International Accounting: Comaprison

Topics: Balance sheet, International Financial Reporting Standards, Audit Pages: 47 (15043 words) Published: December 12, 2010
Acknowledgement

I would like to pay my sincere thanks to, University of Delhi, South Campus for endowing me with the precious insights needed for working out this Project. He has been very instrumental in communicating the core of this project study and thus without his direction, the very inception of this work would not have been possible.

Q1. Whether a country’s capital market is debt –oriented or equity oriented has a significant impact on the financial reporting that develops in the country, both at the cosmetic and at the substantive level. Choose a equity oriented country and a debt oriented country, and obtain two corporate annual reports from each. Comment on the similarities and the differences of the reports National differences in disclosure are driven largely by differences in corporate government and finance. In US, UK and other Anglo-American countries, equity markets have provided most corporate financing and have become developed. In these markets, ownership tends to be spread among many shareholders, and investor protection is emphasised. Institutional investors play a growing role in these countries, demanding financial returns and increased shareholder value. Public disclosure is highly developed in response to companies accountability to the public. In many other countries i.e. France, Germany, Japan and emerging market countries shareholding remains highly concentrated and Banks traditionally have been main source of corporate financing. Structures are in place to protect incumbent management. Banks and other insiders provide discipline. These banks, insiders and others are closely informed about the company’s financial position and its activities. Public disclosures is less developed in these markets and large differences in the amount of information given to large shareholders and creditors vis-a-vis the public may be permitted. As investors around the world demand more detailed and timely information, voluntary disclosures levels are increasing in both highly developed and emerging market countries. Equity Oriented - US ( Companies : Intel Corporation, McAfee Inc.) Debt Oriented – Ireland ( Companies : 1. Glanbia plc, 2. Greencore Group plc ) Equity Oriented Debt Oriented

FocusFocus on profitability, future cash flows, risk.Focus on creditor protection, direct access to information, conservative measurements.
Components of Financial StatementsTwo years of consolidated balance sheets, income statements, cash flow statements, changes in equity and accounting and notes. Similar, except three years required for SEC registrants for all statements except balance sheet.

Balance SheetDoes not prescribe a particular format. A current/non current presentation of assets and liabilities is used, unless a liquidity presentation provides more relevant and reliable information. Certain minimum items are presented on the face of the balance sheet.Entities may present either a classified or non -classified balance sheet. Items on the face of the balance sheet are generally presented in decreasing order of liquidity. SEC registrants should follow SEC regulations.

Income StatementDoes not prescribe a standard format, although expenditure is presented in one or two formats ( function or nature ). Certain minimum items are presented o the face of the income statement.Present as either a single step or multiple step format. Expenditures are present by function. SEC registrants should follow SEC regulations.

Exceptional itemsDoes not use the term but requires separate disclosures of items that are of such size, incidence or nature that their separate disclosures is necessary to explain the performance of the entity.Similar, but individual significant items are presented on the face of the income statement and disclosed in the items.

Extraordinary itemsProhibitedDefined a being both infrequent and unusual, and are rare. Negative goodwill is presented as an...
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