Accounting Measurement

1
Session III

• Accounting Measurement Disclosure

2
Disclosure Measurement

• Disclosure presentation (useful relevant for
  stakeholders)
• Financial statements
• Supplemental information
• Required versus voluntary information
• Monetary and non-monetary information
• Quantitative and non-quantitative information
• Measurement system

3
Intl. Disclosure Evolution

• No common framework
• Cost Benefit aspects

4
Factors Influencing Disclosure

• Global financial markets level playing field
• Statutory requirements
• Accounting profession influence
• Special interest influence
• Corporate rationale
• Education
• Branding
• Avoiding unwanted intervention
• Cost of capital reduction

5
Cost of Disclosure

• Loss of competitive advantage
• Worker demands

Class Exercise Using your teams, argue both sides
of this position.
6
How Measurement Impacts Disclosure

• Inventory cost flow assumptions--p. 146
• Research development spending--p. 147
• Reserves
• Expense reserves
• Statutory reserves
• General reserves
• Revaluation reserves
• Where do you gain additional insight?

7
Reporting Approaches

• Base country compliancedo nothing
• Local language translation
• Language and currency translation
• Local standards disclosure
• Selective restatement
• Complete secondary statements

8
Disclosure Issues

• Specific information needs
• User education levels
• Size of MNC
• Local culture
• Over-disclosure
• Cost effectiveness

9
Social Impact Disclosure

• Employee information--p. 159
• Value-added information--p. 160
• Environmental information--p. 160

10
Specific Variations

• Business combinations
• Goodwill
• Leases

Examples are for discussion purposes only.
11
Cases for Discussion

• ICI Case--p. 185
• Critical Thinking Problem--p. 186

12
Session IV

• Disclosure Diversity Harmonizationand
  Standardization, too!

13
Disclosure Spectrum
CUBA CHINA INDIA JAPAN
USA
Total Government Control
Free Market Economy
14
Elements of Diversity

• Standard setting
• F/S focus
• Specific differences
• See pages 191 - 200 for examples

15
Standardization versusHarmonization

• Standardization
• Required standards worldwide
• Harmonization
• Similar standards that are reconcilable

Class Discussion Argue the merits of both
approaches.
16
Harmoniztion Efforts

• IASB International Accounting Standards Board
  (formerly IASC)
• Voluntary group
• Wide acceptances
• IOSCO International Organization of Securities
  Commissions
• International SEC
• IFAC International Federation of Accts.
• International AICPA

17
Regional Efforts

• EU European Union
• 4th and 7th Directives
• Enforceable by law
• EMU European Monetary Union
• Home of the Euro
• Excludes the UK
• NAFTA North American Free Trade Agreement
• Canada, USA and Mexico

18
International Accounting Models

• British-American-Dutch (BAD model)
• Continental
• South American
• Mixed Economy
• Communist
• Islamic

19
Cases for Discussion

• Tanaguchi Case--p. 227
• Critical Thinking Problem--p. 236