...Business Research Report Financial Reporting According to International Accounting Standards Presented to: XYZ Corporation Assessment Code: RWT1 Student Name: Linda Kaye Craghead Student ID: 000225676 Date: March 13, 2013 Mentor Name: Caroline Juedes Table of Contents Executive Summary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Research Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Annual Report and Auditing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Financial Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Income Statements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
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...IFRS by the United States: An Analysis of Economic and Policy Factors” by Luzi Hail, Christian Leuz and Peter Wysocki: In the world of accounting, abandoning the United States’ Generally Accepted Accounting Principles (U.S. GAAP) in favor of the International Financial Reporting Standards (IFRS) would represent a seismic shift that would require changing what has been the country’s accounting gold standard for decades. This is what the Securities and Exchange Commission (SEC) is contemplating for all publicly listed companies, starting in 2014. But according to a study released today (Friday, March 6) it is not clear whether such a major shift in standards would translate into large (net) benefits for most companies or the entire U.S. economy. The study, “Global Accounting Convergence and the Potential Adoption of IFRS by the United States: An Analysis of Economic and Policy Factors,” was done by Christian Leuz of the University of Chicago Booth School of Business, Luzi Hail of the Wharton School at the University of Pennsylvania and Peter Wysocki of the MIT Sloan School of Management. One of the touted benefits of moving to IFRS is that it can enhance the liquidity of capital markets and reduce companies’ costs of capital by providing investors with better information on corporate performance. However, the authors argue that this is true only if adopting a new set of standards actually improves the quality of reporting and the comparability of reporting practices around the world...
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...past five years, Chevron has been continuously ranked as one of America’s five largest corporations. Chevron’s headquarters is in San Ramon, California (Fox, 2012). It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron was originally known as Pacific Coast Oil Company in 1979, where they made their oil discovery in Pico Canyon north of Los Angeles, California (2012). Since its origination, it has blossomed and generated large amounts of revenue ever since. The International Financial Reporting Standards would be beneficial for Chevron. However, since this company has been in existence for a decade and have foundational methods and ways of their accounting and financial systems such as GAAP already implemented, it is hard for Chevron to adjust and...
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...GOVERNMENTAL STANDARD SEniNG IN PERSPECTIVE The author examines the need tor a single body to set rules. by Michael H. Granof The problems of financial reporting by governmental units are unique and as a consequence the models for standards are not necessarily comparable nor can parallels always be drawn between governmental and corporate reporting. This article examines the differences between user requirements and explores the necessity for standard setting by a single body. First of ali, the sources from which investors derive information regarding securities of municipalities appear to be different from those of other types of organizations. Although there have been few research efforts to identify the factors which influence investor decisions to buy or sell specific municipal issues, it is believed that the bond rating assigned by Moody's or Standard & Poor's is the single most significant element. Available statistical evidence indicates a close correlation between the rating assigned to a bond and the price at which it is sold in the market. An improvement of one grade on the rating scale has been associated with a reduction in interest rate from 28 to 40 basis points (hundredths of a percent in interest rate).' Moreover, government securities are 1 Derived from tables in John E. Petersen, The Rating Game (New York: Twentieth Cenlury Fund, 1974), p.44. MICHAEL H. GRANOF, CPA. PhD., is associate professor of accounting at the University of Texas at Austin. He is currently...
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...Accounting Standards Board Paper Accounting Standards Board Paper Accounting is defined as the practice of recording, analyzing, and reporting the financial transactions of an organization (Schroeder, Clark, & Cathey, 2011). Since 1973, there has been a governing body that has determined what is considered acceptable business practices in regard to the relationship between these functions. In the United States, that governing body is known as the Financial Accounting Standards Board or FASB. FASB helped to refine and establish what is known as the Generally Accepted Accounting Principles or GAAP. These principles have laid the foundation for modern day accounting practices and have served as a road map for financial accountants worldwide. In 2001, a new board was established to bring unity to international accounting practices. It is known as the International Accounting Standards Board or IASB. IASB has its own set of standards commonly known as International Financial Reporting Standards or IFRS. Together these two entities lay the groundwork for accountants to follow to most accurately and ethically report the financial activities of their respective organizations. Although both these organizations have striking similarities and strive to serve a common goal, there are marked differences in their approach to financial reporting standards. In recent years, FASB and the IASB have affirmed their commitment to bring together their basic fundamentals and create a unified...
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...global, regulators, investors, large companies and auditing firms began to realize the importance of the establishment of a single set of high quality accounting standards. With a common accounting language around the world, investors will be able to have greater comparability and greater confidence in the transparency of financial reporting worldwide. IFRS, acronym for International Financial Reporting Standards are financial reporting standards that have been adopted by International Accounting Standard Board (IASB). Increasing number of publicly held companies in many countries are now requiring or allowing the use of IFRS for the preparation of financial statement. In the United States, the Securities and Exchange Commission (SEC) have also proposed a “Roadmap” in incorporating the convergence of US Generally Accepted Accounting Principles (US GAAP) to IFRS with the help of Financial Accounting Standards Board (FASB) and IASB. The IASB and FASB, committed to improving IFRS and US GAAP and achieving their convergence, are also committed in providing public transparency and accountability by reporting their process in achieving their goals. In 2006, the IASB and FASB began to set out their plans of completing major projects in their issued Memorandum of Understanding (MoU). These priority major projects comprises of their joint projects on financial instruments, revenue recognition, leasing, insurance contracts, the presentation of other comprehensive income, fair value measurement...
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...over whether to accept the International Financial Reporting Standards as an alternative to the United States’ Generally Accepted Accounting Principles remains undecided. In February 2010, the SEC generated an IFRS Work Plan in order to promote the development of a single set of high-quality, globally accepted accounting standards. The Work Plan consists of six key areas. The first of these focus on the ability of IFRS to be comprehended, to be consistent, and to be enforced; it is referred to as “sufficient development and application of IFRS for the U.S. domestic reporting system.” The second, “the independence of standard setting for the benefit of investors” emphasizes the IASB’s governance makeup. The third and fourth areas, titled “investor understanding and education regarding IFRS” and “examination of the U.S. regulatory environment that would be affected by a change in accounting standards,” have to do with the education to understand and regulate a new environment. The fifth and six areas address “the impact on issuers, both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations and accounting for litigation contingencies; and human capital readiness” (www.sec.gov). Previous to the Work Plan, beginning in 2002 the FASB and IASB announced a Memorandum of Understanding (MOU), which was updated in 2006 and 2008, to work towards a single set of standards (www.sec.gov). More recently, in May 2011...
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...Student Name: ID Number: Student Name: ID Number: FinaNCIAL aCCOUNTING tHOERY FIN420 Assignment 1 FinaNCIAL aCCOUNTING tHOERY FIN420 Assignment 1 Case 3-8 IASB vs. FASB Conceptual Frameworks Q. Discuss the similarities and differences between the FASB and IASB conceptual frameworks with respect to the definitions of the elements of financial statements. INTRODUCTION At the October 2004 joint IASB-FASB meeting, the Boards agreed to add to their respective agendas a joint project to develop a common conceptual framework—a single framework that both converges and improves upon the existing frameworks of the two Boards. (The Boards had previously discussed a staff proposal for this project at their April joint meeting.) The Boards also agreed that the project should be divided into phases. Initially, the focus will be on objectives, qualitative characteristics, elements, recognition, and measurement. The Boards will give priority to addressing issues that are likely to yield benefits to the Boards in the short term, that is, cross-cutting issues that affect a number of their standards-level agenda projects. Therefore, the first step is to identify and prioritize those cross-cutting issues. Possible examples that the staff have suggested include the meaning and role of reliability; the definition of liability; the meaning of probable; the effect of conditions, contingencies, or other uncertainties; the unit of account; and accounting...
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...Accounting Standards Boards Sandra Ferrara ACC541 June 18, 2012 Professor Sonja Wilson Accounting Standards Boards Accounting standards Accounting standards boards maintain and produce accounting standards to keep financial reporting accurate and useful. Financial reporting should provide a fair presentation of the financial position and financial activity of an entity and permit comparison among other entities. To obtain a true “apples to apples” comparison between entities the statements should be uniform in underlying assumptions, measurements, and general presentation guidelines. Accounting standards produces the guidelines and regulations required for consistency among financial reporting between numerous entities. Accounting standards develop with economic development. In the early development of accounting standards the standards were region specific. For example, individual nations developed accounting standards specific to its economy and the needs of the users in the nation’s economy by establishing a committee or a board. Currently there are two main accounting standard setting boards, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). These two boards are currently collaborating in a goal to establish a “single set of high-quality accounting standards for all listed and other economically significant business enterprises around the world” (Schroeder, Clark, & Cathey, 2011, p. 85). The FASB...
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...All CFA Institute members and candidates are required to comply with the Code and Standards Basic structure for enforcing the Code and Standards The CFA Institute Bylaws primary principles Based on two Fair process to member and candidate Confidentiality of proceedings Rules of Procedure Maintains oversight and responsibility The CFA Institute Board of Governors Through the Disciplinary Review Committee (DRC) Is responsible for the enforcement of the Code and Standards Conducts professional conduct inquiries Structure of the CFA Institute Professional Conduct Program Professional Conduct program (PCP) The CFA Designated Officer Selfdisclosure An inquiry can be prompted by several circumstances Directs professional conduct staff Written complaints Evidence of misconduct Report by a CFA exam proctor jim do Interviewing The Professional Conduct staff conducts an investigation that may include cf a. 1. Code Of Ethics And Standards Of Professional Conduct Collecting documents and records in support of its investigation Conclude the inquiry with no disciplinary sanction Issue a cautionary letter If finding that a violation of the Code and Standards occurred, the Designated Officer proposes a disciplinary sanction ay to Process for the enforcement of the Code and Standards When an inquiry is initiated Upon reviewing the material obtained during the investigation, the Designated Officer may .c Requesting a written explanation from the...
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...maintain the fair representation of financial statements and increase comparability and material information for investors to make better decisions. The primary benefit will be the reduction in discrepancies in financial statements among different countries around the world. “SEC, with convergence, wants to reduce regulatory impediments to cross-border capital transactions that result from disparate national accounting standards.” [3] As noted on pages 5 and 8, paragraph 2 and 3 respectively, some additional benefits are: ● “Greater comparability for investors across firms and industries on a global basis; ● Reduced listing costs for companies with multiple listings; ● Increased competition among exchanges; ● Better global resource allocation and capital formation; ● Lowered cost of capital ● A higher global economic growth rate ● Improved financial statement comparability among companies worldwide; ● Streamlined accounting processes for multinational companies; and ● Easier access to foreign capital and improved liquidity, leading to a reduced cost of capital” [5,8] 1B. Areas of concern within the SEC’s work plan before execution of the use of IFRS by us issuers: “A Work Plan was made to identify the areas of concerns within the roadmap of the proposed convergence of IFRS and GAAP, which included: 1.Sufficient development and application of IFRS for the U.S. domestic reporting system; 2. The independence of standard setting for the benefit of investors; ...
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...adoption include reporting consistency, enhanced global competition and improved financial reporting transparency. While many countries worldwide have already adopted IFRS, many other countries are closely examining its effects before adoption, not only from an economic perspective but also from a reporting quality position. COMPARING RESULTS Researchers Elaine Henry, Stephen Lin and Ya-Wen Yang evaluated the difference between financial results under U.S. GAAP compared to IFRS. Their results show that convergence between U.S. GAAP and IFRS is occurring. Using 2004 to 2006 reconciliation disclosures, the authors found that the calculated difference between shareholders’ equity under U.S. GAAP and under IFRS declined from 2004 to 2006. In addition, the difference between U.S. GAAP and IFRS reported net income during this period also declined but remained significantly different. Pensions and goodwill appeared to be the dominant reconciliation items. Reconciliation amounts varied by industry and country, raising questions about consistency between region and industry. Additionally, more than 70% of the companies examined in 2004 through 2006 had a higher return on equity under IFRS compared to U.S. GAAP. The 2007 SEC elimination of the IFRS-to-U.S. GAAP reconciliation for non-U.S. companies with securities listed in the United States suggests a need for users of financial statements to be aware of the potential for differences resulting from the two sets of standards. “The European-U...
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...accounting + auditing Intro to XBRL Patricia Francis xbrL Is resHApING tHe FINANcIAL reportING LANDscApe WorLDWIDe, AND LooKs set to Do tHe sAme IN mALAYsIA oNce FuLLY ImpLemeNteD bY LocAL reGuLAtors AND busINesses. Are You xbrL reADY? The objectives of SSM’s SDP II are: • To enhance delivery and improve accuracy of information; • To achieve a standardised and consistent mode of reporting with enhanced analytical capabilities; • To promote data usability and exchange flow with external stakeholders. According to Nor Azimah, SSM also promotes the adoption of XBRL as a nationwide format to be used by key agencies such as the Inland Revenue Board (LHDN), Securities Commission (SC) and Bursa Malaysia and the building of extension taxonomies by the mentioned agencies. The said adoption will provide SSM, other regulators and businesses with detailed data which can be aggregated and made available to stakeholders in the form of industry analysis for industrial benchmarking. The move to XBRL-based reporting is also in line with plans to transform Malaysia into a digital country by 2020, as XBRL reports form part of the digital reporting chain. At the recent Digital Malaysia Press Conference held on 5 July 2012 by the Ministry of Science, Technology and Innovation (MOSTI) along with Multimedia Development Corporation (MDeC), Datuk Badlisham Ghazali, CEO of MDeC told the media that Digital Malaysia will help drive automation and technology adoption to ensure productivity and...
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...accounting standards are a set of rules and/or practices in recording and registering business transactions in company’s ledgers and accounts, keeping books and preparing reports on the financial and other business results and standing to owners, public and authorities. Certainly all standards are based on a golden rule of accounting – double entry. Accounting standards are necessary so that financial statements are meaningful across a wide variety of businesses. In the past the authorities of each country endorsed their own rules and instructions on how the financial reports should be made up but in the second half of the XX-th century international business and governments recognized that the international capital markets require both transparency and unification, otherwise, the accounting rules of different companies would make comparative analysis almost impossible and the economic development and growth could be hindered when international investors were deprived of the possibility to compare cost-effectively their investments options across the trading board. Initial efforts focused on harmonization—reducing differences among the accounting principles used in major capital markets around the world. By the 1990s, the notion of harmonization was replaced by the concept of convergence—the development of a unified set of high-quality, international accounting standards that would be used in at least all major capital markets. The International Accounting Standards Committee...
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...International Financial Reporting Standards (IFRS) An AICPA Backgrounder 1 Table of Contents Get Ready for IFRS ........................................................................................ 2 Worldwide Momentum ................................................................................. 2 SEC Leadership in International Effort .......................................................... 3 The SEC Work Plan........................................................................................ 4 FASB and IASB Convergence Efforts............................................................. 5 AICPA Participation ....................................................................................... 7 Two Sides of the Story ................................................................................... 7 Differences Remain Between U.S. GAAP and IFRS ....................................... 8 What CPAs Need To Know ............................................................................ 8 Appendix ..................................................................................................... 10 Organizations Involved ................................................................................ 12 1 Get Ready for IFRS The growing acceptance of International Financial Reporting Standards (IFRS) as a basis for U.S. financial reporting represents a fundamental change for the U.S. accounting profession. The number of countries that require...
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