Audra Ong ¹

Affiliations
1 University of Windsor Odette School of Business Windsor, Ontario N9B 3P4, CA

Abstract

It is argued that companies are structuring lease agreements so that leases can be classified as operating thus enhancing their financial results. The International Accounting Standards Board recently proposed that the present classification be removed and all leases would appear on the balance sheet. This paper compares the opinions of 63 qualified accountants in Canada and 54 qualified accountants in Malaysia on the present regulations and the possibility of abuse of present accounting standards. Canadian accountants are more likely to agree than Malaysian accountants that present standards are being abused and there is statistical support that accountants in Malaysia with shorter work experience are more likely to consider that the standard is abused than those with longer work experience. Reasons are suggested for these differences. The paper concludes by identifying potential avenues for further research which would extend our knowledge on the development and implementation of new standards and improve our understanding of the potential relationship between expressed opinions and the personal attributes of the respondents.

Keywords

Accounting for Leases, Regulatory Non-compliance, Accounting for Leases in Malaysia, Accounting for Leases in Canada, Leasing Transactions, Accountants’ Opinions on Leasing Standards

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Audra Ong ¹, Wan-Ying Lin ², Henry Hsu ²

Affiliations
1 University of Windsor Odette School of Business 401, Sunset Avenue, Windsor Ontario N9B 3P4, CA
2 National Chengchi University Taiwan

Abstract

Recent events suggest that global convergence towards international financial reporting standards (IFRSs) among countries are gaining momentum. However, a detailed investigation of the reality reveals difficulties. The experience of Taiwan reflects these issues. This paper examines those factors, which influenced the degree of success of convergence. In-depth interviews were conducted with 21 interviewees consisting of professional accountants, industrial executives and accounting regulators. They identified the national legal system as the main factor preventing harmonization. This factor was also viewed as a mechanism to protect Taiwan's interests. Furthermore, changing from a rules-based approach to a principles-based approach is not just an issue of translating English-worded standards into Chinese but of overcoming conceptual and practical problems. The experience of Taiwan is probably not unique amongst the financially sophisticated, smaller countries in the Far East that have particular issues, which are often overlooked by the broader accounting community. The study provides valuable lessons for policy-makers and corporate management in their pursuit of accounting harmonization.

Keywords

International Accounting, ROC

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Audra Ong ¹, Roger Hussey ¹

Affiliations
1 University of Windsor, Odette Business School, 401 Sunset Avenue, Windsor, Ontario, N9B 3P4, CA

Abstract

This paper is a follow-up of the article 'Fudged Accounting Theory: Evidence from the UK' in the Journal of Management Research (Ong, 2003). In that article, an analysis of the flexibility within the UK regulations, which allowed companies to use different accounting treatments for intangible assets, was illustrated to support fudged accounting theory (Murphy, 1990). This paper extends that earlier work by examining the association between corporate leverage and accounting choice in the UK at a period when the extant accounting standard for goodwill, SSAP22 Accounting for Goodwill (ASC, 1989), permitted two very different accounting treatments. As a result, other intangibles, particularly brands, could avoid the regulatory strictures. For the present study, a series of hypotheses relating to corporate leverage and capitalization of intangible assets were tested. The results of the present study support fudged accounting theory by providing evidence that there is a relationship between the widespread capitalization of goodwill/brands and the relationship with leverage. The results demonstrate that financial managers will tend to adopt accounting practices that result in stronger balance sheets.

Keywords

Leverage, Fudged Accounting, Intangible Assets, Brands/Goodwill, Food/Drink/Media Industries, International Accounting

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Audra Ong ¹

Affiliations
1 University of Windsor, Odette Business School, 401 Sunset Avenue, Windsor, Ontario N9B 3P4

Abstract

The topic of accounting for intangible assets such as trade marks, patents, brands and goodwill has been highly controversial in the accounting profession for many years. Furthermore, the accounting treatment of brands has importance for marketers. Until recently, the flexibility within the regulations allowed companies to use a variety of accounting treatment and this led to the generation of fudged accounting theory (Murphy, 1990). This empirical study based on recent accounting regulatory changes for intangible assets in the UK examines the validity of the theory in the food, drink and media industries. The analysis demonstrates that companies are moving from the capitalization of brands to that of goodwill. Policies in respect of amortisation are, however, more divergent and fudged accounting theory still applies. The UK approach is being regarded with interest by the International Accounting Standards Committee and fudged accounting theory may be generalisable in different accounting regimes.

Keywords

Intangible Assets, Tangible Assets, Brands, Goodwill, FRS 10, Fudged Accounting, Food/ Drink/Media Industries

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