IFRS and convergence in China and the USA

2014 ◽  
Vol 9 (1) ◽  
pp. 56-66 ◽  
Author(s):  
Randy Moser
Keyword(s):  
Financial Reporting ◽  
Economic Indicator ◽  
Standard Setting ◽  
Global Scale ◽  
Securities And Exchange Commission ◽  
Current Status ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Setting Process ◽  
The Usa

Purpose – The purpose of this paper is to perform a brief examination of International Financial Reporting Standards (IFRS) and the progress towards IFRS convergence in the accounting environments of China and the USA, providing useful information on the current status and future of IFRS convergence in these countries. Design/methodology/approach – A range of IFRS-related literature from 1993 to 2013 was analyzed to provide the current status of IFRS and to determine the past, present and future of IFRS convergence in the country examinations. Findings – IFRS convergence and adoption has occurred on a global scale due to the call for a single set of standards. China's most significant obstacles include training accounting professionals and becoming more involved in the International Accounting Standards Board (IASB) standard setting process. The USA's most significant obstacle is completing the Securities and Exchange Commission roadmap milestones, which will progressively move the accounting industry towards IFRS convergence. Research limitations/implications – These findings have been limited to an overview of IFRS convergence and adoption within China and the USA. Additional research opportunities exist by examining how successful countries have been in protecting individual economic interests by working with the IASB in the standard setting process for the IFRS, as opposed to being passive in the process. One economic indicator that should be examined is foreign direct investment, which has major impacts on country development and can be influenced by financial standards such as IFRS. Practical implications – China and the USA both have milestones identified in this paper that will need to be reached before benefits may be reaped from the converging to IFRS. Originality/value – These findings show that IFRS standards are being implemented globally in many nations, providing a common set of reporting tools to businesses and investors. Through these standards, China and the USA are working to be even more competitive forces in financial markets.

An analysis of SEC comment letters and IFRS

2017 ◽  
Vol 15 (2) ◽  
pp. 226-244 ◽  
Author(s):  
Cheryl L. Linthicum ◽  
Andrew J. McLelland ◽  
Michael A. Schuldt
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Securities And Exchange Commission ◽  
Annual Reports ◽  
Financial Accounting Standards Board ◽  
Content Type ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
The Usa ◽  
Comment Letters

Purpose This study investigates the influence of the Securities and Exchange Commission (SEC) on the interpretation and application of International Financial Reporting Standards (IFRS) by examining a group of SEC-selected foreign private issuers filing 2005 annual reports in the USA and reporting using IFRS for the first time. Design/methodology/approach This paper uses hand-collected information from SEC comment letters to analyze IFRS topics and documents the ultimate resolution of each SEC comment (no change to filing, current change to filing or prospective change to future filing). The authors use descriptive statistical analyses, as well as a logistic regression model involving the resolution of each SEC comment, to examine the SEC’s influence on the interpretation of IFRS. Findings The study finds both higher comment totals, and higher numbers of required filing modifications, for those IFRS pronouncements which were identified as needing improvement during the 2006-2008 convergence efforts by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB). Additionally, the study documents a decreasing likelihood of a filing modification when US generally accepted accounting principles (US GAAP) guidance is referenced in comment letter correspondence involving IFRS topics. Originality/value The study extends the IFRS literature and the SEC comment letter literature by focusing on the resolution of comments directed at IFRS disclosures, as well as exploring the factors which influence whether a comment ultimately requires a filing modification.

Accounting for leases – lessons from COVID-19

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alan Teixeira
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Reporting Standards ◽  
Financial Accounting Standards Board ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Setting Process

Purpose The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have given relief to lessees in response to the coronavirus (COVID-19) pandemic. However, it is not clear why any relief from the requirements in International Financial Reporting Standards (IFRS) or the Accounting Standards Codification (ASC) should be necessary. The purpose of this paper is to highlight weaknesses in how the IASB and FASB developed their leases Standards, and why those Standards are not robust enough to cope with a shock to the economic system. Design/methodology/approach The COVID-19 relief suspends some features of the leasing requirements rather than changing them. What if other economic or regulatory events cause the same circumstances to arise? Findings Have COVID-19 exposed weaknesses in the leasing standards that should have been avoided when they were developed or is COVID-19 the problem? Originality/value Analysis of actual board discussions and staff papers is unusual and provides insights into the standard-setting process.

XBRL adoption and cost of debt

2015 ◽  
Vol 23 (2) ◽  
pp. 199-216 ◽  
Author(s):  
Syou-Ching Lai ◽  
Yuh-Shin Lin ◽  
Yi-Hung Lin ◽  
Hua-Wei Huang
Keyword(s):  
Financial Reporting ◽  
Securities And Exchange Commission ◽  
Cost Of Debt ◽  
Content Type ◽  
Public Firms ◽  
Top Managers ◽  
Weak Evidence ◽  
The Usa ◽  
Mandatory Adoption ◽  
The Cost

Purpose – This paper aims to examine the relation between the cost of debt and the adoption of eXtensible Business Reporting Language (XBRL). Design/methodology/approach – The financial data are obtained from the Compustat database. Regression analysis is used to examine the research hypotheses. Findings – The authors find that both voluntary and mandatory adoption of XBRL lead to a lower cost of debt for firms, with weak evidence that this reduction is greater for the former than the latter. Research limitations/implications – The findings support the policy of the USA Securities and Exchange Commission (SEC), and thus this paper recommends that adoption of XBRL should be mandatory for all public firms. Practical implications – The findings encourage top managers to develop their firms’ XBRL systems. Originality/value – The results support the SEC’s policy of mandatory XBRL adoption, as it can lead to greater financial reporting transparency and mitigate information asymmetry between management and bondholders.

Cautiousness on convergence of accounting standards across countries

2016 ◽  
Vol 21 (2) ◽  
pp. 246-267 ◽  
Author(s):  
Silvia Angeloni
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Empirical Literature ◽  
Corporate Disclosure ◽  
Content Type ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Financial Communication ◽  
Convergence Process ◽  
The Usa

Purpose – The purpose of this paper is to provide an updated picture of the convergence process between International Financial Reporting Standards (IFRS) and United States Generally Accepted Accounting Principles (US GAAP), with IFRS clearly emerging as a global financial reporting benchmark. This study is aimed at evaluating the main benefits but also some significant issues arising from the adoption of a single set of accounting standards. Design/methodology/approach – The main examples of theoretical and empirical literature for and against IFRS implementation are reviewed. Findings – Since markets became increasingly global, the comparability of financial statements is required to enable better corporate communication and transparency to the advantage of all stakeholders. The main difficulties of IFRS adoption by the USA are explored. Practical implications – The study’s implications are to emphasize the practical obstacles to resolving the issues of financial communication through a uniform set of standards, by highlighting the importance of taking into account other dynamics in improving the corporate disclosure domestically and globally. Originality/value – The key contribution of this study is to reflect on the best ways to reach global communication without sacrificing the effectiveness and affordability of financial reporting.

scholarly journals The relationship between financial reporting standards and accounting irregularities: evidence from US banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali İhsan Akgün ◽  
Yener Altunbaş ◽  
Yurtsev Uymaz
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Bank Performance ◽  
Reporting Standards ◽  
Content Type ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
The Usa ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to explore whether the choice of International Financial Reporting Standards (IFRS) vs Generally Accepted Accounting Principles (GAAP) is associated with the frequency and likelihood of accounting irregularities and fraud in US banks. Design/methodology/approach The authors examine the relationship between financial reporting standards and accounting irregularities in publicly listed US banks. Using a sample of 4,284 banks with accounting irregularities observed in the USA over the period of 1996–2014. They used logit model to estimate the likelihood of corporate misreporting having been committed in terms of accounting irregularities. Findings The authors show that banks that use US GAAP exhibit better operating performance than fraudulent banks that use IFRS except for certain variables. They also find that fraudulent banks are more likely to commit accounting irregularities when they have to follow IFRS and banks have relatively better bank performance. Practical implications Overall, the empirical findings result consistent with Kohlbeck and Warfield’s (2010) find that accounting standards are linked to fewer accounting irregularities. Originality/value In this study, accounting irregularities have a significant effect on bank performance during the Dodd–Frank period. It finds that banks that choose to use IFRS are more likely to have accounting irregularities and to engage in fraud.

Mandatory IFRS adoption in Europe: effect on the conservative financial reporting

2018 ◽  
Vol 16 (4) ◽  
pp. 543-563
Author(s):  
Walid Guermazi ◽  
Halioui Khamoussi
Keyword(s):  
Financial Reporting ◽  
Unintended Consequences ◽  
The European Union ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Intention To Adopt ◽  
Conditional Conservatism ◽  
The Usa ◽  
The Impact

Purpose The purpose of this paper is to investigate how the mandatory shift from domestic standards to International Financial Reporting Standards (IFRS) in Europe affects the conservatism level of reported accounting earnings (i.e. conditional conservatism), with the objective of gaining insights that are relevant for standard setters, capital providers and other users of financial accounting information. Design/methodology/approach Various models have been used in the literature to capture conditional conservatism. In the main tests in this paper, the authors use the Basu’s (1997) earnings-return specification. The authors use a panel data methodology to carry out the paper. Findings In contrast to previous international research studies, it is found that conditional conservatism has increased after the mandatory adoption of IFRS in Europe in 2005, with this increase being dependent on the extent of the accounting changes involved in switching from domestic accounting standards to IFRS reporting. Practical/implications These findings are expected to be particularly relevant to some countries which have not yet adopted IFRS, such as the USA, Japan, Columbia, etc., but have announced their intention to adopt IFRS and to regulators in different jurisdictions who are interested in the impact of IFRS conversion. Originality/value The research to date, based on a multi-country setting, consistently shows a significant decrease in conditional conservatism after adopting IFRS. Based on a sample of firms from the European Union over a long period, the authors provide novel evidence for potentially unintended consequences of IFRS adoption, finding an increase in conditional conservatism behavior.

Development of accounting standards in selected Middle Eastern countries in comparison to the United States of America

2016 ◽  
Vol 26 (1) ◽  
pp. 69-87 ◽  
Author(s):  
Peter A Aghimien
Keyword(s):  
Financial Reporting ◽  
Middle Eastern ◽  
Accounting Standards ◽  
The United States ◽  
Future Research ◽  
Developed Country ◽  
Content Type ◽  
Financial Reporting Standards ◽  
The Usa ◽  
Almost All

Purpose – The purpose of this paper is to compare the development of accounting standards in five diverse Middle Eastern countries with those of the USA. Design/methodology/approach – A comparative analysis of each country with what is obtained in the USA. Findings – While there are some similarities that influence the development of accounting standards in each country, there also exist a variety of differences, particularly in the areas of taxation, use of International Financial Reporting Standards (IFRS), religion, population and so on. Research limitations/implications – The findings are limited to the five countries analyzed. Future research may want to expand the number of Middle Eastern countries included in the population studied. Originality/value – The study is original particularly due to the diversity of the countries selected. While the USA is an economically and technologically developed country, almost all of the other countries could be classified as developing. Additionally, the USA is the only country with its own uniquely developed standards, which are universally respected, but different from the single set of high-quality standards commonly referred to as the IFRS, which more than 100 countries have adopted.

The changing IFRS debate in the USA: a rejoinder

2017 ◽  
Vol 13 (1) ◽  
pp. 65-84 ◽  
Author(s):  
Minga Negash ◽  
Andrew Holt ◽  
John Hathorn
Keyword(s):  
Undergraduate Students ◽  
Financial Reporting ◽  
Political Process ◽  
Accounting Standards ◽  
Adoption Process ◽  
Content Type ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
The Us ◽  
The Usa

Purpose The debate on whether global accounting standards are appropriate for use within the US regulatory environment has not yet ended. Nearly four years after the release of the Securities and Exchange Commission’s (SEC’s) much awaited report on the issue, the position of the regulator is still unclear, and the US accounting community is uncertain about the potential for accounting change. This paper aims to examine the documented reasons for the absence of direction and clarity on this issue. Design/methodology/approach Using the theoretical and empirical contributions of prior research on International Financial Reporting Standards (IFRS), this study explores the potential for US adoption of IFRS by examining the main arguments forwarded by the Office of the Chief Accountant of the SEC and the International Accounting Standards Board’s response to the issues raised and by capturing the opinions of 22 graduate and 32 undergraduate students as surrogates for future practicing accountants. The student data were collected from homework submissions to an essay on US accounting convergence with IFRS. Findings From the analysis, the authors make four observations. First, the deliberations over IFRS adoption in the USA are not sufficiently grounded on principles of recognition, measurement and disclosure. Second, the evidence does not support the notion that IFRS is of inferior quality to current US generally accepted accounting principles. Third, the problem areas stem from the apparent divergence of the objectives ascribed to financial statements, the independence and public accountability of the global standard setter and standards that are connected with the regulation of the finance and insurance industries. The final observation is the political process of managing change in the standard setting/adoption process in the USA. Originality/value This paper provides a comprehensive appraisal and a change management perspective to the ongoing IFRS debate in the USA by soliciting and documenting the opinions of future practicing accountants.

Do globalisation and adoption of IFRS by banks in Africa lead to less earnings management?

2019 ◽  
Vol 17 (2) ◽  
pp. 222-248 ◽  
Author(s):  
Mohammed Amidu ◽  
Haruna Issahaku
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Information Quality ◽  
Accounting Information ◽  
Financial Statements ◽  
International Standards ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Accounting Information Quality ◽  
National Economies

Purpose This paper aims to analyse the implications of globalisation and the adoption of international standards (International Financial Reporting Standards [IFRS]) for accounting information quality. Design/methodology/approach This paper uses a sample of 329 banks across 29 countries leading up to and beyond the implementation of IFRS to test for related hypotheses. Findings First, banks’ financial statements are prepared on the basis of international standards as national economies are integrated when social norms are diffused. Building on these results, the second test suggests that the relatively high-quality earnings among banks in Africa during the period is attributable to the adoption of and interaction of IFRS with globalisation and the strategy of banks to diversify within and across interest and non-interest income. Originality/value The authors investigate how globalisation and the adoption of IFRS affect accounting information quality.

Is Hong Kong ready for accounting education reform: an analysis of tri-partite views

2014 ◽  
Vol 27 (3) ◽  
pp. 249-265 ◽  
Author(s):  
Theodore T.Y. Chen
Keyword(s):  
Hong Kong ◽  
Education Reform ◽  
Financial Reporting ◽  
Accounting Education ◽  
Accounting Firms ◽  
Content Type ◽  
The Usa ◽  
Accounting Practitioners ◽  
The Uk ◽  
Big Four

Purpose – The purpose of this study is to determine whether Hong Kong is ready for accounting education reform. Design/methodology/approach – The approach for this study is using a Likert-scale questionnaire for the academic institutions, the Hong Kong Institute of Certified Public Accountants and the big four accounting firms, followed by detailed follow-up interviews with each. Findings – There is general agreement among accounting academics and the profession that the Accounting Education Change Commission initiatives should be adopted in Hong Kong. Hong Kong accounting academics in public institutions do not oppose to a balance between teaching and research, but would oppose to an emphasis of teaching over research. This is important as an overemphasis on research could mean less time for teaching and curriculum development. The big four accounting firms are either happy with the way Hong Kong universities have been educating the accounting graduates or have no complaints against them. This is also important as an urge for accounting education reform usually comes from the practitioners as in the USA. Originality/value – The USA was the first country that saw the need for accounting education reform as accounting practitioners felt that curriculum and pedagogical considerations placed heavy emphasis on the technical aspects of accounting at the expense of a general, broad-based education. Similar needs for change were also found in the UK and Australia. As Hong Kong is one of the world’s major financial centres with a large securities exchange, there is a great deal of emphasis on accounting standards, financial reporting, corporate governance, etc., and hence the importance of accounting education. Is Hong Kong ready for the change?

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