Accounting: A User Perspective
by South-Western College Publishing, 2004; ISBN: 0-324-18620-7;
304 pages, paperback, $79.95
by Yigal Rechtman
- For accountants and auditors who wish to gain strength in international
accounting, there are many articles and books that can describe
part of the picture. But for true insight into the issues and
methods affecting international accounting, this book is a must-read.
gives a succinct narration of the complex web of international
accounting issues. Designed as a textbook, the book is divided
into three parts: overview, technical review, and emerging issues.
two chapters do a good job of combining established research with
common sense and a sincere discussion of the real issues. For
example, in chapter 1 the author does not shy away from telling
it like it is: “[W]here a country was colonized for an extended
period of time, it typically adopted the accounting system of
the colonial power.” Later on, the author discusses the
status of the accounting profession throughout the world: “In
code-law countries [e.g., France, Germany] … the accounting
profession has considerably less stature and power.”
continues to provide an instructive analysis of various accounting
standards paradigms, from the bank-centered German standards to
the pragmatic Australian standards. Chapter 2 explores the harmonization
of accounting standards.
“Accounting for Currency Exchange Rate Changes,” and
chapter 4, “Selected Financial Reporting Disclosures,”
are more technical. For readers interested in a balance between
theoretical analyses and practice, these chapters are an excellent
review of the relevant accounting issues. Examples and case studies
make the reading easier. Chapter 4 does a good job introducing
inflation-based accounting, once mandated even by U.S. GAAP, now
more often found in countries with high inflation rates. Issues
that affect financial analysis, such as performance, social, and
environmental disclosures, are also explored at the end of chapter
who wish to get directly to financial analysis, chapter 5, “Using
Corporate Reports Across Borders,” discusses issues such
as the analysis of financial statements from various countries,
prepared under diverse financial standards. Some noted differences
are in the areas of fixed assets and depreciation, post-employment
benefits, taxation, and of course differences in language, style,
and format of presentation.
chapters 6 and 7 are for professionals who wish to understand
the issues of emerging markets and for corporate managers who
want to understand the concepts that matter most to their non-U.S.
counterparts. The emerging-markets chapter, fascinating to read,
unmasks some myths about what emerging markets entail. For example,
while the U.S. has 168 auditors for every 100,000 persons in the
country (versus Chile and Malaysia, which have 87 and 48, respectively),
the U.S. is ranked seventh on a disclosure index, below emerging
countries such as Chile (sixth) and Malaysia (fifth) and not too
far above Sri Lanka (ninth).
narrative takes the reader by the hand when reviewing technical
matters such as exchange rates or conceptual differences among
various sets of accounting principles. It does a good job of providing
examples where needed.
each chapter, the author continuously refers to underlying foundations
of accounting: availability, reliability, and comparability. This
dimension adds clarity for readers who wish to enhance their understanding
of the substance in the different international standards.
was published in 2004 and more-recent accounting standards are
not covered. The discussion of goodwill, for example, lacks the
rules about impairment now in effect. Also, the author sometimes
refers to studies done a decade or more ago, which may be outdated.
Nor does the text mention technological achievements, such as
the advances with XBRL in international markets or the common
uses of e-mail and videoconferencing, as ways to overcome certain
cultural barriers that otherwise would make accounting transition
is an overview-type narrative, and sometimes avoids issues that
could be perceived as contentious, such as totalitarian regimes
and controlled exchange rates, as in China or Cuba. The author
works around the unpleasantness by providing charts that simply
show the positions of various countries and lets readers arrive
at their own conclusions. A more direct discussion of such issues
would be appropriate in a book aimed at the entire body of international
is a students’ textbook, readers may at times feel as if
they are back in college, especially given the questions and case
studies at the end of each chapter. This is not a deficiency per
se, and for accountants who can withstand the textbook style presentation,
the reward is worth working toward.
As the convergence
of International Financial Reporting Standards (IFRS) and U.S.
GAAP becomes a reality, U.S.-based accountants and auditors should
be prepared to learn more about international accounting. In addition,
the instructor’s manual may be useful in developing in-house
CPE. This book delivers a substantial amount of information in
a well-organized manner, served “just right” for easy
consumption and easy selection of chapters or sections. Overall,
its viewpoint, combined with a fine-tuned conceptual and technical
narrative, represents the right mix of intriguing discussion and
enhancements to professional competence.
Rechtman, CPA, CFE, CITP, CISM, is a director at Buchbinder
Tunick & Company, LLP, and chair of the NYSSCPA’s Technology