The Anglo-Saxon –and the Continental tradition

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Introduction

This chapter starts with an overall view of the purpose of the financial statement, harmoni-zation of the accounting and the implementation of the IASB´s standards in the EU. Next follows a presentation of the different accounting traditions and prior accounting histories of the chosen countries. Furthermore, information about IASB and the standard IAS 40 is presented. This chapter contributes to a deeper understanding of the empirical results and the analysis in chapter 4.

 Purpose of financial statement

The financial statement communicates economic information about the company to deci-sion-makers within and outside the company (Westermark, 2005). It is the company’s sin-gle most important information to people outside the company. The most common users of the economic information are owners, creditors, costumers, competitors, employees, state and local authorities. The use of the financial statement is various. The owners have a tendency to use the information to evaluate the corporate man-agement and in stock-trading decisions. The suppliers and creditors are instead more likely to pay attention in the company’s payment capability (Smith, 2006). It is of importance to create the external accounting in a way that communicates the infor-mation that the users seek, the information is only valuable if it helps the readers to make decisions that are better then they would have done without the information. The financial statement shall communicate useful information and a true and fair value of the financial position of the company (Flower, 2002).

Harmonization of accounting

The boost in the international trade over the previous decades ha lead to that harmoniza-tion, the reduction of differences in the financial reporting, in international accounting is becoming more important. Several companies are today listed on different exchange mar-kets world wide. External accounting intended for an international public is common toda and the capital market has a need to compare financial statements from companies from different markets (Nilsson, 2005). Lack of comparability in the financial information can be an obstacle to cross-border investments. In other words there are several forces striving for an increased harmonization of accounting. Even though financial statements have readers from countries all over the world all studies show that the international accounting still is far from harmonized. A problem for coun-tries with different accounting traditions to accept the same accounting principals is a fact (Artsberg, 2005). There are two levels of harmonization. The first is the de jure-level and the second is the de facto-level. De jure-level deals with the harmonization of the accounting regulations while de facto-level deals with how the companies in fact do their accounting. The de jure-level has three different strategies for harmonization. The first is standardization; this is to incorpo-rate rules that give no options in the accounting. The second strategy is equivalent rules with information in notes. The third is to give the companies different options, but still point out the preferred alternative. IASB uses the last alternative. One of the reasons for this is that IASB is a private organization and only has the authority to give out recom-mendations. To keep its reliability different options in the accounting had to be accepted. The IASB standards received a boost position in 2005 due the implementation in the EU (Artsberg, 2005).

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Implementation in the EU

In the multicultural Europe there are several different views of the purpose of accounting, this has lead to diverse accounting solutions throughout the continent. Accounting solutions are created as an interaction between different interested parties. The accounting problems obtain diverse solutions in different countries because interested par-ties influence differs around the globe. Cultural aspects probably say more about how the regulation of the accounting are applied than the context of the accounting regulations (Artsberg, 2005). The differences in the accounting are obstructions in harmonization of the accounting in the EU.

1 Introduction.
1.1 Background
1.2 Problem
1.3 Purpose
1.4 Delimitations .
1.5 Disposition .
2 Method 
2.1 Introduction
2.2 Research strategy .
2.3 Method for data collection
2.4 Reliability and validit
2.5 Source critique.
3 Frame of reference
3.1 Introduction
3.2 Purpose of financial statement
3.3 Harmonization of accounting
3.4 Implementation in the EU
3.5 The Anglo-Saxon –and the Continental tradition
3.6 Accounting history
4 Empirical results and analysis
4.1 Introduction
4.2 Sweden
4.3 England
4.4 Germany
4.5 Interviews
5 Conclusions
5.1 Result
5.2 Critique of the study
5.3 Suggestions for further studies
References

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The effects of the implementation of IAS 40 for listed investment property companies within the European Union

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