Do Harmonised Accounting Standards Lead to Harmonised

The objective of this paper is to investigate the level of harmonisation for IAS 39 Financial Instruments: Recognition and Measurement and to identify if different levels of harmonisation are associated with company-specific factors. Based on Rahman et al. (2002), we used the Jaccard (JACC) index to determine the level of harmonisation between IAS 39 and the financial reporting practice of a broad-based sample of European-listed companies in 2005.We applied regression analysis to identify companies’ specific characteristics that affect the level of convergence of the reporting practice of financial instruments. The results of this study show a high level of harmonisation between accounting practices of European companies included in our sample and IAS 39

Transition to IFRS and compliance with mandatory disclosure requirements: What is the signal?

The present study examines 153 Greek listed companies' compliance with all IFRS mandatory disclosure requirements during 2005 and complements and extends prior literature in the following way. The unique setting i.e., measuring compliance with IFRS mandatory disclosure requirements during the first year of IFRS implementation, allows for examination of the possibility that the changes in the 2004 shareholders' equity and net income, as a result of the adoption of IFRS, constitute explanatory factors for compliance. Thus, this study hypothesises that, in addition to the financial measures and other corporate characteristics that prior literature identifies as proxies for explaining compliance, a significant change in fundamental financial measures, because of the change in the accounting regime, may also explain compliance based on the premises of the relevant disclosure theories. The findings confirm these hypotheses. This study also makes a methodological contribution on measuring compliance with all IFRS mandatory disclosure requirements by using two different disclosure index methods and pointing out the different conclusions may be drawn as a result

Disclosure of provisions for decommissioning costs in annual reports of oil and gas companies: a content analysis and stakeholder views

This study examines the extent of compliance with accounting disclosure requirements relating to provisions for decommissioning costs by oil and gas companies. We also investigate the views of stakeholders on the reporting practices of these companies. Using a content analysis approach, our findings reveal that compliance is substantially high, but companies tend to take a tick-box approach providing only minimum disclosure requirements. In semi-structured interviews, we find that disclosure decisions were driven by concerns about the credibility of information due to complexities in the accounting processes, regulatory requirements, lack of information demand and proprietary costs. These findings have policy implications

Accounting for extractive industries: has IFRS 6 harmonized accounting practices by extractive industries? [forthcoming]

Accounting for extractive industries has historically been practiced by one of a number of methods: successful efforts, full costing, area of interest, appropriation and reserve recognition accounting. The choice of method adopted leads to different accounting figures. The difference in the treatment of the costs leads to different accounting figures being reported in the financial statements of extractive companies. This makes the “tell it like it is” criteria of accounting functioning differently making it difficult for stakeholders to make like with like comparisons for decision making purposes. These difficulties culminated into the release IFRS 6: an international financial reporting standard for the extractive industries, to help harmonise the accounting practice. This paper, through content analysis of 122 annual reports of upstream oil and gas companies from around the world, investigates the role of IFRS 6 in harmonising accounting practices by extractive industries. Our analysis identifies 7 types of companies, these differ in their compliance with the IFRS 6. Hence, we conclude that the IFRS 6 has made some success in harmonising accounting treatments of exploration and evaluation expense. However this is a limited success and more needs to be done in order to achieve wider harmonisation for the extractive industries

Determining Factors of the Level of Disclosure of Information on Business Combinations with the Entry into Force of the Accounting Standard CPC 15

This paper aimed to investigate information disclosure on business combination transactions that took place in Brazil in 2010, when the Accounting Standard CPC 15 entered into force, and evaluate which were the determining factors of the level of disclosure of information related to it. To evaluate the disclosure level, a disclosure index of business combinations (INDCOMB) was prepared, having the disclosure index developed by Shalev (2009) as a basis. We evaluated, in the light of the literature on disclosure and business combinations, whether the following factors influenced on the disclosure level: acquiring company size, recognized percentage of overprice for expected future profitability in relation to the transaction value, dispersion of capital of the acquiring company, audit firm size, and participation of the acquiring company in American Depositary Receipts (ADRs) programs. The control variables used were listing of the acquiring company in the various segments of BM&FBOVESPA, operation sector, origin (state, private company with national capital or private company with foreign capital), and relative acquired company size in relation to the acquiring company. We analyzed business combination transactions that took place in 2010, reported by 40 open capital companies involved in 76 transactions. We conclude that the audit firm size and the relative acquired company size were factors that influenced on the level of disclosure of information regarding business combinations in 2010. The other factors showed no conclusive results

Compliance with Disclosure Requirements at Germany\u27s New Market: IAS Versus US GAAP

This research examines compliance with both International Accounting Standards (IAS) and United States Generally Accepted Accounting Principles (US GAAP) for companies listed on Germany\u27s New Market. Based on a sample of 100 firms that apply IAS and 100 that apply US GAAP, we investigate the extent to which companies comply with IAS and US GAAP disclosure requirements in their year–2000 financial statements. Compliance levels range from 100% to 41.6%, with an average of 83.7%. The average compliance level is significantly lower for companies that apply IAS as compared to companies applying US GAAP. This study provides the first systematic evidence regarding the enforcement of US GAAP outside the US, and accordingly not subject to Securities Exchange Commission (SEC) review. The results unveil a considerable extent of non–compliance. The overall level of compliance with IAS and US GAAP disclosures is positively related to firms being audited by Big 5 auditing firms and to cross–listings on US exchanges. Compliance is also associated with references to the use of International Standards of Auditing (ISA) or US GAAS in the audit opinion. The findings add to the growing concerns regarding the lack of effective supervision in the German capital market

Adoption of IAS 19R by Europe\u27s Premier Listed Companies: Corridor approach versus Full Recognition: Summary of an ACCA Research Monograph

This report provides a summary of a research monograph sponsored by the Association of Chartered Certified Accountants (ACCA) [Fasshauer, J., Glaum, M., & Street, D. L. (2008). Adoption of IAS 19R by Europe\u27s premier listed companies: Corridor approach versus full recognition. An ACCA research report, London] and is based on our in-depth analysis of the defined benefit pension plan disclosures provided in the year 2005 by companies constituting the premier segments of 20 European exchanges. Most importantly, the study identifies the method these companies selected under International Accounting Standard (IAS) 19 for the recognition of actuarial gains/losses, provides insight into factors affecting the policy choice between the methods allowed under IAS 19 for the recognition of actuarial gains/losses, and assesses the impact on profit and loss (P&L) and the balance sheet of using the new IAS 19 option of full recognition through the Statement of Recognized Gains and Losses (SORIE), in contrast to the traditional corridor approach. We also benchmark key pension assumptions against relevant country or industry averages. As accounting for defined benefit pension plans continues to evolve with the amendment of IAS 19, the recent issuance of SFAS 158 in the U.S., the release of The Financial Reporting of Pensions in Europe, and most notably the release of Preliminary Views on Amendments to IAS 19 Employee Benefits by the IASB, our research provides timely empirical evidence regarding important issues to be addressed in the IASB\u27s current retirement benefits project

Compliance with IFRS 3 and IAS 36 Required Disclosures across 17 European Countries: Company-level and Country-level Determinants

In this study, we analyse compliance for a large sample of European companies mandatorily applying International Financial Reporting Standards (IFRS). Focusing on disclosures required by IFRS 3 Business Combinations and International Accounting Standard 36 Impairment of Assets, we find substantial non-compliance. Compliance levels are determined jointly by company- and country-level variables, indicating that accounting traditions and other country-specific factors continue to play a role despite the use of common reporting standards under IFRS. At the company level, we identify the importance of goodwill positions, prior experience with IFRS, type of auditor, the existence of audit committees, the issuance of equity shares or bonds in the reporting period or in the subsequent period, ownership structure and the financial services industry as influential factors. At the country level, the strength of the enforcement system and the size of the national stock market are associated with compliance. Both factors not only directly influence compliance but also moderate and mediate some company-level factors. Finally, national culture in the form of the strength of national traditions ( conservation ) also influences compliance, in combination with company-level factors