. Distinguish between standardisation and harmonisation.
2. Explain how international differences in the ownership and financing of companies could lead to differences in financial reporting.
3. The IASBs objective is to develop global accounting standards in the public interest. What does in the public interest mean?
4. Which parties stand to gain from the international harmonisation of accounting?
5. What arguments are there against the process of international harmonisation of accounting?
6. Arguably the EU is the IASBs biggest customer for its standards. Would it be appropriate for IASB to be made accountable to the EU Commission or at least for Europeans to have a larger say in the process of developing standards?
7. What is meant by regulation based on principles rather than rules?
8. Results of empirical research indicate that foreign equity investment increases when countries have mandatory adoption of IFRS and effective enforcement. Discuss why this might be the case.
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Week 3 Lecture
Accounting theory and conceptual frameworks
Learning outcomes
On completion of this lecture students should:
1. Understand and evaluate the reasons for accounting standards;
2. Understand and evaluate how accounting policies and standards are set;
3. Understand the concept and development of accounting theory and its role in the standard setting process;
4. Understand and evaluate different approaches to the development of accounting theory;
5. Evaluate and analyse the development of conceptual frameworks
6. Understand the purposes and scope of the IASB conceptual framework
Reading
Elliott & Elliott Chapter 10 Concepts A conceptual framework
Alexander Britton & Jorissen International Financial Reporting & Analysis (5th Edition)
Chapter 8
Why have Accounting standards?
Accounting can be judgmental in nature with a wide variety of possible approaches to questions such as:
How do we value inventory? Cost? Net realisable value replacement cost? How do we account for leases?
Even accepting the underlying principles of matching accruals prudence historical cost and going concern a considerable amount of judgement and therefore range of approaches to answering these questions would exist.
For example:
Inventory valued at the lower of cost and net realisable value But what basis FIFO LIFO Average cost Standard cost?
What costs should be included? (production overheads based on actual or normal levels of production?)
How should the selling price be determined for net realisable value? (List discounted past prices achieved?)
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