Comparative International Accounting (Eleventh Edition)

Citation

Godfrey, A. (2011), "Comparative International Accounting (Eleventh Edition)", Pacific Accounting Review, Vol. 23 No. 1, pp. 89-91. https://doi.org/10.1108/01140581111130689

The first edition of Comparative International Accounting was published in 1981, reflecting the authors' longstanding interest in the topic and their significant contributions to its academic development. The 11th edition of this well established text maintains a remarkable record of publishing a revised edition every two years since 1998 – seven biennial editions consecutively. This emphasis upon current developments has been a major strength of the text, especially given the increased pace of recent change in international financial reporting and accounting.

The revisions since the tenth edition in 2008 provide updated material on a number of key developments – in particular, the expected adoption of international financial reporting standards (IFRS) in the USA, the effects of the financial crisis of 2008/2009 and its impact on accounting for financial instruments, accounting in China, reporting by private companies and the development of IFRS for small and medium enterprises (SMEs), and, finally, updates for major changes in group accounting and segment reporting.

Overview

The objective of the text is relatively simple, to provide a comprehensive and coherent text for relevant undergraduate and postgraduate courses in comparative and international aspects of accounting. To that end, three elements underpin the text: broad overviews, detailed information on real companies and countries and across‐the‐board comparisons of major topics. The structure and content of the text reflects the emphasis on these three elements. There are six major sections in the text.

Issues significant to the context and environment of international financial reporting are covered in Part I, including the global nature and demands of international business, the causes of international accounting and reporting differences, a review of classifications of financial reporting and culminating in a discussion of international harmonisation. Students are advised to return to this section after completing the text as a whole in order to better understand the importance of these contextual issues and developments.

Part II focuses on the application of IFRS to listed companies. The relationship between US GAAP and IFRS is considered in detail, including key financial reporting topics. Two further contextual issues of increasing concern in the IFRS debate are also covered: different versions of IFRS practice and the enforcement of IFRS. An analysis and historical review of the impact of political lobbying on accounting standards concludes this section.

A closer consideration of accounting transition in two important geographic areas comprises Part III. First, the adoption of IFRS by the European Union and the impact of political and economic changes on accounting in Eastern Europe are considered. Second, the accounting developments in East Asia, with particular reference to China and Japan are discussed.

Following the emphasis upon listed companies, and groups in Parts II and III, attention switches in Part IV to financial reporting by individual companies. These are, of course, far more numerous than listed companies and raise issues in relation to the extent of harmonisation. In particular, this section concentrates on individual company reporting in Europe, within the context of the publication of the IFRS for SMEs in 2009.

Three accounting topics specifically related to listed companies are considered in some detail in Part V: group accounting, foreign currency translation and segment reporting. The final section is a somewhat miscellaneous one. The emphasis throughout Parts I to V has been on international financial reporting but Part VI seems to widen the scope of international accounting topics: international financial analysis, international auditing topics, managerial accounting and corporate income taxes.

Evaluation

In terms of meeting the authors' objectives, the text is probably most effective for an international accounting paper at the postgraduate level with accounting graduates who have already covered the equivalent of an advanced financial reporting (AFR) paper. It would be difficult to fully appreciate international issues for technical topics such as foreign currency translation, deferred tax, leasing or group accounts unless the reader has a good grasp of financial reporting techniques.

The text's strength is in discussing the issues around the accounting topics rather than the technical topics themselves. It is a quite different text from the recently published Advanced Financial Accounting by Kothari and Barone (2011) or International Financial Reporting and Analysis by Alexander et al. (2009), for example. It, therefore, complements an AFR paper rather than replaces it. Selected topics could also be useful for an MBA type paper for managers to understand the current situation with regard to international financial reporting, the reasons and effects of differences in international accounting and the prospects for harmonisation.

The text is particularly good around the international differences in accounting and their implications, sometimes viewed rather uncritically by commentators. This probably reflects the research interests of Nobes and Parker. It is especially strong on the “politics” of international accounting, including sovereignty issues and cultural influences, which are used to guide students to an understanding beyond the technical differences and alternatives. It also has strong coverage of the contextual and environmental influences on the concept of global accounting standards – different versions in practice, enforcement models, effects of lobbying.

Part VI is a little incongruous in the context of the text's financial reporting structure. The transfer pricing topic is clearly relevant to international financial reporting through the managerial accounting and taxation effects and it may be better presented in that context.

A range of discussion questions and comprehensive references are provided at the conclusion of each chapter for class presentations and discussions. The references are useful for reading lists, although they have only grown slowly and incrementally with each edition. There are often just one or two new readings for a chapter and the lists would benefit from revision and updating. It will be important for students to search outside these reference lists for additional relevant and contemporary articles.

The lecturer support resources are not extensive. The lecturers' manual provides answers to those end of chapter discussion questions not included in the text itself, some extra and more practical questions and solutions and a set of 67 multiple choice questions. The preface refers to “an extensive set of powerpoint slides”. In fact, these are presentations of selected tables and figures from the text rather than slides of teaching note, as are often provided for similar texts.

Overall, the text continues to contribute significantly to an understanding of the nature and motivations for global accounting and the important debate around the implications and difficulties of actually implementing global financial reporting standards.