International Financial Reporting Standards: Their Importance to U.S.
Business and Legal Practice
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by Stuart H. Deming
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Historically,
the accounting standards used by U.S. companies to report on their financial
status have played a dominant role in the conduct of domestic and
international business. U.S. accounting standards have also played a critical
role in the drafting of legal instruments. But the primacy of U.S. accounting
standards can no longer be assumed. Many countries have adopted and now
require the use of international accounting standards. These international
accounting standards are already having a major impact on U.S. business and
legal practice. Their importance will continue to grow with the convergence
of U.S. and international accounting standards.
Over the years, most countries have developed a set
of accounting principles that serve as a common basis for reporting the
financial status of businesses operating within their borders. These common
accounting principles are formally referred to as Generally Accepted
Accounting Principles (GAAP). They are, in theory, unique to each country.
Their purpose is to provide a common and accepted standard for evaluating and
comparing the financial status of businesses.
The national accounting standards applicable to the
United States are often referred to as ‘‘US GAAP.’’ No single source of US
GAAP exists. It is derived from a composite of principles, standards, and
preferred practices established by U.S. regulators and standard-setters.
Statements, interpretations, and other forms of guidance of the Financial
Accounting Standards Board (FASB), the Securities and Exchange Commission
(SEC), and the American Institute of Certified Public Accountants are the
primary sources of US GAAP.
Given the
dominant role of the United States as a source of capital, foreign companies
are accustomed to using US GAAP in order to raise capital in the United
States. Much like the use of English in the conduct of international
business, the use of US GAAP has generally been assumed. US GAAP is pervasive
because it impacts on all aspects of decision-making with respect to the
conduct of U.S. business and in the conduct of business in many parts of the
world. Though typically unstated, US GAAP governs how transactions are
structured and how legal instruments are drafted.
No longer can it be assumed that US GAAP will
continue to be the primary means by which businesses and business
relationships are evaluated. U.S. companies, financial institutions,
investors, and the lawyers for each must increasingly take into consideration
international accounting standards, and their implications, on a wide range
of issues relating to the operation of a business.
Recognized international accounting standards do
exist and are formally known as the International Financial Reporting
Standards (IFRS). IFRS includes the standards and interpretations issued by
the International Accounting Standards Board (IASB) as well as the
International Accounting Standards (IAS) and interpretations of the
International Accounting Standards Committee.1
The
governing organization for the IASB is the International Accounting Standard
Committee Foundation (Foundation). Paul A. Volcker, former chairman of the
U.S. Federal Reserve Board, is the current chairman of the Foundation, which
includes 19 trustees. The United States is well-represented; including Mr.
Volcker, four trustees have U.S. ties. The Foundation plays the critical role
in appointing members of the IASB, the standards-setting body, and the other
components of the Foundation that work with the IASB in setting international
accounting standards.
The Foundation’s objective is the development of a
single set of ‘‘high-quality’’ international accounting standards that are
transparent, understandable, and enforceable, and that are rigorously
applied. The Foundation also seeks to use the standards it develops through
the IASB as the basis for the convergence of national accounting standards
and IFRS into a single set of high-quality international accounting
standards.
The Foundation mandated that the international
accounting standards developed by the IASB be of high quality. Otherwise, the
establishment of IFRS will be of little benefit if the ultimate result of
convergence is a set of standards based on the lowest common denominator.
They would be subject to a wide range of interpretations, and they could not
be expected to be rigorously and consistently applied. In such circumstances,
IFRS would be useless because no reasonable reliance could be placed on them.
From the
perspective of the United States, both the SEC and FASB are, in concept, very
supportive of convergence. Formal efforts are currently underway to narrow
differences. But the movement towards convergence will continue to be
incremental. A number of major differences have yet to be resolved. Many of
these differences cannot be resolved until the SEC and FASB are adequately
assured that the important protections afforded by US GAAP will not be lost.
A single set of accounting standards, like IFRS,
offers a number of advantages. First of all, IFRS will mean a reduced cost of
capital because the same standards will apply regardless of location. The
time and expense of applying different accounting standards will be greatly
reduced with the use of one consistent reporting standard. In essence, it is
like using the same language. Translation costs are eliminated.
Secondly, the information for decision-making is
enhanced by a single set of accounting standards. A similar basis for
comparison is established. ‘‘Apples to apples’’ will be the basis of
comparison and decision-making, as opposed to an ‘‘apples to oranges’’ basis
for comparison. The latter is inexact, and the degree of the disparity is
often uncertain and subject to varying interpretations.
The emergence of IFRS has coincided with the
requirement of their use by the European Union. Beginning in 2005, virtually
all publicly-held companies listed on exchanges in the European Union are
required to use IFRS. Australia, New Zealand, Hong Kong, Singapore, and the
Philippines have adopted IFRS, as have many countries bordering on the
European Union. Most countries, including China, are moving towards IFRS.
Many small or developing countries have turned to IFRS as their national
GAAP. As they become the prevailing international accounting standards, IFRS’
impact on US GAAP will only increase with convergence.
But even
with the emergence of IFRS, a difference can still exist between IFRS as
adopted by the IASB and as adopted by the European Union or a particular
country. Much like the adoption of uniform laws by individual states in the
United States, in adopting IFRS, the European Union and some countries have
made relatively modest modifications. As a result, any reference to IFRS
should not be unqualified. Reference to the adopting body is always prudent
as a means of clarification. IFRS, as adopted by the IASB, should be the
point of reference for the unaltered standards. For example, IFRS as adopted
by the European Union or a particular country should be referred to as the
respective version of IFRS for the European Union or the particular country.
For U.S. companies, the broader their international
activities, the more significant will be the effect of IFRS. Differences between
the two standards exist. Unlike US GAAP, which does not require a parent and
subsidiaries to conform their accounting policies, IAS 27 under IFRS requires
a parent to present consolidated financial statements for subsidiaries it
controls using uniform accounting policies.
U.S. subsidiaries of companies operating in
jurisdictions like the European Union, where IFRS is the accepted standard,
will need to follow the same accounting standards as their corporate parent.
A subsidiary’s accounting policies must conform to its parent’s accounting
policies under IFRS for similar transactions and events. For example, IAS 2
under IFRS prohibits the valuation of inventory on the basis of the last-in,
first-out method. But the last-in, first-out method is permitted under US
GAAP. The U.S. subsidiary of a parent company located in the European Union
would have to use the average cost or first-in, first-out methods—whichever
is used by its parent—as the method of valuing its inventory.
Similarly, U.S. joint ventures with a venture
partner operating in countries requiring the application of IFRS will need to
follow the same accounting standards as their venture partner. If a listed
European Union company has a major investment in a U.S. company, the U.S.
company will have to prepare information according to IFRS for purposes of
its investor’s equity accounting.
Even for
companies not required to adopt IFRS for reporting purposes, many U.S.
companies looking to new markets will need to adopt IFRS to secure licenses,
raise capital, or comply with requirements of local regulators. Foreign
customers, vendors, or lessors may also require IFRS financial statements. To
facilitate more accurate comparisons to foreign competitors, some U.S.
companies may view IFRS as an opportunity to supplement their current
reporting with reporting or commentary based on IFRS.
In an overall sense, IFRS and US GAAP are far more
similar than they are different. The influence of US GAAP and U.S. practices
on IFRS is substantial. In addition, many of the trustees of the Foundation
and many of the members of the board of IASB are U.S. practitioners, U.S.
trained experts, or practitioners with years of experience working with US
GAAP on behalf of their clients.
As opposed
to historical cost, both IFRS and US GAAP are increasingly based on a fair
value asset and liability model. IFRS is generally viewed as being more
principles-based in orientation than US GAAP, which is viewed as being more
rule-based. By analogy and practice, IFRS has more of a common law approach,
whereas US GAAP has more of a civil law approach.
Despite their common heritage and the movement
toward convergence, the differences between IFRS and US GAAP can at times be
significant. From a legal standpoint, the differences can have dramatic
ramifications. Special care must be exercised in the drafting of legal
instruments that are tied to the financial statements of a company. The
following provides a few examples of how these issues can arise.
Loan covenants associated with financing agreements
present a classic scenario. IAS 32 under IFRS requires convertible debt
instruments to be split in their liability and equity components at the time
of issuance. Under US GAAP, except when warrants are detachable, convertible
debt instruments are to be treated entirely as a liability. Where the
debt-to-equity ratio governs the default provisions of a finance agreement,
the net result of a change to IFRS from US GAAP is that a lender’s risk is
enhanced and the borrower’s risk of default is reduced.
For compensation agreements, a senior officer’s
bonuses or benefits may be based on ordinary income before taxes. Events not
tied to the day-to-day operation of the business are more apt to play a role
as to whether the executive is given a bonus. Under US GAAP, extraordinary
items are permitted but restricted to infrequent, unusual, and rare items
that affect profit and loss. Extraordinary events, like an accounting change
or natural disaster, are less likely to play a role in whether the executive
receives a bonus. But under IAS 1 under IFRS, extraordinary items cannot be
separated out. They must be included in ordinary income.
For
acquisitions, if and when a transaction takes place and how it is structured
can be influenced by whether IFRS or US GAAP is used. Certain transactions
may present very different characteristics under IFRS than under US GAAP. In
counseling clients, special care must be exercised to determine whether a
change in accounting standards will alter the legal advice that is provided.
For securities lawyers, a conversion to IFRS may prompt disclosure
obligations or affect the timing of disclosures.
For legal instruments linked to information
contained in financial statements of entities now in the process of
converting to IFRS, the parties to those instruments and their attorneys need
to review the provisions of the legal instruments to determine the impact of
the change to IFRS. The provisions may need to be revised or clarified or,
alternatively, new arrangements may need to be negotiated. But the impact of
the change to IFRS cannot be disregarded.
Henceforth, agreements dependent in whole or in part
on information in financial statements should, much like choice-of-law
provisions in contracts, clearly define what accounting standards govern
financial statements to which they are linked. Drafters of legal instruments
must take into consideration what accounting standards apply or are likely to
apply and the implications of their application.
But the designation of applicable accounting
standards must be an informed decision. Simply designating the governing
standards can be counterproductive if conversion costs are not adequately
considered. In many situations, conversion costs can be substantial. At
times, incurring substantial conversion costs may be warranted. Yet, in many
situations, the conversion costs cannot be justified, and functionally equivalent
alternatives may need to be identified.
Other
financial ratios or line items might be used to provide similar information
that will not change, depending upon whether IFRS or US GAAP is used.
Reference might also be made to financial information that is entirely
separate from financial statements or data that cannot be affected by a
change in accounting standards.
Whatever the context, US GAAP can no longer be
assumed to be governing the preparation of financial statements. Special care
needs to be exercised to determine what standards apply and what the
implications of those standards may be. Once that determination is made,
precision is required in the drafting of legal instruments to ensure that any
linkage to financial instruments is appropriately qualified by applicable
accounting standards and by the context in which those standards are to be
applied.
1. The IASB is the successor
organization to the International Accounting Standards Committee. The
International Accounting Standards Committee was created in 1973 as a result
of an agreement reached by the accountancy bodies of a number of countries,
including the United States.
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 Stuart H. Deming practices with DEMING PLLC in its offices in Kalamazoo, Michigan and Washington, D.C. Mr. Deming previously served with the Securities and Exchange Commission and has been licensed as a CPA in Michigan. He is a former chair of the State Bar of Michigan’s International Law Section and currently co-chairs the International Accounting Standards Subcommittee of the American Bar Association’s Section of International Law. |
REVIEW
Dari artikel diatas saya dapat mengambil beberapa pemahaman sebagai
berikut
bagi perusahaan di Amerika Serikat, Standar akuntansi telah mendapat peran
dominan dalam melakukan bisnis dalam negeri meupun internasional, merumuskan
instrumen hukum, dan berbagai kepentingan bisnis lain.
Generally Accepted Accounting Principles (GAAP) atau Prinsip Akuntansi yang
bererima umum merupakan prinsip yang telah lama dikembangkan oleh banyak negara
di dunia yang berfungsi sebagai dasar umum untuk melaporkan status finansial
dari operasi bisnis di perusahaan bisnis mereka. Standar akuntansi nasional
berlaku untuk Amerika Serikat sering disebut sebagai US GAAP. Ia diperolehi
dari gabungan dari prinsip, standar praktik, dan disukai didirikan oleh
regulator AS dan standard-setter.
Perusahaan AS, lembaga
keuangan, para investor, dan para pengacara harus semakin mempertimbangkan
standar internasional dan implikasinya pada mereka, pada berbagai masalah yang
berhubungan dengan operasi bisnis. Seperti yang diketahui internasional ada
standar akuntansi dan secara resmi dikenal sebagai Standar Pelaporan Keuangan
Internasional (IFRS). IFRS termasuk
standar dan penafsiran dikeluarkan oleh Standar Akuntansi Board (IASB) serta
International Standar Akuntansi (IAS) dan penafsiran Komite Standar
Internasional Akuntansi.
IFRS, menawarkan
sejumlah keuntungan. Diantaranya, IFRS akan mengakibatkan pengurangan biaya
modal karena ukuran yang sama akan berlaku terlepas dari lokasi. Waktu dan
biaya untuk menerapkan standar akuntansi yang berbeda akan sangat berkurang
dengan menggunakan satu standar pelaporan konsisten. Kedua, informasi untuk
pengambilan keputusan ditingkatkan dengan satu set standar akuntansi. Banyak
perusahaan AS untuk pasar baru beralih mengadopsi IFRS untuk mengamankan
lisensi, meningkatkan modal, atau sesuai dengan persyaratan dari regulator
lokal.
Secara umum, IFRS dan
US GAAP tidak jauh berbeda. Menurut Stuart, yang membedakannya adalah ,IFRS
telah lebih dari sebuah pendekatan hukum umum, sementara kita GAAP telah lebih
dari sebuah pendekatan hukum sipil.
CRIRICAL
Dari sebuah sumber di
situs online, saya mendapat informasi bahwa ada beberapa perbedaan antara IFRS
dan US GAAP baik dari tujuan, karakteristik kualitatif, asumsi dasar, prinsip.
dan kendala. Hal tersebut akan dijelaskan sebagai berikut:
Berikut adalah Perbedaan
keduanya:
Level 1: Tujuan Laporan
Keuangan:
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US GAAP
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IFRS
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§ Menyediakan informasi yang berguna untuk
pengambilan keputusan investasi dan kredit.
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§ Menyediakan informasi yang menyangkut posisi
keuangan, kinerja, serta perubahan posisi keuangan suatu perusahaan yang
bermanfaat bagisejumlah besar pengguna dalam pengambilan
keputusan ekonomi.
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§ Menyediakan informasi yang berguna untuk
memprediksi jumlah, waktu, dan ketidakpastian arus kas masa
depan perusahaan
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§ Pengguna adalah investor, karyawan, pemberi pinjaman,
pemasok dan kreditor usaha lainnya, pelanggan, pemerintah dan masyarakat.
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§ Menyediakan informasi tentang sumber dayaekonomi, klaim terhadap
sumber daya tersebut, dan perubahan terhadap keduanya.
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Level 2: Karakteristik
Kualitatif Informasi Akuntansi
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US GAAP
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IFRS
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Relevan – terdiri dari:
§ Nilai prediksi – membantu pengguna memprediksi hasil
dari kejadian masa lalu, saat ini dan masa depan.
§ Nilai umpan balik – membantu pengguna mengkonfirmasi
dan membetulkan nilai prediksi sebelumnya.
§ Tepat waktu – tersedia sebelum kehilangan kapasitas
untuk mempengaruhi keputusan
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Relevan – terdiri
dari:
§ Nilai prediksi
§ Nilai konfirmasi
§ Materialitas
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Dapat dipercaya –
terdiri dari:
§ Disajikan dengan jujur
§ Netral
§ Dapat diferivikasi
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Dapat dipercaya – terdiri
dari:
§ Disajikan dengan jujur
§ Netral
§ Substansi mengungguli bentuk
§ Kehati-hatian (dimana ada ketidakpastian, kesalahan
dalam menyediakn informasi dan menjamin adanya konservatisme.
§ Kelengkapan
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Dapat dibandingkan
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Dapat dibandingkan
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Konsisten
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Level 2: Element
Laporan Keuangan
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US GAAP
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IFRS
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Aset
Kewajiban
Ekuitas
Investasi pemilik
Distribusi kepada
pemilik
Laba komprehensif
Pendapatan
Keuntungan
Beban
Kerugian
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Aset
Kewajiban
Ekuitas
Pemeliharaan modal
(diperoleh dari revaluasi asset dan kewajiban)
Laba (Pendapatan dan
keuntungan)
Beban (beban dan
kerugian)
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Level 3: Pengakuan dan
pengukuran – Asumsi dasar
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US GAAP
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IFRS
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1. Kelangsungan usaha
2. Entitas ekonomi
3. Unit moneter
4. Periodisitas
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1. Kelangsungan usaha
2. Basis akrual
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Level 3: Pengakuan dan
pengukuran – Prinsip
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US GAAP
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IFRS
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1. Biaya historis
2. Pengakuan pendapatan
3. Kesesuaian
4. Pengungkapan penuh
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1. Biaya historis
2. Biaya sekarang (apa yang harus dibayar hari ini
untuk mendapatkan aset. Ini sering diperoleh dalam penilaian yang sama dengan
nilai wajar)
3. Nilai realisasi (jumlah kas yang dapat diperoleh
saat ini jika asset dilepas
4. Nilai wajar
5. Pengakuan pendapatan
6. Pengakuan beban
7. Pengungkapan penuh
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Level 3: Pengakuan dan
pengukuran – Kendala
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US GAAP
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IFRS
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1. Biaya dan manfaat
2. Materialitas
3. Praktik Industri
4. Konservatisme
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1. Keseimbangan antara biaya dan manfaat
2. Tepat waktu
3. Keseimbangan antara karakteristik kualitatif
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JIka diringkas dalam
gambar, kerangkan konseptual perlaporan keuangan berdasarkan IFRS adalah
sebagai berikut:
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