1.

“The international standard-setter’s e orts to increase comparability of

accounting have failed because of the absence of an international monitoring and
enforcement agency.” Critically evaluate the extent to which each aspect of this
quotation is correct.

2. “US GAAP is a better set of accounting requirements than International Financial

Reporting Standards (IFRS)”. Explain various ways in which US GAAP could or
could not be regarded as “better”, and how one could check if the statement is
true. What evidence have researchers found in this area?

3. Explain why the European Union decided to abandon its programme of

harmonisation based on EU Directives and to issue the ‘IAS Regulation’ in 2002.

4. Explain how accounting in China has developed since the early 1990s, and
explain what has driven these various developments.

5. Explain why some international classi cations put UK accounting with US

accounting but some classi cations put them in di erent groups. In your answer
discuss both accounting di erences and di erences in the data and methods used
by classi ers.

6. The following shows extracts from the nancial statements of a German

company under German accounting rules. The company expects soon to be listed
on a stock exchange, so it plans to prepare IFRS statements.

Assets (€m)
Cash 800
Receivables (including foreign currency 1,600
ones)
Inventories (LIFO basis) 324
Investment properties 950
Other property, plant 3,200
Intangible assets 4,000
Total assets 10,874

Provisions (€m)
Pension liabilities 1,000
Other provisions 1,600
Deferred tax 420
Total provisions 3,020
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Required: Examine the items in the lists of assets and provisions above. Which of these
items might change on adjustment from German accounting to IFRS? For each change,
explain:

• why it might happen,

• whether or not it depends on an IFRS policy choice available to the company,
• the likely direction of the change (increase and decrease), and
• the effect on the gearing/leverage ratio (debt on equity) and the pro tability ratio (return
on net assets).

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