by businesses and customers from the use of computers as part of the commission of the crime. Computers and different networks can be used to attack victims or to prepare global violent acts such as terrorist particular among other. In absence of technology and trained personnel to deal with this new threat known as cybercrime, the security agencies are challenged by specialized cyber offenders which are known as hackers because apart from managing to break into state institution websites they are able to have unauthorized access to information classified as state secret and top-secret. Due to the global nature of computer crime, the general action in preventing and combating this type of crime, consists on building bridges of cooperation and coordinated action of all countries, and in this case of Kosovo in order to set international standards in the field of defense and security of information systems which standard would guarantee the success of a sustainable national perspective in combating threats from cybercrimes. In this paper, among others I will present the global aspect of cybercrime, the legal infrastructure defining cybercrimes and their forms, in, the role of security institutions in combating crime in general with particular focus on tackling cyber challenges, current threats and future threats related to cybercrimes, recommendations to combat these crimes, etc. DOI: 10.5901/mjss.2014.v5n19p592

Feature selection algorithm based on bare bones particle swarm optimization

Abstract Feature selection is a useful pre-processing technique for solving classification problems. As an almost parameter-free optimization algorithm, the bare bones particle swarm optimization (BPSO) has been applied to the topic of optimization on continuous or integer spaces, but it has not been applied to feature selection problems with binary variables. In this paper, we propose a new method to find optimal feature subset by the BPSO, called the binary BPSO. In this algorithm, a reinforced memory strategy is designed to update the local leaders of particles for avoiding the degradation of outstanding genes in the particles, and a uniform combination is proposed to balance the local exploitation and the global exploration of algorithm. Moreover, the 1-nearest neighbor method is used as a classifier to evaluate the classification accuracy of a particle. Some international standard data sets are selected to evaluate the proposed algorithm. The experiments show that the proposed algorithm is competitive in terms of both classification accuracy and computational performance.

International Banking Standards, Private Law and the European Union

Over the past decades, but especially since the 2008 global financial crisis, there has been a proliferation as well as an intensification of international regulatory processes regarding the activities of banks: this goes from the work of the Basel Committee on Banking Supervision on prudential supervisory standards to the activities of the OECD-based Financial Action Task Force (FATF) on money laundering, the negotiations within the World Trade Organization (WTO)’s General Agreement on Services (GATS) regarding financial services, and the more recent work of the Group of 20 (G20) and the Financial Stability Board (FSB) on issues as diverse as credit rating agencies and systemically important financial institutions. In all of these bodies, the European Union (EU) is involved, though often on a different institutional basis, going from full membership to observer status; some bodies count all EU Member States among their members whereas others are more limited in membership. This contribution looks into the role which the EU plays in this area of standard setting for international banking activities, in particular those norms that can broadly be characterized as ‘regulatory private law’, thereby bringing together both dimensions of ‘EU external relations law’ and ‘private law’. First of all, it is explored how the EU engages in practice within the international banking standard setting processes concerned. It then turns to the impact of international banking standards on internal EU law- and policy-making in a number of chosen areas. The paper attempts to assess the influence which the EU exercises – partly through exporting its own regulatory agenda/acquis - on international law- and policymaking in this area.

Is the Adoption of IFRS for SMEs an Added Value for the Financial Reporting in Albania?

SMEs play a vital role in the economy of a country. As in the other European countries, in Albania the SMEs represent over 97 % of entities registered in the commercial register. The importance and their contribution to the economy of a country made possible that the international standard setting body, IASB, to devote a special attention to those developing a specific standard aimed to reduce the reporting burdens on these entities. IFRS for SMEs, published in July 2009, it is not mandatory but the adoption of this standard remains a challenge for every country of the world. Most of European countries are still conservative deciding in favor of the application of this standard as prefer their local standards for SMEs. Albania also has its own local accounting standards for such entities, but in circumtances when it aspires to become an EU country, aims to increase foreign investment and tries to incourage doing business in Albania, the adoption of IFRS for SMEs remains a very important decision. The purpose of this paper is to assess whether the adoption of IFRS for SMEs is an added value for financial reporting in Albania. The conclusion will be reached through the evaluation of capability of preparers of financial statements of SMEs, the needs of users of SME financial statements and thecost / benefit analysis. DOI: 10.5901/ajis.2014.v3n3p371

General approach to the IFRS and US GAAP convergence

Two most significant organizations in the field of financial reporting regulation setters in the world – the Financial Accounting Standard Board (FASB) and the International Accounting Standards Board (IASB) have recognized that in order international capital markets to function properly, a single set of high-quality international accounting standards designed especially for listed companies around the world must exist. The effort should be especially aimed at spreading the IFRS around the world and the FASB – IASB Convergence. The most significant difference between the US GAAP and IFRSs is in the area of the general approach. The IFRSs are based on basic accounting principles with limited application guidance, US GAAPs are based especially on rules with specific application guidance. The main objective of this work is to assist in the development of an improved common conceptual framework that provides a sound foundation for developing future accounting standards.The structure of the paper is divided into three parts. The theoretical background presents the historical development of the IAS/IFRS and US GAAP convergence efforts in general. The second part of the paper is aimed at the comparative analysis of conceptual frameworks (the IAS/IFRS and US GAAP). At the end, based on the results of the comparative analysis, the basic principles for a common conceptual framework, which should be applicable, are clarified. The paper uses the standard methods of scientific work. Firstly, the method of description is used to describe the development in the area of IAS/IFRS and US GAAP convergence. Then, a comparative analysis is used to discuss the differences in the position a principles of conceptual frameworks the IAS/IFRS and US GAAP. At the end the method of synthesis, deduction and induction is used.

Do Critical Audit Matter Paragraphs in the Audit Report Change Nonprofessional Investors' Decision to Invest?

SUMMARY: Both U.S. and international standard setters have recently proposed changes to the standard audit report, including a requirement to include a critical audit matter (CAM) paragraph. We examine how nonprofessional investors react to an audit report's CAM paragraph that is centered on the audit of fair value estimates. We perform an experiment with nonprofessional investors who are business school graduates who invest in individual stocks and analyze company financial data. We find that investors who receive a CAM paragraph are more likely to change their investment decision than are investors who receive a standard audit report (an information effect) or investors who receive the same CAM paragraph information in management's footnotes (a source credibility effect). We also find that the effect of a CAM paragraph is reduced when it is followed by a paragraph offering resolution of the critical audit matter. Our findings should be of interest to regulators and standard setters as they consider the feasibility of CAM paragraphs and whether and how to convey the resolution of critical audit matters.

A opinião do normatizador importa?: análise do impacto da divulgação da carta do IASB nos retornos das ações dos bancos europeus com exposição em títulos gregos

Este estudo investiga se há evidências de que a carta emitida e divulgada ao mercado pelo normatizador contábil internacional, o International Accounting Standards Board (IASB), alertando sobre a inadequação da contabilização dos títulos de dívida soberanos de alto risco, apresentou conteúdo informacional e causou alterações nos preços das ações de bancos da Alemanha, Espanha, França, Itália e do Reino Unido, que possuíam títulos gregos em suas carteiras. Esta análise revela-se importante, pois esta foi a primeira vez que o IASB se posicionou sobre a adequação das demonstrações financeiras publicadas às normas internacionais de contabilidade (International Financial Reporting Standards - IFRS). Para a implementação da análise foi identificada como data do evento o dia da divulgação pública da carta pela mídia especializada. Apesar de a carta ter sido publicada em 30 de agosto, ela é datada de 04 de agosto de 2011 e, segundo o IASB, só veio a ser divulgada neste dia, pois, no dia anterior (29 de agosto de 2011), o Financial Times havia noticiado reportagens sobre as preocupações do IASB acerca das inadequações contábeis que estavam ocorrendo no mercado. Para avaliar o impacto do evento foi utilizada a medida de Retorno Ajustado pelo Mercado e, através de uma abordagem de diferença em diferença, foi possível testar o efeito da interação entre o tempo após a data do evento e o grupo de tratamento (bancos que possuíam títulos do governo grego). Para esse teste foi realizada uma regressão para cada janela de evento, sendo aplicado o método dos Mínimos Quadrados Ordinários (MQO) com dados agrupados (pooled data). Os resultados mostraram que há evidências de que a opinião do normatizador é relevante, ou seja, que a carta do IASB impactou o retorno das ações dos bancos que possuíam títulos do governo grego no período analisado.

Introducing the Institute of Physics in Engineering and Medicine (IPEM)

Introducing the Institute of Physics in Engineering and Medicine (IPEM)

Introducing the Institute of Physics in Engineering and Medicine (IPEM)

Introducing the Institute of Physics in Engineering and Medicine (IPEM)