Investigating international accounting standard setting : the black box of IFRS 6

This paper examines the role of powerful entities and coalitions in shaping international accounting standards. Specifically, the focus is on the process by which the International Accounting Standards Board (IASB) developed IFRS 6, Exploration for and Evaluation of Mineral Resources. In its Issues Paper, the IASB recommended that the successful efforts method be mandated for pre-production costs, eliminating the choice previously available between full cost and successful efforts methods. In spite of the endorsement of this view by a majority of the constituents who responded to the Issues Paper, the final outcome changed nothing, with choice being retained. A compelling explanation of this disparity between the visible inputs and outputs of the standard setting process is the existence of a “black box”, in which powerful extractive industries entities and coalitions covertly influenced the IASB to secure their own ends and ensure that the status quo was maintained

The quality of financial information in the extractive industries: a value relevance analysis

The extractive industry is characterized by high levels of risk and uncertainty. These attributes create challenges when applying traditional accounting concepts (such as the revenue recognition and matching concepts) to the preparation of financial statements in the industry. The International Accounting Standards Board (2010) states that the objective of general purpose financial statements is to provide useful financial information to assist the capital allocation decisions of existing and potential providers of capital. The usefulness of information is defined as being relevant and faithfully represented so as to best aid in the investment decisions of capital providers. Value relevance research utilizes adaptations of the Ohlson (1995) to assess the attribute of value relevance which is one part of the attributes resulting in useful information. This study firstly examines the value relevance of the financial information disclosed in the financial reports of extractive firms. The findings reveal that the value relevance of information disclosed in the financial reports depends on the circumstances of the firm including sector, size and profitability. Traditional accounting concepts such as the matching concept can be ineffective when applied to small firms who are primarily engaged in nonproduction activities that involve significant levels of uncertainty such as exploration activities or the development of sites. Standard setting bodies such as the International Accounting Standards Board and the Financial Accounting Standards Board have addressed the financial reporting challenges in the extractive industry by allowing a significant amount of accounting flexibility in industryspecific accounting standards, particularly in relation to the accounting treatment of exploration and evaluation expenditure. Therefore, secondly this study examines whether the choice of exploration accounting policy has an effect on the value relevance of information disclosed in the financial reports. The findings show that, in general, the Successful Efforts method produces value relevant information in the financial reports of profitable extractive firms. However, specifically in the oil & gas sector, the Full Cost method produces value relevant asset disclosures if the firm is lossmaking. This indicates that investors in production and non-production orientated firms have different information needs and these needs cannot be simultaneously fulfilled by a single accounting policy. In the mining sector, a preference by large profitable mining companies towards a more conservative policy than either the Full Cost or Successful Efforts methods does not result in more value relevant information being disclosed in the financial reports. This finding supports the fact that the qualitative characteristic of prudence is a form of bias which has a downward effect on asset values. The third aspect of this study is an examination of the effect of corporate governance on the value relevance of disclosures made in the financial reports of extractive firms. The findings show that the key factor influencing the value relevance of financial information is the ability of the directors to select accounting policies which reflect the economic substance of the particular circumstances facing the firms in an effective way. Corporate governance is found to have an effect on value relevance, particularly in the oil & gas sector. However, there is no significant difference between the exploration accounting policy choices made by directors of firms with good systems of corporate governance and those with weak systems of corporate governance.

Full IFRS x lei 11.638 (1ª fase) x lei 6.404: impacto esperado nos resultados de 2010 a partir das empresas que se anteciparam

Este estudo objetiva estimar o impacto esperado do full IFRS no resultado de 2010 a ser reportado pelas empresas brasileiras, a partir da análise das companhias que voluntariamente anteciparam sua adoção nos relatórios de 2008 ou 2009. É aplicado o inverso do “Índice de Conservadorismo” de Gray (1980), renomeado “Índice de Comparabilidade” por Weetman et al. (1998), para determinar o impacto da transição entre os três conjuntos normativos no processo de convergência: da lei 6.404 para a lei 11.638 (primeira fase da transição), da lei 11.638 para o full IFRS (última fase da transição), bem como do processo total (da lei 6.404 para o full IFRS). Os resultados encontrados são consistentes com a hipótese de conservadorismo da contabilidade brasileira preconizado por Gray (1988), sendo apurados aumentos médios no lucro reportado de 44% no exercício de 2007 e de 64% em 2008 e, no patrimônio líquido, de 8,7% em 2007 e 21% em 2008 (todos significativos a pelo menos 5%, exceto o patrimônio líquido de 2004). O estudo também apurou um aumento incremental médio no lucro de 31% em 2007 e de 38% em 2008 (ambos significativos a pelo menos 10%) e de 6,8% e 51%, respectivamente, no patrimônio líquido de 2007 e de 2008 das empresas analisadas (embora só o de 2008 seja significativo a 5%). Assim, prevê-se um novo aumento no lucro e patrimônio líquido das empresas nos relatórios a serem publicados em 2011 em decorrência da aplicação da fase final da convergência para o full IFRS.

Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.

Conflito de interesses nas companhias de capital aberto e o novo padrão de transparência do IFRS : um estudo empírico dos mecanismos voluntários dedicados às transações entre partes relacionadas

O trabalho está inserido na grande área do direito societário, especificamente sob a temática dos conflitos de interesses nas deliberações de S.A.´s listadas em Bolsa de Valores. O objetivo assumido foi o de percorrer criticamente as propostas teóricas empregadas na interpretação do problema jurídico resultante destes conflitos, para depois realizar um estudo empírico sobre uma modalidade negocial potencialmente conflitiva, as transações entre partes relacionadas. Após o estudo da lógica norteadora das propostas doutrinárias, sustenta-se a hipótese de que as explicações da literatura jurídica brasileira variam na razão do conceito aberto de “interesse da companhia”, articulado de acordo com a posição da parte representada pelo advogado. Arbitrariamente concebidas como formais ou substancias, tais interpretações cuidam do momento de violação do interesse da companhia, respectivamente, visando proibir ou garantir o exercício de voto do interessado por meio de entendimentos convenientes ao tempo do litígio. Diante deste comprometimento do raciocínio abstrato com a prática da advocacia, sugere-se a abordagem do tema por outra proposta teórica, vinculada a uma noção específica do Direito. Compreendido como um provedor de informações relevantes aos interessados nas operações das empresas, ele atua na regulação dos dados exigidos destas sociedades e na confecção das informações produzidas individualmente por elas. Tal transparência, junto das regras que vinculam o mercado, forma o conteúdo conceitual da expressão governança corporativa, desenvolvido em torno da proposta chamada de “sistema de governança corporativa”. A interpretação das informações dos diversos possíveis sistemas deve oferecer ao tomador de decisão a chance de conhecer os seus poderes, prerrogativas, incentivos, competências, limitações e proibições, de modo a avaliar se a sua escolha é uma boa prática de governo da empresa, segundo o sistema no qual ela opera. Aos terceiros interessados, deve servir para verificar se o processo decisório segue o esperado pelo ambiente negocial que o sistema de governança delineia. No tema do conflito de interesses, a sugestão de pensar o problema por esta noção do Direito visa respaldar a criação e divulgação de regras próprias pelas empresas listadas, as quais alimentem o aludido sistema de governança e sirvam à tomada de decisões que orientem o alinhamento dos objetivos dissonantes envolvidos na companhia, sem que haja a necessidade de recorrer ao arbitramento externo. O trabalho empírico se debruça então nos estudos destas regras particulares aplicáveis às transações entre partes relacionadas, tais mecanismos são colhidos nos formulários de referência das 100 companhias mais líquidas da BM&FBovespa no ano de 2011. Os resultados mostram que apenas 6% das empresas possuem procedimentos para identificar as relações conflituosas decorrentes da modalidade negocial estudada e 29% para tratar o problema. Os números relativos às sociedades que estabelecem regras para a administração dos conflitos de interesses nas deliberações de assembleia geral e conselho de administração também são baixos, respectivamente, 7% e 13% apresentam mecanismos de identificação, 4% e 11% para o seu tratamento. A baixa frequência mostrada pelos resultados à luz da proposta teórica construída identifica uma oportunidade, qual seja, a de pensar a mitigação do problema por esta via particular e extrajudicial.

Pre-adoption market reaction to IFRS 9:a cross-country event-study

We are the first to examine the market reaction to 13 announcement dates related to IFRS 9 for over 5400 European listed firms. We find an overall positive reaction to the introduction of IFRS 9. The regulation is particularly beneficial to shareholders of firms in countries with weaker rule of law and a smaller divergence between local GAAP and IAS 39. Bootstrap simulations rule out the possibility that sampling error or data mining are driving our findings. Our main findings are also robust to confounding events and the extent of the media coverage for each event. These results suggest that investors perceive the new regulation as shareholder-wealth enhancing and support the view that stronger comparability across accounting standards of European firms is beneficial to international investors and outweighs the costs of poorer firm-specific information.

Synthesis and characterization of K2Ca5(SO4)6· H2O, the equivalent of görgeyite, a rare evaporite mineral

Görgeyite, K2Ca5(SO4)6··H2O, is a very rare monoclinic double salt found in evaporites related to the slightly more common mineral syngenite. At 1 atmosphere with increasing external temperature from 25 to 150 °C, the following succession of minerals was formed: first gypsum and K2O, followed at 100 °C by görgeyite. Changes in concentration at 150 °C due to evaporation resulted in the formation of syngenite and finally arcanite. Under hydrothermal conditions, the succession is syngenite at 50 °C, followed by görgyeite at 100 and 150 °C. Increasing the synthesis time at 100 °C and 1 atmosphere showed that initially gypsum was formed, later being replaced by görgeyite. Finally görgeyite was replaced by syngenite, indicating that görgeyite is a metastable phase under these conditions. Under hydrothermal conditions, syngenite plus a small amount of gypsum was formed, after two days being replaced by görgeyite. No further changes were observed with increasing time. Pure görgeyite showed elongated crystals approximately 500 to 1000 µ m in length. The infrared and Raman spectra are mainly showing the vibrational modes of the sulfate groups and the crystal water (structural water). Water is characterized by OH-stretching modes at 3526 and 3577 cm–1 , OH-bending modes at 1615 and 1647 cm–1 , and an OH-libration mode at 876 cm–1 . The sulfate 1 mode is weak in the infrared but showed strong bands at 1005 and 1013 cm–1 in the Raman spectrum. The 2 mode also showed strong bands in the Raman spectrum at 433, 440, 457, and 480 cm–1 . The 3 mode is characterized by a complex set of bands in both infrared and Raman spectra around 1150 cm–1 , whereas 4 is found at 650 cm–1.

Evaluation of polycaprolactone scaffold degradation for 6 months in vitro and in vivo

The use of polycaprolactone (PCL) as a biomaterial, especially in the fields of drug delivery and tissue engineering, has enjoyed significant growth. Understanding how such a device or scaffold eventually degrades in vivo is paramount as the defect site regenerates and remodels. Degradation studies of three-dimensional PCL and PCL-based composite scaffolds were conducted in vitro (in phosphate buffered saline) and in vivo (rabbit model). Results up to 6 months are reported. All samples recorded virtually no molecular weight changes after 6 months, with a maximum mass loss of only about 7% from the PCL-composite scaffolds degraded in vivo, and a minimum of 1% from PCL scaffolds. Overall, crystallinity increased slightly because of the effects of polymer recrystallization. This was also a contributory factor for the observed stiffness increment in some of the samples, while only the PCL-composite scaffold registered a decrease. Histological examination of the in vivo samples revealed good biocompatibility, with no adverse host tissue reactions up to 6 months. Preliminary results of medical-grade PCL scaffolds, which were implanted for 2 years in a critical-sized rabbit calvarial defect site, are also reported here and support our scaffold design goal for gradual and late molecular weight decreases combined with excellent long-term biocompatibility and bone regeneration. (C) 2008 Wiley Periodicals, Inc. J Biomed Mater Res 90A: 906-919, 2009

Year 6 students' idiosyncratic notions of unitising, reunitising and regrouping decimal number places

Having flexible notions of the unit (e.g., 26 ones can be thought of as 2.6 tens, 1 ten 16 ones, 260 tenths, etc.) should be a major focus of elementary mathematics education. However, often these powerful notions are relegated to computations where the major emphasis is on "getting the right answer" thus procedural knowledge rather than conceptual knowledge becomes the primary focus. This paper reports on 22 high-performing students' reunitising processes ascertained from individual interviews on tasks requiring unitising, reunitising and regrouping; errors were categorised to depict particular thinking strategies. The results show that, even for high-performing students, regrouping is a cognitively complex task. This paper analyses this complexity and draws inferences for teaching.

Raman spectroscopic study of the multi-anion mineral dixenite CuMn2+14Fe3+(AsO3)5(SiO4)2(AsO4)(OH)6

The mixed anion mineral dixenite has been studied by Raman spectroscopy, complimented with infrared spectroscopy. The Raman spectrum of dixenite shows bands at 839 and 813 cm-1 assigned to the (AsO3)3- symmetric and antisymmetric stretching modes. The most intense Raman band of dixenite is the band at 526 cm-1 and is assigned to the ν2 AsO33- bending mode. DFT calculations enabled the position of AsO22- symmetric stretching mode at 839 cm-1, the antisymmetric stretching mode at 813 cm-1, and the deformation mode at 449 cm-1 to be calculated. Raman bands at 1026 and 1057 cm-1 are assigned to the SiO42- symmetric stretching vibrations and at 1349 and 1386 cm-1 to the SiO42- antisymmetric stretching vibrations. Both Raman and infrared spectra indicate the presence of water in the structure of dixenite. This brings into question the commonly accepted formula of dixenite as CuMn2+14Fe3+(AsO3)5(SiO4)2(AsO4)(OH)6. The formula may be better written as CuMn2+14Fe3+(AsO3)5(SiO4)2(AsO4)(OH)6•xH2O.

Proceedings of the 21st Australian Software Engineering Conference (ASWEC 2010) : 6-9 April 2010, Auckland, New Zealand.

ASWEC is a joint conference of Engineers Australia and the Australian Computer Society reporting through the Engineers Australia/ACS Joint Board on Software Engineering.