...What is the effect of mandatory IFRS adoption on earning management ABSTRACT: International Accounting Standard play a important role in the world. More and more countries trend to adopt international accounting standard. Beginning in 2005, public companies in the member states of the European Union (EU) are required to apply IFRS. Ten years have passed, what is the effect of mandatory IFRS adoption on these countries, and how IFRS affect on earning management. In the paper, I will discuss this question based on some previous finding. Next, I will use IFRS 9 as a specific case for my conclusion. Finally, I will give my opinion on the effect of mandatory IFRS adoption on earning management. Key Words: Accounting Standard, earning management, IFRS, Financial Instrument, bank, impairment of asset, IAS39, IFRS 9 I. The effect of mandatory IFRS adoption on earning management 1.1 In 2012, Yi Lin Chua, Chee Seng Cheong. And Graeme Gould publish a article named “The Impact of Mandatory IFRS Adoption on Accounting Quality: Evidence form Australis. This article examines the impact of IFRS on accounting quality by focusing on threes perspectives: (1) earning management, (2) timely loss recognition, and (3) value relevance. In my paper, I will focus on earning management. First, the author talk about the reason he choose Australia. Because Australia is one of the first countries located outside of the EU that has mandated IFRS and is also the first non-EU adopting...
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...on the active agenda that are being addressed by the IASB. Items that will be addressed for each of the projects are what is the timetable identified for milestones on each of the projects and what is the status of the conceptual Framework project? IFRS 9: Financial Instruments (replacement of IAS 39) The IASB divided this project to reconsider the accounting for financial into three phases classification and measurement, impairment methodology, and hedge accounting. IFRS 9 included requirements for financial assets and was published in November 2009. During October 2010 requirements for liabilities were added. One of the most notable changes were made to the fair value option for liabiliober 2010 requirements for liabilities were added.One of the most notable changes were made to theties to respond to the issue of own credit risk. It was decided by the IASB that the mandatory date of January 2015 did not allow enough time for entities to apply the new standard due to the impairment phase of the IFRS 9 has not been completed. A new date will be decided when the entire IFRS 9 project is close to completion. The changes made to IFRS 9 in November 2013 remove the effective date from IFRS 9, but entities may choose to apply IFRS 9 immediately. Phase II: Amortized cost and impairment of financial assets. The IASB is attempting to recognize credit losses on a timelier basis. Credit losses that are expected are to be recognized from when they are originated or purchased. Phase e three...
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...IFRS vs. GAAP ACC/291 June 1, 2015 Judith Bines IFRS vs. GAAP The International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) are rules used to ensure ethical reporting of financial information. During Accounting 291, we have learned how to apply these rules however the differences between the United States GAAP and the IFRS make it difficult to compare companies. Some of these differences appear in the measurement of “fair value”, component depreciation, the revaluation of plant assets, product development expenditures, contingent liabilities, and the accounting for liabilities. Moving to Fair Value Measurement To the average person, the meaning of “fair value” would seem to have one meaning but this is not the case under GAAP and IFRS. “Under IFRS 1-3, the fair value of a financial liability is the cost to transfer it to another market participant in an orderly transaction at the measurement date. This is subtly different to how the fair value of a financial liability is determined under the previous rules in IAS 39 where the fair value of a financial liability is the amount at which it could be settled between knowledgeable, willing parties in an arm's-length transaction” (McCarroll & Khatri, 2012). “The Accounting Standards Update (ASU) provides a converged meaning of "fair value," defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market...
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...GLOBAL ACCOUNTING A. International Accounting proposed that the Nations of the world should be reporting their economic activities in accounting with some general understanding. Examine this statement? B. SAS 9: Accounting for Depreciation. You are required to discuss the requirement of this standard and compare its provisions with International Accounting? A. International Accounting is saddled with the responsibility of preparing and presenting financial statements that provide financial information about the financial position, financial performance, and changes in cash flow of a global business; and shows the result of management’s stewardship of resources in their care. These financial statements are useful to a wide range of users across the globe in making economic decisions. Financial statements comprises of a balance sheet, a profit and loss account, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes (IAS 1). The accounting report is a major way of getting a picture of what a company is doing and how it has been performing over the years (Walton and Aerts, 2006). The information in these financial statements, quantitative and qualitative in nature, should be simple, clear, and easily understood by all users. The users includes individuals, group of investors, or financial institutions who need to determine the liquidity , profitability, and viability of...
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...Comparing IFRS to GAAP Essay Joshua Tracey ACC /2291 March 22nd, 2016 Mr. Bob Wells Comparing IFRS to GAAP Essay The past few weeks, the team and I have been discussing each of the questions and have come to some very good answers to each. We tried to compile a list so that each can put into our own words and input our opinions and examples that we have direct experiences with. Each question is outlined below and has a brief excerpt of each of our discussions. IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed? Under either system, companies will be required to report assets at either book value or fair value, depending on the situation. Fair value measurements provide users of financial statements with an accurate picture of the value of a company’s assets. Both IFRS and GAAP require firms to include information regarding fair value measurement practices in the notes of financial statements. As a general rule of thumb, all assets in the same class must receive the same valuation treatment. In regards to the value of receivables, IRFS uses a two-tiered method that first analyzes individual receivables, and then looks at receivables as a whole to determine if there is any impairment. IFRS 9-1: What is component depreciation, and when must it be used? Component depreciation happens when an asset has fundamentally different parts that should...
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...roles IASB consist of develop drafts of International Financial Reporting Standards (IFRS) and to carry out tasks alongside with the International Financial Reporting Committee (IFRIC), where the IASB role is to approve the interpretations by the IFRIC. Australia has joined the revolution of accounting integration by the intention to adopt IFRS in 2003, with implementation required for reporting periods on or after 1 January 2005 (Nobes & Zeff, 2008). Intention of adopting IFRS is to embrace international harmonisation by having a single universal set of accounting rules and to optimize accounting quality reducing diversity in accounting practices and information asymmetries. Concurrently, many scholars has raised doubts and speculation of this ideology of accounting standardisation stirred up by the adoption of the controversial International Accounting Standards (IAS) 39 or in Australia, the Australian Accounting Standards Board (AASB) 139: Financial Instruments: Recognition and Measurement which has been subject to much criticism (Armstrong, Barth, Jagalinzer, & Riedl, 2008; Barth, Landsman, & Lang, 2006). Due to this uproar, the IASB has decided to review the standards for financial instruments formulating a new financial instrument standard, IFRS 9: Financial Instruments which would be implemented in January 2013, however, an option is given to companies if they wish to adopt the new standard earlier. Hence, this essay would discuss in depth the issues arising from...
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...5/6/2015 Salient differences between IAS 39 and IFRS 9 | Accounting For Investments Accounting For Investments Web site resources for the book 'Accounting for Investments' by R. Venkata Subramani Home Accounting Standards I F R S Indian Standards (AS) US GAAP BookVolume1 00 – Introduction Chapter Arrangement Foreword Preface Reviews 01 – Financial Instruments 02 – Trading – FVPL 03 – Available for Sale 04 – Transfer of Categories 05 – Derivatives Theory 06 – Index Futures 07 – Stock Futures 08 – Call Options 09 – Put Options 10 – Hedge Accounting 11 – Contract for Difference 12 – Short Selling 13 – ADR/GDR 14 – Disclosures BookVolume2 02 – Fixed Income Securities – FVPL News Americas Hedge Funds India Private Equity Subprime crisis Online Courses Accounting Standards Courses Financial Products Related Books Tutorials Credit Default Swaps Equity Shares Indian Income Tax Options Videos Subscribe http://accountingforinvestments.com/salientdifferencesbetweenias39andifrs9/ 1/5 5/6/2015 Salient differences between IAS 39 and IFRS 9 | Accounting For Investments Salient differences between IAS 39 and IFRS 9 by R. Venkata Subramani On 12 November 2009, the International Accounting Standards Board (IASB) issued IFRS 9 Financial Instruments. Salient differences between IAS 39 and IFRS 9 Parameter IAS 39 IFRS 9 Name Financial Instruments: Recognition and Measurement Financial Instruments ...
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...Comparing IFRS to GAAP Kerry Pettit ACC/291 October 25, 2015 Cameo Christopher Comparing IFRS to GAAP IFRS 8-1: IFRS and GAAP are similar when it comes to basic accounting and reporting issues that connect. With identification and measurement of allowance accounts, accounts receivables, recording discounts, and the reduction process to account for bad debt and factoring. However, FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) have taken steps to implement fair value measurement to financial instruments. As a result opposing factors, FASB and IASB have adopted a fragmentary approach. The first step the two have taken is disclosing the appropriate use information in the notes. Step two is the adoption of the fair market alternative that allows companies to record some financial instrument at fair value in financial statements (Kimmel, 2013). The third step is acknowledging the complexity and universality of recognizing the area of revenues in fiscal reporting. FASB and IASB have also collaborated in the development of a new single revenue recognition standard. Both FASB and IASB are of the opinion that transparency and comprehension of financial statements can increase if companies record and report all financial instruments at fair value. Some of the criticism on both FASB and IASB is that they represent a split model. The critics claim that some financial instruments state at fair value. Some loans and receivables (reported...
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...Disclosures in IFRS Evidence from Infosys financial statements Abstract: INTRODUCTION: To reassure the position of a globalised economy, India is all set to implement IFRS .This paper attempts to show cause the disclosures as per the new accounting standard IFRS. Infosys, the software giant is one of the early movers in India to prepare the financial statements as per IFRS. This company has carved a niche in itself in good practices in financial reporting. Though India has missed the earlier deadline of converging to IFRS from April 2011, has shown its commitments to implement IFRs compliant accounting standards once few ambiguities are addressed to The main thrust of IFRS prepared by IASB (internal Accounting standard Board) is the “fair value accounting and detailed disclosures to make the financial statements more useful for the stakeholders. With the paradigm shift in the accounting standard there might be volatilities of the numbers reported. Right from the classification of assets, liabilities, equities until principle differences of asset valuations, revenue recognitions IFRS differ from existing GAAP. There were inquisitive analysts, accounting experts who would want to capture the transition difference of the two accounting standards. Hence, it will be of academic interest to study the difference between local GAAP and IFRS. This paper analyses the IFRS statement of Infosys from Financial year 2009 and makes comparisons with the Indian GAAP numbers. This study...
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...ISSUES IN ACCOUNTING EDUCATION Vol. 22, No. 4 November 2007 pp. 685–708 China Eastern Airlines: People’s Republic of China Accounting Standards, International Financial Reporting Standards, or U.S. Generally Accepted Accounting Principles? John L. Haverty ABSTRACT: China Eastern Airlines, headquartered in the People’s Republic of China, has been listed and traded on the New York Stock Exchange since 1997. In its 2005 annual report, China Eastern Airlines presents two sets of financial statements: one prepared under People’s Republic of China accounting regulations, and a second set prepared under International Financial Reporting Standards. In addition, as a listed company on the New York Stock Exchange, China Eastern Airlines files Form 20-F with the United States Securities and Exchange Commission. This filing includes a limited reconciliation of net income and net assets from International Financial Reporting Standards to United States’ generally accepted accounting principles. Your job is to examine these financial statements, explore any differences noted between each of the financial statements and U.S. GAAP, and highlight some issues to be included in a financial analysis of China Eastern Airlines for possible inclusion in an investment portfolio. W INTRODUCTION alt Gregory is a junior portfolio analyst at Chartgood, a portfolio manager for several major mutual funds. Susan Bedell, the portfolio manager, just informed Walt that one of the funds she managed, the Global...
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...In 2002 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) met and issued the Norwalk Agreement where they both agreed to develop of high quality accounting standards. Since that time the FASB and the IASB have been working on joint projects a.k.a convergence projects designed to improve both US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), eliminate differences between them, and ultimately make the standards fully compatible. In 2010, to increase efficiency the boards decided to focus on the priority projects. Two of those projects, fair value measurement and statement of other comprehensive income, are poised for release. Now, the “big three” remain—financial instruments, revenue recognition, and leases. The IASB is also working to its monster project on insurance contracts, with the FASB closely engaged in the discussion. Therefore, bellow is the list of the active joint FASB/IASB projects according to current technical plan on the fasb.org website: - Accounting for Financial Instruments (Updated November 10, 2011): • Classification and Measurement (Updated November 10, 2011); • Impairment (Updated November10, 2011); • Hedging (Updated November 10, 2011). - Revenue Recognition (Exposure Draft issued November 14, 2011); - Leases (Updated November 15, 2011); - Balance Sheet – Offsetting (Updated August 15, 2011); - Consolidation: Policy and Procedures (Exposure...
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...Stephen Elop President & CEO Timo Ihamuotila CFO Matt Shimao Head of Investor Relations Disclaimer It should be noted that certain statements herein which are not historical facts are forward-looking statements, including, without limitation, those regarding: A) the expected plans and benefits of our strategic partnership with Microsoft to combine complementary assets and expertise to form a global mobile ecosystem and to adopt Windows Phone as our primary smartphone platform; B) the timing and expected benefits of our new strategy, including expected operational and financial benefits and targets as well as changes in leadership and operational structure; C) the timing of the deliveries of our products and services; D) our ability to innovate, develop, execute and commercialize new technologies, products and services; E) expectations regarding market developments and structural changes; F) expectations and targets regarding our industry volumes, market share, prices, net sales and margins of products and services; G) expectations and targets regarding our operational priorities and results of operations; H) expectations and targets regarding collaboration and partnering arrangements; I) the outcome of pending and threatened litigation; J) expectations regarding the successful completion of acquisitions or restructurings on a timely basis and our ability to achieve the financial and operational targets set in connection with any such acquisition or restructuring; and K) statements...
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...Abstract There are many issues surrounding fair value accounting, this assignment concerns about the discussion of fair value measurement under both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB). So far, IASB and FASB have created a uniform framework for how to measure fair value for entities around the world. By publishing IFRS 13 Fair Value Measurement, the IASB established a single source of guidance under IFRS for all fair value measurements. After searching relevant sources from financial books and economic websites, some of the issues about fair value accounting have been clarified and analysed. This assignment provides a better understanding of the joint work between IASB and FASB, the definition of fair value under both standards, the relevant issue about IFRS 13 and why accounting differences exist. A. Explain the purpose of the Memorandum of Understanding between the IASB and the US national standard-setter, the Financial Accounting Standards Board (FASB). Theoretically, A Memorandum of Understanding is a document that involved a bilateral or multilateral agreement between parties (Wikipedia 2011). In this particular research essay, the Memorandum of Understanding is a convergence process that both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB) would take steps to balanced the reciprocal...
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...Advantages and Disadvantages of switching from U.S.GAAP to IFRS Nara Yoon Charles Center Summer 2009 Advantages and Disadvantages of switching from U.S.GAAP to IFRS 2 In today’s business, markets are demanding increasing conformity. Many countries have converted to and implemented the International Accounting Standards Board (IASB)’s accounting standards. The United States, however, still maintains its own Financial Accounting Standards Board (FASB). Both IASB and FASB have created International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (U.S.GAAP) respectively. These accounting standards are rules of measurements for financial statements that companies issuing stock to the public must provide to stockholders (Libby, 21). There are various advantages and disadvantages of the U.S. companies changing their systems from U.S.GAAP to IFRS. As the markets have grown to become more complex and global, the disparities between the two standards have been a significant issue as consumers and producers call for reform. The current differences between U.S.GAAP and IFRS affect many aspects of business. There seems to be some future losses but the U.S. is continuing to move toward conversion. The primary benefits U.S. hopes to get are comparability, and thus, greater market liquidity and lower cost of capital. They also hope to see cost savings for multinational companies who keep record of several accounting standards. Most...
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...FHL Group decided to elect to adopt IFRS 9 Hedge Accounting which will enable the Group to more effectively mitigate the adverse foreign exchange movements involved with importing of raw materials and finished goods for our leading retail business units, c $120M per year. The identification of foreign exchange risk has been formally identified as a key financial risk to the Group and as such compliments this decision to adopt hedge accounting as a method by which to minimise the volatility of the AUD against the USD contracts. The risk likelihood and impact are considered high in both cases. FHL has chosen to hedge with Forwards Exchange Contracts to hedge the foreign exchange risk. A forward contract is a contract to exchange a fixed amount of f financial assets on a fixed future date at a fixed price. The fair value of a forward contract is affected by changes in the spot rate and changes in the forward points. Although the Group has used forward contracts in the past, the adoption of IFRS 9 Hedge Accounting has not been applied because the tenure of the contracts was hedging against AUD/USD FX rates three months out from the accounting period. The Board has decided that the tenure should now look prospectively 6 months out which brings better value FEC’s with respect to the agreed Forward rate but equally the longer period creates more uncertainty, therefore the Board has elected to adopt Hedge Accounting. Background IFRS 9 Hedge Accounting states that derivative...
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