COMPARATIVE INTERNATIONAL ACCOUNTING

Transcription

1 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

2 Contributors Preface xvi xvii Part I SETTING THE SCENE 15,itroduction 3 Contents 3 Objectives 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 22 Summary ' 24 References 24 Useful websites 26 Questions 26 Causes and examples of international differences 28 Contents j 28 Objectives Introduction Culture Legal systems Providers of finance * Taxation ~ Other external influences The profession Conclusion on the causes of international differences Some examples of differences 42 Summary 50 References 51 Questions 54 VII

3 3 International classification of financial reporting 55 Contents 55 Objectives 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 74 Summary 75 References 75 Questions 77 4 International harmonization 79 Contents 79 Objectives Introduction Reasons for, obstacles to measurement of harmonization The International Accounting Standards Committee Other international bodies The International Accounting Standards Board 96 Summary 100 References 101 Useful websites 103 Questions 104 Part II FINANCIAL REPORTING BY LISTED GROUPS \ i.. i _ I 5 The context of financial reporting by listed groups 107 Contents 107 Objectives Introduction Adoption of, and convergence with, IFRS IFRS in the EU IFRS/US differences 113 VIM

4 5.5 US convergence with and adoption of IFRS Reconciliations from national rules to US CAAP or IFRS Introduction to international financial analysis 120 Summary 122 References 123 Useful websites 125 Questions The requirements of International Financial Reporting Standards 126 Contents 126 Objectives Introduction The conceptual framework and some basic standards Assets Liabilities Group accounting Disclosures 142 Summary 143 References 143 Further reading 144 Useful websites 144 Questions 144 Appendix 6.1 An outline of the content of International Financial Reporting Standards Different versions of IFRS practice 155 Contents 155 Objectives Introduction Motivations for different IFRS practice Scope for different IFRS practice Examples of different IFRS practice Implications 165 Summary 166 References 166 Questions Financial reporting in the United States 168 Contents 168 Objectives 169 IX

5 8.1 Introduction 8.2 Regulatory framework 8.3 Accounting standard-setters 8.4 The conceptual framework 8.5 Contents of annual reports 8.6 Accounting principles 8.7 Consolidation 8.8 Audit 8.9 Differences from IFRS Summary References Further reading Useful websites Questions ; 9 Key financial reporting topics Contents Objectives 9.1 Introduction 9.2 Recognition of intangible assets 9.3 Asset measurement 9.4 Financial instruments 9.5 Provisions 9.6 Employee benefits 9.7 Deferred tax 9.8 Revenue recognition 9.9 Comprehensive income Summary References Questions 10 Enforcement of financial reporting standards Contents Objectives 10.1 Introduction 10.2 Modes and models of enforcement 10.3 United States 10.4 European Union 10.5 West Pacific rim Summary References Useful websites Questions ;'

6 11 Political lobbying on accounting standards - US, UK, and international experience 247 Contents 247 Objectives Introduction Motivations for political lobbying Political lobbying up to US political lobbying from Political lobbying of the IASC/IASB Preparer attempts to control the accounting standard-setter Political lobbying of the FASB's convergence with the IASB Some concluding remarks 274 Summary 275 References 275 / Useful websites 277 Questions 277 Part til HARMONIZATION AND TRANSITION IN EUROPE AND EAST ASIA 12 Harmonization and transition in Europe 281 Contents 281 Objectives Introduction Harmonization within the European Union Transition in Central and Eastern Europe 288 Summary 297 References 298 Useful websites 300 Questions Harmonization and transition in East Asia 302 Contents 302 Objectives,< Introduction " japan China 319 Summary 324 References 325 Further reading 327 Useful websites 327 Questions 327 Appendix 13.1 ASBE standards 329 xi

7 Part IV FINANCIAL REPORTING BY INDIVIDUAL COMPANIES 14 The context of financial reporting by individual companies 333 Contents 333 Objectives Introduction Outline of differences between national rules and IFRS or US CAAP The survival of national rules Financial reporting, tax and distribution Special rules for small or unlisted companies 338 Summary 341 References 342 ji Useful websites 342 Questions Making accounting rules for unlisted business enterprises in Europe 343 Contents Objectives 15.1 Introduction 15.2 Who makes accounting rules? 15.3 Which business enterprises are subject to accounting rules? Summary References Further reading Useful websites Questions Appendix 15.1 Appendix 15.2 Contents of the Plan comptable general (relating to financial accounting and reporting) Financial accounting chart of accounts, Classes 1-7 in the Plan comptable general Accounting rules and practices of individual companies in Europe Contents Objectives 16.1 Introduction 16.2 France 16.3 Germany 16.4 United Kingdom XII

8 Summary 375 References 376 Further reading 377 Useful websites 377 Questions 377 Appendix 16.1 Formats for French financial statements 378 Appendix 16.2 Formats for German financial statements 383 Appendix 16.3 Formats for British financial statements 386 ipart V GROUP ACCOUNTING ISSUES IN REPORTING BY MNEs 17 Group accounting 393 Contents 393 Objectives Introduction Rate of adoption of consolidation The concept of a 'group' Harmonization from the 1970s onwards Definitions of group companies Publication requirements and practices Techniques of consolidation 404 Summary 409 References 409 Further reading 410 Questions Foreign currency translation 411 Contents 411 Objectives Introduction Translation of transactions Introduction to the translation of financial statements The US initiative The temporal method versus the closing rate method FAS 52 ;' IAS Translation of comprehensive income Accounting for translation gains and losses Research findings An alternative to exchange rates? 450 Summary 451 References 452 Further reading 453 Questions 453 xiii

9 19 Segment reporting 454 Contents 454 Objectives What is segment reporting? Segment reporting regulations Evidence on the benefits of segment reporting 471 Summary 480 References 481 Questions 484 Part VI ANALYSIS AND MANAGEMENT ISSUES 20 International financial analysis 489.Contents 489 /Objectives Introduction Understanding differences in accounting Disclosure practices in international financial reporting Interpreting financial statements Financial analysis and the capital market 504 Summary 508 References 508 Useful websites 510 Questions International auditing 512 Contents 512 Objectives Introduction Reasons for the internationalization of auditing Promulgating international standards The international audit process 526 Summary 539 References 540 Further reading 540 Useful websites 540 Questions International aspects of corporate income taxes 542 Contents 542 Objectives Introduction Tax bases 545 XIV

10 22.3 International tax planning Transfer pricing Tax systems Harmonization 557 Summary 559 References 560 Further reading 562 Useful websites 562 Questions Managerial accounting 564 Contents 564 Objectives Introduction 565 I 23.2 The balanced scorecard as an overview tool Currency and control Variances and foreign exchange Management accounting across nations Control and performance Looking forward 584 Summary 585 References 586 Questions 588 Glossary of abbreviations 590 Suggested answers to some of the end-of-chapter questions 596 Author index 617 Subject index 621 xv