IFRS GLOBAL DIFFUSION: HISTORY, RHETORIC, IMPACT AND FUTURE’S PERSPECTIVE
IFRS GLOBAL DIFFUSION: HISTORY,
RHETORIC, IMPACT AND FUTURE’S
PERSPECTIVE
By: ERSA TRI WAHYUNI, PhD
Universitas Padjadjaran Bandung
KONFERENSI ILMIAH AKUNTANSI 3, UNTAR, 10 MARET 2016
1
AGENDA
•
•
•
•
•
•
•
•
The Evo lutio n o f G lo b a l Ac c o unting Sta nd a rd
The Rise o f IFRS : The Tim e line
The Rhe to ric o f IFRS
The G o ve rna nc e Mo d e l o f IASB
The Rhe to ric : The C yc le o f IFRS Q ua lity Ma king
Ho w C o untrie s Ad o p t IFRS
The C o nse q ue nc e s o f IFRS Diffusio n
Do e s IFRS Diffusio n e nc o ura g e Ha rm o niza tio n o f ta x
rule s?
• C o nc lusio ns
2
BACKGROUND
• IFRS ha s b e e n d iffuse d to b e c o m e a n inte rna tio na l sta nd a rd o ve r the
p a st 15 ye a rs, the re a re b urg e o ning num b e r o f e m p iric a l stud ie s a b o ut
the inte nd e d a nd uninte nd e d c o nse q ue nc e s o f this g lo b a l re g ula to ry
c ha ng e (se e Brüg g e m a nn e t a l., 2013 ; Ta rc a , 2012 fo r a n o ve rvie w)
• So m e re se a rc h p ro vid e s e vid e nc e tha t IFRS p ro d uc e s b e tte r q ua lity
a c c o unting info rm a tio n c o m p a re d to lo c a l G AAP (Ba rth e t a l., 2008;
Ho rto n e t a l., 2013; Da ske e t a l., 2008; Le e e t a l., 2008)
• If c o m p a nie s c o nve rt fro m US G AAP to IFRS, a c c o unting q ua lity
d im e nsio ns ha ve b e e n fo und to re m a in unc ha ng e d (Ba rto v e t a l., 2005;
Le uz, 2003) o r e ve n d e te rio ra te (Va n d e r Me ule n e t a l., 2007; Ba rth e t
a l., 2012)
• IFRS a s a hig h q ua lity sta nd a rd is a n im p o rta nt rhe to ric fo r IFRS g lo b a l rise
(Be sid e the lo we r o f c o st o f c a p ita l)
• US G AAP use d to b e the m a in re fe re nc e fo r m o st c o untrie s in d e ve lo p ing
the ir a c c o unting sta nd a rd s b e fo re a d o p ting IFRS
• Ho w IFRS wa s a d o p te d a nd institutio na lise d in to the c o untrie s with the
p a st c lo se re la tio nship to US G AAP?
3
IFRS DIFFUSION AND ADOPTION:
WHAT DO WE KNOW SO FAR?
• IFRS d iffusio n w a s hig hly influe nc e d b y
• Asia n Fina nc ia l C risis 1997 G 7 FSF ne w fina nc ia l infra struc ture
• EU a d o p tio n in 2005 Austra lia , Philip p ine s, Ho ng Ko ng , So uth Afric a
• US SEC d e c isio n in 2007 a llo wing IFRS fo r fo re ig n p riva te issue rs
• C o e rc ive iso m o rp hism is a c o m m o n e xp la na tio n fo r the c a se
o f IFRS a d o p tio n e sp e c ia lly in d e ve lo p ing c o untrie s.
• Pre ssure fro m inte rna tio na l d o no r o rg a nisa tio ns suc h a s the
Wo rld Ba nk, the Asia n De ve lo p m e nt Ba nk, the IMF a nd the EU
ha d b e e n a m a jo r c a use fo r d e ve lo p ing c o untrie s to a d o p t
IFRS, suc h a s in the c a se o f Ba ng la d e sh, Pa kista n, Eg yp t,
Ka za khsta n, Ro m a nia a nd Zim b a b w e (Alb u e t a l., 2011;
C ha m isa , 2000; Ha ssa n, 2008; Husse y a nd O ng , 2006; Juna id
a nd G ha ni, 2005; Mir a nd Ra ha m a n, 2005; Tyrra ll e t a l., 2007)
4
THE EVOLUTION OF ACCOUNTING
STANDARD : GLOBAL PERSPECTIVES
Disha rm o nio us
na tio na l a c c o unting
sta nd a rd s
• Be fo re 1970s
O ne se t o f g lo b a l
a c c o unting
sta nd a rd s
• Sta rting a ro und
1970s - no w
A fe w se ts o f g lo b a l
a c c o unting
sta nd a rd s ?
• Po st 2012
• Be fo re 1970s a c c o unting sta nd a rd is a p ro d uc t o f na tio na l
sta nd a rd se tte r
• Sta rting in 1970s, the id e a o f o ne se t o f g lo b a l a c c o unting
sta nd a rd sta rte d to e m e rg e
• The id e a o f o ne se t o f g lo b a l a c c o unting sta nd a rd is d iffuse d
stro ng ly
• But with US a nd Ja p a n a re p ro m o ting m o re c o m p e titio n o f
sta nd a rd s, m a yb e the wo rld c ulture o f a c c o unting will c ha ng e
a g a in.
5
Time Line of IFRS Diffusion World Wide
1973, IASC established
2007 US SEC allowed
IFRS for foreign issuers
1987, IOSCO-IASC First
project
1993 IOSCO-IASC
Revision project
1997-1998 Asian Crisis
2005, IFRS adoption by
EU, and some countries*
2002 EU decided to
adopt IFRS by 2005.
Convergence project
starts between IASB and
FASB
2000, IOSCO
endorsement
2012,
2008 Global Financial
crisis
Some countries adopt
IFRS for the first time**
IASB-FASB convergence
ended.
* e.g Australia, Philippines, Hongkong, South Africa
** e.g Indonesia, Malaysia, Singapore, Rusia, Mexico
6
The Objective
7
The IFRS Foundation and the IASB are dedicated to
developing and sustaining a single set of globally
accepted accounting standards:
Aimed at providing high-quality, transparent and comparable
information for investors and other users of financial information
Providing the world’s integrated capital markets with a common
language for financial reporting
Promoting capital market stability through the transparency and
integrity of financial reporting
Taking appropriate steps with regulators and standard-setters to help
promote consistent application of standards
Source: Tweedie, 20 11
3
Why Global Standards are Needed
8
Accounting standards evolved nationally because
companies borrowed and investors invested only in
their home country
Globalisation is inconsistent with multiple, national or
regional accounting languages that hinder
comparability
Corporations must consolidate global network of operations
Investors seeking diversification and return increasingly invest
outside domestic markets
Source: Tweedie, 20 11
4
Why Global Standards: Benefits to Capital
Markets
9
Transparent financial markets and free
trade require a high-quality, single, global
accounting language
Credibility of local market to foreign investors
Greater cross-border investment
Efficient capital allocation
Comparability across political boundaries
Facilitates global education and training
Source: Tweedie, 20 11
5
Why Global Standards: Benefits to
Companies
10
In the long run, global standard benefit companies
– especially multi-nationals
Lower cost of capital
Integrated IT systems
Easier consolidation
One set of books
Assist in raising capital overseas
Understand financial statements of overseas
suppliers, customers, subsidiaries
Source: Tweedie, 20 11
6
Source: Tweedie, 2011
Corporate Governance – Three Tier Model
US Model
Securities and
Exchange
Commission (SEC)
FAF Trustees
Financial Accounting
Standards Board
Global Model
Public accountability
to securities
regulators
Monitoring Board
Overseen by Trustees
IFRS Foundation
Trustees (5/22 US)
Independent
standard-setter
International
Accounting Standards
Board
Independent and publically accountable
16
11
The Cycle of IFRS Quality Im age Making
12
IFRS as a high quality
global accounting
standard
Prom oted by
International Bodies
As m ore countries adopt,
the IFRS quality im age is
enhanced and IFRS
becom e m ore
international
Early Adopters Countries and
J urisdictions adopt not for
quality reason :
e.g. Europe, Philippines
Late Adopter Countries see
the widespread adoption of
IFRS as an evidence of IFRS
high quality
e.g. Canada, Brazil, Indonesia
Actors engaged in the process
The Role of Actors
Rule makers :
Create the standard
Rule enforcer :
Enforce,
endorse
recommend the standard
Example of Actors in Example of Actors in the
the International Arena National Arena
IASB, IFRS
Interpretation
Committee
IOSCO, IMF, World
or Bank
National Standard-setter for
example FASB (US), AcSB
(Canada).
Capital Market Regulator,
Central Bank for example the US
SEC or the Japanese-FSA.
Adopting jurisdictions:
Preparers: Public-listed
EU, Countries,
companies, financial institutions,
and others.
Rule enablers*:
IASB
Professional associations,
Support
knowledgeaccounting/consultant firms,
building of IFRS.
universities/ academics
Rule takers :
Apply the standard
13
How do Countries Adopt IFRS?
14
Harmonization
Period
Decision
Period
Transition
Period
During the transition period, countries may alter
or reverse their decision, thus the two arrows.
This is evident in Indonesia, Canada, J apan and
the US
Implementation
Period
Different form s of Institutional Work
15
Institutional work : “the
purposive action of individuals
and organisations aimed at
creating, maintaining and
disrupting institutions ”. (Lawrence
and Suddaby 20 0 6)
Institutional work
represents a new idea
connecting, bridging and
extending the work of
institutional
entrepreneurship,
institutional change and
innovation and
deinstitutionalisations
(Lawrence et al., 20 0 9)
Disruptive Work
• Underm ining the ‘localism ’ logic
of the old accounting standard
• Disrupting the full adoption of
IFRS
• Prohibiting the continued use of
US GAAP
Maintaining Work
Creating Work
• Resisting IFRS and
m aintaining US GAAP
• Maintaining the IFRS
adoption decision:
Reinvented the new actors
• Maintaining full IFRS
adoption
• IFRS as a high quality
accounting standard:
Im age-m aking processes
• Reconfiguration of belief
system s
• The creation of
com petition logic
Why IFRS was Chosen over the Alternative?
16
Respondents agreed that IFRS and US GAAP are good quality
accounting standards.
IFRS was chosen than the alternatives, for:
1. International recognition (Becom e m em ber of IFRS global
society) and endorsem ent from international bodies
(IOSCO, IFAC, G20 , World Bank)
2. Efficiency reason. Developing their own unique standard
is expensive
3. More inclusive due process to include a wider audience
while US GAAP only cater US stakeholder’s interest
4. Retain/ im prove their influence in the IFRS m aking arena
Consequences of IFRS Diffusion
17
Changing Role of National Standard Setters
IFRS diffusion also push the FASB/ IASB m odel to diffuse.
FASB/ IASB logic : quasi-judicial, technical-expert,
independent.
E.g : J apan, Brazil, Korea,
Recent charter between IASB and IFASS about the “A m odel
for National Standard Setter”
New Player in the International field : Regional
Group of Standard Setters.
GLASS, AOSSG, IFASS
IFRS Diffusion and Harm onisation of Tax Rules
18
No evidence of global m ovem ent to harm onise the
tax rules
It is difficult to lobby the tax harm onisation at the
international level due to the absence of an
international association of tax authority
Many countries do not have significant change in
their tax rules after IFRS adoption (Mulyadi, Soepriyanto, Anwar,
20 12)
Som e countries provided som e rules during the
transition year that the IFRS adoption should not
increase the tax paym ent.
Conclusions
• The decision making of IFRS adoption is a complex political
process and sometime take several years to make.
• The mechanism of the adoption, the dynamics of IFRS
adoption creates several patterns of IFRS adoption process
which are unique one another
• The quality of IFRS is not very important reason to adopt IFRS
• IFRS diffusion bring institutional consequences to the national
and international regulatory field
19
Online sources:
•
•
•
•
www.iasplus.com : website by Deloitte
www.ifrs.org : IASB website
IFRS.wiley.com : for technical articles
http://www.accountancyage.com/ for accounting and
business news in UK
• http://www.accountingtoday.com/ for accounting and
business news in US
20
Reference List
• Albu, N., Albu, C. N., Bunea, S., Calu, D. A. & Girbina, M. M. (2011) A Story About Ias/Ifrs Implementation
in Romania. Journal of Accounting in Emerging Economies, 1(1), pp.76-100.
• Barth, M. E., Landsman, W. R. & Lang, M. H. (2008) International Accounting Standards and Accounting
Quality. Journal of Accounting Research, 46(3), pp.467-498.
• Barth, M. E., Landsman, W. R., Lang, M. & Williams, C. (2012) Are Ifrs-Based and Us Gaap-Based
Accounting Amounts Comparable? Journal of Accounting and Economics, 54(1), pp.68-93.
• Bartov, E., Goldberg, S. R. & Kim, M. (2005) Comparative Value Relevance among German, Us, and
International Accounting Standards: A German Stock Market Perspective. Journal of Accounting, Auditing
& Finance, 20(2), pp.95-119.
• Brüggemann, U., Hitz, J.-M. & Sellhorn, T. (2013) Intended and Unintended Consequences of Mandatory
Ifrs Adoption: A Review of Extant Evidence and Suggestions for Future Research. European accounting
review, 22(1), pp.1-37.
• Daske, H., Hail, L., Leuz, C. & Verdi, R. (2008) Mandatory Ifrs Reporting around the World: Early Evidence
on the Economic Consequences. Journal of Accounting Research, 46(5), pp.1085-1142.
• Drori, G. S., Meyer, J. W. & Hwang, H. (2006) Globalization and Organization: World Society and
Organizational Change. New York: Oxford University Press.
• Hassan, M. K. (2008) The Development of Accounting Regulations in Egypt: Legitimating the International
Accounting Standards. Managerial Auditing Journal, 23(5), pp.467-484.
• Horton, J., Serafeim, G. & Serafeim, I. (2013) Does Mandatory Ifrs Adoption Improve the Information
Environment? Contemporary Accounting Research, 30(1), pp.388-423.
• Hussey, R. & Ong, A. (2006) Taiwanese Regulators' Perceptions of Accounting Convergence. The Asia
Pacific Journal of Economics & Business, 10(1), pp.4-17.
•
Junaid, A. & Ghani, W. I. (2005) Accounting Development in Pakistan. The International Journal of
Accounting, 40(2), pp.175-201.
• Lawrence, T. B. & Suddaby, R. (2006) 1.6 Institutions and Institutional Work. In: Clegg, S. R., Hardy, C.,
Lawrence, T. & Nord, W. R. (eds.) The Sage Handbook of Organization Studies. London: Sage,pp.215-254
21
•
•
•
•
•
•
•
•
•
Lawrence, T. B., Suddaby, R. & Leca, B. (2009) Institutional Work: Actors and Agency in Institutional
Studies of Organizations. New York: Cambridge university press.
Lee, E., Walker, M. & Christensen, H. (2008) Mandating Ifrs: Its Impact on the Cost of Equity Capital in
Europe (Vol. 105). London: Associated Chartered Certified Accountants [Online].Available:
http://www.accaglobal.com/general/activities/research/reports/global_integration/rr_105. [Accessed
15th September 2013]
Leuz, C. (2003) Ias Versus Us Gaap: Information Asymmetry–Based Evidence from Germany's New
Market. Journal of Accounting Research, 41(3), pp.445-472.
Mir, M. Z. & Rahaman, A. S. (2005) The Adoption of International Accounting Standards in Bangladesh: An
Exploration of Rationale and Process. Accounting, Auditing & Accountability Journal, 18(6), pp.816-841.
Meyer, J. W., Boli, J., Thomas, G. M. & Ramirez, F. O. (1997) World Society and the Nation-State. American
Journal of Sociology, 103(1), pp.144-181.
Mulyadi, Soepriyanto and Anwar. (2012). IFRS Adoption and Taxation Issues. International journal of Arts
and Commerce. Vol.1 No.7.
Tarca, A. (2012) The Case for Global Accounting Standards: Arguments and Evidence. [Online]. Available:
http://www.ifrs.org/use-around-the-world/documents/case-for-global-accounting-standards-argumentsand-evidence.pdf [Accessed 5th August 2014].
Tyrrall, D., Woodward, D. & Rakhimbekova, A. (2007) The Relevance of International Financial Reporting
Standards to a Developing Country: Evidence from Kazakhstan. The International Journal of Accounting,
42(1), pp.82-110.
Van der Meulen, S., Gaeremynck, A. & Willekens, M. (2007) Attribute Differences between U.S. Gaap and
Ifrs Earnings: An Exploratory Study. The International Journal of Accounting, 42(2), pp.123-142.
22
Thank You
Email: [email protected]
Website: etw-accountant.com
23
RHETORIC, IMPACT AND FUTURE’S
PERSPECTIVE
By: ERSA TRI WAHYUNI, PhD
Universitas Padjadjaran Bandung
KONFERENSI ILMIAH AKUNTANSI 3, UNTAR, 10 MARET 2016
1
AGENDA
•
•
•
•
•
•
•
•
The Evo lutio n o f G lo b a l Ac c o unting Sta nd a rd
The Rise o f IFRS : The Tim e line
The Rhe to ric o f IFRS
The G o ve rna nc e Mo d e l o f IASB
The Rhe to ric : The C yc le o f IFRS Q ua lity Ma king
Ho w C o untrie s Ad o p t IFRS
The C o nse q ue nc e s o f IFRS Diffusio n
Do e s IFRS Diffusio n e nc o ura g e Ha rm o niza tio n o f ta x
rule s?
• C o nc lusio ns
2
BACKGROUND
• IFRS ha s b e e n d iffuse d to b e c o m e a n inte rna tio na l sta nd a rd o ve r the
p a st 15 ye a rs, the re a re b urg e o ning num b e r o f e m p iric a l stud ie s a b o ut
the inte nd e d a nd uninte nd e d c o nse q ue nc e s o f this g lo b a l re g ula to ry
c ha ng e (se e Brüg g e m a nn e t a l., 2013 ; Ta rc a , 2012 fo r a n o ve rvie w)
• So m e re se a rc h p ro vid e s e vid e nc e tha t IFRS p ro d uc e s b e tte r q ua lity
a c c o unting info rm a tio n c o m p a re d to lo c a l G AAP (Ba rth e t a l., 2008;
Ho rto n e t a l., 2013; Da ske e t a l., 2008; Le e e t a l., 2008)
• If c o m p a nie s c o nve rt fro m US G AAP to IFRS, a c c o unting q ua lity
d im e nsio ns ha ve b e e n fo und to re m a in unc ha ng e d (Ba rto v e t a l., 2005;
Le uz, 2003) o r e ve n d e te rio ra te (Va n d e r Me ule n e t a l., 2007; Ba rth e t
a l., 2012)
• IFRS a s a hig h q ua lity sta nd a rd is a n im p o rta nt rhe to ric fo r IFRS g lo b a l rise
(Be sid e the lo we r o f c o st o f c a p ita l)
• US G AAP use d to b e the m a in re fe re nc e fo r m o st c o untrie s in d e ve lo p ing
the ir a c c o unting sta nd a rd s b e fo re a d o p ting IFRS
• Ho w IFRS wa s a d o p te d a nd institutio na lise d in to the c o untrie s with the
p a st c lo se re la tio nship to US G AAP?
3
IFRS DIFFUSION AND ADOPTION:
WHAT DO WE KNOW SO FAR?
• IFRS d iffusio n w a s hig hly influe nc e d b y
• Asia n Fina nc ia l C risis 1997 G 7 FSF ne w fina nc ia l infra struc ture
• EU a d o p tio n in 2005 Austra lia , Philip p ine s, Ho ng Ko ng , So uth Afric a
• US SEC d e c isio n in 2007 a llo wing IFRS fo r fo re ig n p riva te issue rs
• C o e rc ive iso m o rp hism is a c o m m o n e xp la na tio n fo r the c a se
o f IFRS a d o p tio n e sp e c ia lly in d e ve lo p ing c o untrie s.
• Pre ssure fro m inte rna tio na l d o no r o rg a nisa tio ns suc h a s the
Wo rld Ba nk, the Asia n De ve lo p m e nt Ba nk, the IMF a nd the EU
ha d b e e n a m a jo r c a use fo r d e ve lo p ing c o untrie s to a d o p t
IFRS, suc h a s in the c a se o f Ba ng la d e sh, Pa kista n, Eg yp t,
Ka za khsta n, Ro m a nia a nd Zim b a b w e (Alb u e t a l., 2011;
C ha m isa , 2000; Ha ssa n, 2008; Husse y a nd O ng , 2006; Juna id
a nd G ha ni, 2005; Mir a nd Ra ha m a n, 2005; Tyrra ll e t a l., 2007)
4
THE EVOLUTION OF ACCOUNTING
STANDARD : GLOBAL PERSPECTIVES
Disha rm o nio us
na tio na l a c c o unting
sta nd a rd s
• Be fo re 1970s
O ne se t o f g lo b a l
a c c o unting
sta nd a rd s
• Sta rting a ro und
1970s - no w
A fe w se ts o f g lo b a l
a c c o unting
sta nd a rd s ?
• Po st 2012
• Be fo re 1970s a c c o unting sta nd a rd is a p ro d uc t o f na tio na l
sta nd a rd se tte r
• Sta rting in 1970s, the id e a o f o ne se t o f g lo b a l a c c o unting
sta nd a rd sta rte d to e m e rg e
• The id e a o f o ne se t o f g lo b a l a c c o unting sta nd a rd is d iffuse d
stro ng ly
• But with US a nd Ja p a n a re p ro m o ting m o re c o m p e titio n o f
sta nd a rd s, m a yb e the wo rld c ulture o f a c c o unting will c ha ng e
a g a in.
5
Time Line of IFRS Diffusion World Wide
1973, IASC established
2007 US SEC allowed
IFRS for foreign issuers
1987, IOSCO-IASC First
project
1993 IOSCO-IASC
Revision project
1997-1998 Asian Crisis
2005, IFRS adoption by
EU, and some countries*
2002 EU decided to
adopt IFRS by 2005.
Convergence project
starts between IASB and
FASB
2000, IOSCO
endorsement
2012,
2008 Global Financial
crisis
Some countries adopt
IFRS for the first time**
IASB-FASB convergence
ended.
* e.g Australia, Philippines, Hongkong, South Africa
** e.g Indonesia, Malaysia, Singapore, Rusia, Mexico
6
The Objective
7
The IFRS Foundation and the IASB are dedicated to
developing and sustaining a single set of globally
accepted accounting standards:
Aimed at providing high-quality, transparent and comparable
information for investors and other users of financial information
Providing the world’s integrated capital markets with a common
language for financial reporting
Promoting capital market stability through the transparency and
integrity of financial reporting
Taking appropriate steps with regulators and standard-setters to help
promote consistent application of standards
Source: Tweedie, 20 11
3
Why Global Standards are Needed
8
Accounting standards evolved nationally because
companies borrowed and investors invested only in
their home country
Globalisation is inconsistent with multiple, national or
regional accounting languages that hinder
comparability
Corporations must consolidate global network of operations
Investors seeking diversification and return increasingly invest
outside domestic markets
Source: Tweedie, 20 11
4
Why Global Standards: Benefits to Capital
Markets
9
Transparent financial markets and free
trade require a high-quality, single, global
accounting language
Credibility of local market to foreign investors
Greater cross-border investment
Efficient capital allocation
Comparability across political boundaries
Facilitates global education and training
Source: Tweedie, 20 11
5
Why Global Standards: Benefits to
Companies
10
In the long run, global standard benefit companies
– especially multi-nationals
Lower cost of capital
Integrated IT systems
Easier consolidation
One set of books
Assist in raising capital overseas
Understand financial statements of overseas
suppliers, customers, subsidiaries
Source: Tweedie, 20 11
6
Source: Tweedie, 2011
Corporate Governance – Three Tier Model
US Model
Securities and
Exchange
Commission (SEC)
FAF Trustees
Financial Accounting
Standards Board
Global Model
Public accountability
to securities
regulators
Monitoring Board
Overseen by Trustees
IFRS Foundation
Trustees (5/22 US)
Independent
standard-setter
International
Accounting Standards
Board
Independent and publically accountable
16
11
The Cycle of IFRS Quality Im age Making
12
IFRS as a high quality
global accounting
standard
Prom oted by
International Bodies
As m ore countries adopt,
the IFRS quality im age is
enhanced and IFRS
becom e m ore
international
Early Adopters Countries and
J urisdictions adopt not for
quality reason :
e.g. Europe, Philippines
Late Adopter Countries see
the widespread adoption of
IFRS as an evidence of IFRS
high quality
e.g. Canada, Brazil, Indonesia
Actors engaged in the process
The Role of Actors
Rule makers :
Create the standard
Rule enforcer :
Enforce,
endorse
recommend the standard
Example of Actors in Example of Actors in the
the International Arena National Arena
IASB, IFRS
Interpretation
Committee
IOSCO, IMF, World
or Bank
National Standard-setter for
example FASB (US), AcSB
(Canada).
Capital Market Regulator,
Central Bank for example the US
SEC or the Japanese-FSA.
Adopting jurisdictions:
Preparers: Public-listed
EU, Countries,
companies, financial institutions,
and others.
Rule enablers*:
IASB
Professional associations,
Support
knowledgeaccounting/consultant firms,
building of IFRS.
universities/ academics
Rule takers :
Apply the standard
13
How do Countries Adopt IFRS?
14
Harmonization
Period
Decision
Period
Transition
Period
During the transition period, countries may alter
or reverse their decision, thus the two arrows.
This is evident in Indonesia, Canada, J apan and
the US
Implementation
Period
Different form s of Institutional Work
15
Institutional work : “the
purposive action of individuals
and organisations aimed at
creating, maintaining and
disrupting institutions ”. (Lawrence
and Suddaby 20 0 6)
Institutional work
represents a new idea
connecting, bridging and
extending the work of
institutional
entrepreneurship,
institutional change and
innovation and
deinstitutionalisations
(Lawrence et al., 20 0 9)
Disruptive Work
• Underm ining the ‘localism ’ logic
of the old accounting standard
• Disrupting the full adoption of
IFRS
• Prohibiting the continued use of
US GAAP
Maintaining Work
Creating Work
• Resisting IFRS and
m aintaining US GAAP
• Maintaining the IFRS
adoption decision:
Reinvented the new actors
• Maintaining full IFRS
adoption
• IFRS as a high quality
accounting standard:
Im age-m aking processes
• Reconfiguration of belief
system s
• The creation of
com petition logic
Why IFRS was Chosen over the Alternative?
16
Respondents agreed that IFRS and US GAAP are good quality
accounting standards.
IFRS was chosen than the alternatives, for:
1. International recognition (Becom e m em ber of IFRS global
society) and endorsem ent from international bodies
(IOSCO, IFAC, G20 , World Bank)
2. Efficiency reason. Developing their own unique standard
is expensive
3. More inclusive due process to include a wider audience
while US GAAP only cater US stakeholder’s interest
4. Retain/ im prove their influence in the IFRS m aking arena
Consequences of IFRS Diffusion
17
Changing Role of National Standard Setters
IFRS diffusion also push the FASB/ IASB m odel to diffuse.
FASB/ IASB logic : quasi-judicial, technical-expert,
independent.
E.g : J apan, Brazil, Korea,
Recent charter between IASB and IFASS about the “A m odel
for National Standard Setter”
New Player in the International field : Regional
Group of Standard Setters.
GLASS, AOSSG, IFASS
IFRS Diffusion and Harm onisation of Tax Rules
18
No evidence of global m ovem ent to harm onise the
tax rules
It is difficult to lobby the tax harm onisation at the
international level due to the absence of an
international association of tax authority
Many countries do not have significant change in
their tax rules after IFRS adoption (Mulyadi, Soepriyanto, Anwar,
20 12)
Som e countries provided som e rules during the
transition year that the IFRS adoption should not
increase the tax paym ent.
Conclusions
• The decision making of IFRS adoption is a complex political
process and sometime take several years to make.
• The mechanism of the adoption, the dynamics of IFRS
adoption creates several patterns of IFRS adoption process
which are unique one another
• The quality of IFRS is not very important reason to adopt IFRS
• IFRS diffusion bring institutional consequences to the national
and international regulatory field
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Online sources:
•
•
•
•
www.iasplus.com : website by Deloitte
www.ifrs.org : IASB website
IFRS.wiley.com : for technical articles
http://www.accountancyage.com/ for accounting and
business news in UK
• http://www.accountingtoday.com/ for accounting and
business news in US
20
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