Comparative International Accounting

Standards of Accounting and Economic Determination of the Standard Terms!
Accounting standards are the regulations or rules (including also the laws and statutes) that govern the preparation of financial statements. Standard setting is the process of formulating or formulation of accounting standards. Standards are the result of standard setting. However, actual practice differs from the prescribed standard. That is because the 4 things: in most countries the penalty for noncompliance with the provisions of the official accounting tends to be weak and ineffective voluntary infomasi company may report more than required; some countries allow companies to ignore the accounting standards if by doing operations and financial position will give better results, and in some countries, the standard only applies to the separate financial statements, and not for the consolidated report.
Accounting standard setting involve a combination of private sector group that includes the accounting profession, users and compilers of financial statements, the employees and the public which includes agencies such as the tax authorities, ministries in charge of commercial law and capital market commission. Stock exchanges are private or public sector (depending on country) also affect the process.
– Understanding why standard accounting practices different!
In common law countries, the private sector is more influential and auditing profession tends to regulate itself and to better be able to attest to the consideration of the fair presentation of financial statements. In code law countries, the public sector is more influential and the accounting profession tend to be more regulated by the State. This is why different accounting standards around the world.
– Accounting systems in developed countries!
1) France
Accountancy in France is strongly associated with the code so it is possible to overlook the fact that the legislation of commercial law (Code de Commerce) and the actual tax laws determine many accounting practices and financial reporting in France. The primary basis of accounting rules is the Accounting Law 1983 and Decree 1983 which includes accounting Compatible General Plan shall be used by all companies. Every company should have a manual accounting. The special feature is the presence of accounting in France dichotomy between the separate financial statements of companies with a consolidated group reports. French law allows French companies to follow International Financial Reporting Standards (International Financial Reporting Standards-IFRS). The reason, many multinational companies from France who recorded their shares abroad.
Five major organizations involved in standard-setting process in France:
a. Counseil National de la Comptabilite or CNC (National Accounting Board)
b. Comite de la Reglementation Comptable or CRC (Accounting Regulation Committee)
c. Autorite des Marches financiers or AMF (Financial Markets Authority)
d. Ordre des Experts-Comptables or OEC (Institute of Certified Public Accountants)
e. Compagnie Nationale des Comptes Commisaires aux or CNCC (Association of National Compliance Auditor)
French company reported a balance sheet, income statement, notes to financial statements, directors report and auditors report. There are no provisions regarding the statement of changes in financial position or cash flows although CNCC recommends to him. To give you an actual and reasonable (fidele image), the financial statements have been prepared in accordance with the regulations (regularite) and with good intentions (sincerite).
In the measurement of accounting, fixed assets are generally depreciated according to the tax provision in a straight line or multiple balances. Inventories should be valued at the lower of cost or net realizable value using FIFO or weighted average method. Research costs are not amortized over 5 years. Many risks and uncertainties can be reserved, such as those associated with litigation, restructuring, and self-insurance and this allows the emergence of opportunities for income smoothing.
2) Japan
Accounting and financial reporting in Japan reflects a combination of domestic and international influences. To understand accounting in Japan, one must understand the culture, business practices, and history of Japan. Japan is a traditional community with cultural and religious roots are strong. Japanese companies have equity shares each to each other, and together often have other companies. These investments are interlocked industrial conglomerate that produces meraksasa called keiretsu. Keiretsu venture capital is in line with refomasi structural changes in the Japanese to overcome the economic stagnation that began in the 1990s.
The national government still has the most significant influence on accounting in Japan.Accounting regulation is based on three laws, namely the commercial law, capital market law, tax law and corporate income. Commercial law is governed by the Ministry of Justice (MOJ). The law is at the core of accounting regulation in Japan and most have a major influence. Public-owned enterprises shall further comply with the Laws of capital markets (Securities and Exchange Law-SEL) is regulated by the Ministry of Finance. The main purpose of SEL is to provide information in making investment decisions.
Company incorporated under commercial law are required to menyususn reports required to be approved in the annual meeting of shareholders which contains balance sheet, income statement, business reports, proposals for the use (appropriation) retained earnings, supporting schedules. Companies that list their stocks should also prepare financial statements in accordance with the laws of capital markets in general require the same basic financial statements of the commercial law coupled with the cash flow statement.
Commercial law requires large firms to prepare consolidated reports. Consolidated subsidiary if the parent company directly and indirectly control the financial and operational policies. Goodwill is measured on the basis of the fair value of net assets acquired and is amortized over a maximum of 20 years. Inventories can be valued at cost which is the lower of cost or market price, but cost the most widely used.
3) The United States
Accounting in the United States regulated by the private sector (Financial Accounting Standards Board, Accounting Standards Board or Fincancial-FASB), but a government agency (Capital Market Supervisory Commission or the Securities Exchange Commission-SEC) also has the power to set its own standards.
The U.S. system has no general legal provisions regarding the issuance of audited financial statements periodically. U.S. companies formed under state law, not federal hum. Although it has the legal power to determine the accounting and reporting standards for public companies, SEC continue to rely on the private sector that sets the standard stretcher. SEC and FASB to work together to provide pressure when viewing the FASB moving too slowly or in the wrong direction.
Annual financial report should be made by a major U.S. company that includes the following components:
A. Management reports
2. Independent auditor’s report
3. Primary financial statements (income statement, balance sheet, statement of cash flows, comprehensive income, stockholders’ equity and statements)
4. Management discussion and analysis of operating results and financial condition
5. Disclosure of accounting policies with the most important influence on the financial statements
6. Notes to the financial statements
7. Comparative financial data for 5 or 10 years
8. Selected quarterly data
U.S. accounting measurement rules assume that a business entity will continue to carry out its business. Accrual basis of measurements with a very broad and the recognition of transactions and events are highly dependent on the matching concept. Business combination should be recorded as a purchase. Goodwill is capitalized as the difference between the fair value of the gifts given in exchange and the fair value of net assets acquired. Goodwill must be reviewed for impairment annually and written off and charged in the profit if the book value exceeds fair value.

4) German
Environmental accounting in Germany undergoing continuous change and the result is remarkable since the end of world war i. Commercial Law on specifically demanded the presence of a variety of bookkeeping principles are regularly and independently audited hardly left after the war was over. Law firms in 1965 changed the reporting system keunagan Germany with lead to the ideas of the American United Kingdom but applies only to large companies. In the early 1970s, the EU began issuing the harmonization directive, which must be adopted by Member States into national law. The EU directive and the fourth, seventh, and eighth in total into the law of Germany through Comprehensive Accounting legislation enacted on 19 December 1985. Two new laws came into force in 1998, first add a new paragraph in the third book Commercial Law allowing Germany the company that issued the stock/debt on a capital market organized for using internationally accepted accounting in consolidated financial statements he made. Second, allow the establishment of private-sector organizations to set accounting standards for financial statement consolidation. Tax law outline specifying the commercial accounting. The principle of determination (Massgeblichkeitsprinzip) specifies that taxable income is determined by what is recorded in the financial records of the company.
The law on control and transparency in 1998 introduced a must for the Ministry of Justice to admit the private agency which sets the national standard to meet the following objectives:
1. develop recommendations for the application of accounting standards in the consolidated financial statements
2. provide advice to the Ministry of Justice over new accounting legislation
3. Represents Germany in international accounting organizations such as IASB
Accounting legislation in 1985 specifically to determine the provisions of accounting, auditing, and financial reporting is different according to the size of the company, not according to form orgasisasi. The accounting Act 1985 specifically determine the content and form of the financial statements include the balance sheet, income statement, notes to the financial statements, the management report and the auditor’s report.
Based on commercial law (HGB), a method of purchase/acquisition is the main method of consolidation, although the unification of ownership can also be applied in conditions of limited. Two forms of the method the purchase allowed is the book value method and method of revaluation. HGB does not control the translation of foreign currency and companies in Germany using a number of methods. Translation differences treated in some way, as a result of special attention should be given to the financial statements, note where the method of translation of foreign currency should be described.

5) Netherlands 
Accounting in the Netherlands has some interesting paradox. Netherlands have the provisions of financial accounting and reporting, but the standard relative permissive professional practices is very high. Netherlands country code law, but akuntansinya oriented penjayian fair. In the Netherlands, accounting is considered a branch of economy of effort. As a result, many of the economic thinking that poured out of accounting topics and especially to the measurement accounting.
Regulation in the Netherlands remained a liberal until 1970 when the Act annual report goes into effect. Among the main provision of the 1970 Act is as follows:
1. the annual report must show a reasonable picture of the financial position and results for one year
2. the report shall be drawn up in accordance with the keuangn practice is good business
3. basis of presentation of assets and liabilities and the determination of operating results should be disclosed
4. the financial statements shall be drawn up in accordance with a consistent basis and the influence of material from a change in accounting principle must be disclosed to taste
5. comparative Information for the previous period of finance must be disclosed in the financial statements and accompanying notes
The quality of financial reports are very uniform. Netherlands Mandatory financial reports should be drafted in the language of the Netherlands, however, United Kingdom, France, and Germany is acceptable. The financial statement shall contain the following things: balance sheet, income statement, notes, report of the Board of Directors, and other information that are recommended. Annual financial statements are presented should be based on both the parent company alone or consolidation. Groups of companies for the purpose of consolidation consists of companies that make up the economic units that are under the control of the same.
Although the method of unification for the merger can be used in certain circumstances, such methods are obsolete in the Netherlands. Goodwill is the difference between cost of acquisition with reasonable values of assets and liabilities purchased. Flexibility of accounting measurement in the Netherlands can be seen with diperbolehkannya use of present value for intangible assets such as inventories and fixed assets are depreciated. Because the Netherlands firms have flexibility in applying the rules of measurement, it can be presumed that there is a chance of leveling melakakukan profit. Certain outposts can ignore the income statement and directly adapted to the reserves in shareholders ‘ equity. These things, among others:
1. loss due to disasters is not possible or is not common for the insured
2. loss due to nationalization or similar other foreclosures
3. Consequences due to financial restructuring

6) United Kingdom 
Accounting in the United Kingdom developed as a branch of science that indipenden and pragmatically, addressing the needs and business practices. United Kingdom accounting for world heritage is very important. United Kingdom was the first country in the world to develop the accounting profession that we know today. The concept of presentation of results and a reasonable financial position also comes from United Kingdom.
The two main sources of financial accounting standards in the United Kingdom is the law firm and the profession of accounting. Activities of the company established in the United Kingdom broadly regulated by assets which are known as the Statute of the company. Customized corporate laws, expanded and consolidated throughout the year.
The following accounting bodies in the United Kingdom, 6 related to the Consultative Committee of accountancy bodies who stand in 1970:
1. Institute of Accountants in the United Kingdom and licensed official in Wales (The Institute of Chartered Accountants in England and Wales-ICAEW)
2. Institute of Accountants licensed official in Ireland (The Institute of Chartered Accountants in Ireland-ICAI)
3. the official licensed Accountant Institution in Scotland (The Institute of Chartered Accountants in Scotland-ICAS)
4. Association Accounting official licensed and certified (The Association of Chartered Certified Accountants-ACCA)
5. Institute of Management Accountants licensed official (The Chartered Institute of Accountants Manajement-CIMA)
6. the Financial Institution and the official licensed public accounting (The Chartered Institute of Public Finance and Accountancy-CIPFA)
United Kingdom financial reporting includes the most comprehensive in the world. Financial statements generally include the report of the Board of Directors, the income statement and balance sheet, cash flow statement, reports the total recognised gains and losses, accounting policy report, notes to references in the financial statements and the auditor’s report. Report of the Board of Directors discussed the main business activities, a discussion on the operation and possible development, important events after the balance sheet date, the dividend disusulkan, the names of the members of the Board of Directors, and the size of the shareholdings, as well as this major contribution to political and charity do.
United Kingdom allow both methods of acquisition and merger in the noted accounting for the merger. Nevertheless, the conditions of use of the methods of merger so tight so it is nearly not used. Based on the method of acquisition, goodwill is calculated as the difference between the fair value of the submission is done and reasonable value of assets acquired.

SIMILARITIES AND DIFFERENCES OF THE ACCOUNTING SYSTEM IN DEVELOPED COUNTRIES

1.The existence and importance of accounting profession

Accounting profession that is more advanced in developed countries also make the accounting system used by more advanced than in countries that are implementing a centralized accounting system and uniform.

2.Accounting education and research

Accounting education and research carried out less well in countries that are developing. Professional development is also influenced by education and the quality of accounting research.

3.The accounting rules

Accounting standards and rules set out in certain countries is certainly not entirely the same as other countries. Role in determining standards of professional accountants and accounting rules were more common in those countries wherewith to enter the professional rules in the rules of the company, such as in Britain and the United States. Meanwhile, Christopher Nobes and Robert Parker (1995:11) explains the presence of seven factors that lead to important differences in the development of international accounting systems and practices. Such factors include the:

(1) The legal system,

(2) The owner of the funds,

(3) The influence of the tax system

(4) Stability of the accounting profession.

(5) Inflation,

(6) Accounting theory

(7) Accidents of history.

 4.The legal system

Company regulations, including in this case is the accounting systems and procedures, much influenced by the legal system in force in a country. Some countries such as France, Italy, Germany, Spain, the Netherlands adhere to the legal system that is classified in the codified Roman law. Codified in law, the rules associated with the basic idea of moral and justice, which tends to be a doctrine. Meanwhile, countries like Britain, the United States and British Commonwealth countries adopted the common law. In common law, the existence of an attempted answer to specific cases and not make a general formulation.

Legal system to determine how individuals and institutions interact. The western world has two basic orientations: the codification of law (civil) and common law (case). In most common law countries, the accounting rules established by private sector professional organizations. This allows accounting rules become more adaptive and innovative. Except for the provisions of a broad base, most of the accounting rules are not incorporated directly into the basic law. Codification of the law (legal code) tend to stare at the payload (contents) of its economy. For example, the lease under the common law rule is usually not capitalized. Instead, the lease under the general law can basically be capitalized if it becomes part of the property buyer.

5.Sources of funding

By source of funding, the company can be grouped into two. The first group is a company that gets most of the funds of the shareholders in the capital market (shareholders). The second group is a company that gets most of the funds of the bank, state or family funds. Generally, in countries with a majority of companies owned by shareholders but the shareholders do not have access to internal information, the more demands on the disclosure (disclosure), examination (audit) and get an unbiased (fair information). In countries with strong equity markets, such as the United States and Britain, accounting has a focus or how well management runs the company (profitability) and is designed to help investors analyze the cash flow risk associated dependent. Full disclosure is made to comply with extensive public ownership. Instead, the credit-based system in which the bank is the main source of funding, accounting has focused on the protection of creditors through conservative accounting measurement minimize dividend payments and maintain adequate funding in the framework of protection for borrowers. Because financial institutions have the direct access to what information is desired, an extensive public disclosure deemed unnecessary. Examples are Japan and Switzerland.

6.Tax system

Countries like France and Germany using the company’s financial statements as a basis for determining income tax debt, while countries like the United States and Britain to use financial statements have been adjusted by the tax code as a basis for determining the tax debt and delivered separately to the financial statements to shareholders . The extent to which the tax system may affect the accounting system is to look at tax laws determine the extent to which accounting measurement (accounting measurement). In Germany, books must be equal to the tax according to commercial accounting. Whereas in many other countries such as Britain, the United States and also includes Indonesia, there are rules – rules that differ between taxation and commercial companies. The most obvious example of this is depreciation. In most countries, tax legislation effectively determines accounting standards because the company should record revenue and expenses in their accounts to claim the tax purposes. In other words, financial and tax accounting tax is the same. In this case, as an example is the case in Germany and Sweden. In other countries like the Netherlands, different financial accounting and tax: taxable income is basically the accounting profit adjusted for differences in tax law. Of course, when the separate financial accounting and tax, tax rules sometimes require the application of certain accounting principles. Inventory valuation according Last Sign In First Out (last-in, first-out, LIFO) in the United States is an example.

7.Accounting profession

Bodies were formed as a container of different professions in each country, and the results of the rules or standards are affected by the shape, authority and members of such bodies. In some countries it was found that the separation of the accounting profession, as a tax expert or just as a corporate accountant. Members of a governing body of accounting standards may consist only of the public accountant or involve parties from business groups, industry, government and educators. The level of education and experience in the practical world as a condition of a person to become a member agency will also determine the quality of accounting standards and rules as the output produced.