Table Of ContentINTERNATIONAL FINANCIAL REPORTING
This book provides a comparative international survey of company financial
reporting requirements and practices in 30 countries from most regions of the
world. It is based on an extensive survey of legal and other documents and financial
reports carried out in each country. The book specifies the sources of authoritative
pronouncements, whether from legal, professional accountancy or stock exchange
bodies, and also indicates the financial reporting practices adopted by large
companies in each country.
The topics covered in the book include fundamental topics such as income and asset
measurement (fixed assets, inventories, taxation, etc.) and extend to emerging
issues such as social reporting and forecasts. It also deals with topics which are
included in the reporting requirements and practices of some countries but not of
others-for example, group accounts, inflation accounting, foreign currency
translation, and segmental reporting. There is also a section on the factors which
influence the development of national accounting requirements and practices.
The information provided will, therefore, be of use to anyone interested in the
international aspects of financial reporting. In particular, it will be useful to
managers and accountants in multinational enterprises who wish to know reporting
requirements in countries around the world; to auditors involved with multi
national enterprises; to investors and analysts concerned with evaluating non
domestic financial reports; to creditors and lenders involved with foreign
companies; to national, regional and international professional accountancy
bodies; to standard-setting agencies both professional and governmental; and to
academics and students of this rapidly developing field of study.
Sidney J. Gray. Professor of Accountancy, University of Glasgow. He has been
Head of Department since 1979. He taught previously at the University of
Lancaster and the University of Sydney. Prior to entering academic life he gained
several year's managerial experience with international companies in the UK,
India, and Australia. He was Secretary-General of the European Accounting
Association in 1982-3, and he is a member of the editorial boards of Abacus,
Journal of Business Finance and Accounting, Journal of International Business
Studiesand Issues in Accountability. He is the author/editor of EEC Accounting,
International Accounting and Transnational Business, Information Disclosure and
the Multinational Corporation and Value Added Reporting.
Leslie G. Campbell. Manager, Executive Office, Deloitte Haskins & Sells, London.
He won a gold-medal for his performance in the examinations of the Institute of
Chartered Accountants of Scotland. He gained a Master's degree in international
financial management and reporting from the University of Glasgow in 1982. He is
the author of International Auditing.
John C. Shaw. Senior Partner, Deloitte Haskins & Sells, Edinburgh. He was
formerly Johnstone Smith Professor of Accountancy, University of Glasgow. He
was President of the Institute of Chartered Accountants of Scotland, 1983-4. He is
the author of Group Accounts and Auditing.
INTERNATIONAL FINANCIAL
REPORTING
A Comparative International Survey
of Accounting Requirements and Practices
in 30 Countries
Edited by
S.J. Gray
University of Glasgow
L. G. Campbell
Deloitte Haskins & Sells
J.C.Shaw
Deloitte Haskins & Sells
M
MACMILLAN
© S. J. Gray, L. G. Campbell and J.C. Shaw 1984
Softcover reprint of the hardcover 1st edition 1984 978-0-333-37302-6
All rights reserved. No part of this publication
may be reproduced or transmitted, in any form
or by any means, without permission
First published 1984 by
MACMILLAN PUBLISHERS LTD
(Journals Division)
and distributed by
Globe Book Services Ltd
Brunel Road, Houndmills
Basingstoke, Hampshire, RG21 2XS
England
British Library Cataloguing in Publication Data
International financial reporting.
1. Financial statements 2. Comparative
accounting
I. Gray, S.J. (Sidney John), 1942-
II. Campbell, L.G. III. Shaw, J.C.
657' .3 HF5681.B2
ISBN 978-1-349-07444-0 ISBN 978-1-349-07442-6 (eBook)
DOI 10.1007/978-1-349-07442-6
Contents
Introduction 1
How to use the book 7
1 Influences on accounting development 11
2 Accounting concepts and policies 29
3 Income and asset measurement 39
Inventories 50
Fixed Assets 83
Taxation 120
Research and development 131
Leases 139
Pensions 147
Earnings per share 157
4 Funds statements 187
5 Group accounts 223
6 Inflation accounting 303
7 Foreign currency translation 331
8 Segmental reporting 357
9 Forecasts, contingencies, and post balance sheet events 407
10 Social reporting 451
11 Interim reporting 513
Appendices
I Abbreviations used in the survey 545
II International glossary of accounting terms 551
DTR.ODUCTIOB
Background
International aspects of accounting and financial reporting have
received increasing attention in recent years. This has been due
to a large extent to what can be termed an explosion in
international business activity.
International investment is now undertaken on a large scale both
by private and institutional investors, in the form of portfolio
investment, and by multinational companies largely through the
medium of foreign direct investment.
The growth of international trade and investment has led to other
individuals and groups (apart from investors) developing an
interest in international financial reporting issues. For
example, large-scale borrowers and lenders are now operating in
an international market instead of a national one; employees and
their representatives may wish to know how their employer's
overall worldwide investment strategy affects their particular
local interests: and governments may be concerned as to the
impact of inward investment on national objectives such as
employment, balance of payments, economic growth, and the
development of new technology.
Increased internationalism has led to the development of a number
of regional and international organisations, either dealing
specifically with accounting matters or as part of a wider
framework of economic and social policy.
2
Much of this interest in international accounting has focused on
the corporate annual report, which includes the enterprise's
financial statements. These financial statements are the
principal means of communicating the enterprise's position,
profitability and prospects to the various interest groups
concerned.
However, because these interest groups may come from a different
country from that in which the enterprise is based, there may be
difficulties in interpreting the data due to uncertainties
regarding the accounting measurement and disclosure policies
used.
There is, therefore, a need for a greater awareness and
understanding of the nature and extent of the international
differences which exist.
Purpose
The purpose of this survey is to help meet the need for an
improved appreciation of differences and similarities in
international financial reporting. This is done by providing
information on approximately 400 questions relating to a wide
range of financial reporting topics. The survey covers a total of
30 countries from most parts of the world; the number of
countries included being limited by available resources.
The information in the survey is given in two parts: Requirements
and Practices.
3
The Requirements part of each question is intended to show the
specific influence of governments, professional accountancy
bodies, stock exchanges, and other authoritative bodies, by
indicating the content and force of pronouncements made by these
bodies on that particular question. As these pronouncements take
many forms (laws, declarations, standards, guidelines, etc.), the
specific source of each pronouncement has been identified and
whether the source has a legal, professional accountancy body, or
stock exchange basis.
The Practices part of each question is intended to show the
extent to which that particular measurement or disclosure
practice is being used by large companies in each country. This
provides an indication as to current "best practice" in certain
topics where there are no requirements or recommendations, and
also shows the extent to which practice is consistent with
existing pronouncements. In some cases, of course, requirements
which have been recently introduced will not yet be effective in
practice.
Sources of information
This survey is the result of a joint project by the University of
Glasgow and Deloitte Haskins and Sells International. The survey
was carried out during 1982 and the collation and editing of the
findings completed in 1983.
The answers to the "Requirements" part of each question have been
supplied by the international network of offices of Deloitte
Haskins & Sells, and are based on their interpretation of the
relevant current pronouncements as at 1 January 1982.
4
The answers to the "Practices" part of each question are based on
surveys of company reports carried out by each national office.
These surveys were based on the most recent annual financial
reports of a number of large companies (usually 50 companies in
the major industrialised countries and 20 companies in less
developed countries or in small countries).
In some questions the "Practices" answers are based on the
judgement of the local partners rather than on the survey - for
example, if only two of the fifty companies in a country's survey
published a funds statement, then it was considered that this
sub-sample size was too small to provide a reliable indication of
what information is usually provided in the Funds Statement. In
these rare cases the local office gave their subjective opinion
on the extent to which the particular practice was adopted by
large companies. In some countries a number of questions were
answered on the basis of information contained in existing
surveys of financial reports.
While the information in the survey does not purport to be
exhaustive it should provide a useful guide to major items of
interest. More detailed information, including particulars of
any changes since the date of the survey, must necessarily be
obtained from the local office in the country concerned.
