FASBIASB

Enterprise ownershipEnterprise activitiesInternational factorsFinance and capital marketsTaxationAccounting professionAccounting education and researchPolitical systemSocial climateEconomic growth and developmentInflationLegal systemAccounting regulationCultureAccounting Systems

Factors for Differentiation of Accounting Systems

1.Type of users of the published accounts of the listed companies

2.Degree to which law or standards prescribe in detail and exclude judgment

3.Importance of tax rules in measurement

4.Conservatism / prudence (e.g., valuation of buildings, stocks, debtors )

5.Strictness of application of historic cost ( in the historic cost accounts )

6.Susceptibility to replacement cost adjustments in main or supplementary accounts

7.Consolidation practices

8.Ability to be generous with provisions ( as opposed to reserves ) and to smooth income

9.Uniformity between companies in application of rulesSource: C. W. Nobes, A Judgmental International Classification of Financial Reporting Practices, Journal of Business Finance and Accounting (Spring 1983): 8.

Gerhard Mueller(1967)the macroeconomic patternthe microeconomic pattern(the independent discipline pattern)the uniform accounting pattern)

Developed Western countries Marco-UniformMicro-basedClassGovernment EconomicsContinental government tax legalBusiness Practice Pragmatic British originBusiness Economics theoryLaw-basedTax-basedU.K. influenceU.S. influenceSwedenJapanGermanySpainBelgiumFranceItalyCanadaU.S.IrelandU.K.N.Z.AustraliaNetherlandsSub-ClassFamilySpeciesA Hypothetical Classification of financial Reporting Measurement Reporting measurement practices in developed western countries

Societal ValuesIndividualism/collectivismPower distanceAccounting valueProfessionalism Uniformity/FlexibilityConservatism/OptimismAccountingSystems/practicesAuthority andenforcementMeasurement ofAssets and profits

Statutory ControlFlexibilityUniformProfessionalismNordicAnglo-AmericanGermanicMore-developed LatinAsian colonialAfricanLess-developed Asia

Less-developed Latin

Near EasternJapanAccounting Systems: Authority and Enforcement

GermanicLess-developed Asia

AfricanLess-developed Latin

Near EasternJapanMore-developed LatinAsian colonialNordicAnglo-AmericanSecrecyConservatismOptimismTransparencyAccounting systems: Measurement and Disclosure

The Comparative Impact of International Accounting Differences on Earnings: Earnings Adjustment Index Based on U. S. GAAP

1.2.3.4.5.6.7.

EU Financial Reporting Strategy2005IASIAS

Basel committee supports IASBasel committee-20004G7IASIASC

Basel committee supports IASTwo Standards Receive Special Attention:IAS30-Disclosures in Financial Statements of Banks and Similar Financial InstitutionsIAS39-FinancialInstruments: Recognition and Measurement

IOSCO Report on IASIOSCO-2000517IASCIAS 200030 IASC Standards

IASBActive Agenda Project931.Projects intended to provide leadership and promote convergence include:(a) Accounting for insurance contracts(b) Business combinations(c) Performance reporting (a joint project with the United Kingdoms standard setter)(d) Accounting for share-based payments

IASBResearch Agenda161.Accounting measurement2.Accounting for financial instruments3.Accounting for leases4.Accounting by small and medium entities and in emerging economies5.Accounting for taxes on income6.Business combinations, phase7.Consolidation policy

8.Definitions of elements of financial statements9.Derecognition issues, other than those addressed in IAS 3910.Employee benefits11.Impairment of assets (convergence topics)12.Intangible assets13.Managements discussion and analysis14.Revaluations of certain assets15.Accounting by extractive industries16.Liabilities and revenue recognition

FASBIASB

SEC Concept Release(2000)

FASB;;;;IASB

FASB1.Principle-based2.3.4.FASB5.EITFAcSEC

FASB1.432.Director of Research and Technical ActivitiesaBoard ProjectbEITFc3.

Principle-based1.2.3.4.5.

Principle-based1.2.3.4.IASB

Principle-based1.2.3.

IASBFASBThe Norwalk Agreement (Sep,2002)(a) undertake a short-term project aimed at removing a variety of individual differences between U.S. GAAP international Financial Reporting Standards (IFRSs, which include International Accounting Standards, IASs)(b) remove other difference between IFRSs and U.S.GAAP that will remain at January 1,2005,through coordination of their future work programs; that is, through the mutual undertaking of discrete, substantial projects which both Boards would address concurrently(c) continue progress on the joint projects that are currently undertaking; and(d) encourage their respective interpretative bodies to coordinate their activities

Short-Term International Convergence (Last Updated: March2005In the current phasethe FASB addressed five areas:1.Inventory costs2.Asset Exchanges3.Accounting Changes4.Earnings per Share5.Balance Sheet Classification

1.Inventory cost FASB no151(2004/11)ARB No.43 Items such as freighthandling costs be recognized as current-period charges regardless of whether they meet the criterion of so abnormal.

2.Exchanges of nonmonetary Assets FASB No.153(2004/12)APB Opinion No.29 FVcommercial substanceFV

3.Accounting Changes 4.EPS 5.Balance Sheet Classification FASBS-T Convergence ProjectFASBFinancial Performance Reporting by Business EnterprisesProject

Overview of the Current Progress1.A Deloitte&Touche study indicates that 94 countries either require or permit the IFRSs for publicly traded companies beginning in 2005.2.Some other jurisdictions, including Australia, New Zealand, the Philippines and Singapore, base their national practices on international standards.3.U.S. FASB/IASB Convergence project (Sep 2002~present)4.ASB of Japan/IASB Convergence project (Jan 2005~present)

Joint Project for Convergence:IASB and ASB of Japan (March 2005 Tokyo)1st Phase:1.Measurement of inventories (IAS 2)2.Segment reporting (IAS 14)3.Related party disclosures (IAS 24)4.Unification of accounting policies applied to foreign subsidiaries (IAS 27)5.Investment property (IAS 40)Other Topics Considered:*Introduction of the statement of changes in equity*Share-based payment

Figure1:Intentions Regarding Accepting IFRS or Converging with IFRS5%3%92%

Figure2:Basis for convergence plan281557

Figure 3:Approach to Convergence20%22%58%

Concerns Expressed About Impediments to Achieving IFRS Convergence

Availability of IFRS Translation30%Not Available20%Not Available on a timely basis50%AvailableCountries Surveyed

IFRS Inclusion in University Curriculum20%Not Included27%Limited Coverage53%IncludedUniversities Surveyed

1. (1) (2) 2.

1 (1) (2) (3)

2 (1) (2) (3)

1. (1) (2) (3) (4)

2. (1) (2) (3)

Council on Corporate Disclosure and Governance (CCDG)CCDGMinister of Finance( CCDG)

(AASB)Financial Reporting Council (FRC)AASBFRC

() (1) (2) (3)

() (1) (2)

() (1) (2) 2002

Funding SourceIASBIASB memberIASB

Spontaneous Harmonization Effects of Culture and Market Forces on Accounting Disclosure Practices (Zarzeski,1996)International Disclosure Method1.Companies with higher foreign sales (customers) are more likely to disclosure higher levels of investor-oriented information2.Larger companies disclose higher levels of investor-oriented information3.Companies with greater dependence on debt financing, i.e, usually a more local resource, are found to disclose less public information

Taiwanese accounting may differ from that required by IAS because of the absence of specific Taiwanese rules on recognition and measurement in the following areas:

Impairment of assets IAS36 90027

the derecognition of financial assets IAS39.35 9252233

IFRS(2004 / 06

55618192123

the FIFO or current cost of inventory when LIFO is used IAS2.36 IAS2.3612

There are no specific rules requiring disclosure of :-the fair values of investment properties IAS40.69

There are inconsistencies between Taiwanese and IAS rules that could lead to differences for many enterprises in certain areas .Under Taiwanese rules:

-special purpose entities are not generally consolidatedSIC12

SIC12SPE923337

trading ,available for-sale and derivative financial assets are not recognized at fair value IAS39.69

-pre-operating and start up costs can be capitalizedIAS38.569133119

-if investment properties are revalued , the gains are taken directly to equity [IAS40.28] IAS40.28

some employee benefits paid by cash and stock should be reported as a distribution of retained earnings [IAS19.10] 1910IAS

In certain enterprises, these other issue could lead to differences from IAS: some enterprises that are de facto controlled but not majority owned may be excluded from consolidation IAS27.6 IAS50793

the excess of the fair value of identifiable net assets acquired over the cost of an acquisition should be used to reduce the fair vales of the non-monetary assets with only any remainder being recognized as negative goodwillIAS22.59

IAS2259

Inventories can be valued at replacement cost if this below cost and net realizable valueIAS2.6

IAS2.610

tangible and intangibles assets may be revalued without revaluing a whole class of assets and without keeping the valuation up -to -date IAS16.29/34;IAS38.64/70 179IAS