1、1International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 3: Comparative Accounting: Europe2Learning ObjectiveslUnderstand how financial reporting is regulated and enforced in five European countries: France, Germany, the Czech Republic, the Netherlands, and the U.K.lDescribe the key simi

2、larities and differences between the accounting systems of these five countries.3lIdentify the use of International Financial Reporting Standards at the levels of the individual company and the consolidated financial statements in these five countries.lDescribe the audit-oversight mechanisms in thes

3、e five countries.4IFRS in the European Union lStarting in 2005, all EU-listed companies must follow IFRS in their consolidated financial statements.lGenerally, IFRS consolidated statements are permitted for non-listed companies.lRequirements for individual company financial statements vary IFRS may

4、be required, allowed, or prohibited.56IFRS (contin)lIFRS are based on fair presentation principleslIFRS may be overridden in rare circumstances to achieve fair presentationlAccounting measurementslBusiness combinations purchase accountinglGoodwill annual impairments testlInvestments in associates eq

5、uity methodlTranslation of financial statements of foreign operations functional currency concept7lAssets valued at historical cost or fair valuelResearch costs expensed; development costs capitalizedlLIFO （Last in, First out ）not allowedlFinance leases capitalized; operating leases expensedlProvisi

6、ons recognized when probable and estimablelDeferred taxes recognized in full, using the liability method, for temporary differences between the carrying amount and tax base89France lOverviewl“The Plan” national uniform chart of accounts (national accounting code)lObjectives and principles of financi

7、al reportinglDefinitions of elementslRecognition and valuation ruleslStandardized chart of accountslModel financial statementslOther influences on French accounting ruleslCommercial legislation (Code de Commerce)lTax laws10France (contin)lAccounting regulation and enforcementlCNC National Accounting

8、 BoardlKeeps plan currentlMakes rulings and recommendations on accounting issueslCRC Accounting Regulation CommitteelConverts CNC rulings and recommendations into binding regulations11lAMF Financial Markets AuthoritylSupervises securities marketslOEC Institute of Public AccountantslRepresents the ac

9、counting professionlMembers prepare financial statements, and provide tax, information systems, and management advisory services12lCNCC National Institute of Statutory AuditorslMembers audit and give an opinion on financial statementslMust report criminal acts to the High Council of External Auditor

10、slSubstantial overlap in OEC and CNCC membershiplStatutory auditors not allowed to provide accounting services to the same clientlAMF oversees audits of listed companies, but relies on a committee of the CNCC to conduct audit-quality reviews13France (contin)lUnusual features of French financial repo

11、rtinglMust report results of environmental activitieslReports aimed at preventing bankruptcieslSocial report14GermanylOverviewlCreditor protectionlConservative balance sheet valuationslReserves as protection against unforeseen risks and insolvencylAccounting is designed to compute a prudent income a

12、mount that leaves creditors unharmed after distributions are made to owners15lInfluence of tax lawlDetermination principle: taxable income is determined by what is booked in a companys financial recordslReliance on statutes and court decisions16Germany (contin)lAccounting regulation and enforcementl

13、German Commercial Code (HGB) lApplies to all business entitieslGerman Accounting Standards Board lDevelops recommendations for consolidated financial statements17lFinancial Reporting Enforcement Panel lEnforces compliance with German financial reporting requirements and IFRS by listed companieslCham

14、ber of Accountants lOversees WPs (“enterprise examiners”)lUnusual features of German financial reportinglAuditors private report to board of directors and supervisory board on companys future prospects18Czech RepubliclOverviewlAccounting changed directions several times in 20th century, reflecting t

15、he countrys political historylUntil end of World War II German influenceslAfter World War II Soviet influenceslAfter 1989 EU influences (market orientation)19lAccounting regulation and enforcementlMinistry of FinancelOversees Commercial Code (modeled on German commercial law)lOversees Accountancy Ac

16、t (based on EU directives)lChamber of AuditorslOversees auditorslUnusual features of Czech financial reportinglForm over substance still applies in some caseslStill implementing accounting practices consistent with EU directives and IFRS20The NetherlandslOverviewlAccounting paradoxeslPermissive requ

17、irements, but high professional practice standardslCode law country whose accounting is oriented toward fair presentationlFair presentation orientation developed without a strong stock marketlOther influences on Dutch accountinglU.K. and U.S. as much as continental European countrieslAccounting prof

18、essionlBusiness economics (microeconomics)lIASB21The Netherlands (contin)lAccounting regulation and enforcementlCompany law Act on Annual Financial StatementslDutch Accounting Standards BoardlDevelops guidelines on generally acceptable accounting standardslEnterprise ChamberlEnforces compliance with

19、 accounting requirementslNIvRAlOversees auditing professionlUnusual features of Dutch financial reportinglFinancial statements may be in Dutch, French, German, or EnglishlOther than consolidated financial statements of Dutch listed companies, financial statements may be based on Dutch guidelines, IF

20、RS, or a combinationlFlexible accounting measurementslCurrent values are permitted for tangible assetslOpportunities for income smoothing22United KingdomlOverviewlLegacy of British accountinglFirst country to develop an accountancy professionlFair presentation (true and fair view)lExported British accounting around the world23United Kingdom (contin)lAccounting regulation and enforceme