国际会计第七版英文版课后答案(第八章)

1、Chapter 8Global Accounting and Auditing StandardsDiscussion Questionsmeasurementmay1. Argument for measurement:?Discrepancies in internationalproduce accounting amounts that are vastly different (even where financial transactions and position are identical), leading to incorrect comparisons. Here it

2、 doesn t matter what is disclosed; no reliable comparisons are possible anyway.Arguments for disclosure:If companies do not disclose complete information, they can hide losses or future problems from financial statement users. For example, losses can be hidden by offsetting them against gains. Expec

3、ted future problems related to loss contingencies can be hidden simply by not disclosing them. Thus, if disclosure is incomplete, even the application of similar measurement principles will lead to incorrect comparisons.Clearly, international accounting convergence requires that both measurement and

4、 disclosure be made comparable.2. The term convergence is associated with the International Accounting Standards Board. Before the IASB, harmonization was the commonly used term. Harmonization means that standards are compatible; they do not contain conflicts. Harmonization was generally taken to me

5、an the elimination of differences in existing accounting standards, in other words, finding a common ground among existing standards. Convergence means the gradual elimination of differences in national and international accounting standards. Thus, the terms harmonization and convergence are closely

6、 aligned. However, convergence might also involve coming up with a new accounting treatment not in any current standards.3. a. Reciprocity, or mutual recognition, exists when regulators outside of the home country accept a foreign firm s financial sta tements based on the home country s principles,

7、or perhaps IFRS. For example, the London Stock Exchange accepts U.S. GAAP-based financial statements in filings made by non-U.K. foreign companies. Reciprocity does not increase cross-country comparability of financial statements, and it can create an unlevel playing field in that foreign companies

8、may be allowed to apply standards that are less rigorous than those used by domestic companies.b. With reconciliation, foreign firms can prepare financial statements using the accounting standards oftheir home country or IFRS, but also must provide a reconciliation between accounting measures (such

9、as net income and shareholders equity) of the home country and the country where the financial statementsare being filed. Reconciliations are less costly than preparing a full set of financial statements under a different set of accounting principles, but provide only a summary, not the full picture

10、 of the enterprise.c. International standards are a result of either international or political agreement, or voluntary (or professionally encouraged) compliance.Whenaccounting standards are applied through political, legal, or regulatory procedures, statutory rules typically govern the process. All

11、 other international standards efforts in accounting are voluntary in nature.464 .Key rationales supporting the development and widespread application of IFRS include:a. A growing body of evidence indicates that the goal of international convergence of accounting, disclosure and auditing has been wi

12、dely accepted.b. All dimensions of accounting are becoming converged worldwide.c. Increasing numbers of highly credible organizations strongly support the goals of the IASB.d. National differences in the underlying factors that leadto variation in accounting, disclosure, and auditing practices are n

13、arrowing as capital and product markets become more international.e. International standards will improve the comparability of international financial information.f. Time and money will be saved on international consolidations, the components of which now are subject to different national laws and p

14、ractices.g. There may be a tendency for accounting standards throughout the world to be raised to the highest possible level.h. Widespread application of IFRS might also result in:? Improved managerial decision making within multinational enterprises.? Improved allocations of corporate investment mo

15、ney worldwide.Better internationalunderstandabilityof financialstatements.Cost reductions in accounting processing and financial disclosure multinational rmationcosts forpublishedGreater international credibility for financial statements.5 .Key rationales against the development and

16、widespread application of IFRS include:a. Accounting has built-in flexibility. Its ability to adapt to widely different situations is one of its most important features. Critics doubt that international standards can be flexible enough to handle differences in national backgrounds, traditions, and e

17、conomic environments, and may be a politically unacceptable challenge to sovereignty.b. It is claimed that international accounting standardinternationaltheir marketc. Internationalsetting is a tactic of the large accounting service firms to expand share.standards may create standardsoverload for co

18、mpaniesthat do rude onpoliticald. National political concerns frequently accounting standards. International influences would compromise international accounting standards.e. International standards are not suitable for smalland medium-sized companies, particularly unliste

19、d ones with no public accountability.f. Risks of misinformation uniform standards may give the appearance of similarities when in fact countries and companies may be highly dissimilar.g. Political costs of the necessary international treaties on financial accounting and reporting which would have to

20、 be negotiated to enforce the use of IFRS.6 .Evidence indicating wide acceptance of IFRS around the world:a. Growing numbers of companies are adopting IFRS voluntarily and refer to their use of IFRS in their annual reports.b. Dozens of countries base their national accounting standards on IFRS.c. So

21、me 7,000 EU listed companies now use IFRS in their consolidated financial statements.d. Many international organizations, such as IOSCO, endorse the use of IFRS.e. IFRS are used as an international benchmark in many major industrialized countries.f. IFRS are accepted by many stock exchanges and secu

22、rities regulators.g. IFRS are recognized by the European Commission (EC) and other supranational bodies.h. Norwalk Agreement committed FASB and IASB to convergence.7 . The International Accounting Standards Board is overseen by the International Accounting Standards Committee, consisting of 22 trust

23、ees:six from NorthAmerica, six from Europe, six from the Asia-Pacific region, and four from any area. The trustees appoint the members of the IASB. The IASB receives advice from the StandardsAdvisory Council on its agenda and priorities. The SAC consists of around 30 members appointed by the IASC tr

24、ustees and they represent a diversity of geographic and professional backgrounds.12 full-timeand twoin setting accounting the boardnormallysets out the variousThe IASB consists of 14 members, part-time. It follows a due process standards. For each standard, publishes a discussion paper that possible

25、 requirements for the standard and the arguments for and against each one. Later, the board publishes an exposure draft for public comment, and it then examines the arguments put forward in the comment process. A final standard is issued when nine of the 14 board members have voted in its favor.8 .A

26、ccounting harmonization in the EU is just one element of the overall project of harmonizing the legal and economic systems of the member states, and is part of the process of harmonizing company law.The Fourth Directive illustrates the concept of harmonization, and specifies accounting measurement (

27、valuation) and disclosure requirements. It provides formatrules for the balance sheet and the profit and loss account.The true and fair view is the overriding requirement and holds for footnote disclosures as well as the financial statements. The Fourth Directive also sets out the requirements for f

28、inancial statement audits.The Seventh Directive addresses consolidated financial statements. It requires consolidations for groups of companies above a certain size, specifies disclosures and notes, and requires a directors report. When it was issued in 1983, consolidated financial statements were t

29、he exception rather than the rule in Europe.The Eighth Directive addressed various aspects of the qualifications of professionals authorized to carry out legally required (statutory) audits. Now referred to as the Statutory Audit Directive, it was substantially amended in 2006. The new directive tig

30、htens oversight of the audit profession and has standards for, among other points, auditor appointment and rotation, and continuing professional education.The EU abandoned its approach to harmonization to one favoring the IASB for practical and political reasons. The Fourth and Seventh Directives we

31、re incomplete and essentially remained as they were issued. Improvements to them proved difficult to achieve and the directives did not achieve the comparability expected. Some saw a set of Europe-wide standards as an unnecessary redundancy given the emergence of comprehensive IFRS. Others saw U.S.

32、GAAP as a rival to IFRS. The EU cannot influence U.S.GAAP, but can influence IFRS. By putting its weight behind the IASB, the EU could serve as a counterweight to U.S. GAAP.9.International accounting harmonization/convergence should address many, if not most, investor concerns about cross-national d

33、ifferences in accounting practices. The key issue here is comparability investors want to make “ apples to apples ” comparisons of financial statements of companies from countries around the world. However, converged standards are only the beginning. Standards must also be comparably applied and the

34、y must be rigorously enforced. The financial statements must also be similarly audited to ensure comparable reliability.10.Convergence of auditing standards will help ensure that audit quality will reach acceptable levels worldwide. Auditing convergence may be less difficult to achieve than accounti

35、ng convergence because auditing is more technically oriented and there is wider agreement as to what constitutes best practices in auditing than there is for accounting principles.IFAC is a worldwideorganizationof over 160 memberorganizations in 120 countries.Its missionincludesestablishing and prom

36、oting adherence to high-quality auditing and other professional standards, and furthering the international convergence of such standards. Its work is done through standard setting boards and standing committees. Among its standard setting boards are:?International Accounting Education Standards Boa

37、rd?International Auditing and Assurance Standards Board?International Ethics Standards Board for AccountantsIts work spans the entire array of professional responsibilities of auditors and includes standards covering professional education, the conduct of the audit, and professional ethics.11.IOSCO

38、consists of securities regulators from more than100 countries. Together, IOSCO members are responsible for regulating more than 90 percent of global securities markets. One of IOSCO s objectives is promoting “ high standards of regulation in order to maintain just, efficient, and sound markets. ” IO

39、SCO has worked extensively on international disclosure and accounting standards to facilitate the ability of companies to raise capital efficientlyin global securities markets. It has a technical committee whose sole focus is multinational disclosure and accounting. Model disclosure standards were p

40、ublished in 1998 and 2002.IOSCO s disclosure harmonization work is important because it has established a set of high quality disclosure standards, globally recognized, that serves as a model for nationsaround the world as theydevelop nationalrequirements for cross-border offerings and initial listi

41、ngs.12.The UN and OECD now play supporting roles in harmonizing accounting and auditing standards. The IASB and IFAC are now the clear leaders in this endeavor, but inthe 1970s and 1980s, both the UN and OECD were potential rivals. Most of the effort of the UN and OECD is directed toward providing t

42、echnical accounting assistance to developing countries. For example, the UN has focused much attention on Russia and countries of the former Soviet bloc, and on African countries.Exercises1.One of the main problems with mutual recognition (or reciprocity) is that it actually may make financial state

43、ments within the home market noncomparable. If many different accounting standards are acceptable, then companies domiciled in countries with rigorous standards (such as the United States) would be at a disadvantage to companies whose home country standards are not as stringent, but still would be a

44、cceptable. Investors also would face the difficult task of having to master many sets of accounting principles in order to be able to understand the associated financial statements.The U.S. SEC considers reconciliation to be a cost-effective means to allow foreign firms to list on a domestic exchang

45、e. With reconciliation, differences between accounting standards are identified and quantified without the need to prepare a second set of financial statements. However, significant differences between domestic and foreign accounting principles can increase the burdens associated with reconciliation

46、, and reconciliations do not provide a full picture of the enterprise as would result from a second set of financial statements.The use of International Financial Reporting Standards would provide many benefits for cross-border listings.Companies would have to provide only one set of financial state

47、ments for all nondomestic capital markets, and investors would have to be familiar with only one set of accounting principles to properly understand and interpret nondomestic financial statements. However, as with reconciliation, domestic companies required to comply with domestic standards still wo

48、uld compete for capital with nondomestic companies that would be required to comply with a different (and possibly less stringent) standard.Preferred approaches from perspectives of different groups:a. Investors might prefer international standards, as they would increase the ease in understanding i

49、nformation from nondomestic companies. Knowledge of only one set of standards would be required to understand all nondomestic statements.However, there is also acase forreconciliation,whichpresents in aneconomical manner the significant differences between nondomestic and domestic financial statemen

50、ts and does not require investors to be familiar with any set of accounting standards other than the home country.b. Company management might prefer mutual recognition,as it does not require acompany toprepare anyadditionalinformationandrequiresnoadditional expense or time commitments. However, comp

51、anies in some countries might adopt IFRS voluntarily to increase their credibility with investors and increase the overall quality of their financial reporting.c. Regulatory authorities might prefer reconciliation as it places the burden on companies yet provides adequate disclosure and investor pro

52、tection.d. Stock exchanges might prefer convergence as it is the only method that provides truly complete and identical information disclosure from companies outside the home market.e. Professional associations will take positions according to their constituents - associations of stockbrokers might

53、prefer convergence to the extent that it would make company information easier to understand, whereas associations of company executives might prefer reciprocity.2 .The following discussions are based on the respective organizations Web sites at the time of writing.International Federation of Accoun

54、tants (IFAC)IFAC, an organization of national professional accountancy organizations, plays a critical role in the convergence of auditing standards and other international auditing initiatives. The organization has over 160 member organizations in 120 countries, representing more than 2.5 million a

55、ccountants. Organized in 1977, IFAC s goal is to develop the accountancy profession and converge its professional standards worldwide to enable accountants to provide services of consistently high quality in the public interest.To achieve its objective, IFAC develops and promotes technical, professi

56、onal and ethical standards for accountants, provides leadership on emerging issues, and serves as a voice for the world s accountants on issues ofpublic and professional concern. IFAC fosters the advancement of strong national professional accountancy organizations, and works closely with regional a

57、ccountancy organizations and outside agencies to accomplish this.The IFAC Council, comprisedof one representativefromeach member body, providesoverallleadership of IFAC.The councilelectsthe IFACBoard, and isresponsiblesetting policy and overseeing IFAC operations, the implementation ofprograms,and t

58、he workof IFAC sstandard setting groups and committees. The Public Interest Oversight Board (PIOB), an independent board, provides additional oversight. Day-to-day administration is providedby the IFAC chief executive locatedin New York,which is staffedby accounting professionalsfrom aroundthe world.IFAC s professional workis done through itsstandardsettingboards andstanding committees.IFACstandardsetting boards are:?International Accounting Education Standards Board?International Auditing and Assurance Standards Board?International Ethics Standards B