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MODUL-5
Financial Accounting
Financial Accounting &
Accounting StandardBy
MUH. ARIEF EFFENDI,SE,MSI,AK,QIA
Magister Accounting Program (MAKSI)
BUDI LUHUR UNIVERSITY
Jakarta - Indonesia
2010
Financial Accounting &
Accounting Standard
1. Understand the Basic of the Financial Accounting & Accounting Standard.
2. Understand the Usefullness of the Financial Accounting Standard.
3. List the objective of Financial Accounting .
4. Explain the Need to Develop Standard.
5. Understand the United States of General Accepted Accounting Principles (US
GAAP).
6. Understand the International Accounting Standard (IAS).
7. Understand the International Financial Reporting Standard (IFRS)
8. Understand the Govermental Accounting Standard (GAS).
9. Understand the adopted of IFRS in Indonesian GAAP (PSAK).
10. Understand the benefits of Convergence to IFRS.
After studying this topic, students should be able to:
1. Securities and
Exchange
Commission
2. American Institute of
CPAs
3. Financial Accounting
Standards Board
4. Changing role of the
AICPA
Financial
Statements and
Financial
Reporting
Parties Involved
in Standard
Setting
Generally
Accepted
Accounting
Principles
Issues in
Financial
Reporting
1. Accounting and
capital allocation
2. Challenges
3. Objectives
4. Need to develop
standards
1. FASB Codification 1. Political
environment
2. Expectations gap
3. International
accounting
standards
4. Ethics
Financial Accounting and Accounting Standards
Financial Accounting & Accounting
Standard : The Basic
Essential characteristics of accounting are:
1. the identification, measurement, and communication of financial information about
2. economic entities to
3. interested parties.
Financial Statements & Financial Reporting
Financial Accounting & Accounting
Standard : The Basic
Financial Information
-----------
Accounting?
--------------
Identifies
and
Measures
and
Communicates
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Owners’ or Stockholders’ Equity
Note Disclosures
President’s letter
Prospectuses,
SEC Reporting
News releases
Forecasts
Environmental Reports
Etc.
GAAP Not GAAP
Financial Statements Additional InformationEconomic Entity
Financial Statement &
Financial Reporting
Financial reporting should provide information that :
1. is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions.
2. helps present and potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts.
3. clearly portrays the economic resources of an enterprise, the claims to those resources, and the effects of transactions, events, and circumstances that change its resources and claims to those resources.
Objective of Financial Accounting
Various users need financial information
The accounting profession has attempted to develop a set of standards that are generally accepted and universally practiced.
Financial StatementsBalance SheetIncome StatementStatement of Stockholders’ EquityStatement of Cash FlowsNote Disclosure
Generally Accepted
Accounting Principles
(GAAP)
Need To Develop Standard
Wheat Committee’s recommendations resulted in the creation of a the
Financial Accounting Standards Board (FASB) in 1973.
Financial Accounting Foundation (FAF)
o Selects members of the FASB o Funds their activities o Exercises general oversight.
Financial Accounting Standards Board (FASB)
Financial Accounting Standards Advisory Council (FASAC)
o Mission to establish and improve standards of financial accounting and reporting.
o Consult on major policy issues.
Financial Accounting Standard Boards (FASB)
Missions is to establish and improve standards of
financial accounting and reporting. Differences
between FASB and APB include:
Smaller Membership
Full-time, Remunerated Membership
Greater Autonomy
Increased Independence
Broader Representationhttp://www.fasb.org/
Financial Accounting Standard Boards (FASB)
FASB Preparers (e.g., FEI)
Financial Community
Government (SEC, IRS,
other agencies)
Industry Associations
Business Entities
CPAs and
Accounting Firms
AICPA (AcSEC)
Academicians
Investing Public
Accounting standards, interpretations, and bulletins
Standard SettingUser Groups that Influence Accounting Standards
Source : Kieso, Weygandt & Warfield, Intermediate Accounting, John Wiley & Sons, Inc, 13th Ed, 2009
Financial Accounting Standard Boards (FASB)
FASB relies on two basic premises:
(1) Responsive to entire economic community
(2) Operate in full view of the public
Due Process
Step 1 = Topic placed on agenda
Step 2 = Research conducted and Discussion Memorandum issued.
Step 3 = Public hearing
Step 4 = Board evaluates research, public response and issues
Exposure Draft
Step 5 = Board evaluates responses and issues final Statement of
Financial Accounting Standard
Source : Kieso, Weygandt & Warfield, Intermediate Accounting, John Wiley & Sons, Inc, 13th Ed, 2009
Financial Accounting Standard Boards (FASB)
Issued by the FASB :
Types of Pronouncements
1. Standards, Interpretations, and Staff Positions.
2. Financial Accounting Concepts
3. Emerging Issues Task Force Statements
Source : Kieso, Weygandt & Warfield, Intermediate Accounting, John Wiley & Sons, Inc, 13th Ed, 2009
Financial Accounting Standard Boards (FASB)
Two sets of standards accepted for international use:
1. U.S. GAAP, issued by the FASB.
2. International Financial Reporting Standards
(IFRS), issued by the IASB.
FASB and IASB recognize that
global markets will best be
served if only one set of GAAP
is used.
Issues in Financial Reporting :International Accounting Standards (IAS)
National professional organization in USA :
Committee on Accounting
Procedures (CAP)
Accounting Principles Board (APB)
1939 to 1959
Issued 51
Accounting
Research Bulletins
(ARBs)
Problem-by-problem
approach failed
1959 to 1973
Issued 31 Accounting
Principle Board
Opinions (APBOs)
Wheat Committee
recommendations
adopted in 1973
The American Institute of Certified
Public Accountants (AICPA)
The AICPA established the Accounting Standards Executive
Committee (AcSEC):
1. Audit and Accounting Guides
2. Statements of Position (SOP)
3. Practice Bulletins
Changing Role of AICPA
AICPA and AcSEC no longer issues authoritative accounting
guidance for public companies.
PCAOB oversees the development of auditing standards.
AICPA continues to develop and grade the CPA examination.
The American Institute of Certified
Public Accountants (AICPA)
General Accepted Accounting Principles (GAAP)
GAAP Documents
FASB Statements, Interpretations, and Staff
PositionsAPB Opinions CAP Accounting
Research Bulletins
Category A (Most Authoritative)
FASB Technical Bulletins
AICPA Industry Audit and Accounting Guides
AICPA Statements of Position
Category B
FASB Emerging Issues Task Force AICPA AcSEC Practice Bulletins
Category C
AICPA Accounting Interpretations
Category D (Least Authoritative)
FASB Implementation Guides
Recognized Industry Practices
House of General Accepted
Accounting Principles (GAAP)
International Accounting Standard (IAS)
Produced by International Accounting Standard
Commissions (IASC).
I A S C
o set up in 1973.
o works for improvement and harmonisation of
financial reporting.
o develops IAS s through an international process,
involving :1. world-wide accounting profession,
2. preparers and users of financial statements
3. national standard setting bodies
International Accounting Standards (IAS) :History
1. 1973 International Accounting Standards Committee (IASC) founded by 10 national accountancy organisations.
2. 1981 All members of IFAC became members of IASC.
3. 1999 100+ countries. Structure reviewed.
4. 2001 International Accounting Standards Board (IASB) began operations.
5. 2005 Europe, Australia, 90+ countries adopting IFRS
International Accounting Standard
Commissions (IASC) : Objectives
Formulate and publish accounting standards (in
public interest) for companies to observe in
presenting financial statements.
Promote world-wide acceptance and observance.
Works generally for improvement and
harmonisation of regulations, accounting standards
and procedures relating to financial statements
presentation.
Board (14)(approves IAS
[IFRS], ED, SIC [IFRIC])
7 Liaison Members
International Financial Reporting
Interpretations Committee (12+1)
(publishes draft Interpretations and
prepares draft of final Interpretations)
Standards Advisory
Council (SAC)
(advises Board)
Trustees (19)(appoint Board, IFRIC and SAC)
(6 North America, 6 Europe, 4 Asia/Pacific, 3 Other)
National standard setters
(Australia/NZ, Canada,
France, Germany, Japan,
UK, USA.)
International Accounting Standard Boards
(IASB) Structure
International Accounting Standard
Commissions (IASC) Foundation
19 trustees :
6 from North America
6 from Europe
4 from Asia Pacific
3 from any area
Appoint IASB members, Standard Advisory Council
(SAC) and International Financial Reporting
Interpretations Committee (IFRIC).
Monitor IASB’s effectiveness, raise funds, approve budget,
responsible for constitution.
Standard Advisory Council (SAC)
About 50 members from throughout the
world.
Meets three times each year.
Provides advice to IASB on priorities.
Informs IASB of implications of proposed
standards.
International Financial Reporting
Interpretations Committee (IFRIC)
12 voting members and a non-voting
chairman.
Provide guidance on reporting issues not
specifically addressed in IASB’s standards,
or where unsatisfactory or conflicting
interpretations have developed.
Financial Accounting Foundation
(FAF)
Financial Accounting Standards Board
(FASB)
Financial Accounting Standards Advisory Council
(FASAC)
Governmental Accounting Standards Board
(GASB)
Governmental Accounting Standards Advisory Council
(GASAC)
Governmental Accounting Standard Boards (GASB)
Landasan Operasional / Landasan
Praktik
Tingkat 3
Praktik, konvensi, dan kebiasaan pelaporan yg
sehat
Buku teks, buku ajar, artikel, dan pendapat ahli.
Tingkat 2
Buletin teknis
Peraturan Pemerintah
untuk industri
Pedoman atau Praktik Akuntansi Industri
Simpulan Riset
Akuntansi
Tingkat 1
Pernyataan Standar Akuntansi Keuangan
(PSAK)
Interpretasi Pernyataan Standar Akuntansi Keuangan (IPSAK)
Landasan Konseptual (Conceptual Framework)
Kerangka dasar (basic framework) penyusunan dan penyajian Laporan Keuangan (Financial Statement)
GAAP Framework
in Indonesia
Indonesian GAAP (PSAK)
Adopted International Financial Reporting Standard
(IFRS) in Indonesian GAAP (PSAK)
Menurut Prof. DR. Insukendro dalam makalah Penerapan Nilai Wajar untuk Penilaian
Aktiva Tetap dan Pengaruhnya terhadap Besaran Ekonomika , sbb :
Munculnya skandal Enron : “cook the books” menyadarkan FASB (Financial
Accounting Standard Board) di USA mengenai perlu pendefinisian ulang dan
pengetrapan nilai wajar dalam laporan keuangan perusahaan. Dalam bulan September
2006, FASB melakukan perubahan yang sangat berarti mengenai ketentuan GAAP
(Generally Accepted Accounting Principles) dan berpengaruh terhadap bisnis di dunia.
Berdasarkan ketentuan tsb semua laporan keuangan yang dikirim ke masyarakat di luar
perusahaan wajib disusun berdasar nilai wajar (King, 2008: 1-2).
Negara-negara di kawasan ASEAN juga telah mengapdosi konsep nilai wajar dalam
sistem akuntansinya (lihat misalnya studi yang dilakukan oleh Lee, 2008; Sui, 2008
dan Monthapan, 2008). Ikatan Akuntan Indonesia(IAI) / Dewan Standar Akuntansi
Indonesia (DSAI) (2007) juga telah mengadopsi konsep nilai wajar dalam PSAK
(Pernyataan Standar Akuntansi Keuangan) di Indonesia.
Adopted International Financial Reporting Standard
(IFRS) in Indonesian GAAP (PSAK)
Pengadopsian nilai wajar dalam sistem akuntansi ternyata berpengaruh
terhadap variabel mikroekonomika dan makroekonomika suatu negara (lihat
misalnya: Cornett,1996; Shortridge dkk, 2006 dan Breitenbach dkk, 2007).
IAS 16 dan FRS 116 mendefinisikan: Fair Value is the amount for which an
asset could be exchanged between knowledgeable, willing parties in an arm’s
length transaction (lihat juga: Lee, 2008 dan Sui, 2008).
SFAS 157 mendefinisikan: Fair Value is the price that would be received to
sell an asset, or paid to transfer a liability, in an orderly transaction between
market participants at the measurement date (lihat juga: King, 2008: 78).
IAI/DSAI dalam PSAK (2007) mendefinisi-kan nilai wajar (fair value) adalah
jumlah yang dipakai untuk mempertukarkan suatu aset antara pihak-pihak
yang berkeinginan dan memiliki pengetahuan memadai dalam suatu transaksi
dengan wajar (arm’s length transaction).
Nampaknya definisi nilai wajar dari IAI serupa dengan IAS 16 dan FRS 116 .
More Benefits of Convergence to International
Financial Reporting Standard (IFRS)
1. Inter-firm comparability = lower cost to
investors.
2. Lower listing costs with multiple listings.
3. Greater competition amongst exchanges.
4. More efficient resource allocation.
5. Lower cost of capital.
6. Higher global economic growth rate.
REFERENCES
1. American Institute of Certified Public Accountants (AICPA), http://www.aicpa.org
2. Financial Accounting Standard Board (FASB), http://www.fasb.org
3. Hague, Ian P.N., Update on International AccountingStandards, Principal, Accounting Standard, AcSB, Canada, Special LibrariesAssociation, Toronto, June 2005.
4. Indonesian Institute of Accountants (IIA), Dewan Standard AkuntansiKeuangan (DSAK), http://www.iaiglobal.or.id
5. Insukendro, Penerapan Nilai Wajar untuk Penilaian Aktiva Tetap danPengaruhnya terhadap Besaran Ekonomika, Program Magister EkonomikaPembangunan Fakultas Ekonomika dan Bisnis UGM Yogyakarta.
6. International Accounting Standard Board (IASB), http://www.iasb.org
7. International Financial Reporting Standard (IFRS), http://www.ifrs.org
8. Kieso, Donald E., Jerry J. Weygandt & Terry D. Warfield, IntermediateAccounting, John Wiley & Sons, Inc, 13th Ed, 2009.
9. Warren, Carl S., James M. Reeve & Philip E. Fess, Accounting, South-Western College Publishing, 21th Ed, 2004.