poland empirical research and contribution to standard...
TRANSCRIPT
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Poland – Empirical research and contribution to standard setting
prof. Radosław Ignatowski Head of International Accounting Unit
Department of Accounting Management Faculty
University of Lodz, Poland
Presentation prepared for
Accounting and Auditing Education Community of Practice Workshop
Joint Vienna Institute, 16 – 17 January, Vienna
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Presentation
Accounting Profession, Accounting Regulations, Accounting Theory and Academics’ World
Institutional framework of Polish Accounting System in International Environment – Legal or Environmental (law vs accounting standards, rules based vs principles based regulations)
Standards and IFRSs phenomena in Poland
Impact of Academics and Empirical Research on Standard Setting Process (internal and international level)
Developments in Polish Accounting System and Accounting Research – Obstructions and Challenges
Contents:
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Accounting and Reality
Accounting Objective
Active and Passive
Depict (present) reality by availably-ideal model – Financial Accounting
Create reality – Managerial (and Financial) Accounting
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Accounting Profession
(Financial) Accounting Profession Triangle
Theory
Regulations Practice
Reality
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Accounting Profession and Academics
(Financial) Accounting Profession Triangle
Theory
Regulations Practice
Reality
Academics
Academics Academics
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Accounting Development And Academics
19 State Universities
5 State Schools of Economics
8 (of 25) State Technical Universities
1 (of 7) Agricultural Academies
72 Private Academies and Higher Education Schools of Economics
Polish Accouting Academicians Society
with at least one Accounting Department (or Unit)
No Accounting Department (or even Unit) at the Law Faculties!!!
Totally about 700 Academicians of Accountancy, but …
Some of them focus on Managerial Accounting only
Highly actively working (publications, presentations, etc.) – about 100 – 150
Engaged in development, improvement and regulatory system – about 30
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Accounting Development And Academics
Scientific research on applied and potential regulations – verifications of existed and potential models – empirical research, based on classical and pragmatic approaches – logical reasoning vs statistical modelling, case studies, others
Review of existed and potential regulations by individuals and within scientific (academic) organization: Scientific Board of the Accountants Association in Poland (AAP) – 48 Members
Proposals of regulations (legal or professional) by individuals and within scientific organization: Perfection of Regulatory and Accounting Principles Commission of the AAP
Active participation within formal regulatory bodies – e.g. Accounting Standards Committee in Poland (ASC) – 8 of 18 Members are full or part-time academic staff
Contribution of Academics to Polish Accounting Regulatory System Development
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Accounting Development And Academics
Scientific research on applied and potential regulations – verifications of existed and potential international regulations – empirical research, based on classical and pragmatic approaches – logical reasoning vs statistical modelling, case studies, others
Review of existed and potential regulations by individuals and within scientific and professional organizations: AAP, ASC
Glosses and Opinions on Discussion Papers and Exposure Drafts of IFRSs by individuals and by official bodies: AAP, ASC, National Chamber of Statutory Auditors (NCSA)
Active participation within formal regulatory and professional bodies – IFAC, EFRAG (TEG plus Working Groups), EU Reflection Groups, World Standards Setters Meetings, FEE, UN ISAR, EFAA
Contribution of Academics to International Accounting Regulatory and Profession Systems Development
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Accounting Development And Academics
Professional National Accounting Standards (NAS) and Statements (SAP) – all of them where prepared by academics: NAS 1 – Separate and Consolidated Cash Flow Statements – University of Łódź
NAS 2 – Income Taxes – Warsaw School of Economics
NAS 3 – Construction Contracts – University of Łódź
NAS 4 – Impairment of Assets – University of Warsaw
NAS 5 – Lease, rental and usage transactions – University of Łódź
NAS 6 – Provisions, Deferred Income and Contingencies – Cracow University of Economics
NAS 7 – Accounting Policy, Estimates and Errors and Events after the balance sheet date – University of Gdańsk
NAS 8 – Real Estate Developments – University of Łódź
NAS 9 – Management Commentary – University of Łódź
(…)
Contribution of Academics to Polish Accounting Regulatory System Development
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Accounting Development And Academics
Professional National Accounting Standards (NAS) and Statements (SAP) – all of them where prepared by academics:
(…)
SAP-1 – Cost of Production – Warsaw School of Economics
SAP-2 – Emission Rights – University of Łódź
SAP-3 – Green Energy Certificates – University of Łódź
SAP-4 – Electronic Accounting Systems – Wrocław University of Economics
Contribution of Academics to Polish Accounting Regulatory System Development
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Accounting Development And Academics
Why do academics are (should be) involved in Regulatory Process?
Trust and Authority
Neutrality and Objectivity
Holistic not Individually Oriented Approach
Up-to-date knowledge and international orientation
Ability to explain why, not only how
Academic as an managerial, investor viewer – accounting as a tool for decision making on entity and economy level
Contribution of Academics to (Polish) Accounting Regulatory System Development
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Accounting Development And Academics
Empirical research cycle (A.D. de Groot’s empirical cycle): (*)
Observation: The collecting and organisation of empirical facts; Forming hypothesis
Induction: Formulating hypothesis
Deduction: Deducting consequences of hypothesis as testable predictions
Testing: Testing the hypothesis with new empirical material
Evaluation: Evaluating the outcome of testing
(*) http://en.wikipedia.org/wiki/Empirical_research
Contribution of Empirical Research to Accounting Regulatory System Development
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Accounting Development And Academics
Empirical research methods to be used:
case study (studies) research
qualitative research
quantitative research
Contribution of Empirical Research to (Polish) Accounting Regulatory System Development
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Accounting Development And Academics
Pre-setting
Define the constituents needs
Define existing practice
Define available solutions
Setting
Define choosen solution
Verify choosen solution by field tests
Post-setting
Identify existing practice (implemented standard attitude)
Be satisfied or back to the beginning
Contribution of Empirical Research to (Polish) Accounting Regulatory System Development
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Accounting Development
External Finance – shareholders vs stakeholders, private and public sector
Legal System – normative and legalistic orientation vs non-legalistic approach based on profession regulations
Political and Economic Ties with Other Countries
Size and Complexity of Business Enterprises
Sophistication of Management and the Financial Community,
General Level of Education (on both side: Academics and Students) (Scolatization Factor in Poland: 2013 – 52% (1990) – 13%)
Culture and Individualism and Ambiguity, and Uncertainty Avoidance
Level of Inflation
Main Variables shaping (financial) accounting developments
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Accounting Development
The Fair Presentation/Full Disclosure Model – Anglo-Saxon Model
The Legal Compliance Model – Continental Model
The Inflation Adjusted Model
Rules (Based) Accounting Model
Principles (Based) Accounting Model
Objective (Based) Accounting Model
Main Accounting Models (Systems)
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Concepts Principles Rules
US GAAP US GAAP
IFRSs IFRSs, PAR
Regulation Mythology
Accounting Development and Standards
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Accounting Development and Academics
Purpose – development and rigorous application of globally accepted, high quality reporting standards, being the base of reliable and transparent information provided by entities’ general purpose financial statements for decision making by external users
Realization – Do it by yourself or Use experience and authority of scholars, who did it by theirselves earlier
Harmonization of Accounting and Globalisation
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Accounting Development
Languages
Different purposes of accounts (financial statements): pro investments and decision making versus pro fiscal (tax) purposes
Different legal systems – some countries require certain policies and outlaw others
Different (orientation on) users of financial information provided – capital market investors versus government (state)
Nationalism
Weak education systems
Lack of strong accountancy bodies – lack of independence
Barriers to International Harmonization
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General Remarks on Financial Reporting
Obligation to prepare and present general purposes financial statements comes from:
Act on Accounting 1994 and
Regulations on Publicly Traded Entities 2006
mostly approved and applied consistently in conformity with EU Directives and other EU regulations
The way the entity fulfil its obligation on financial statutory reporting depends on whether:
entity is covered by UE Regulation 1606/2002 on application of international accounting standards,
entity is not covered by above EU Regulation, and
parent company or its investors have some special needs on statutory financial reporting.
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Polish Regulatory Framework and IFRS
Entities which are covered by UE Regulation 1606/2002 on application of international accounting standards have to follow entire set of IFRSs (full IFRSs application) approved by EC
Other entities, to whom Act on Accounting is entirely in force, but there are some areas of accounting not covered by AoA or National Accounting Standards (KSR), where some selected IFRSs are permitted (selected IFRSs application).
Two different scope of IFRSs application:
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Polish Regulatory Framework and IFRS
Obligatory Full Usage of IFRSs adopted by the EU Currently publicly traded companies within the scope of EU markets Banks for preparation and presentation of theirs Consolidated Financial Statements
Facultative Full Usage of IFRSs Currently publicly traded companies within the scope of EU markets
Banks
for preparation and presentation of theirs Separate or Individual Financial Statements
Future publicly traded companies within the scope of EU markets
Members of Groups preparing and presenting Consolidated Financial Statements in conformity with the IFRSs
for preparation and presentation of theirs Individual, Separate and Consolidated Financial Statements
Entities’ scope of IFRSs Application
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Polish Regulatory Framework and IFRSs
Facultative Selected Usage of IFRSs Any entity
Entities’ scope of IFRSs Application
for preparation and presentation of its Individual, Separate and Consolidated Financial Statements
In matters and issues not covered by Polish Accounting Regulations
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Regulatory Framework, IFRSs and Academics
Act on Accounting 1994, fully amended in 2000 complied with IASs existed at that time in all material aspects and matters
Lots of amendments to IASs and new IFRSs distinct Polish Accounting Regulations and today’s IFRSs
Not all of IFRSs provisions are suitable and able to be implemented in PAR
Ministry of Finance has established a Working Group on PAR Amendments
There is no way out from IFRSs worldwide implementation
Main objective is to implement as much as possible IASs and IFRSs provisions on a reasonable and law level
Internationalization of accounting profession requires existance of academics and theirs researches on regulatory level and development of accounting profession
Differences, Similarities, Harmonisation and Academics
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Regulatory Framework, IFRS and Academics
Thank you for your attention and welcome
Q&A