1、 Financial Reporting in Different Countries Monday,October 03,20221Learning Objectives Explain the most important domestic and international influences on financial reporting in different countries.Describe the local GAAP in different countries.Explain the general characteristic of accounting in dif
2、ferent countries.Outline the principal differences between country accounting rules and IFRSs.Monday,October 03,20222o To group countries according to the common elements and distinctive characteristics of their financial accounting systems.Monday,October 03,20223Review of selected classification st
3、udiesuMuller(1967)identified the following four approaches to accounting development in Western market-oriented economies.Under the macroeconomic approachUnder the microeconomic approachUnder the independent discipline approachUnder the uniform approachMonday,October 03,20224Review of selected class
4、ification studiesMonday,October 03,20225Review of selected classification studiesuNobes classification is consistent with certain environment factors discussed earlier in Chapter 1.uOthersLegal Systems:Common Laws vs.Code Law AccountingPractice Systems:Fair Presentation vs.Legal Compliance Accountin
5、gGrays accounting values and Hofstedes cultural dimensionsu This chapter more closely examines accounting in a few selected countries.(France,Germany,Dutch,Japanese,U.K.,U.S.A).What-characteristics What-characteristics Why-environmental factors Why-environmental factors How-regulations,convergenceHo
6、w-regulations,convergenceMonday,October 03,20226Review of selected classification studiesn In this sectionlThere is an examination of the regulatory framework,especially the Securities and Exchange Commission(SEC)which demands the worlds most extensive disclosures from public companies.lThen examine
7、s the standards-setting process,leading to consideration of the conceptual framework and the detailed US GAAP components.lThere is a comparison with IASB requirements,differences from IFRS.Monday,October 03,20227American Accountingo What-The Characteristics of American AccountingoU.S.influenceoBusin
8、ess practice,Pragmatic,British originoMicro-uniform Monday,October 03,20228American AccountingU.S.influencen US influence on the accounting of other countries and on international standards has been considerable.n However,from 2001,with the creation of the International Accounting Standards Board(IA
9、SB)coinciding closely with a series of accounting scandals in the United States,US accounting has been influenced form outside,especially by plans for convergence with IFRS.Monday,October 03,20229American AccountingBritish originn US accounting was originally an export from the United Kingdom,like t
10、he American language and the American legal system.n The United States and the United Kingdom are reasonably similar in world context,although regulation of accounting differs.n If countries are to be classified,the similarities suggest that the United States and the United Kingdom are in the same f
11、amily.Monday,October 03,202210American Accounting2022年10月3日星期一pWhat-The Characteristics of American AccountingnDual regulatory structureSEC FASBReorganized(2002)nNo general legal requirement for corporation financial statementsState law,not federal lawAnnual audit and financial reporting requirement
12、s exist at the federal level by SECnRoles of AICPA-FASBAmerican Accountingo Why specific specific environmental factorslLawslThe securities and Exchange CommissionlThe United States Congress Monday,October 03,202212American Accounting Laws The United States is a federation of individual states,each
13、of which has its own legislative body with extensive powers to control business activity and levy taxes within its own boundaries.The most important regulations for the control of dealing in securities are enforced at the federal level under the Securities Act of 1933 and the Securities Exchange Act
14、 of 1934.Neither these statutes nor any others contain detailed provisions relating to financial reporting.Monday,October 03,202213American AccountingLawsNeither these statutes nor any others contain detailed provisions relating to financial reporting.The United States has no statutory requirements
15、for accounting in a form that is comparable to the accounting section of the Companies Acts in the UK or similar regulations in other EU countries.Monday,October 03,202214American AccountingLaws The federal securities legislation established the SEC in 1934 to administer the securities regulations.o
16、 It requires publication and receives registration of prospectuses and periodic financial reports.o It also has the power to prescribe the methods to be followed in the preparation of financial reports and to prescribe the form and content of those reports.Monday,October 03,202215American Accounting
17、 The securities and Exchange Commission The commission comprises five members appointed by the President of the United States and act as an independent regulatory body with quasi-judicial powers.o It has issued a large number of statements on accounting matters.o However,these have related mainly to
18、 the details of registration rather than to accounting standards.Monday,October 03,202216American Accounting The securities and Exchange CommissionHowever,the SEC has tended to limit the exercise of its accounting standard-setting authority to a supervisory role,permitting and encouraging the privat
19、e sector,currently through the Financial Accounting Standards Board(FASB),to maintain leadership in the standard-setting process.Monday,October 03,202217American Accounting The securities and Exchange CommissionThe commission sometimes issues instruction on how to do accounting in Accounting Series
20、Release or more recent Financial Reporting Releases.There are also Staff Accounting Bulletins.Monday,October 03,202218American Accounting The securities and Exchange CommissionThe events of accounting scandals of Enron and WorldCom of 2001/2 and the collapse of Andersen,the Big-5 accounting firm,led
21、 to the creation by Congress of the Public Company Accounting Oversight Board(PCAOB),which is overseen by the SEC.Also,the accounting duties of directors and the independence requirements of auditors were increased.Monday,October 03,202219American AccountingThe United States Congress The US legislat
22、ive authority the Congresshas occasionally taken a direct interest in accounting matters,although it has usually relied on the SEC to look after the public interest.The action of Congress may be seen as the forerunner of the concern about the neutrality of standards.Monday,October 03,202220American
23、Accounting The United States Congress u The political lobbying on US stand-settingSolomons(1978),Zeff(1978,1997)and Mozes(1988)describe a major battle between standard-setters and elements of government on the subject of accounting of stock options.The general topic of political involvement in stand
24、ard-setting exemplify the further involvement by Congress on the reform of accounting for business combinations caused by opposition from companies to the banning of pooling accounting.Monday,October 03,202221American Accounting2022年10月3日星期一p How regulate and enforcen SEC/FASBuSEC-oversight,by excep
25、tion uFASB-be perceived,support of public accounting professionuAdvantages of dual regulatory structure P166-167American Accounting2022年10月3日星期一p How regulate and enforcen SEC/FASBnAccounting is regulated by a private-sector body(FASB),AICPA,another private-sector body,set auditing standards;but a g
26、overnmental agency(SEC)underpins the authority of its standards.American AccountingHow Regulate SEC/FASBStock Crash in 1929 and Great Depression2022年10月3日星期一p How regulate and enforceu SEC/FASB SEC has the legal authority to prescribe accounting and reporting standards for public companies but relie
27、s on the private sector to set standards.SEC is independent regulatory agency.However,the five fill-time SEC commissioners are appointed by the president and confirmed by the Senate,SEC has only the powers that Congress has granted if by statute.Congress and the president have no direct influence ov
28、er its policies.Intervened?few exception,economic consequence no bias,neutralityAmerican Accounting2022年10月3日星期一p How regulate and enforceu SEC/FASB l SEC affirms its supports for FASB by indicating that financial statements conforming to standards set by the FASB will be presumed to have substantia
29、l authoritative support.P168l Accounting standards have generally been developed in the private sector either through the American Institute of Certificated Public Accountants(AICPA)or the Financial Accounting Standards Board(FASB).American Accountingo How regulate and enforcen SEC/FASB Accounting i
30、n the United States is regulated by a private-sector body,the Financial Accounting Standards Board(FASB),but a governmental agency,the Securities and Exchange Commission(SEC)underpins the authority of its standardsMonday,October 03,202226American Accountingo How regulate and enforcen AICPAUntil 2002
31、,the American Institute of Certified Public Accountants(AICPA),another private-sector body,set auditing standards.In 2003,the Public Company Accounting Oversight Board decided to set auditing standards itself rather than delegating this task to the AICPA,which had performed the role for over 60 year
32、s.Monday,October 03,202227American Accounting28American AccountingpHow regulate and enforcenAICPAEnron and WorldCom scandalsuThe Sarbanes-Oxley Act of 2002uPublic Company Accounting Reform and Investors Protection Act of 2002uSignificantly expanding U.S.requirements on corporate governance,Disclosur
33、e and reporting,and the regulation of the audit profession.SEC-Public Company Accounting Oversight Board 公众公司会计监督委员会uPCAOB assume the responsibility of setting standards from the AICPA 29American AccountingpHow regulate and enforcenAICPAResponsible for the Code of Professional Ethics and disciplined
34、 auditors.Independent Auditors:limit non-audit services,rotate off audits every five yearsAuditors Report covers both the financial statements and internal control.-(COSO)30American AccountingpHow regulate and enforceuCOSOThe Committee of Sponsoring Organizations of The National Commission of Fraudu
35、lent Financial Reporting 全国虚假财务报告委员会下属的发起人委员会 （通常称Treadway委员会）Sarbanes-Oxley Act Internal Control-Integrated Framework(Treadway,1992)内部控制一整体框架 Enterprise Risk Management Framework(COSO-ERM,2004)企业风险管理框架 Monday,October 03,202231American AccountingMonday,October 03,202232American AccountingMonday,Octo
36、ber 03,202233Monday,October 03,202234Monday,October 03,202235Monday,October 03,202236“MANAGEMENT ASSESSMENT OF INTERNAL CONTROLS”pHow regulate and enforcenAICPA Independent Auditors The Sarbanes-Oxley prohibits the provision of some non-audit services to audit clients,requires the rotation of audit
37、lead and review partners every five years,and require audits to report to an audit committee not management.Monday,October 03,202237American Accounting2022年10月3日星期一p How regulate and enforceu SEC American AccountingEstablished by federal governmentAccounting and reporting for public companiesEncoura
38、ged private standard-setting bodySEC requires public companies to adhere to GAAPSEC OversightEnforcement Authority2022年10月3日星期一pHow regulate and enforcenFASB Predecessors(AICPA)P168American AccountinguIssued 51 Accounting Research Bulletins (会计研究公报)1939 1958Problem-by-problem approach faileduIssued
39、31 Accounting Principle Board Opinions(会计原则委员会意见书)1958-1973uWheat Study Group(惠特调研惠特调研组）组）recommendations adopted in 1973FASB uTrueBlood Report(特鲁布特鲁布拉德报告拉德报告)Objective s of Financial ReportingCohesive system2022年10月3日星期一Selects members of the FASB(AICPA,%)Funds their activities Exercises general ov
40、ersight.Mission to establish and improve standards of financial accounting and reporting.Consult on major policy issues.pHow regulate and enforcenFASB and GAAP http:/www.fasb.org/nWheat Committees recommendations resulted in the creation of a the in 1973.American AccountingpHow regulate and enforcen
41、FASB and GAAPOriginally,GAAP meant what is said;that is,a set of high-level principles endorsed by respectable companies,auditors and textbooks.However,from the 1930s onwards,rules have gradually been written down.As a result,GAAP is now a large body of instructions:it is not principles but detailed
42、 rules,and it is not generally accepted but written down by bodies approved by the SEC.Monday,October 03,202241American AccountingMonday,October 03,202242American AccountingpHow regulate and enforcenFASB and GAAPuGAAP comprise all the financial accounting standards,rules,and regulations that must be
43、 observed in the preparation of financial reports.The SFASs are the major component of GAAP.More voluminous and more detailed than any other country.nRule-based Principle-based(2002-)pHow regulate and enforcenFASB and GAAP In 2001/2,the difference between US rules-based standards and IASB principles
44、 based standards was highlighted because of the spectacular collapses of some large companies(e.g.Enron).Monday,October 03,202243American AccountingMonday,October 03,202244American AccountingpHow regulate and enforcenFASB and GAAPStatements of Financial Accounting Standards (SFAS,财务会计准则公告)Statements
45、 of Financial Accounting Concepts (SFAC,财务会计概念公告)Interpretations on Financial Accounting Standard (财务会计准则解释)2022年10月3日星期一The FASB has issued six Statements of Financial Accounting Concepts(SFAC)for business enterprises.SFAC No.1-Objectives of Financial ReportingSFAC No.2-Qualitative Characteristics
46、of Accounting InformationSFAC No.3-Elements of Financial Statements(superceded by SFAC No.6)SFAC No.4-Non-business OrganizationsSFAC No.5-Recognition and Measurement in Financial Statements SFAC No.6-Elements of Financial Statements(replaces SFAC No.3)SFAC No.7-Using Cash Flow Information and Presen
47、t Value in Accounting MeasurementspHow regulate and enforcenFASB and GAAPAmerican Accounting2022年10月3日星期一SFAC No.6 defines ten interrelated elements that relate to measuring the performance and financial status of a business enterprise.“Moment in Time”“Period of Time”American AccountingpHow regulate
48、 and enforcenFASB and GAAP2022年10月3日星期一The Conceptual Framework is comprised of three levels:First Level=Basic ObjectivesSecond Level=Qualitative Characteristics and Basic ElementsThird Level=Recognition and Measurement Concepts.American AccountingpHow regulate and enforcenFASB and GAAPu Appendix P1
49、74-1792022年10月3日星期一American AccountingTHE Conceptual Framework for Financial ReportingHierarchy of Accounting QualitiesFinancial ReportingMonday,October 03,202251A typical annual financial report of a large US corporation includes the following components:l 1.Report of management l 2.Report of indep
50、endent auditors l 3.Primary financial statements(income statement,balance sheet,statement of cash flows,statement of comprehensive income,statement of changes in stock holders equity)Financial ReportingMonday,October 03,202252l 4.Management discussion and analysis of results of operations and financ
