COMPARATIVE INTERNATIONAL ACCOUNTING - GBV

Eleventh Edition

COMPARATIVE INTERNATIONAL ACCOUNTING Christopher Nobes and Robert Parker

Financial Times Prentice Hall is an imprint of

Harlow, England • London • New York • Boston • San Francisco • Toronto Sydney • Tokyo • Singapore • Hong Kong • Seoul • Taipei • New Delhi Cape Town • Madrid • Mexico City • Amsterdam • Munich • Paris • Milan

Contents Contributors

xvi

Preface

xvii

Part I SETTING THE SCENE

1 5 ,itroduction

3

Contents Objectives 1.1 1.2 1.3 1.4 1.5

3 3

Differences in financial reporting The global environment of accounting The nature and growth of MNEs Comparative and international aspects of accounting Structure of this book

Summary References Useful websites Questions

4 5 15 18 22 '

24 24 26 26

Causes and examples of international differences

28

Contents Objectives

28 28

j

2.1 Introduction 2.2 Culture 2.3 Legal systems 2.4 Providers of finance * 2.5 Taxation ~ 2.6 Other external influences 2.7 The profession 2.8 Conclusion on the causes of international differences 2.9 Some examples of differences

29 29 32 33 37 39 40 41 42

Summary References Questions

50 51 54

VII

Contents

3 International classification of financial reporting

55

Contents Objectives 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11

55 56

Introduction The nature of classification Classifications by social scientists Classifications in accounting Extrinsic classifications Intrinsic classifications: 1970s and 1980s Developments related to the Nobes classification Further intrinsic classification Is there an Anglo-Saxon group? Classification in an IFRS world A taxonomy of accounting classifications

56 57 57 59 60 64 70 . 71 73 73 74

Summary References Questions

75 75 77

4 International harmonization

79

Contents Objectives

79 79

4.1 4.2 4.3 4.4 4.5

80 81 84 93 96

Introduction Reasons for, obstacles to measurement of harmonization The International Accounting Standards Committee Other international bodies The International Accounting Standards Board

Summary References Useful websites Questions

100 101 103 104

Part II FINANCIAL REPORTING BY LISTED GROUPS i_

_____

„..

„___

i

______

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5 The context of financial reporting by listed groups

VIM

\ _„

__

I

107

Contents Objectives

107 107

5.1 5.2 5.3 5.4

108 108 110 113

Introduction Adoption of, and convergence with, IFRS IFRS in the EU IFRS/US differences

Contents

5.5 5.6 5.7

US convergence with and adoption of IFRS Reconciliations from national rules to US CAAP or IFRS Introduction to international financial analysis

Summary References Useful websites Questions

6 The requirements of International Financial Reporting Standards

117 119 120 122 123 125 125

126

Contents Objectives

126 127

6.1 Introduction 6.2 The conceptual framework and some basic standards 6.3 Assets 6.4 Liabilities 6.5 Group accounting 6.6 Disclosures

127 129 135 139 140 142

Summary References Further reading Useful websites Questions Appendix 6.1 An outline of the content of International Financial Reporting Standards

143 143 144 144 144

7 Different versions of IFRS practice

145

155

Contents Objectives

155 155

7.1 7.2 7.3 7.4 7.5

155 156 158 164 165

Introduction Motivations for different IFRS practice Scope for different IFRS practice Examples of different IFRS practice Implications „

Summary References Questions

8 Financial reporting in the United States Contents Objectives

166 166 167

168 168 169

IX

Contents

8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9

Introduction Regulatory framework Accounting standard-setters The conceptual framework Contents of annual reports Accounting principles Consolidation Audit Differences from IFRS

169 170 174 178 181 186 192 195 196 198 198 200 200 200

Summary References Further reading Useful websites Questions ;

9 Key financial reporting topics

201

Contents Objectives

201 201

9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9

202 202 204 206 210 214 218 223 224

Introduction Recognition of intangible assets Asset measurement Financial instruments Provisions Employee benefits Deferred tax Revenue recognition Comprehensive income

226 227 228

Summary References Questions

10 Enforcement of financial reporting standards Contents Objectives 10.1 10.2 10.3 10.4 10.5

;'

Introduction Modes and models of enforcement United States European Union West Pacific rim

Summary References Useful websites Questions

229 229 229 229 230 234 235 241 243 244 245 246

Contents

1 1 Political lobbying on accounting standards - US, UK, and international experience Contents Objectives

247 247 247

11.1 Introduction 11.2 Motivations for political lobbying 11.3 Political lobbying up to 1990 11.4 US political lobbying from 1990 11.5 Political lobbying of the IASC/IASB 11.6 Preparer attempts to control the accounting standard-setter 11.7 Political lobbying of the FASB's convergence with the IASB 11.8 Some concluding remarks Summary References / Useful websites Questions

248 250 252 262 265 270 272 274 275 275 277 277

|Part til HARMONIZATION AND TRANSITION IN EUROPE | AND EAST ASIA 12 Harmonization and transition in Europe

281

Contents Objectives 12.1 Introduction 12.2 Harmonization within the European Union 12.3 Transition in Central and Eastern Europe Summary References Useful websites Questions

281 281 282 282 288 297 298 300 300

13 Harmonization and transition in East Asia

302

Contents Objectives 13.1 13.2 13.3

Introduction japan China

,