Introduction to the Special Issue: The Globalization of Accounting Standards

2005 ◽  
Vol 7 (3) ◽  
pp. 1-7 ◽  
Author(s):  
Andreas Nolke
Keyword(s):  
International Political Economy ◽  
Accounting Standards ◽  
Major Change ◽  
Fair Value ◽  
Special Issue ◽  
Private Company ◽  
Accounting Firms ◽  
The Us ◽  
Policy Fields ◽  
Accounting Standard Setting

We are currently witnessing the evolution of global accounting standards, as developed by the International Accounting Standards Board (IASB). This is a remarkable development, not only because accounting standards are relevant for all business operations. Whereas accounting standard-setting has previously been a task of national authorities, the process will now be managed internationally by a London-based organisation whose parent foundation is a private company incorporated in the US state of Delaware and mainly financed by the Big Four accounting firms. Furthermore, the US appear to be willing to accept foreign standards that are quite different from their own Generally Accepted Accounting Standards (GAAP). This does not only contradict a widespread perception that equals globalization with Americanization, but also offers a remarkable contrast to US unilateralism in other policy fields. Finally, we are also amidst a major change in the substance of accounting standards, as indicated by a shift from historic cost to fair value accounting within the work of the IASB. This special issue of Business and Politics is devoted to a systematic explanation of these developments, drawing on concepts from International Relations, International Political Economy and Systems Theory.

Determinants and Consequences of Firms' Derivative Accounting Decisions

2020 ◽  
Vol 5 (1) ◽  
pp. 81-114 ◽  
Author(s):  
Spencer Pierce
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Firm Risk ◽  
Accounting Firms ◽  
Earnings Volatility ◽  
Hedge Accounting ◽  
Reported Earnings ◽  
Jel Classifications

ABSTRACTFinancial accounting standards require derivatives to be recognized at fair value with changes in value recognized immediately in earnings. However, if specified criteria are met, firms may use an alternative accounting treatment, hedge accounting, which is intended to better represent the underlying economics of firms' derivative use. Using FAS 161 disclosures, I examine determinants of hedge accounting use and the effects of hedge accounting on financial reporting and capital markets. I find variation in firms' hedge accounting use and provide evidence that compliance costs of applying hedge accounting affect firms' decision to use hedge accounting. Firms decrease their reported earnings volatility via derivatives that receive hedge accounting and could further decrease their earnings volatility if hedge accounting were applied to all their derivatives. Inconsistent with arguments given for using hedge accounting, I fail to find a decrease in investors' assessments of firm risk from using hedge accounting.JEL Classifications: M40; M41; G32.

scholarly journals ONE FINANCIAL REPORTING GLOBAL LANGUAGE: THE ULTIMATE GOAL?

2017 ◽  
Vol 5 (1) ◽  
Author(s):  
Amelia Limijaya
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
International Accounting Standards ◽  
Political Aspect ◽  
Accounting Standard ◽  
The Us ◽  
Global Language ◽  
Accounting Standard Setting

This article aims to analyse the extent to which international accounting standards is applied and whether it is the ultimate goal. Up until the end of 2016, approximately there are 84% of the 149 jurisdictions analysed which require IFRS for all or most domestic publicly accountable entities. This may indicate that we are not that much further from having a single set of globally-accepted accounting standards. However, there is more to financial reporting than just accounting standards alone, such as the political aspect of accounting standard-setting, translation issues surrounding IFRS adoption, the US position and the complexity of financial reporting. Improving financial reporting quality needs more than just having global accounting standards, rather, it is also essential to consider the preparers’ incentives and other institutions surrounding the firm. Stakeholders need to broaden the perspective when viewing financial reporting, so that it will not be focused merely on accounting standards alone.

The Determinants and Consequences of Big 4 Lobbying Positions on Proposed Financial Accounting Standards

2021 ◽  
Author(s):  
Brian R. Monsen
Keyword(s):  
Accounting Standards ◽  
Standard Setting ◽  
Financial Accounting ◽  
Financial Statement ◽  
Accounting Standard ◽  
Accounting Firms ◽  
Big 4 ◽  
Textual Features ◽  
Comment Letters ◽  
Accounting Standard Setting

Despite the considerable participation of Big 4 accounting firms in accounting standard setting, there is no systematic evidence on what factors shape Big 4 support or opposition toward proposed accounting standards or whether their lobbying positions materially influence standards. Using textual features of Big 4 comment letters on FASB proposals, I find that Big 4 firms' lobbying positions reflect profit motives through support for standards that will generate more fees or are supported by their clients. Big 4 lobbying support is concentrated in proposals exhibiting both characteristics, with some evidence suggesting client agreement dominates fee-generating incentives. Big 4 lobbying positions are significantly associated with standard setting outcomes, both in isolation and relative to other FASB constituents, including financial statement users. Although I primarily focus on Big 4 accounting firms, results indicate the tone of comment letters submitted by users is unassociated with the standard setting outcomes measured in this study.

International Accounting Standard Setting: A Network Approach

2005 ◽  
Vol 7 (3) ◽  
pp. 1-32 ◽  
Author(s):  
James Perry ◽  
Andreas Nöelke
Keyword(s):  
Accounting Standards ◽  
Standard Setting ◽  
Fair Value ◽  
Advisory Group ◽  
International Accounting ◽  
The European Union ◽  
Accounting Standard ◽  
Market Values ◽  
Accounting Standard Setting ◽  
International Accounting Standard

The article takes a political economy perspective on the current harmonization of accounting standards. It argues that the process not only signals a major shift in the mode of governance (towards private authority), but also in the substance of what is being governed. In political-economic terms, the most significant change which the International Accounting Standards Board (IASB) brings to accounting is an increased reliance on market values in the form of so-called Fair Value Accounting (FVA). The FVA paradigm represents a financial perspective on business operations. This perspective is matched by the process and structure of the institutions that govern international accounting standard setting, particularly the IASB and the European Financial Reporting Advisory Group which advises the Commission of the European Union on the adoption of IASB standards. A network analysis of the different committees and working groups of these two institutions demonstrates that financial sector actors wield substantially more influence than other categories of business actors within the governance of international accounting standard setting.

scholarly journals The Standardisation of Natural Capital Accounting Methodologies

2020 ◽  
pp. 27-53
Author(s):  
Sylvain Maechler ◽  
Jean-Christophe Graz
Keyword(s):  
Political Economy ◽  
Power Relations ◽  
International Political Economy ◽  
Natural Capital ◽  
Accounting Standards ◽  
Ecological Crisis ◽  
Accounting Firms ◽  
Natural Capital Accounting ◽  
Technical Specifications ◽  
Big Four

The global ecological crisis has prompted the development of tools that try to redefine relations between business and nature, among them, natural capital accounting methodologies. The International Organization for Standardization (ISO) recently set standards on which these methodologies are based. Other actors, including the Big Four audit and accounting firms, developed their own methodologies outside the scope of ISO. This chapter examines why and how ISO developed natural capital accounting standards that are likely to compete with other methodologies. From the assumption that standards are not just technical, but also political instruments, it argues that they shape the future by creating power relations between actors within and outside ISO. The chapter suggests that these ISO standards aims at competing with first-movers' methodologies, in particular on the power implications resulting from transparency. It builds the argument on international political economy approaches to emphasise the link between technical specifications and power relations in contemporary capitalism.

scholarly journals Goodwill Accounting Alternative: Private Versus Non-private Companies

2015 ◽  
Vol 3 (1) ◽  
pp. 159
Author(s):  
Dahli Gray ◽  
Monica Jorge ◽  
Laura Rodriguez
Keyword(s):  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Private Company ◽  
Private Companies ◽  
Goodwill Impairment ◽  
For Profit ◽  
Straight Line ◽  
Business Entities

<p>This article examines the accounting change effective after December 15, 2015 and illustrates the Goodwill Accounting Alternative available to private companies as introduced by the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-18 Business Combinations (Topic 805) Accounting for Identifiable Intangible Assets in a Business Combination—a consensus of the Private Company Council (PCC). The measurement and reporting results of private companies are compared with those of public business entities and not-for-profit entities (i.e., non-private companies) for the same in-scope transactions (i.e., acquisitions, assessing fair value under the equity method, and reorganizations). If a private company adopts the FASB ASU 2014-18, then it must also adopt the FASB ASU 2014-02 Intangibles-Goodwill and Other (Topic 350) Accounting for Goodwill—a consensus of the PCC. This results in the private company amortizing goodwill over 10 or fewer years using the straight-line method. Non-private companies use goodwill impairment testing involving fair value measurements. The illustration presented includes a comparison of the initial and subsequent period measurement and reporting requirements and results and indicates that financial accounting choice can result in a significant monetary difference in the total reported owners’ equity.</p>

scholarly journals Fair value and corporate governance

2008 ◽  
Vol 6 (1-3) ◽  
pp. 382-384
Author(s):  
Andrea Polo
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
International Accounting Standards ◽  
Financial Instruments ◽  
New Paradigm ◽  
Sfas 157 ◽  
The Us ◽  
Definition Of

Recently two discussion papers on a new paradigm for the International Accounting Standards (IAS) have attracted much controversy. In the new proposed paradigm the definition of fair value used in the US standard SFAS 157 for financial instruments and acquisitions is extended to all the IAS and stewardship is abolished as a separate objective of financial reporting. In this work, we revise the reasons behind these proposals and the criticisms they are attracting. In the light of this analysis and especially focusing on the corporate governance concerns, we discuss the opportunity for the IASB to retrace their steps back and to avoid pushing the fair value approach too far.

THE EVOLUTION OF THE RELATIONSHIP BETWEEN THE US FINANCIAL ACCOUNTING STANDARDS BOARD AND THE INTERNATIONAL ACCOUNTING STANDARD SETTERS: 1973–2008

2012 ◽  
Vol 39 (1) ◽  
pp. 1-51 ◽  
Author(s):  
Robert J. Kirsch
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
Working Relationships ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Accounting Standard ◽  
Staff Members ◽  
The Us ◽  
The Relationship

ABSTRACT Utilizing archival materials as well as personal interviews and correspondence with personnel of the Financial Accounting Standards Board (FASB) and International Accounting Standards Committee/Board (IASC/B), including former Board chairmen and staff members, this paper examines the development of the working relationships between the FASB and the IASC/B from their earliest interactions in 1973 through the transformation of the IASC into the IASB and the Convergence Program rooted in the 2002 Norwalk Agreement up to 2008.

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