An analysis of the accounting principles applied by the European Farm Accountancy Data Network

In spite of its relative importance in the economy of many countriesand its growing interrelationships with other sectors, agriculture has traditionally been excluded from accounting standards. Nevertheless, to support its Common Agricultural Policy, for years the European Commission has been making an effort to obtain standardized information on the financial performance and condition of farms. Through the Farm Accountancy Data Network (FADN), every year data are gathered from a rotating sample of 60.000 professional farms across all member states. FADN data collection is not structured as an accounting cycle but as an extensive questionnaire. This questionnaire refers to assets, liabilities, revenues and expenses, and seems to try to obtain a "true and fair view" of the financial performance and condition of the farms it surveys. However, the definitions used in the questionnaire and the way data is aggregated often appear flawed from an accounting perspective. The objective of this paper is to contrast the accounting principles implicit in the FADN questionnaire with generally accepted accounting principles, particularly those found in the IVth Directive of the European Union, on the one hand, and those recently proposed by the International Accounting Standards Committee’s Steering Committeeon Agriculture in its Draft Statement of Principles, on the other hand. There are two reasons why this is useful. First, it allows to make suggestions how the information provided by FADN could be more in accordance with the accepted accounting framework, and become a more valuable tool for policy makers, farmers, and other stakeholders. Second, it helps assessing the suitability of FADN to become the starting point for a European accounting standard on agriculture.

Mandatory accounting disclosure by small private companies

This article analyzes how mandatory accounting disclosure is grounded on differentrationales for private and public companies. It also explores technological changes, such ascomputerised databases and the Internet, which have recently made disclosure of companyaccounts by small companies potentially less costly and more valuable, thanks to electronicfiling and universal online access to credit information systems. These recent developmentsfavour policies that would expand the scope of mandatory publication for small companies incountries where it is voluntary. They also encourage policies to reduce the costs and enhancethe value of disclosure through administrative reforms of filing, archive and retrieval systems.Survey and registry evidence on how the information in the accounts is valued and used bycompanies is consistent with these claims about the evolution of the tradeoff of costs andbenefits that should guide policy in this area.

Teaching, research and service: Experience and opinions of accounting Spanish academics

Research, teaching and service are the main activities carried out in almost all European universities. Previous research, which has been mainlycentred in North-American universities, has found solid results indicatingthat research and teaching are not equally valued when deciding on facultypromotion. This conclusion creates a potential conflict for accountingacademics on how to distribute working time in order to accomplish personalcareer objectives. This paper presents the results of a survey realisedin two European countries: Spain and the United Kingdom, which intendedto explore the opinions and personal experience of accounting academicsworking in these countries. Specifically, we focus on the following issues:(i) The impact of teaching and service on time available for research;(ii) The integration of teaching and research; (iii) The perceived valueof teaching and research for career success and (iv) The interaction betweenprofessional accounting and accounting research. The results show thatboth in Spain and in the United Kingdom there is a conflict between teachingand research, which has its origin in the importance attached to researchactivities on promotion decisions. It also seems evident that so far, theconflict is being solved in favour of research in prejudice of teaching.

Accounting information and the prediction of farm viability

Until recently farm management made little use of accounting and agriculture has been largely excluded from the scope of accounting standards. This article examines the current use of accounting in agriculture and points theneed to establish accounting standards for agriculture. Empirical evidence shows that accounting can make a significant contribution to agricultural management and farm viability and could also be important for other agents involved in agricultural decision making. Existing literature on failureprediction models and farm viability prediction studies provide the starting point for our research, in which two dichotomous logit models were applied to subsamples of viable and unviable farms in Catalonia, Spain. The firstmodel considered only non-financial variables, while the other also considered financial ones. When accounting variables were added to the model, a significant reduction in deviance was observed.

A portrait of the Spanish accounting community

This study presents a portrait of the Spanish academic accountingcommunity in 1995, based upon a questionnaire circulated to Spanishaccounting academics in 1995 and upon an analysis of authorship andcitations in the main Spanish accounting journals. The approach tothese analyses is grounded in similar studies which have been carriedout in the United States, Spain and elsewhere. but the combination oftechniques used in this study is particularly broad in range.The results of the study are used to describe a range ofcharacteristics of Spanish accounting academics, for example,publications records and length of academic experience. The analysisof publications produces a ranking by institutional affiliation ofthe most significant contributors to current debates on accounting.Citation analysis is used to identify the range and extent ofinternational influences upon the Spanish academic accountingcommunity, and to provide an additional ranking by institutionalaffiliation of the most frequently cited sources A significantfinding was that the nature and extent of international influence hadchanged very little over the ten year period since Spain entered theEuropean Union and started to implement European Directives.Perceptions of journal quality were elicited by questionnaire. Fortyfive journals, Spanish and international are included in a listranked for perceived importance as outlets for publication. and assources of support for teaching and research. The results of thisexercise show that Spanish journals were ranked low relative tojournals published in the United Kingdom and United States.Finally the study examines the extent of purpose upon Spanishaccounting academies to publish, by presenting results of a questionabout criteria for promotion, and also by examining and increasingtendency to publish co-authored work.

New opportunities for farm accounting

There is a gap between the importance given to accounting and the low level of bookkeeping and accounting practice in the agricultural sector. Current general accounting rules do not adapt very well to the particularities of farming and are difficult and expensive to implement. The Farm Accountancy Data Network (FADN) and IASC's Proposed International Accounting Standard on Agriculture (PIASA) could be key elements to improve the use of accounting in European farms. The PIASA provides a strong conceptual framework but might need further instruments for its implementation in practice. FADN is an experienced network that has elaborated very detailed farm accounting procedures. Empirical data indicate that current FADN reports are already considered useful by farmers for different purposes. Some changes in the FADN procedures are suggested, while some aspects of FADN are worthwhile for the future IAS on agriculture.

Creative accounting: Some ethical issues of macro- and micro-manipulation

This paper examines two principal categories of manipulative behaviour. The term'macro-manipulation' is used to describe the lobbying of regulators to persuadethem to produce regulation that is more favourable to the interests of preparers.'Micro-manipulation' describes the management of accounting figures to produce abiased view at the entity level. Both categories of manipulation can be viewed asattempts at creativity by financial statement preparers. The paper analyses twocases of manipulation which are considered in an ethical context. The paperconcludes that the manipulations described in it can be regarded as morallyreprehensible. They are not fair to users, they involve an unjust exercise ofpower, and they tend to weaken the authority of accounting regulators.

The case for a new accounting research agenda in Spain

In Spain both accounting practice and accounting research have been strongly influenced by accounting practices developed in the Englishspeaking world. This paper:1) Summarizes a seminal English paper, the 'Corporate Report', that identified the potential for accounting reports to serve a wide range of users.2) Identifies the ways in which English language accounting conceptual frameworks have paid lip service to a range of user needs, but in practice have excluded users other than investors and creditors.3) Argues that for Spain the ideas put forward in the Corporate Report have a particular relevance, and might usefully form the basis for a new research agenda.

Variations in national management accounting approaches

During the 1990's studies of management accounting practices in Europe and in Latin America have given us data on 23 countries. In this paper we use this data to identify five distinct aspects of national management accounting culture being:1. The influence of regulations on official recommendations;2. The source of management accountants;3. Influence from one country to another;4. Variations in use of specific techniques;5. Variations in the objectives of the management accounting system.We then identify seven significant implications of the manager operating in the multinational environment.

The struggle against creative accounting: Is "true and fair view" part of the problem or part of the solution?

Creative accounting is a growing issue of interest in Spain. In this article we argue that the concept true and fair view can limit or promote the use of creative accounting depending upon its interpretation. We review the range of meanings that true and fair view can take at an international level and compare the experience of the United Kingdom with the Australian one by analysing the use of true and fair view to limit creative accounting. Finally, we suggest lines of action to be considered by the Spanish accounting standards-setting institutions.

An attempt to go beyond conventional financial accounting information

Conventional financial accounting informationis slanted in favour of certain economic interests. This paper argues in favour ofaccounting information capturing and showingrelevant aspects of the economic-social situation,and of decision-making based on it allowingfor decisions to be taken with economic-social,and not purely economic-weighted, awareness.

Ethics and creative accounting: Some empirical evidence on accounting for intangibles in Spain

Recent research shows that financial reports are losing relevance. Mainly thisis due to the growing strategic importance of intangible assets in theperformance of a company. A possible solution is to modify accounting standardsso that statements include more self-generated intangible assets, taking intoaccount with their inherent risk and difficulty of valuation. We surveyed loanofficers who were asked to assess the credit-worthiness of a hypotheticalcompany. The only information given was a simplified version of financialstatements. Half the group got statements where research and development costshad been capitalized. The other half got statements in which these costs hadbeen treated as an expense. The findings show that capitalization wassignificantly more likely to attract a positive response to a loan request. Thepaper raises the question of whether accounting for intangibles might providemanagers with one more creative accounting technique and, in consequence, itsethical implications.

Environmental factors giving rise to variations in national management accounting practice

Comparative national management accounting is the least developed aspect in the field of international accounting. Only during the second half of the 1990's some comparisons of national managementaccounting practice have appeared published but only at theregional level. In this paper a range of factors that give rise to variations in national management accounting practice are postulated. We support this list with examples from a range of analyses of national management accounting practices, drawing particularly on the work of Lizcano (1996) and Bhimani (1996).Finally, twelve key factors are identified as influencing an individual country's approach to management accounting.

Growth accounting in items of turbulence and death: efficiency, technology, capital accumulation and human capital 1929-1950

We employ a non-parametrical approach to growth accounting (Data Envelopment Analysis,DEA) to disentangle the proximate sources of labour productivity growth in 41 nationsbetween 1929 and 1950 by decomposing productivity growth into four components:technological change; efficiency catch-up (movements towards the production frontier),capital accumulation and human capital accumulation. We show that efficiency catch-upgenerally explains productivity growth, whereas technological change and factoraccumulation were limited and distorted by the effects of war. War clearly hamperedefficiency. Moreover, an unbalanced ratio of human capital to physical capital (a gap to thetechnological leader) was crucial for efficiency catching-up.

The ethics of creative accounting: Some Spanish evidence

'Creative accounting' involves accountants in making accounting policy choices or manipulating transactions in such a way as to give the impression in the accounts that they prefer. While regarded as unethical by most observers, a defence of creative accounting can be based on the ability of the users of accounts to identify bias in accounting policy choices and make appropriate adjustments.In this paper we take the example of the Barcelona Football Club where the club management made three key accounting policy choices that presented a favourable position, and a supporters' club presented an alternative report choosing three alternative accounting policies that presented an unfavourable position. We presented each of these financial reports to one of two groups of Spanish bank loan offices, with supporting notes making the impact of the accounting policy choices clear. We found that the more favourable set of accounts was significantly more likely to attract a positive response to a loan request.This result undermines the defence for creative accounting, based on the ability of users to identify manipulation.