Matakuliah
Tahun
: F0142/Akuntansi Internasional
: September 2006
Session 03
Comparative Accounting I
1
Introduction
• Accounting Standards are the regulations or rules that govern
the preparation of financial statements.
• Standards setting is the process by which accounting
standards are formulated. Thus, accounting standards are the
products of standard setting.
• Actual practice may deviate from what the standards require.
There are four reason for this :
– In many countries the penalties for non compliance with
official accounting pronouncements are weak or ineffective
– Companies may voluntarily report more information than
required
– Some countries allow companies to depart from accounting
standards if doing so will better
– In some countries accounting standards apply only to
individual company financial statements, not to
consolidated.
2
Six National Financial Accounting
Systems
France
•
•
•
•
•
Plan Comptable General (national accounting code) in September
1947.
A revised plan came into effect in 1957.
A further revision in 1982 under the influence of the Fourth Directive of
The European Union (EU).
In 1986 the plan was extended to implement the requirements of the
EU Seventh Directive on consolidated financial statements, and it was
further revised in 1999.
The Plan Comptable General provides :
• Objectives and principles of financial accounting and reporting
• Definitions of assets, liabilities, shareholders’ equity, revenues and
expenses
• Recognition and valuation rules.
• A standardized chart of accounts
• Model financial statements and rules for their presentation.
3
Six National Financial Accounting
Systems
France
•
•
A feature of French accounting is :
– dichotomy between individual company financial statements and
those for the consolidated group.
– The law allows French companies to follow International Financial
Reporting Standards (IFRS) or US GAAP in their consolidated
financial statements.
Major organizations are involved in setting standards :
– Counseil National de la Comptabilite or CNC (National Accounting
Board)
– Counseil National de la Comptabilite or CNC (National Accounting
Board)
– Comite de la Reglementation Comptable or CRC (Accounting
Regulation Committee)
– Autorite des Marches Financiers or AMF (Financial Markets
Authority)
– Ordre des Experts Comptables or OEC (Institute of Public
Accountants)
– Compagnie Nationale des Commissaires aux Comptes or CNCC
(National Institute of Statutory Auditors)
4
Six National Financial Accounting
Systems
France
• French companies must report the following
–
–
–
–
–
Balance Sheet
Income Statement
Notes to Financial Statements
Directors’ Report
Auditor’s Report
• Listed companies must provide half yearly interim
reports and starting in 2003, the results of their
environmental activities. Information must be given on :
– Auditor’s Report
– Water, raw material and energy consumption, and actions taken to
improve energy efficiency
– Activities to reduce pollution in the air, water, or ground, including
noise pollution and their costs, and
– Amount of provisions for environmental risks.
5
Six National Financial Accounting
Systems
Germany
• In 1965 Corporation Law moved the German
financial reporting system toward British
American ideas.
• The fourth, seventh and eighth EU directives all
entered German law through the Comprehensive
Accounting Act of December 19, 1985.
• The fundamental characteristic of German
accounting :
– Creditor protection as embodied in the commercial law
– The determination principle states that taxable income is
determined by whatever is booked in a firm’s financial records.
– Its reliance on statutes and court decisions
6
Six National Financial Accounting
Systems
Germany
• The 1985 Accounting Act specifies the content
and format of financial statements, which
include :
–
–
–
–
–
Balance Sheet
Income Statement
Notes
Management Report
Auditor’s Report
• A feature of the German financial reporting
system is a private report by the auditors to a
company’s managing board of directors and
supervisory board. The report comments on the
company’s future prospects and especially
factors that may threaten its survival
7
Six National Financial Accounting
Systems
Japan
• To understand Japanese accounting, one must
understand Japanese culture, business practices and
history.
• Accounting regulation is based on three laws (a
triangular legal system) :
– The Commercial Code
– Te Securities and Exchange Law
– The Corporate Income Tax Law
• The commercial code was enacted in 1890 but not
implemented until 1899. Its developed from German
commercial law
• Publicly owned companies must meet the requirements
of the Securities and Exchanges Law (SEL).
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Six National Financial Accounting
Systems
Japan
• The Business Accounting Deliberation Council (BADC) is a
special advisory body to the Ministry of Finance responsible for
developing accounting standards.
• The Japanese Institute of Certified Public Accountants (JICPA)
is the professional organization of CPA’s in Japan.
• A major change in accounting standard setting in Japan
occurred in 2001 with the establishment of the Accounting
Standards Boards of Japan (ASBJ) and its related oversight
foundation known as the Financial Accounting Standards
Foundation (FASF).
• Companies are required to prepare a statutory report, consist
of :
– Balance Sheet
– Income Statement
– Business Report
– Proposal for Appropriation of Retained Earnings
– Supporting Schedules
9
Six National Financial Accounting
Systems
The Netherlands
• In 1970, the Act on Annual Financial Statements was
enacted but accounting regulations remained liberal.
• The act was amended in 1983 to incorporate the EU
fourth directive.
• Further amended in 1988 to incorporated the EU
seventh directive
• The council for annual reporting issues guidelines on
generally acceptable (not accepted) accounting
principles. The members are
– Preparers of financial statements (employers)
– Users of financial statements (representatives of trade unions and
financial analysts)
– Auditors of financial statements (The Netherlands Institute of Register
Accountants or NIvRA)
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Six National Financial Accounting
Systems
The Netherlands
• Statutory financial statements should be filed in Dutch,
but English, French and Germany are also acceptable.
The statements must include :
–
–
–
–
–
Balance Sheet
Income Statement
Notes
Directors’ Report
Other Prescribed Information
• A cash flow statement is not required, but is
recommended by a council guideline, and most Dutch
companies provide one
• Dutch companies permitted to prepare financial
statements using IFRS or US GAAP instead of Dutch
accounting standards
11
Six National Financial Accounting
Systems
United Kingdom
• In 1981 the EU Fourth Directive was
implemented, adding statutory rules
regarding formats, accounting principles
and basic accounting conventions. The
act set five basic accounting principles:
– Revenues and expenses are matched on an accrual
basis
– Individual asset and liability are valued separately
– The principles of conservatism is applied
– Consistent application of accounting policies
– The going concern principles is applicable
12
Six National Financial Accounting
Systems
United Kingdom
• British financial reporting generally include :
–
–
–
–
–
–
–
Directors’ report
Profit and loss account and balance sheet
Cash flow statement
Statement of total recognized gains and losses
Statement of accounting policies
Notes that are referenced in the financial statements
Auditor’s Report
13
Six National Financial Accounting
Systems
United States
• Accounting in the United States is regulated by
– A private sector body (FASB)
– A governmental agency (SEC)
• Generally Accepted Accounting Principles are comprised
of all financial accounting standards, rules, and
regulations that must be observed in the preparation of
financial report.
• The Sarbanes Oxley Act was signed into law in 2002,
significantly expanding US requirements on corporate
governance, disclosure and reporting and the regulation
of the audit profession.
• Among its more important provisions is the creation of
the PCAOB, a new non profit organization overseen by
the SEC.
14
Six National Financial Accounting
Systems
United States
• A typical annual financial report of a large US corporation
includes the following :
– Report of management
– Report of independent auditors
– Primary financial statements (income statement, balance sheet,
statement of cash flows, statement of comprehensive income and
statement of stockholders’ equity)
– Management discussion and analysis of results of operations and
financial condition
– Disclosure of accounting policies
– Notes to financial statements
– Five or ten year comparison of selected financial data
– Selected quarterly data
15
Summary of Significant Accounting
Practices
Items
Business Combination,
Purchase or Pooling
Goodwill
Affiliated Companies
Foreign Currency
Translation Current Rate
Method
Temporal Method
Asset Valuation
Depreciation Charges
France
Germany
Japan
Netherlands
UK
USA
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Capitalize &
Amortize
Capitalize &
Amortize
Capitalize &
Amortize
Capitalize &
Amortize
Capitalize &
Amortize
Capitalize &
Impairment
tested
Equity Method
Equity Method
Equity Method
Equity Method
Equity Method Equity Method
Autonomous
Subsidiaries
Autonomous
Subsidiaries
All
Subsidiaries
Autonomous
Subsidiaries
Autonomous
Subsidiaries
Autonomous
Subsidiaries
Integrated
Subsidiaries
Integrated
Subsidiaries
Not Used
Integrated
Subsidiaries
Integrated
Subsidiaries
Integrated
Subsidiaries
Historical Cost
Historical Cost Historical Cost
Historical &
Current Cost
Historical &
Current Cost
Historical Cost
Economic Based
Taxed Based
Taxed Based
Economic
Based
Economic Based
Economic
Based
Not Used
Not Used
Not Used
Not Used
Not Acceptable
Used
Finance Leases
Not Capitalized
Not
Capitalized
Capitalized
Capitalized
Capitalized
Capitalized
Deferred Taxes
Accrued
Accrued
Accrued
Accrued
Accrued
Accrued
Used
Used
No
Some
Some
No
LIFO Inventory Valuation
Reserves for Income
Smooting
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