International Classification of Accounting Systems

assortment of invoice Systems Critic anyy evaluate to what extent past investigate into classification of account statement systems has become irrelevant because of inter field harmonisation efforts. tout ensembleow us incite that IASC was replaced in 2001 by IASB ( worldwide be Standards scorecard). We atomic number 18 going to start this story with the different classification researches, taking for example Hofstede and color ins studies. then(prenominal) we leave draw the main differences between generally accepted accounting principles (Generally Accepted history Principles) and IFRS (International pecuniary Reporting Standards). We will also speak about the Americanocentrism problem. To ultimately dealing with the differences and harmonisation. *Two Main Example*s* of Past Studies* *Hofstedes* societal dimensions and Grays story values Different Classification Researches The first champion is the deductive or judgmental method.Environmental factors argon identi fied and they atomic number 18 linked to national explanation practices. Then, world-wide gatheringings and victimisation patterns be proposed. The second maven is the inductive or empirical memory access where individual practices argon analyzed the grouping or development patterns are identified, and where the explanations are based on economic, social, political and cultural factors proposed. In the deductive approach, Mueller developed four approaches to story development.Macroeconomic pattern where business accounting is tied to national economic policies (Sweden, France, Germany) Microeconomic pattern where accounting is a branch of business economics (Holand) Independent discipline pattern where accounting is a service function derived from business practices (US, UK) and where accounting is considered to be dependent of developing its own conceptual framework from business practice. Uniform accounting system pattern where accounting is an efficient mean of control and administration. It takes into account that finis and historical roots are very important.Hofstede define four societal dimensions individualism versus collectivism, large versus small power distance, uncertainty deflectance story to which a firm is ok with ambiguity, masculinity preference for achievement, assertiveness, material success. promptly let us focus on Gray who has developed the succeeding(a) pairs of contrasting accounting values Professionalism VS Statutory Control there is a preference for individual judgment, self regulation. Uniformity VS flexibility there is a preference for enforcement of uniform practices.Conservatism VS Optimism there is a preference for careful approach. Secrecy VS Transparency there is a preference for confidentiality. there are a lot of international pressures equivalent the growing international interdependencies and the harmonisation of the regulatory framework. But also the new opportunities, joint ventures and alliances. *GAAP/ *IFRS Let us start by an analysis of the GAAP (Generally Accepted Accounting Principles). Financial accounting relies on certain standards of the GAAP. Principles of GAAP derive from usage.There are s as yet main principles regularity or consistency, sincerity, permanence of methods, non compensation, prudence, continuity, and periodicity. In any report of financial statements ( scrutinise, compilation, or review), the auditor must testify to the reader whether or not the information contained within the statements complies with GAAP. The convergence of accounting standards, that the majority of the industrialized countries support is advantageous for the companies in the Stock transfigure they should not have to produce several financial statements and and then come through important sums of m bingley. The financial risk is reduced.The investors, for their part, can better compare and come across the financial data of companies wherever they are established. Their decision ma king is thus improved. This international harmonisation is a process making it possible to convey to a basic bringing together various accounting standards atomic number 53 big advantage can be seen when we face a coalition or an acquisition. Decisions are much easier to take. However, the experience of convergence IASB/FASB shows that many years are necessary to ensure the convergence of two reference frames moreover based on the same Anglo-Saxon culture of the businesses.This is due chiefly to an existence of an opposition between an approach by the rules in the fiber of FASB and an approach by the principles which draws IASB. IASB is at the center of the convergence movement. The IFRS are draw like founded on principles, which means that they leave a big liberty of action to the companies about the evaluation of the accounting data. The US GAAP are described like founded on rules and they aim to regulate all the possible aspects of the presentation of the accounts. T hese standards thus require very detailed information on behalf of the companies.In the case of convergence between IASB and FASB, the harmonization of the IFRS and US GAAP is currently working and common solutions have already been found. That do not prevent from the divergence of several points of view, among the principal aspects to be solved one we think about the financial instruments and the presentation of the performances. Some of the differences between US GAAP and IFRS are embodied in the standards themselves. They are intentional deviations from US requirements. Americanocentrism Some countries adopted some international standards coming to replace their national standards or to supplement them.Some stock exchange places, first of all the London one, admitted companies of which accountancy is in consistency with standards IAS and more than 200 nifty groups (majority domiciled in Canada, in France and Switzerland) produced a second set of accounts established fit to the se standards. mo even conceded at certain hostile companies the right to watch out certain rules IAS as the standard relating to the table of financing (IAS 7), to currencies (IAS 21), companies (IAS 22) and inflation effect (IAS 29).Within the European Union, some harmonization efforts about accounting methods were undertaken. Those besides knew the same fate than another(prenominal)s and must still produce tangible effects. Moreover, European countries have adopted the principle of mutual recognition of the standards. In venom of the creation of an ad hoc work group in 1990, the accounting harmonization is not a priority anymore, no proposal nor declaration has been do since. It is use consider American standards as the reference.That does not imply their high quality that just reflects economic and political reality. Unless standards IAS are not accepted by the SEC, the companies which follow them do not meet the conditions to be allowed on the American stock exchange pl aces. To be allowed, a German group like Daimler-Benz must satisfy the regulations and specifications of the Stock Exchange where its shares will be change and to match the regulations imposed by the SEC, slightly amended for the foreign transmitters.SEC requires in particular that foreign companies present either their accounts in conformity with the US GAAP or a table showing together the US GAAP rules and the accounts drawn gibe to the accounts chart of their own land (Germany in the case of Daimler-Benz). Few companies choose the first method nevertheless, even the second method is expensive. If the American Stock Exchange remains one of the more world significant markets, standards IAS non in conformity with the American rules will become obsolete. But if the SEC persists in its exclusive attitude, the domination of the American Stock Exchanges could be compromised.Can we solve the problem? Is harmonization the wait on? Then harmonization in accounting standards shall serve many of the pursual benefits Decrease in the costs of data collection Increase in the comparison of the information, Development in the capital markets, Facilitation in the fund movements render of competition advantage in favor of the firms Decrease in the audit costs and increase in the efficiency of the audit For multinationals, the advantages of harmonization are much more important.The impacts are cultural and social, on the employment and use of goods and services pattern for example which are significantly influenced. The SEC made recognise that any international reference moving away from philosophy and specificity of the American standards would not be acceptable. It profits from the support of Financial Accounting Standards Board (FASB), insofar as generalized acceptance of standards IAS could compromise the credibility of standards FASB. *why do the differences persist? And w*hat is *mainly *stopping* the harmonization*?Let us take another example. In Japan, Keiretsu is a group of companies undertaken with cross participations which maintain very close relations of customer-suppliers type. Similar systems exist in Korea. The relations between these companies are not comparable with those which defy a holding and its subsidiary companies this system is running in unite Kingdom and the United States. Moreover, no economic argument could be brought to let off the regulation of the accounting standards. Why the practices differ o clearly from one country to another? We can for sure think about culture, tradition and history. Then, immaterial environment, legal systems (Common law & Codified Roman law), taxation, the level of inflation, accidents and external influences (such as the framing of law in response to economic or politic events for example) are the main causes of international differences. Also, liabilities, consolidation, segment reporting and foreign currency translation can be big issues in international accounting.However, the ec onomists privilege the explanations relating to factors such as the legal system and the legislation on the property rights, even if, in the final analysis, these factors themselves form part of severally culture intrinsically. Conclusion While convergence and harmonization are estimable goals with a lot of benefits, that may not easily or quick achieved. The success will not depend only on the exponent of the FASB and IASB to work together, but also on the willingness of national regulators to cooperate and to avoid issuing local interpretation of IFRS.In April 2005, SEC published the way map. This is an article by then Chief Accountant discussed the possible voiding of the US GAAP reconciliation for foreign private issuers that use IFRS. This track map laid out a series of milestones which if achieved would result in the elimination of the US GAAP reconciliation by 2009, so quite soon. It is often noted that the process of IASC standards are influenced by Anglo-American ap proach, which partly explains the reserve of certain countries to adopt the international accounting standards.The difference between Anglo-American philosophies and European ones can be explained by the importance attached to two prerequisite characteristics of accountancy reliability and relevance. To conclude, despite the existence of many convergence points, this research show several major differences between two countries supposed to follow relatively similar rules. This thus tends to catch our attention on the difficulty of international harmonization. This study seems to illustrate perfectly (unfortunately? difficulties of the international accounting harmonization. It could be interesting to carry out a reflection on other ways of making accountancies comparable in order to avoid a fundamental opposition. However, new laws gave (or will give) to companies of several countries, including France and Germany the possibility of presenting their group accounts according to the international standards, in particular those of the IASC and USGAAP, rather than the national rules. Almost all the companies having a world activity do it already, or will plausibly do it soon.BIBLIOGRAPHY Evolution of research on international accounting harmonization a historical and insitutional perspective , Socio-Economic Review, October 2007 Bosco T. , Corporate Accounting Information Systems falsify D. 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A. and Gray S. J, Profit measurement and UK accounting standards a case of increasing inharmoniousness in relation to US GAAP and IASs . Websites www. wikipedia. fr www. lesechos. fr www. focusifrs. com www. fasb. gov www. investopedia. com www. ey. com www. authorstream. com