The changing relationship between tax and financial reporting in Spain

The degree of connection between tax and financial reporting is regarded as a key factor in the study of international accounting differences. The position for Spain is briefly outlined in previous research but without examination of any specific accounting issues except, in outline only, depreciation and the tax-free revaluation of assets from 1977 to 1983. The absence of a detailed study of the major tax/accounting linkages for Spain is of particular importance because the relationship is regarded as having changed dramatically in the early 1990s, from a position of tax dominance. In order to measure the links between tax and financial reporting, we adopt the methodology of Lamb et al. (1998) by assessing major accounting topics using a five-case classification shown as Table 1. We refute the proposition that suggests that the link between tax/accounting has been reduced substantially.Tax, accounting, Spain

Were Islamic records precursors to accounting books based on the Italian method? A comment

Some readers might have interpreted Zaid [2000] as claiming that the accounting practices of the Islamic State already used or directly led to double entry. This comment puts Zaid\u27s paper into the context of prior literature and points out that no evidence is offered in that literature or by Zaid to dispute an Italian origin for double entry. Nevertheless, there are clear influences from the Muslim world on some antecedents to Western accounting developments and on some features of pre-double-entry accounting in the West

IFRS Ten Years on:Has the IASB Imposed Extensive Use of Fair Value? Has the EU Learnt to Love IFRS? And Does the Use of Fair Value make IFRS Illegal in the EU?

This paper is a commentary on issues related to the first decade's mandatory use of International Financial Reporting Standards (IFRSs) in the EU. Three specific but related questions are addressed, as in the paper's title. On the first (imposition and use of fair value (FV)), I conclude that the International Accounting Standards Board has not substantially extended the use of FV in its 15 years of work and that most companies hold few assets or liabilities on the FV basis. On the second question (adoption in the EU), I analyse a consultation exercise which strongly suggests that the EU's imposition of IFRSs will continue. On the third question (legality of IFRSs), I explain why recent UK legal opinions that question the legality of reporting under IFRSs are not persuasive

Deviations from the Mandatory Adoption of IFRS in Europe? Why Non-adoption Does Not Mean Non-compliance

Using Worldscope data, Pownall and Wieczynska (2018) show that there was extensive non-adoption of International Financial Reporting Standards (IFRS) by European listed firms in 2005 to 2012. They also suggest that much of this non-adoption is illegal. This would constitute a serious failing by European firms, auditors and regulators. However, in this note we show that there is no non-compliance with mandatory requirements to use IFRS in Germany and the UK in various years including 2012 and 2020. We also find no non-compliance in Austria and Portugal, two countries with less highly regarded enforcement. The reasons for legitimate non-adoption vary by country and by year. Our analysis is based on hand-collected data and it documents that the Worldscope database contains many errors in various fields. Therefore, we provide researchers with a hand-collected database for German and UK firms for the period 2005 to 2020, which can be used to supplement Worldscope. The database includes information on country of incorporation, whether consolidated financial statements are prepared, the accounting standards applied, and whether the firm is listed on an EU-regulated market. We use the database to provide some evidence on voluntary adoption of IFRS

Towards a solution to the variety in accounting practices of extractive firms under IFRS

Accounting for exploration and evaluation (E&E) costs is one of the last major issues to remain largely unregulated by International Financial Reporting Standards (IFRS), even though extractive firms are an important part of several big stock markets. Under a temporary permissive standard (IFRS 6), which has been in place since 2004, firms use a wide range of accounting policies for E&E costs, thus undermining comparability. We review the IFRS annual reports of a large number of firms, looking for different policies. We identify many distinguishable methods of accounting. Along with this, we discover that disclosures are often confusing, partly because of the lack of definitions in IFRS 6. To aid insight into this complexity, we prepare a classification of these methods and give real examples of each. We then assess the methods in the context of IFRS 6 and other relevant parts of IFRS. We find that nearly all the methods comply with IFRS. This leads us to a proposal for narrowing the variety of practice by withdrawing IFRS 6, and putting E&E costs within the scope of IAS 38 Intangible Assets. As part of this, IAS 38 could be further revised to extend the scope of capitalisation of other development costs, thereby addressing one of the criticisms of current reporting practice and bringing IAS 38 more into line with the latest version of the Conceptual Framework

The qualitative characteristics of financial information, and managers’ accounting decisions:evidence from IFRS policy changes

This is the first empirical study that uses publicly available data to provide direct evidence about the role of the qualitative characteristics (QCs) of financial information in managements’ accounting decisions. Based on 40,895 hand-collected IFRS policy choices on 16 topics made by 514 large firms of 10 jurisdictions in the period 2005–2011, we identify 204 reasons for policy changes. The majority of these refer to QCs from the conceptual framework of the standard-setter, in particular to relevance, faithful representation, comparability and understandability. Firms also frequently refer to transparency, which is not directly mentioned in the framework. Furthermore, we analyse the circumstances under which firms explain their policy changes in terms of improved quality. We hypothesise and find that QCs are more often referred to if the change relates to measurement (i.e. to a more important accounting policy decision). We also find that references to QCs are positively associated both with firm size and with a measure of a jurisdiction’s transparency. This complements previous research by providing evidence that managers are, at the least, alert to QCs

Investigating international differences in financial reporting : data problems and some proposed solutions

This paper is designed to assist researchers in international accounting by analysing a number of problems which they might meet. In particular, we focus on problems related to selecting the sample, specifying the variables, using databases and hand-collecting data. We provide examples of the problems from prior literature and, on some topics, by supplying original data. We suggest solutions to the problems discussed in the paper

Rac Inhibition Reverses the Phenotype of Fibrotic Fibroblasts

Background: Fibrosis, the excessive deposition of scar tissue by fibroblasts, is one of the largest groups of diseases for which there is no therapy. Fibroblasts from lesional areas of scleroderma patients possess elevated abilities to contract matrix and produce alpha-smooth muscle actin (alpha-SMA), type I collagen and CCN2 (connective tissue growth factor, CTGF). The basis for this phenomenon is poorly understood, and is a necessary prerequisite for developing novel, rational anti-fibrotic strategies.Methods and Findings: Compared to healthy skin fibroblasts, dermal fibroblasts cultured from lesional areas of scleroderma (SSc) patients possess elevated Rac activity. NSC23766, a Rac inhibitor, suppressed the persistent fibrotic phenotype of lesional SSc fibroblasts. NSC23766 caused a decrease in migration on and contraction of matrix, and alpha-SMA, type I collagen and CCN2 mRNA and protein expression. SSc fibroblasts possessed elevated Akt phosphorylation, which was also blocked by NSC23766. Overexpression of rac1 in normal fibroblasts induced matrix contraction and alpha-SMA, type I collagen and CCN2 mRNA and protein expression. Rac1 activity was blocked by PI3kinase/Akt inhibition. Basal fibroblast activity was not affected by NSC23766.Conclusion: Rac inhibition may be considered as a novel treatment for the fibrosis observed in SSc

Paxillin and Hic-5 Interaction with Vinculin Is Differentially Regulated by Rac1 and RhoA

Cell migration is of paramount importance to organism development and maintenance as well as multiple pathological processes, including cancer metastasis. The RhoGTPases Rac1 and RhoA are indispensable for cell migration as they regulate cell protrusion, cell-extracellular matrix (ECM) interactions and force transduction. However, the consequences of their activity at a molecular level within the cell remain undetermined. Using a combination of FRET, FRAP and biochemical analyses we show that the interactions between the focal adhesion proteins vinculin and paxillin, as well as the closely related family member Hic-5 are spatially and reciprocally regulated by the activity of Rac1 and RhoA. Vinculin in its active conformation interacts with either paxillin or Hic-5 in adhesions in response to Rac1 and RhoA activation respectively, while inactive vinculin interacts with paxillin in the membrane following Rac1 inhibition. Additionally, Rac1 specifically regulates the dynamics of paxillin as well as its binding partner and F-actin interacting protein actopaxin (α-parvin) in adhesions. Furthermore, FRET analysis of protein:protein interactions within cell adhesions formed in 3D matrices revealed that, in contrast to 2D systems vinculin interacts preferentially with Hic-5. This study provides new insight into the complexity of cell-ECM adhesions in both 2D and 3D matrices by providing the first description of RhoGTPase-coordinated protein:protein interactions in a cellular microenvironment. These data identify discrete roles for paxillin and Hic-5 in Rac1 and RhoA-dependent cell adhesion formation and maturation; processes essential for productive cell migration