M41 - AccountingReturn

Generally speaking, financial accounting textbooks are in harmony on the explanation of accounts payable and accrued liabilities/expenses. However, the same thing cannot be said for accounts payable turnover and days in accounts payable ratios. Different financial accounting textbooks and academic papers have different explanations for the accounts payable turnover ratio. The extant literature on the ratio is mainly comprised of two groups of authors. The first group relates the ratio to purchases and the second group relates the ratio to cost of goods sold (COGS). Purchases, in a purely theoretical sense, relate to periodic inventory method, whereas the perpetual inventory method relates purchases with inventory (being debit) and accounts payable (being credit). The second major group who explain the ratio by using the COGS figure ignore what is included in COGS. It should not include depreciation, amortisation, payroll and interest expenses to be meaningful for the purposes of the calculation of the ratio. In practice, manufacturing companies do not attempt to calculate these ratios due to the difficulty of obtaining the figures. These ratios can only be truly calculated from within the company if need be. Their accounting departments will be able to calculate the ratio correctly since they can reach the data. Any financial analyst not being able to reach a detailed breakdown of the expenses of the companies whose shares are being traded in stock exchanges will not able to calculate these ratios.

This paper analyses debtors who proposed for a debt relief in a period between 1. 1. 2012 and 31. 12. 2013. Topic of debt relief has been already researched in Moravian and Silesian regions, therefore this paper concentrates mainly on Bohemian regions. The possibility of debt relief (personal bankruptcy in other words) for debtors has been in Czech legislation since year 2008 and number of personal bankruptcies has been considerably rising ever since. This paper presents only a part of ongoing research and therefore comprise only certain characteristics, such as the level and structure of debtor's income, the amount of their debt and also structure of their creditors. The data and the results of the research are analysed and compared among regions.

The aim of the research the results of which are presented in this paper, based on an empirical survey of forty financial statements using IFRS by non-financial companies active in the Czech business environment, is to map the process and scope of reporting of employee benefits by Czech companies applying IFRS in the preparation of their consolidated and individual financial statements and to find out the differences in the extent, detail and relevancy of reporting employee benefits in accordance with IFRS among companies whose securities are publicly traded and other companies as well as to measure the differences in the scope, detail and relevancy of reporting employee benefits in accordance with IFRS among companies which are considered the best employers in the Czech Republic and other companies, including the interpretation of results.

The paper deals with the effects of IFRS adoption by a specific group of companies. It focuses on the so-called forced IFRS adopters, which are such private (non-listed) companies that (a) are forced to adopt the IFRS (because their parent prepares IFRS consolidated statements) and simultaneously (b) are not permitted by the regulatory framework of a given jurisdiction to apply the IFRS in their individual financial statements on a voluntary basis. In particular, benefits and costs connected with the forced IFRS adoption by Czech private companies are assessed. The results, based on a questionnaire survey among affected companies, confirm the intuitive presumption that accounting treatment of certain items significantly differs between Czech GAAP and IFRS, which requires the use of advanced methods for the conversion of financial statements. Regardless of which conversion method is used, perceptions of both benefits and appropriateness of incurred costs vary across entities. The benefit-to-cost ratio for the two most commonly used conversion methods (spreadsheets and dual accounting software) is comparable, as the first method generates fewer benefits for lower costs and the second method is connected with more benefits, but at higher costs. Finally, the survey reveals that actual costs of IFRS adoption are higher than the expected costs regardless of the conversion method applied.

This paper analyzes the influence of one uniform accounting rule on accounting quality by investigating the effect of IFRS on earnings management. The paper examines whether IFRS adoption is associated with lower earnings manipulation measured by discretionary accruals, a commonly used method. It focuses on European Union membership among countries with both the common-law tradition and the code-law tradition. It investigates a sample of 603 companies (10,251 firm-year observations) during the years 1992-2013. The finding contributes to current accounting debate with the empirical evidence that earnings management did not decline after IFRS adoption. In the European Union itself, the research sample contains a very little portion of companies which show increased reporting quality, more precisely earnings management, on IFRS. Overall, the results do not support the assumption that IFRS have an improving impact on reporting quality and demonstrate that other relevant factors should be considered in creating more efficient capital markets.

The first part of the exposition is aimed to establish basic definitions of the theory of measurement. I consider the possibilities and limitations of measurement in natural sciences, too. The findings of this part are extended to social sciences and the emphasis is put on measurement in accounting. Measurement of assets and liabilities and income determination are the fundamental parts of the measurement process in accounting. Proper measurement of these magnitudes is necessary in order to disclose useful and relevant information, especially about financial position, performance and changes in financial position of the firm. When preparing financial statements, we should respect both the substance of the economic activities carried out by firms and also the correctness of mathematical operations performed in accounting. On this account, the introduction of current values as primary valuation basis is the crucial condition. Current costs or current realizable price (opportunity costs) are possible alternatives. I recommend presenting both type of information (as components of the multifunctional statements) in order to enhance the quality and usefulness of disclosed data.

The paper describes the IFAC Education Committee effort to develop new International Education Standards for Professional Accountants. It informs about the structure and content of International Education Standards and it defines the principle standard requirements. The end of the paper is devoted to the questions of the standards impact on the pre-qualification education system in both of our professional bodies - in the Chamber of Auditors of the Czech Republic and in the Union of Accountants. It generally characterizes level of both of systems to be comparable with the Standards requirements; in the same time, however, it prefers the way of the common body of knowledge development, that would harmonize the education requirements of professional accountants and auditors and optimize the start-up and operational costs of the education system.

The paper focuses on financial reporting of long-lived assets. The author's aim was to analyze the approach of two major accounting principles - IAS/IFRS and US GAAP.
Both of the principles address following issues:
* initial recognition and measurement,
* depreciation: allocation of capitalized costs over the useful life of the asset
* disposal of the asset.
Broadly accepted classification of the long-lived assets divides the whole group into two parts: tangibles and intangibles.
General definitions and recognition criteria are covered by the framework. Particular standards dial then with special matters.
Although both international approaches have a lot in common, several differences emerge:
* US GAAP do not allow to capitalize internally developed intangibles,however developed intangibles can be capitalized under special conditions according to IAS/IFRS;
* impairment: IAS/IFRS allow to cancel or adjust the impairment towards the original value of the asset, US GAAP - once impairment is recognized, it is not permitted to cancel it and to return back to the original value of the asset
* IS /IFRS use historical costs based treatment and allowed alternative treatment - revaluation, US GAAP don't use allowed alternative treatment of the assets - revaluation is not permitted;
* IAS/IFRS set the useful life of the intangibles up to 20 years, US GAAP don't restrict the useful life at all.
In the process of convergence of IAS/FRS and US GAAP questions have arisen which of the approaches should be taken as a crucial one for world accounting principles. Standard-setters prepare studies to support their current approach. Unified solution has not been found yet.

This exposition focused to some basic problems by definition of the microeconomic (and accounting) category "revenue", of its congruence and differences in canonic texts (law act, instruction, directive etc.), which regulate a complex of accounting performances, in the first place, income statements. As canonic texts was make use of directives EU, International Accounting Standards, Financial Accounting Standards in USA and Czech law. Theoretically compared are the functions of revenue (and its precise definition) by isolating of multifarious types of income: operating profit, realizable cost saving, realized cost saving and realized capital gains. The process of revenue recognition in some complicated situations is minutely described mainly in International Accounting Standard No. 18 - Appendix. Next highlighted is any logically uncompromising accounting category 'revenue' necessity in Czech canonic texts for financial statements preparation and disclosure.

The ordering a categorization of data in the income statement is unavoidable. Even in the absence of clearly identified subtotals, there is some form of implicit structure in any income statement. An immediate difficulty, however, is that attempts to define income statement categories can be viewed in one of two ways. First, they can be viewed as attempts to make distinctions that provide useful information - for example, by separating items that are not expected to recur, so that analysts and other users can focus on the entity ongoing business. Second, they can be categorized according to operating, financing and extraordinary activities.
In thinking about possible income statement categories, a practical matter is that certain categorizations must take primacy over others. There is the possibility of introducing a second dimension to the statement of comprehensive income, which would then allow a second primary categorization to be made. This is approach favored by IASB: specifically, the two primary categorizations in the IASB proposed format are, first, operating and financing and, second, "income components" and "valuations adjustment". It gives possibility to display and present comprehensive income - i. e. all income and expenses, or all recognized changes in assets and liabilities except those related to transactions with owners as owners.

This article evaluates the similarities and differences between the balance sheet as defined by International Financial Reporting Standards (IFRS / IAS) and American Generally Accepted Accounting Principles (US GAAP). Both systems define the balance sheets elements in a very similar manner. Neither prescribes a single standard form. But in the practice we can see many similarities between balance sheets prepared according to the two.
Since examining the overall structure of the balance sheet would not yield any meaningful information, this article focuses on examining individual line items. Such an analysis is, however, complicated by the fact that there are certain systemic differences that make a line-by-line comparison problematic. Nevertheless, such a study was performed by Ernst and Young and examined 32 companies converting their financial reports from IAS to US GAAP.
On the other hand, vast differences exist in the vary conceptual foundation on which a balance sheet created to these two international norms and one created according to Czech legislation (as well that of most continental European countries) exists, the January 1, 2005 transition to IFRS is thus presenting the Czech and European accounting professions with challenge of historic proportion, a challenge such scope and magnitude that it has no modern day precedent.

A comparison of the conceptual frameworks underlying International Financial Reporting Standards (IFRS / IAS) and American Generally Accepted Accounting Principles (US GAAP) reveals a striking theoretical similarity between the two. Unfortunately, this similarity is masked by an even more striking difference in their form and presentation. For example, US GAAP defines 10 accounting elements and, apart from three (assets, liabilities and equity), none are directly comparable to the five defined by IFRS. It is not that the other seven do not exist under IFRS. It is just that IFRS chooses to express them differently by, for example, combining some (such as revenue and gains, which comprise income) and omitting others (such as contributions to owners and distribution to owners, whose explicit definition is not particularly useful anyway). Pointing to such differences as evidence of a fundamental, conceptual rift would, however, be a serious error in judgment. These differences are neither fundamental nor conceptual. They are, at most, attributable to the same cultural and linguistic dissimilarities that make American literature and cinematography so unlike the European. Thus, given both the cause and the effect of these differences, it would be both naïve and unrealistic to expect their elimination simply for the sake of some international convergence. Or, to put it differently, both the IASB and FASB have far meatier issues on their plates than to allow themselves get sidetracked by rearranging the garnish.

Financial accounting has been playing an important role in the economic system in the USA, since it has been supporting an effective operation of capital market, and consequently of whole economy. Its main task is to provide reliable accounting information about accounting entity to its users who do not take direct part in its management. Reliability of information is secured by generally accepted accounting principles (GAAP). Their publication is carried out by Financial Accounting Standards Board (FASB). In the course of preparation of accounting standards each user is allowed to protect its interests. However, the FASB members enjoy "last word" in the whole process of decision-making. Following this process an important role is played by Securities and Exchange Commission (SEC), with which FASB is closely co-operating. Whole process of approval of each standard is shaped by systemic approach: firstly, problems are identified, next, proposals of various alternatives of accounting solutions are presented, assessed and lastly, final solution is chosen. Following FASB rules any standard may be issued if it is approved by two thirds of Board members. 147 standards have been passed until the year 2002. Further development may follow a path of approachment of US GAAP with International Financial Reporting Standards (IFRS) and a unified globally accepted set of accounting standards may emerge. Such advisement is responding to globalisation of capital markets and maintaining high level of investors protection.

The article deals with the process of European accounting harmonisation. The process of European accounting harmonisation is divided into several historical phases including an overview of EC regulations on accounting. Description of the process of implementation of International Accounting Standards into the European law system, known as endorsement mechanism, is included too. The article deals with qualitative changes in European approach of accounting regulation.