Introduction/Overview of the first three weeks of the Module
Week 1 provide background for the financial reporting module and refreshes basic accounting concept in Finance and accounting for manager module. It provides detailed differences between cash flow and accrual accounting and a critical analysis of preferred methods as well as examines the standard setting processes and challenges. Week 2 is a follow up to week1 as it dwells extensively on economist approach to income and asset valuation, accounting for price-level changes and income recognition models. It looks at computation of profit from both accounting and economics view and the relationship between the two.
Week 3 was a follow up on weeks 1 and 2 studies; it examines both traditional and modern way of interpreting financial statements and assessing the financial health of an organization. It also introduces the challenges and benefits of financial reporting on the internet.
These 3 weeks studies put together has captured important areas of financial reporting that are of practical use in modern accounting environment. This paper therefore ride on these to examine the article by Larson & Street (2004) on the progress and impediment identified by top accounting firms’ survey during International Financial Reporting standard( IFRS) convergence process in an expanding Europe.
Overview of (Larson & Street, 2004) article
In 2002, European Union (EU) requires all members’s listed companies to adopt and prepare consolidated accounts using International Financial accounting standard (IFRS) effective 2005. This is a big event for International Accounting Standard Board (IASB) which makes boosted their status and legitimacy as a standard setting body. Larson & Street (2004) study therefore examines the effectiveness of the convergences, progress, issues and challenges in the 17 EU countries.
The article was appropriately structured into summary of findings of major accounting firms in GAAP Convergence 2002, efforts of EU on convergence, literature review, finding from country by country analysis, detailed discussion on the finding and conclusion.
Research Questions, Methodology and Data
Larson & Street (2004) articles addresses the question from Meek & Thomas (2004) article, on whether non-listed entities and individual organizations will shift from national accounting system or continue to reflect them, in particular those from European code law countries. In addressing this question, Larson & Street (2004) uses the data collected from the six largest international accounting firm that were used for their 2002 survey on GAAP Convergence in some European Countries, in particular comments provided by the partners of these accounting firms. Also subsequent event after the survey and other studies were used.
More so the article contribute to various studies and literatures of IFRS convergence in European countries by exploring the implication of regulators allowing...