international accounting

Is a wide field of study, including: Accounting multinational companies MNEs  International accounting comparative  Accounting Convergence / International Standards The concept of int

►Research directions

Is a wide field of study, including:

 Accounting multinational companies (MNEs)

 International accounting comparative

 Accounting Convergence / International Standards

The concept of international

accounting

 Factors affecting the national accounting system

 Grouping national accounting system

 The existing accounting differences

International Accounting

Collation

* United States includes American SE, SE Group and NASDAQ New York

** Japan includes Tokyo SE and Osaka SE

*** Euronext includes France, Portugal, the Netherlands and Belgium

* United States includes American SE, New York SE Group and NASDAQ

** Japan includes Tokyo SE and Osaka SE

*** Euronext includes France, Portugal, the Netherlands and Belgium

Source: www.word-exchanges.org

Some figures (Billion USD)

Countries Market Values

2006

The value of domestic transactions in

2006

The value of international transactions

• The development of the accounting system is based on current prices (CCA) and constant purchasing power (CCP)

• The accounting system of the countries in

South America

Business Environment

The legal system

• Common law

• Roman Law

Legal Environment

COMMON LAW ROMAN LAW

MỸ Canada US

ASIA Korea Taiwan Thailand

LATIN AMERIC A

Agrentina’B razil Chile Columbia Costa Rica Mexico Panama

SPAIN Philippines

USA-France - UK Israel

S FINLAND Thụy Điển Phần lan

WEDEN-GERMANY Germany

ISLAMIC Egypt Saudi Arabia United Arab Emirates

Roman law

 Accounting is prescribed

meticulous, detailed

in the laws, for example the

Commercial Law or Corporate Law In some countries,

there is a separate set

Taxes and Accounting

Influence of Tax to Accounting

 Trend 1: The tax does not affect the accounting.

Accounting profit is related but independent of taxable profit.

 Trend 2: Tax dominant way of accounting records,

accounting profit has to be closest to taxable profits.

Legal Environment

Role of professional organizations

voluntariness, to try

to achieve control

self-.

Legal Environment

Population (million) **

 Accounting is the language of business, so that accounting can not escape from the cultural environment

 Identifying the elements of the cultural environment is a difficult issue.

 The different viewpoints.

Cultural Environment

Hofstede – Gray Model

Greert Hofstede's perspective

 Researching the impact of cultural factors to business

 Providing five dimension (dimensions) to evaluate the influence of culture to business:

 Wide / narrow Power Distance (PD – Power Distance)

 Individualism / collectivism (IDV – Individualism)

 The avoidance / Not avoidance the issue is uncertain (UAV Uncertainty Avoidance)

- Male / female

 Long-term / short-term Orientation(LTO)

Cultural Environment

Narrow power distance Wide power distance

Inequality between human beings

upper class and lower class.

Common decentralization Common Centralization of power

The wage gap is not large The wage gap is large

Subordinates expect reference of

Individualism Collectivism

People are grown to care for

themselves and their immediate

family

People are born into a family (or one community) and protected in exchange for loyalty

Children learn to think in a "I" Children learn to think in a "we"Presenting directly his comments

are considered honest personality

Reconciliation should always be conserved and avoid direct

confrontation

The purpose of education is to

teach how to learn

The purpose of education is to learn how to do

Personal interests is above the

collective interests

Collective interests is above personal interests

Individualism (IDV)

Not avoiding Avoiding

The unknown is a normal thing in

life, every day is acceptable when

it comes

Considering what is unclear is the permanent threat that need to deal

Unusual things attract curiosity All the differences are dangerous

Students feel comfortable in

condition of open learning and

focusing on good discussion

Students feel comfortable in condition of learning the old routine and focusing on finding the right answer

A special characteristics is that

feeling should have rules even if

the rules were never used

Rules is just enough for the problem really necessary

Uncertainty Avoidance (UAV)

Voluntary condescension for

certain purposes

Paying attention to the face

Persisting with the late results Desire to achieve faster results

Long-term Orientation (LTO)

Countries IDV

index

PD index

UAV index

LTO index

Hofstede – Gray Model (continue)

 Gray developed the theory of Hofstede in the accounting field into cultural values:

Professionalism / Statutory control

Uniformity / Flexibility

Conservatism / Optimism

Secrecy / Transparency

Cultural Environment

4 ACCOUNTING VALUE OF Sidney J.Gray

• Professionalism versus Statutory control:

The tendency to make a professional judgment and

maintain professional self-control is opposed to the

tendency to comply with the legislation and under the

control of the State.

• Uniformity versus Flexibility:

The tendency to enforce the rules agreed between the

accounting firm is opposed to the flexibility in each specific case of every business

4 ACCOUNTING VALUE OF Sidney J.Gray (cont.)

• Conservatism versus Optimism:

The trend cautious approach in measuring for the event with the uncertainty in the future is opposed to optimistic approach, freedom and risk taking.

• Secrecy versus Transparency:

Tendency limit provision of business information within the management or capital provider is opposed to the approach of transparency and providing information to the public

Hofstede – Gray Model

Professionalism Statutory control

Individualism Accepting the unknown

Low power distance

AuditingTruthfulness and reasonableness

Professional organizations

Voluntary, self-control

CollectivismAvoiding the unknownHigh power distance

Hofstede – Gray Model

Flexibility Uniformity

Accepting the unknown

Narrow power distance

Individualism

LawDomination

RealityLow level of unity

Avoiding the unknownWide power distance

Collectivism

LawRoman lawRealityHigh level of unity

Hofstede – Gray Model

Avoiding the unknown

CollectivismFemale

EvaluationDecrease in assets, profits

Hofstede – Gray Model

Accepting the unknown

Narrow power distance

Declaring information

lower level

Countries Professionalism Flexibility Optimism Transparency

United

States

Australia Strong Strong Strong Strong

Germany Medium limited limited Weak

France limited Weak Weak limited

Examples of Gray’s results

Historical perspective and interaction

 Cultural environment is influenced by past and interaction between countries:

The former colonies

The process of regional and international integration

The former socialist country

Cultural Environment

 There are many other factors which are identified as politics, finance, geography

 Some models attempt to systematize the factors or explain the change of the national accounting system

Cultural Environment

Model Gray (1998)

Institutionalization (legal,

capital markets, professional organizations, education,

Accounti

ng System

Model Gray (1998)

External

environment

Culture (including institution

al structures

)

The supply power system of external capital

The different accountin

g systems

 Simple classification

The Anglo-Saxon school

The Europe mainland School

Grouping national accounting system

Classifying by Nobes (1993)Macro - uniform

Continental, Government Tax, legal

Business Practice, Pragmatic, British origin

Business economics, theory

US influence

Sweden Japan

UK influence

Law-based

Tax-based

German y Spain France Canada US Ireland UK Australi a Holland

Developing countries

in Latin - America

Africa

Japan Developing countries in Asia Middle eastern

Developing countries

in Latin - America Africa

Japan

Developing countries in Asia

 Valuation system (HCA, CCA, CPP)

 Accounting Group (the consolidated financial statements, the equity method, processing the minority interests )

 Business combinations (goodwill, pp purchasing- pp plus… )

 Evaluation of fixed assets (revaluation, fair value ), inventory (LIFO)

 Income Taxes (pp tax payable / tax allocation, pp deferral or liability )

The existing differences

 Transactions in foreign currency (exchange rate differences )

 The lease contract (finance leasing )

 Cash flow statement (required or not required, other forms )

 Research and development cost (capitalize or not…)

 Borrowing costs (capitalize or not…)

 Financial instruments

….

The existing differences

 Causes

 International organizations participate

 International Accounting Standards Board

 Convergence problem

Reconciliation – International Convergence

 Seeking a common language for the profession

 International Trade

 International Investment

 Globalization

 International Capital Markets

 From reconciliation to convergence

Causes

World Congress of Accountants

 Organized for the first time in 1904 in St Louis (USA)

 WCOA 18 was held in Malaysia in 2010

 Currently held by IFAC, every four years

Seeking a common language

(millions USD)

International Trade and Investment

80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00

Source: World Federation of Exchanges

 Globalization and the development of international capital markets requires

standards around the world

From reconciliation to convergence

• The international professional organizations

 International Federation of Accountants (IFAC)

 International Accounting Standards Board (IASB)

 Group G4+1

• The regional organizations

 Federation of European Accountants(FEE)

 Confederation of Asian and Pacific Accountants (CAPA)

 ASEAN Federation of Accountants (AFA)

 Inter-American Accounting Association (IAAA)

 African Accounting Council (AAC)

International organizations participate

• Intergovernmental Organizations

 European Union (EU)

 Organization for Economic Cooperation and Development(OECD) – Group working on Accounting Standards

 United Nations Conference on Trade and Development(UNCTAD) – intergovernmental expert group on internationalaccounting standards (ISAR)

 Securities market organizations

 The International Organization of Securities Commissions(IOSCO)

 The National Securities Commission SEC

International organizations participate

 ISAB established in 1973 with 10 member organizations was called IASC.

History of development

reforming IASC into IASB

1973-1989 1990-1995 1995-1998 2001-present

The organizational structure of the IASB

International Accounting Standards

Committee Foundation IASC Foundation - IASCF

International Accounting Standards Board - IASB

Standards Advisory Council SAC International Financial Reporting

Interpretation Committee - IFRIC

Bảo nhiệm

advisory report

Convergence problem

IOSCO

IASB

Conve rgenc e

EU

US

 IOSCO stand for International Organization of Securities Commissions.

 Established in 1983 with 11 members, today IOSCO has 108 official members, accounts for 90% of securities markets in the world.

 IASB desires the "support" of the IOSCO so that financial statements prepared in accordance with IAS / IFRS can be accepted by members of IOSCO.

IASB and IOSCO

 In 1993, the IASC and IOSCO agreement on a list of accountingstandards framework (core accounting standards) servedtransnational investment.

 In 1995, the commitment IOSCO-IASC is formed in which theIASC will complete the standards frameworks IOSCO will supportthe standards accepted by the members of IOSCO

 In 1998, the IASC issued IAS 39, completed list of agreedstandards framework

 In 2000, IOSCO announced "support" 30 standards framework ofthe IASC with a number of recommendations

IASB and IOSCO

• Previously, the EU has issued specific regulations

on accounting, a reconciliation in the region :

Since 1995, the EU began with accounting integration strategy

In 2000, EU recommended IASC to be submitted to Parliament and the European Commission to apply IAS for listed companies

In 2001, the EU launched a bill to apply IAS for listed companies

In 2002, the EU prescribed listed companies to apply IAS 2005

IASB and EU

The problem is that the EU did not accept

standards that was applied.

This leads to the fact that there are many types of IFRS

IASB and EU

One of the biggest challenges of the IASB

accordance with IFRS in securities market

of the United States

Partner is the US Securities and Exchange Commission (SEC) and US Financial Accounting Standards Board (FASB)

IASB – United States

In 2000, the SEC released a statement regarding the foreign company to issue shares in the United States using IASC standards, stating the differences between IAS and US GAAP

In 2002, the IASB and FASB Norwalk signed an agreement on the convergence of two systems

IASB – United States

 In 2005, the SEC disclosed their roadmap to remove regulations that financial statements prepared in accordance with IFRS of the foreign listed companies on US securities market must be conform to US GAAP, was expected to be completed before 2009

 In 2006, the route was adjusted

 Project IASB-FASB convergence achieved many steps On 11.15.2007, the SEC voted to allow foreign listed companies on US securities market to not required to apply IFRS adjusted according to US GAAP

IASB – United States

 Australia has used the IFRS with adjustments (A-IFRS))

 The convergence project was conducted or agreed :

Canada

Japan

China

Other countries

 In the past:

Developing accounting systems

Using the international accounting standards as national standards

Using international standards and advanced standards based on a review of national practice.

 Today:

convergence

Applying full IFRS

The access strategies

Research on international accounting in different directions:

Research factors affecting the national accounting differences

Research the factors affecting the reconciliation of international accounting

Measuring the level of reconciliation of international accounting

Research directions