Post on 12-May-2018
The harmonization of accounting practices after the mandatory adoption of IASs / IFRSs in European Union: the
case of Greece
By IOANNIDOY EVANGELIA
COORDINATOR: Dr ATHIANOS STERGIOS
MSc in Finance and Financial Information Systems
Kavala 2006
Technological Educational
Institute of Kavala
TABLE OF CONTENTS
PAGES ABSTRACT 4
1. INTRODUCTION 4
2. LITERATURE REVIEW 9
2.1 International trends in accounting 9
2.1.1 Classification 9
2.1.2 Harmonization 14
2.1.3. The difference between harmonization and standardization 17
2.1.4 Manners to measure harmonization 18
2.1.5 Approaches for assessing the effects of harmonization 22
2.1.6 Important differences between IAS and local GAAP 23
2.1.7 Differences between IAS and Greek GAAP 26
2.1.8 Into the future 28
2.1.9 Arguments in favour of and /or against complete harmonization 29
2.2 Empirical studies 32
2.2.1 The global harmonization 32
2.2.2 Herfindahl index and I harmonization 34
3. DATA 38
4. METHODOLOGY 41
5. RESULTS 42
6. CONCLUSIONS 54
REFERENCES 55
APPENDIX A 63
APPENDIX B 68
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CONTENTS OF TABLES PAGES
Table 1: The main empirical studies on the International Accounting
Harmonization and the tests they used 21
Table 2: Differences in the terminology between US-GAAP and IAS 23
Table 3: Methods used by the companies for calculating the inventories
in 2003 42
Table 4: Methods used by the companies for calculating the depreciation
in 2003 43
Table 5: Methods used by the companies for presenting the financial
statements in 2003 44
Table 6: Methods used by the companies for calculating inventories
in 2004 45
Table 7: Methods used by the companies for calculating depreciation
in 2004 46
Table 8: Methods used by the companies for presenting the financial
statements in 2004 47
Table 9: Methods used when adopting IASs (2004) 48
Table 10: Methods used by the companies for calculating inventories
using IASs (2005) 49
Table 11: Methods used by the companies for calculating depreciation
using IASs (2005) 50
Table 12: Methods used by the companies for presenting the financial
statements using IASs (2005) 51
Table 13: Comparison of H indices Spearman correlation results 52
Table 14: H index of harmonization trend 53
Table A1: A list of Greek companies using local standards or IASs
in 2004 63
Table A2: Listed companies per sector 64
Table A3: % participation per sector 65
3
PAGES
Table A4: Average assets and sales using local
standards (2003-2004) 66
Table A5: Average assets and sales using IASs (2005) 67
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ABSTRACT
Many organizations have made efforts to improve the comparability of financial reporting. Many
studies have discussed the advantages and disadvantages of comparability. Our study
investigated the affect on the harmonization of accounting practices when a sample of companies
chooses to use international accounting standards (IASs) when preparing financial reports. This
study analyzed trends in the H index, a measure introduced by Van der Tas, in order to determine
if the adoption of IASs by a sample of Greek companies has increased the level of harmony. The
study included a control sample of Greek companies that did not switch from reporting using
local Greek standards during the same time period, 2003 through 2005. Three accounting
practices were included, depreciation, inventory and financial statement cost basis. The results
indicated that across the 3-year period, the majority of the H indices comparisons were positive
and statistically significant.
1. INTRODUCTION
Different countries have contributed to the development of accounting over the centuries. The
archaeologists many times discover ancient remains with writing and numbers on and they can be
sure that also those societies had the need to keep account.
The Romans developed a single-entry accounting and later Italy led to the emergence of the
double entry-system due to the increasing business. The seventeenth century, we first meet the
public subscription of share capital in Holland and next the growing separation of owner-ship
from management raised the need for audit in nineteenth century in Britain. Many European
countries have contributed to the development of accounting: France led in the development of
legal control over accounting, Scotland gave us the accountancy profession and Germany gave us
standardized formats for financial statements. From the late nineteenth century, the United States
has given us consolidation of financial statements, management accounting, and capitalization of
leases and deferred tax accounting.
Although international influences and similarities are clear, there are great differences among the
countries particularly in Europe.
Nowadays, it is known that the scenery of legal systems differs around the world and so on the
accounting principals in companies among different countries. The globalisation of markets and
the extension of enterprises is a reality. We need a method that can be used in order to eliminate
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or reduce these “difference” problems and to provide comparability in financial information by
using the same Accounting Standards.
There are many differences among the principles that rule the financial reports in different
countries. To overcome this type of problems of dealing in an international environment, nine
countries founded and formed the International Accounting Standards Committee (IASC) in
1973 and had a based in London. The original members were the accountancy bodies of nine
countries: Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United
Kingdom and the United States. This organization purposed to devise and spread widely
international standards in order to reduce the variation of practices in financial reporting
throughout the world. The IASC reorganized in 2001 as the IASB (International Accounting
Standards Board).
From 1973 to 1988, the IASC (International Accounting Standard Committee) formed standards
to complete the model of harmonization. The IASC formulates and publishes in the public
interest accounting standards to be observed in the presentation of financial statements and to
promote their worldwide acceptance and observance. The members agreed to support the
standards and use their best efforts to ensure that published financial statements comply with the
standards. They managed to persuade governments, stock exchanges, and other bodies to support
the IASC's standards.
Some years later, a new project named “Comparability/ Improvements” (IASC 1990) took place
to complete the formed standards and led the EC to set a new strategy for the financial reporting
in Europe. This strategy is a method which can reduce these differences. The international
competition, new investments in the world market, and the expansion in these markets have as a
result the need to compare all the data received. The aims of IASs are to determine and certify all
the above activities through their regulations, in order to achieve balance and gradual advance in
world markets. We can state that the IASs are a simple measure to interpret financial information
(FASB 1996). It is a great need that had been created in all the enterprises per the world to find a
way of common information of shareholders but also of people involved with the economic unit.
This led in new developed models, high quality, comprehensible and applicable that would be as
long as possible objective.
In many countries, IASs, are adopted as a whole and are legally obligatory. In some other
countries, the IASs are adjusted or incorporated to the local accounting standards and regulations.
Accounting standards are the regulations or rules (often including laws and statutes) that govern
the preparation of financial statements. Standard setting is the process by which accounting
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standards are formulated. Thus, accounting standards are the products of standard setting.
However, actual practice may deviate from what the standards require. There are at least four
reasons for this.
First, in many countries the penalties for non-compliance with official accounting
pronouncements are weak or ineffective. Second, companies may voluntarily report more
information than required. Third, some countries allow companies to depart from accounting
standards if doing so will better represent a company's results of operations and financial
position. Finally, in some countries accounting standards apply only to individual company
financial statements, not to consolidated statements. In those countries, companies are free to
choose different accounting standards for their consolidated financial statements. To gain a
complete picture of how accounting works in a country, we must pay attention to the accounting
standard-setting process, the resulting accounting standards, and actual practice. Auditing adds
reliability to financial reports.
However the most important advantage of the IASs is that they are the “official language in stock
exchanges” around the world.This happens because many stock exchanges all over the world
accept IASs for cross border listing purposes. It is also important to mention that IASs aid the
harmonization process of accounting rules world-wide.
Harmonization is a process of increasing the compatibility of accounting practices by setting
bounds to their degree of variation. The term “harmonization”makes clearly the report in
accounting diversity. The harmonization of accounting standards, first at the regional level and
eventually at the global level, provides a basis for making the financial information of
multinationals more comparable. So, harmonization seems to imply coordination in the context
of a more flexible approach with acceptance of a state of harmony which may be short of total
uniformity.
According to Samuels & Piper (1985), international harmonization of accounting has been
defined as “the attempt to bring together different systems. It is the process of blending and
combining various practices into an orderly structure, which produces a synergistic result”. The
harmonisation of financial accounting and reporting standards is seen as a means of facilitating
the globalization of capital markets.
Prior research on accounting harmonisation may be characterised as either ‘‘de jure’’
harmonization, or formal harmonization, and ‘‘de facto’’ harmonization, or material
harmonization. The formal term refers to harmonization between regulations and practices
applied by companies. Some studies on the assessment of accounting harmonization have
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focused on the investigation of material harmonization, disregarding the importance of formal
harmonization. The methodologies developed use the accounting information prepared by
companies to examine the level of harmonization among the practices and treatments applied.
This definition gives the term material harmonization.
Earlier writers have written about the benefits and costs of harmonization, obstacles and
problems that harmonization hinder, scope for harmonization, factors that are encouraging the
harmonization drive and so on. Nair and Frank (1981) and Evans and Taylor (1982) with aims
similar to those of Nair and Frank (1981), Doupnik and Taylor (1985), Van der Tas (1988) and
Tay and Parker (1990) tried to answer the question of how to measure harmonization.
‘Strong’ definitions coexist with ‘weak’ definitions. In this category (strong category), we find
Nobes and Parker (1991), who believe that harmonization is a process of reducing alternative
accounting choices and increasing the uniformity of accounting practices. Choi and Mueller
(1992) are representative of a second attitude (weak definition). They content themselves with an
absence of contradictions between accounting practices. Meek and Saudagaran (1990) belong to
this category. They argue that harmonization involves a conciliation of various points of view,
thereby avoiding logical conflict. This degree of harmonization does not prevent the existence of
choices between different accounting practices. A similar view of harmonization was expressed
by Tay and Parker (1992) who stressed that there should be flexibility within harmonization Van
der Tas (1992) occupies a middle position between the views of Nobes and Parker and, Choi and
Mueller. He recognizes the importance of a uniform set of accounting rules, but acknowledges
their ‘less strict’ character. Based on a review of the literature, our conclusion is that
harmonization should be viewed as the first stage in the overall process of International
Accounting Harmonization.
The European Union attributes great importance in the international harmonisation under the
application of accountant models because they constitute the basic condition for a fair and
effective competition. The EU recognizes that the comparability, the transparency and the
reliability of economic information constitute the fundamental condition on a single market of
capital. The lack of comparability discourages the investments because of the uncertainty. The
application of models is created acceptable accountant practices all over the world and thus we
deter an anarchy that may exist in the economic world. The solutions that will improve the
comparability should be supported internationally because the pumping of capital does not stop
in the borders of a country or in Europe. So, the international accountings standards are presented
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as the most suitable and most acceptable solution in order to constitute the common denominator
that will lead to the collaboration of international markets.
The objective of Greek economy is the convergence with the matured economies of other
countries. The obligatory application of International Accounting Standards, at least for the
companies which their shares are negotiable in ASE (Athens Stock Exchange), contributes in the
creation of a single Stock Exchange Market. The application of International Accounting
Standards from the listed companies will improve the general picture of ASE and attract
foreigner investments what can constitute a very important lever of growth for the Greek
economy.
In Greece, the need for reliable accountant models is urgent and was voted a law that forecasts
the obligatory application of IASs from 01-01-2005 for publishing the economic situations,
especially when the company is listed in ASE. In EU exist today 7.000 listed companies, 300
companies apply the IASs and 200 companies apply the US GAAP.
In this thesis we examine the affect on the harmonization, or comparability, of accounting
practices a) when a sample of companies choose to use international accounting standards (IASs)
when preparing financial reports, b) when the sum of sample companies use local accounting
practices and c) when the total of sample companies adopt and use international accounting
practices, in our case IASs / IFRSs.
The rest of the dissertation is as follows: section 2 literature review. In section 3, it is presented
the sample of Greek firms in which we make our investigation. Section 4 mentions the
methodology which is followed for the processing of the data. Section 5 provides effects of
adopting IASs /IFRSs. On harmonization index H, reports the differences between accounting
practices that the sample companies choose to use across two accounting systems (under Greek
GAAP and IASs / IFRSs). Final section is the conclusions.
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2. LITERATURE REVIEW
2.1 International trends in accounting
2.1.1 Classification
A critical question is why we should know how and why accounting develops. The answer is
critical, too. If we can identify what causes accounting to develop, we might be able to influence
or anticipate its direction and rate of change. It is said that we could better understand a nation's
accounting by knowing the factors that influence the development. Accounting clearly differs
around the world. In other words, these factors make us observing the differences and the
similarities between the accounting practices in different countries. Because accounting responds
to its environment, different cultural, economic, legal, and political environments produce
different accounting systems, and similar environments produce similar systems.
This leads us to classification. Classification is fundamental to understanding and analyzing why
and how national accounting systems differ. We can also analyze whether these systems are
converging or diverging. The goal of classification is to group countries according to the
distinctive characteristics of their financial accounting systems. Classifications reveal
fundamental structures that group members have in common and that distinguish the various
groups from each other. By identifying similarities and differences, we can better understand the
accounting systems. Classifications are a way of viewing the world.
International accounting classification work has been done in two ways: judgmental
classifications and empirically classifications. Although the methods of analysis for the two
approaches are different, their results are generally in agreement.
Mueller made the initial work on classification. Mueller's classification scheme was widely used
by national institutes of accountants, international organizations and multinational professional
accounting service firms. Later, the American Accounting Association's 1975-76 Committee on
International Accounting Operations and Education classified the accounting patterns of the
world into five separate ''Zones of Influence." They based their conclusions on historical, cultural
and socioeconomic sources that have influenced accounting principles of financial measurement
and reporting in different countries and regions. After Mueller, Nobes, based on these earlier
studies, showed that classification not only indicates which countries are in different categories,
but also how close or distant these categories are to one another. Further, Gray developed a
different judgmental classification scheme based on his work linking accounting and culture.
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Another system of classification is to analyze accounting and reporting standards and practices
actually in use. Frank showed that financial accounting and environmental factors are related,
and he supported that accounting similarities can be expected among countries with similar
environments. After, a new study by Nair and Frank extended the Frank study in two ways and
the conclusion from this study is that measurement practices should be distinguished from
disclosure and that accounting measurement seems to be more stable than disclosure.
We can say that the classification has practical benefits. Due to the coexistence of certain
countries in a common group, these countries acquire common characteristics of reaction. The
differences among groups are barriers to the regional and worldwide harmonisation efforts. It is
easy to succeed, if the groups involved (such as the International Accounting Standards Board at
the international level and the European Union at the regional level) understand the differences
should overcome. Many times, developing countries can not develop their own accounting
standards. So it is frequent phenomenon copying existing standards as China and other countries
in Eastern Europe are doing now. Communication problems are often. Companies face users
(internal and external) who are unfamiliar with every company's accounting standards. All the
companies need to speak the same language.
It is known that every nation's accounting standards and practices is a result of economic,
historical, institutional and cultural factors and that is the “variety” among countries. It is
important to mention the following eight factors that have a significant influence on accounting
development. The first seven are economic, socio-historical and institutional in nature. Recently,
the relationship between culture (the eighth item) and accounting development has begun to be
explored.
In countries with strong equity markets such as the United States and United Kingdom,
accounting focuses on firms’ profitability. Company needs to meet the shareholders’ interest.
Japan and Switzerland are examples on the other side. In these countries, the credit-based system
(bank) is the dominant source of finance and accounting focuses on creditor protection through
conservative accounting measurements. The financial institutions have direct access to any
information they want so extensive public disclosures are not considered necessary.
The legal system determines how individuals and institutions have an effect on each other. The
Western world has two basic orientations: legalistic (code or civil law) and non-legalistic
(common or case law). Code law derives mainly from Roman law and the Code Napoleon. In
code law countries, laws are a set of requirements and procedures, and codification of accounting
standards and procedures is natural. By contrast, common law develops on a case-by-case basis.
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Common law derives from English case law. Of course, statute law does exist, but it tends to be
less detailed and more flexible than in a code law system. This encourages experimentation and
permits the exercise of judgment. In most common law countries, accounting rules are
established by private sector professional organizations. This allows them to be more adaptive
and innovative.
Taxation is another critical issue. In many countries, tax legislation effectively determines
accounting standards because companies must record revenues and expenses for tax purposes
(Germany, Sweden). In other countries (Netherlands), financial and tax accounting are separate
but often tax legislation require the application of certain accounting principles.
It is known that accounting ideas and technologies are transferred through conquest, commerce,
and similar forces and the “copying” is a motivation for the harmonization of accounting.
Double-entry bookkeeping, which originated in Italy in the 1400s, gradually spread across
Europe with other ideas of the Renaissance. British colonialism exported accountants and
accounting concepts throughout the empire. Many developing economies use an accounting
system that was developed elsewhere, either because it was imposed on them (for example,
India) or by their own choice (for example, countries of Eastern Europe now modelling their
accounting systems after European Union (EU) regulations).
Another factor that affects the accounting development is the inflation. Inflation distorts
historical cost accounting and affects the prices. Israel, Mexico and certain countries of South
America use general price-level accounting because of their experiences with hyperinflation. In
the late 1970s, in response to unusually high rates of inflation, both the United States and United
Kingdom experimented with reporting the effects of changing prices.
The economic growth of a country influences the structure of the company and the way that
functions. This factor affects all the types of business transactions and determines which ones are
most prevalent. All the enterprises are adapted in the prevailing conditions because the most
important issue they face is the new accounting challenges.
The level of education is the last of the seven parameters that affect the accounting development
and belong in the sphere of economic, socio-historical and institutional factors. There are so
many terms in the economic scene that is impossible to comprehend them easily. It has no mean
if highly sophisticated accounting standards and practices are misunderstood and misused. That
is the magic. People must understand these terms in order to use them correctly and provide the
accounting principles. The only way to do so is a high educational level.
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The new factor “culture” means the values and attitudes shared by a society. Cultural variables
underlie nations' institutional arrangements. According to Hofstede, culture is defined as
collective programming of the mind; it manifests itself not only in values, but in more superficial
ways: in symbols, heroes, and rituals (Hofstede, 2001). With the help of a model, cultural
differences and their consequences between nations, societies, and regions can be described in
detail.
There are four national cultural dimensions or societal values, the individualism, the power
distance, the uncertainty avoidance and the masculinity. His analysis is based on data from
employees of a large U.S. multinational corporation operating in forty different countries.
He said that “…individualism (versus collectivism) is a preference for a loosely knit social fabric
over an interdependent, tightly knit fabric (I versus us). Power distance is the extent to which
hierarchy and an unequal distribution of power in institutions and organizations are accepted.
Uncertainty avoidance is the degree to which society is uncomfortable with ambiguity and an
uncertain future. Masculinity (versus femininity) is the extent to which gender roles are
differentiated and performance and visible achievement (traditional masculine values) are
emphasized over relationships and caring (traditional feminine values)…”.
In this point, it is considered to report widely the theories of Mueller (1967, 1968), Nobes (1983)
and Gray (1988).
The macroeconomic pattern, the microeconomic pattern, the independent discipline approach and
the uniform accounting approach were first proposed by Mueller. Mueller’s (1967) study
identified four distinct patterns of contemporary accounting development. He believed that many
factors, such as the stage of economic development, the stage of business complexity, the shades
of political persuasion, and reliance on particular systems of law, would lead to the development
of different schemes of contemporary accounting.
The macroeconomic pattern is based on three propositions, the business enterprise is the basic
component in the national economy, the business enterprise succeed its goals best through close
coordination of its activities with national economic policies and public interest is served best if
business enterprise accounting is closely linked to national economic policies (Sweden).
Under the microeconomic approach, the individual firms are the core of business activities, the
main aim of the firm is to survive, firm’s best strategy for survival is economic optimization and
accounting derives its concepts and applications from economic analysis. The central accounting
concept here is that the accounting process must hold the amount invested in the firm constant in
real terms (Netherlands).
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Business operates independently and produces its own concepts and methods from experience
and practice. Accounting is viewing here as a service function that derives its concepts and
principles from the business process it serves, not from a discipline such as economics (United
Kingdom, United States).
Finally, the uniform accounting approach maintains that accounting is a tool for administrative
control. This approach is used in countries with strong governmental involvement in economic
planning (France).
Nobes continued the study above adding in his classification fourteen essentially ‘‘Eurocentric’’
capitalist countries. His study was dominated by the structural constraints of the priorities of
capital. It was necessary for him to report an acceptance of the social, political and economic
arrangements, but also the belief that all self- interested economic transactions must rely on some
underlying bond to remain coherent.
Supported in previous studies, Gray suggested four accounting value dimensions that affect the
financial reporting practices. He believed that statutory control, uniformity, conservatism and
secrecy are the elements in a high power distance society. These societies are hard, there is no
trust between people, there exist null information of public and an imposition of laws and codes
is accepted. On the other hand, there are the professionalism, the flexibility, the optimism and the
transparency. In this case, people are more concern for equal rights, there is trust, they are not
scared for the future and business information move on a need-to-know basis.
On the basis of data gathered during the 1988–1992 period from 86 samples drawn from 41
cultural groups in 38 nations, Schwartz (1994) and Schwartz and Bardi (1997) divided national
cultures into seven value types. Conservatism, autonomy, hierarchy, mastery, egalitarian
commitment and harmony are the main ideas in Schwartz’s study.
Conservatism means the emphasis on the status quo and prohibits actions that might disrupt the
traditional order. Autonomy means the emphasis on the person viewed as an autonomous entity.
Hierarchy means the emphasis on how important is the hierarchical role. Mastery is the emphasis
on active mastery of the social environment through self-assertion. Egalitarian commitment is
how people can control selfish interests and harmony emphasizes on the unity with the nature.
These culture-level value types are condensed by Schwartz into two broad dimensions: autonomy
versus conservatism and egalitarian commitment and harmony versus hierarchy and mastery.
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2.1.2 Harmonization
The big growth of international market leads us to wonder why do we need harmonization of
International Accounting Standards, what are the advantages and what are the barriers that hinder
harmonization? Although accounting may be the "language of business”, a common language has
never been necessary. This, however, is no longer true. We now face a global economy and this
affect the entire business world. Today's global corporation make the production and distribution
facilities separate widely. So, multinational corporations must prepare multiple reports for
different nations they do business in. Prices, interest rates and currency exchange values have
become internationally linked. Harmonization is necessary because standard national financial
statements are useless. There is a need for harmonization for accounting standards in order to
help the foreign investor to understand the financial statements of the foreign companies whose
shares they might want to buy. After all, financial information is a form of a language, so that
information could be comparable. The new factors of the global economy lead to the adoption of
International Accounting Standards (IASs) and the harmonization of the accounting practices.
Many writers underline the advantages of harmonization. According to Turner (1983) the
greatest benefit that would flow from harmonization would be the comparability of international
financial information. Such comparability would eliminate the current misunderstandings about
the reliability of foreign financial statements and would remove one of the most important
obstacles in the services of international investment. Choi, Frost and Meek (1999) said that
harmonization would save time and money that is currently spent to consolidate divergent
financial information when more than one set of reports is required to comply with the different
national laws or practice. They also added that harmonization improve the tendency for
accounting standards throughout the world to be raised to the highest possible level and to be
consistent with local economic, legal and social conditions. Nobes and Parker (2002) believed it
would be beneficial to countries which do not have standards of accounting and it would also
help in raising foreign capital as investors, financial analysts and foreign lenders will be able to
understand the financial statements of foreign companies. Samuels and Piper (1985) supported
that on the line of harmonization firms and users would be able to compare the investment
opportunities which will help them to make the right investment decision. As taxes exist on the
total global income of an organisation, it would be a help to the national tax authorities around
the world if they computed them on similar accounting principles and practices.
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All the above is a small number of opinions around the advantages of harmonization and are the
prevailing opinions. Always when advantages exist, we also meet the disadvantages. Below are
presented elements that writers believed that constituted obstacles in the completion of
harmonization.
The most fundamental obstacles to harmonization are the present of differences between the
accounting practices of different countries, the lack of strong professional accountancy bodies in
some countries and the differences in the political and economic systems (Nobes and Parker
2002). Many writers mentioned that if accounting measurement rules were the only difference
among countries, then straightforward translations would be sufficient to enable reports to be
understood and interpreted. However, countries also raise substantial economic and cultural
differences that preclude simple interpretations, even when the figures are generated use the same
accounting principles.
The degree to which the government is involved also varies from country to country. Whereas
professional organizations set the standards in Britain, for example, the government assumes this
responsibility in France. Another barrier that the governments of different countries will have to
face is the coordination of their accounting policies with policies prevailing in other countries in
order to minimize negative externalities and to maximize positive externalities.
There are many barriers to harmonization as well. Users have different needs in different nations
(debtor vs creditor, countries that have very active stock markets and those where banks
primarily accumulate and invest capital) (Wyatt 1997). The existence of these barriers enforces
the belief that the public does not desire the adoption. However there are a number of benefits as
well which will come with the harmonization of international accounting standards.
It is useful in this analysis to highlight the reasons for accounting harmonisation from two view
points, the preparation of financial statements and the users.
Companies prepare financial statements for its users who are interested on the company. But it is
not the only reason. It is so hard for a company, any time making an investment in a country, to
deal with a new set of accounting standards. A uniform set of accounting standards, adopted from
all the countries, provide efficiency gains both internally and externally (Epstein and Mirza,
2001). So, preparators will best serve the client if harmonized principles and practices are
followed. A similar internal reporting system gives the chance of better comparisons, less
confusion and mistakes between the parts of the company. Cost savings can be achieved, because
the preparation of financial statements will be easier for companies. With Accounting Standards
the credibility of the externally reporting could be raised. All the reported figures would be
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shown in the same way. The access to main financial markets will become easier for companies
and the capital would be appeared simpler for them.
At the other hand, there are users (employees, investors, banks, and owner). Harmonization
brings a lot of advantages. Investors, banks or owners are interested in obtaining information,
which enables them to take investment decisions. Financial statement based on harmonized
principles would make easier the comparison between companies because similar transactions
take place in the same way everywhere in the world. In other words, similar accounting practices
lead to a better comparability between companies. It is a major theme, the fact of better
understanding the reports because the risk is lower and the selections of investments is more
efficient. Choi et al. argue that “financial statement users have difficulty in interpreting
information produced under non-domestic accounting systems. They claim that harmonisation
will make it more likely that users will interpret the information correctly, and thus make better
decisions based on that information” (Choi et al., 2002). For the employees, we can claim
harmonised accounting standards are important because they can better understand the
development of the company they work in and operate its functions efficiently.
Harmonization is a movement away from total diversity of practice. According to Fredrick Choi
(1999), harmonization is a process of increasing the compatibility of accounting practices by
setting limits on how much they can vary. From this definition, harmonization of standards will
minimise logical conflicts and improve the comparability of financial information from different
countries. Harmonization is flexible and open. R.D. Nair and Werner G. Frank, in their article
“The Harmonization of International Accounting Standards, 1973-1979”, wrote that in the 1970s,
serious attempts were made to harmonize international accounting practices. This effort was
important because the growth of international trade and of multinational corporations
necessitated the comparison of accounting data across national boundaries.
From all the above, it is clear that international harmonization of accounting standards is vital to
promote the international capital market and it is also necessary to overcome the difficulties. In
spite of differences in international financial reporting, harmonisation of the accounting practices
were used in the preparation and presentation of financial information.
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2.1.3. The difference between harmonization and standardization
International accounting harmonization generates interest among accounting practitioners,
academicians, investors, and other users of financial reports. Many organisations proposed the
accordance of financial reporting. In this point, it is essential to make clear the concepts of
harmonization and standardization and whether the target is harmonization or standardization.
Both ‘harmonization’ and ‘standardization’ are used in accounting practice and in the literature.
Harmonization is a movement away from total diversity of practice and standardization is a
movement toward uniformity. There is no real difference between them, perhaps, in the degree of
harmonisation they involve. In each case, they refer to the efforts required to ensure that
transactions and events are accounted in the same way wherever they took place or were
reported. “Standardisation” implies uniform standards in all the countries involved.
“Standardisation” is also a process, a movement towards uniformity, which is also a state (Tay
and Parker, 1990; Nobes and Parker, 2000). “Harmonisation” implies a reconciliation of different
points of view, and permits different requirements in individual countries to be reported in a
uniform way provided that there is no logical conflict (Canibano and Mora, 2000). Wolk et al.
describe harmonisation of Accounting Standards as “the degree of co-ordination or similarity
among the various sets of national Accounting Standards and methods and formats of financial
reporting” (Meek and Saudagaran in Wolk et al., 2001). Roberts et al. give a similar definition,
who describes harmonisation as a process by ”which accounting moves away from total diversity
of practice” (Roberts et al., 1998). Hence, international accounting harmonisation can be defined
as “the process of bringing international Accounting Standards into some sort of agreement so
that the financial statements from different countries are prepared according to a common set of
principles of measurement and disclosure” (Haskins et al. 1996).
From all the above definitions, it is clear that harmonization of standards will minimise logical
conflicts and improve the comparability of financial information from different countries. The
final end is a standardised situation, in which homogeneity and uniformity exist.
18
2.1.4 Manners to measure harmonization
The company transfer its financial position and affairs into a financial report. A financial report is
a manner of communicating. The structure of each financial report depends on the method used
by the company. As part of these policies, a company decides whether to translate an event (the
decision between alternative degrees of disclosure) and which accounting method to practice (the
choice between alternative methods of valuation, profit determination, consolidation and
presentation). Many times, the company has no choice. There are standards are settled by the
government or a private standard setting body and can refer either to the degree of disclosure or
to the accounting method to be applied. If a company desires to harmonize its financial reports,
the only way to do so is to follow these rules.
One definition about harmonization refer:”…harmonization is an increase in the degree of
comparability and means that more companies in the same circumstances apply the same
accounting method to an event or give additional information in such a way that the financial
reports of more companies can be made comparable…”.
The most popular manner measuring the degree of comparability in a financial report is the H
index (Herfindahl index). This index constitute one of a great number of statistical methods that
have been developed to measure the degree of concentration and rises when the methods of the
parties involved concentrate more on one or only a limited number of alternative methods. Its
calculation shows that high relative frequencies have a higher weighting that low relative
frequencies. The H index fluctuates between zero (0) meaning there is no harmony (with an
infinite number of alternative methods all with the same frequency), and one (1) meaning that all
the companies use the same method.
Many examples illustrate the application possibilities of Herfindahl index.
Deferred tax in the UK: A survey of Published Accounts (ICAEW, 1968-1981) showed five
different ways to present the deferred tax. When using the same standards, the result was that
harmonization took place and they could measure the provisions.
Accounting for the WIR (investment tax credit) in the Netherlands: There are three ways measure
the WIR. The results showed that the draft guideline, issued by Raad voor de Jaarverslaggeving
(1983), has a slight impact on the degree of harmony at the very time when the process of
harmonization stopped.
19
Accounting for the investment tax credit (ITC) in the US: They found two different methods for
measuring ITC but the H index showed that the degree of harmony rose during the examinant
period.
The WIR equalization account in the Netherlands: The WIR equalization could be presented in
five ways. The frequencies when adopting H index were favoring.
Valuation of land and buildings in the Netherlands: The increase in the C index was caused when
companies applied historical cost to give additional information about the current value of these
assets.
I index for the ITC in the US and the Netherlands: the method showed that the international
harmony decreased, while the two countries concentrated on a different method.
Tay (1989) briefly proposed the methodology below:
-Data on accounting methods and disclosure levels were obtained from the financial statements
of listed companies from five different countries.
- For each accounting method or disclosure item, companies were grouped according to the
practice followed.
- The chi-square test was used to assess the significance of the actual degree of harmony
demonstrated by the grouping, compared with a rectangular distribution. It was utilized by Tay
and Parker (1990) and although it is easily calculated, the chi-square has several limitations
because it does not consider the sample size and its value is not significant when the number of
observations is low or zero.
- Harmony was quantified using two different concentration measures — the H-index suggested
by van der Tas, and the entropy measure (E) — in three different forms (absolute, numbers-
equivalent and relative measures).
- Improvements in the level of disclosure and superiority of accounting method were quantified
using a disclosure index.
- The effects of disclosure of information and accounting methods on comparability were
quantified by calculating the C index.
- Changes in the values of H, E, C and the disclosure index were tested for statistical significance
by using nonparametric tests.
In general, there are three different statistical methods to measure harmonization and
standardization. These may be broadly described as descriptive statistics, non-parametric
statistics and indices.
20
The first one, descriptive statistics, is the simplest method. This method presents the calculation
of the number or percentage of companies within the sample which complied with specified
regulations. The size of the percentage described the degree of uniformity. But, these studies do
not provide completed information. Evans and Taylor (1982), McKinnon and Janell (1984) and
Nobes (1987) studied and showed that the result does not reflect general standardization of
accounting practice so much as uniformity of compliance with these IAS requirements.
The Friedman’s ANOVA test and the Mann-Whitney U test show that non-parametric statistics
may be useful in testing for evidence of harmony when data are ordinal in nature. However, they
also show that the concept must be properly defined and data properly interpreted and
appropriately categorized.
Finally, the three main indices, the H index, the I index and the C index. The first two are used
for calculating national and international harmony. The third calculates comparability of accounts
when different accounting methods are used but sufficient information is provided to show the
effect of using alternative methods.
To measure the extent of harmonization in Sweden, Cook (1989) used the V test of Cramer and
the C coefficient of contingency as a supplement to the chi-square test. Krisement (1997) also
applied the V test to measure the extent of harmonization of accounting practices for foreign
currency in nine European countries. Another statistical method used to measure the extent of
harmonization of accounting practices involves the generation of linear regression models such
as those developed by Archer, Delvaille and McLeay (1996) and McLeay et al. (1999). This
method allows a distinction to be made between the influence of normalization and the effects of
harmonization. Taplin (2003) argued that H and C indexes are not adequate to measure the level
of accounting harmonization. This is because there is a significant difference between an index
(H or C) calculated for the sample and an index created for a population and he proposed a
method to measure this difference – the standard error.
In Table 1 showed the main empirical studies on the International Accounting Harmonization
and the tests they used (Taplin 2003).
21
Authors Test used
H C Cmodified I Imodified X2 Others
Van der Tas (1988)
Tay and Parker
(1990, 1992)
Concentration
index
Van der Tas
(1992a, 1992b)
Emenyonu and Gray
(1992)
Archer, Delvaille and
McLeay (1995)
Hermann and Thomas
(1995)
Garcia-Benau
(1996)
Global
concentration
index
Archer, Delvaille and
McLeay (1996) Linear regression
Lainez, Callao and Jarne
(1996)
Friedman’s test
Wilcoxon’s test
Krisement (1997) V index
Adhikary and Emenyonu
(1997, 1998)
McLeay et al. (1999) Linear regression
Morris and Parker (1999)
Lainez, Jarne and Callao
(1999)
Canibano and Mora
(2000) Bootstrapping test
Parker and Morris (2001)
Aisbitt (2001) Wilcoxon’s test
Chen, Sun and Wang (2001)
Taplin (2003) Standard error
Ding, Stolowy and Tenenhaus
(2003)
Logistic
regression
Table 1: The main empirical studies on the International Accounting Harmonization and the tests they used (Taplin 2003).
22
2.1.5 Approaches for assessing the effects of harmonization
Many writers proposed several approaches to assess the effects of the implementation of
international standards in finance. Participants proposed that the authors need to be concentrated
on the income differences and investigate how the implementation of those standards will affect
these differences. They examined the net income across countries and they argued that there were
differences provoked by the implementation of standards. They examined depreciation, depletion
and amortization expense and operating expense and concluded that differences among countries
are relatively constant. One participant suggested that the authors must directly investigate the
potential effect of changes in accounting measurement by using an approach as in French and
Poterba (1991) who computed P/E ratios. The differences in accounting practices made difficult
to measure these ratios because there are many details in firm’s financial reports.
Authors believe that other more direct approaches used to evaluate accounting measurement
diversity have serious limitations and they view their study as an attempt to avoid some of those
studies’ problems, such as the need to observe accounting practices that many companies do not
disclose. A capital markets approach has many limitations but it may be the best approach to
address certain accounting issues.
2.1.6 Important differences between IAS and local GAAP
It is important to study the differences in the content of financial reports taking into account that
the differences vary depending on many factors as the nature of the company's operations, the
industry in which it operates, and the accounting policy choices it has made. It is also essential to
report what IAS articles mentions about the elements we are going to examine.
A great number of studies were published trying explaining the differences between the local
GAAPs and the IASs. The most popular are these explaining the differences between the US-
GAAP and the IASs (Leuz, 2003, Pacter, 2002, Street, Nichols and Gray, 2000). The most of
them are theoretical approaches.
Choi et al. (2002) has summarized the differences in the U.S., U.K., and IAS GAAPs, however,
the standards appear more similar than different. In addition to the similarities previously
discussed, IAS and U.S. GAAP are very similar in some areas such the framework and
treatments of related party transactions, post balance sheet events, contingencies and provisions.
23
The financial ratios used to analyze financial statements are also very similar under the IAS and
U.S. GAAP.
Sawabe (2002) notes a country specific difference in the Japanese banking industry. In this
example, Japanese Regulatory Accounting Principles (RAP) concurs with GAAP on inventory
valuation. Yet, corporate managers have discretion to choose between lower of cost or market
(LCM) or historical cost method, for corporate accounting principles. Another example is the
case of German banks. SFAS 131 and IAS 14R describe segment reporting requirements for
public companies. Homolle (2003) notes there are “substantial differences” between SFAS 131
and IAS 14R approaches when applied to the German banking industry, which had to be
reconciled with Germany’s GAS 3, imposed by the GASC. Furthermore, GAS 3 was then
supplemented by GAS 3-10, Segment Reporting of Banks, in an attempt to define industry
specific banking guidelines for segment reporting (Homolle, 2003). Using Securities and
Exchange Commission (SEC) form 20-F that reconciles IAS to U.S. GAAP, researchers have
identified the following practical terminology differences between the two GAAP methods
(Pacter, 2002; Sleigh-Johnson, 2002; Street et al., 2000) (Table 2):
US-GAAP terminology IAS terminology
Income statement Profit and loss accounts
Account receivable Debtors
Account payable Creditors
Capital lease Finance lease
Allowance for uncollectible accounts Provision for bad debts
Inventory Stock
Common stock Ordinary shares
Statement of cash flows Cash flow statement
Accounts receivable confirmation Debtors circularization
Table 2: Differences in the terminology between US-GAAP and IAS (Pacter, 2002; Sleigh-Johnson, 2002; Street et al., 2000).
24
Below is given concisely the content of IAS article that we are going to examine in our work
(IASB):
Summary of IAS 1
“A complete set of financial statements comprises a balance sheet, an income statement, a
statement of changes in equity, a cash flow statement and notes comprising a summary of
significant accounting policies and other explanatory notes. Financial statements present fairly
the financial position, financial performance and cash flows of an entity. Fair presentation
requires faithful representation of the effects of transactions, events and conditions in accordance
with the definitions and recognition criteria for assets, liabilities, income and expenses set out the
Framework for the Preparation and Presentation of Financial Statements. The application of
IFRSs (Standards and Interpretations), with additional disclosure when necessary, is presumed to
result in financial statements that achieve a fair presentation. An entity makes an explicit and
unreserved statement of compliance with IFRSs in the notes to the financial statements. Such a
statement is only made on compliance with all the requirement of IFRSs. A departure from
IFRSs is acceptable only in the extremely rare circumstances in which compliance with IFRSs
conflicts with providing information useful to suers in making economic decisions. IAS 1
specifies the disclosures required when an entity departs from a requirement of an IFRS.
IAS 1 specifies the following about the preparation and presentation of financial statement:
-Financial statements are prepared on a going concern basis unless management either intends to
liquidate the entity or to cease trading, or has no realistic alternative but to do so.
- Financial statements, except for cash flow information, are prepared using the accrual basis of
accounting.
- The presentation and classification of items in the financial statements are usually retained
from one period to the next.
- Each material class of similar items is presented separately. Dissimilar items are presented
separately unless they are immaterial. Omissions or misstatements of items are material if they
could, individually or collectively; influence the economic decisions of users taken on the basis
of the financial statements.
- Assets and liabilities, and income and expenses, are not offset unless required or permitted by
an IFRS.
- Comparative information is disclosed for all amounts reported in the financial statements,
unless an IFRS requires or permits otherwise.
25
-Financial statements are presented at least annually.”
Summary of IAS 2
“Inventories are measured at the lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale. Cost includes all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present location and
condition. The cost of inventories, other than those for which specific identification of costs are
appropriate, is assigned by using the first-in, first-out (FIFO) or weighted average cost formula.
When inventories are sold, the carrying amount of those inventories is recognised as an expense
in the same period as the revenue. The amount of any write-down of inventories to net realisable
value is recognised as an expense in the period the write-down or loss occurs. The amount of any
reversal of a write-down of inventories is recognised as a reduction in the amount of inventories
recognised as an expense in the period in which the reversal occurs.”
Summary of IAS 16
“Property, plant and equipment is initially recognised at cost. Subsequent to initial recognition,
property, plant and equipment is carried either at:
-Cost, less accumulated depreciation and any accumulated impairment losses, or
-Revalued amount, less subsequent accumulated depreciation and any accumulated impairment
losses. The revalued amount is fair value at the date of revaluation.
The choice of measurement is applied consistency to an entire class of property, plant and
equipment. Any revaluation increase is credited directly to the revaluation surplus in equity,
unless it reverses a revaluation decrease previously recognised in profit or loss. Any revaluation
decrease is recognised in profit or loss. However, the decrease is debited directly to the
revaluation surplus in equity to the extent of the credit balance in revaluation surplus in respect of
that asset. Depreciation is applied on a component basis. That is to say, each part of an item of
property, plant and equipment with a cost that is significant in relation to the total cost of the item
is depreciated separately. The depreciable amount of an asset is allocated on a systematic basis
over the useful life of the asset. Impairment is recognised in accordance with IAS 36 Impairment
of Assets. The gain or losses on derecognition of an item of property, plant and equipment is the
26
difference between the net disposal proceeds, if any, and the carrying amount of the item. It is
included in profit or loss.”(www.iasplus.com)
2.1.7 Differences between IAS and Greek GAAP
Greek requirements are mainly based on Corporate Law 2190/1920, accounting standards issued
by the Ministry of National Economy, the interpretations issued by the National Accounting
Standards Board (ESYL) and the Greek General Chart of Accounts approved by Presidential
Decree 1123/80.
Greek accounting may differ from that required by IAS in the following areas:
Financial statements reports
- There is not financial report for cash flows, only for the listed companies.
- There is not report for the change on owners. It is presented in the table Earning disposal
indirectly.
Τangibles
- Revaluation of the real estate value per 4 years.
Ιntangibles
- The interest when buing fixed assets are characterized as expenses of prolonged depreciation
(5 years).
Depreciation (tangible)
- Factors of annual depreciation
Deprciation (intangible)
- Depreciation in 5-year period.
Expenses of research and growth
- The expenses of research ad growth are presented in the account of expenses of prolonged
depreciation.
Securities valuation
- It separately becomes in the lower price between price of acquisition and current value for each
element.
Deferred taxation
- It is not contented in law 2190/20
27
Forecasts for employees’ compensation
- The company is forced to make forecasts with regard to the retirement.
Consolidation
- Only the subsidiary companies with same activity.
Goodwill
It is valued with one way.
There are no specific rules requiring disclosures of:
- a primary statement of changes in equity
- the FIFO or current cost of inventories valued on a LIFO basis
- the fair values of financial assets and liabilities
- the fair values of investment properties
- related party transactions, except for balances resulting from transactions that are not in the
normal course of business
- discontinuing operations
- segment reporting, except for sales
- cash flow statements
- earnings per share
There are inconsistencies between Greek and IAS rules that could lead to differences for many
enterprises in certain areas. Under Greek rules:
- Some subsidiaries with no similar activities from the rest of the group are excluded.
- The classification of business combinations between unitings of interests and acquisitions is
made on the basis of legal form rather than on whether an acquirer can be identified.
- Gains on foreign currency monetary balances are deferred until settlement.
- Trading and derivative liabilities are not recognized at fair value.
- Research costs and pre-operating costs may be capitalized.
- Goodwill can be written off directly against equity.
- Land and buildings are revalued periodically.
- Inventories are valued at the lowest of cost, net realizable value and replacement cost.
- Investment properties are revalued every four years and depreciated.
-Costs and revenues on construction contracts are not necessarily recognized on a stage of
completion basis.
28
- Provisions are not generally discounted
- Own (treasury) shares are shown as assets and an equivalent reserve is set up through the
appropriation statement and reflected in shareholders' equity; gains and losses on their sale are
recognized as income.
2.1.8 Into the future
Decision makers recognize the need to understand financial documents with transparency and
clarity. The rapid development of economies internationally has created a lot of occasions for the
growth of enterprises. The globalisation has created powerful bonds and the new data lead to an
imperative application of international models that ensure high quality economic information that
is comparable and comprehensible, independent from the country of origin. Thus is presented
high quality, comprehensible, transparent and comparable information.
A possible future prediction is that accounting system harmonization will facilitate the
commonality for the benefit of both investors and firms. The level of investors around the world
will increase. Investors visit stock markets and become more active in markets. On the other
hand, enterprises do not desire missing great amounts and time trying to accord their financial
reports. The timing is perfect for the maturity with global investors able to access information
and conduct transactions at low cost and high speed with the term that all the procedures and
techniques are similar.
The same effect faces also the Greek market. It is considered that the application of International
Accounting Standards is essential for the modernisation of Greek market, as is ensured the
uniformity of economic situations of companies’ and consequently the better comparison with
companies abroad. The economic situations that are created based on IASs facilitate the investors
and the analysts to compare the Greek companies with other. There are a lot of profits for Greek
companies: help the investors make comparisons, transparency in the presentation of economic
situation, integration of information for the investors.
The practice showed that the passage from the national accountant models in the IASs is
particularly difficult and no a simple change in the way of presentation of financial information.
This requires a big effort, particularly in countries, as Greece that the national accountant models
are directed in the tax needs, despite in the complete and essential briefing of users of economic
reports.
29
It is true that the adoption of IASs constitutes a revolution with particularly positive results. A
simple comparison of financial reports that is drawn up based on IASs with these reports that are
drawn up based on the Greek Accountant Models shows the qualitative difference.
2.1.9 Arguments in favour of and /or against complete harmonization
One of the arguments in favour of harmonization is the high quality of standards. Many studies
published for the accounting quality states that international standards are of higher quality than
most local GAAP. These studies show that IAS-earnings have higher value relevance than
earnings based on local GAAP (Niskanen et al., 2000). Auer in1996 suggested that IAS-based
earnings convey significant higher information content when compared with Swiss GAAP
earnings. Ashbaugh and Pincus (2000) showed that financial information of companies become
more predictable after the adoption of IASs and the reduction in the variation in measurement
and disclosure practice as a consequence. In particular, they found that the accuracy of financial
analysts earnings forecasts is increasing after adoption of IASs. Leuz and Verrecchia (2000)
found that the information asymmetry component of the cost of capital decreases after IASs
implementation, because of an increase in the level and quality of disclosure. Ball et al. (2000)
found that IASs have fewer explicit accounting choices and increases the amount of financial
disclosure.
Another fact that supports the adoption of IASs is that they offer lower cost of capital. This could
be considerable by companies since as IAS is of higher quality than most local GAAP (more
disclosure, fewer choices, timely, more predictable), companies who disclose information
according to IAS could receive a higher rating and as a consequence obtain a lower cost of
capital. In addition, the comparability of economic positions between business entities
irrespective of whether they are organized as single enterprises or groups would be reached,
which could have a positive effect on the decision usefulness of the financial statements for their
users (Ballwieser, 1999, p. 441).
It is undoubtedly that the harmonization of financial accounting is the result of the adoption of
IASs. We know that the implementation of these standards is mandatory for companies, so will
not be created a risk of a wide gap between the financial statements and the individual reporting,
leading to a disharmonization within countries. The application of uniform accounting principles
and rules for individual and group accounts is practical and efficient. Implementing a complete
harmonization would mean a cost reduction for these companies.
30
All the above is the positive side of this subject. There are also many writers that are contrary
with the mandatory adoption of such standards. Their arguments are counted mainly on the
economical sphere. An example is the Belgium; the Belgian Commission of Banking, Finance
and Insurance (CBFA, 2004) has carried out a survey in 73 listed Belgian companies, which
examines the difficulties and costs in relation to convergence with IASs. Although a majority of
the firms (62 per cent) state that they have no problems in obtaining the necessary data to report
under IASs, the respondents find it costly to implement IASs. Moreover, only 22 per cent of the
respondents state that the value added of IASs financial statements is positive for the majority of
users of financial statements. It is sure that the relative implementation cost will even be larger
for smaller companies. Furthermore there are fewer potential users of the financial information
disclosed by small firms, which would result in fewer potential benefits and higher accounting
costs per users (Bollen, 1995, p. 39).
There are many prior researches that indicate the negative influence of the relationship between
tax and financial reporting on accounting harmonization (Guenther and Hussein, 1995 and Lamb
et al., 1998). The question should be asked how tax computation should be organized in the
future. What problems will be arising with the adoption of IASs? Is it fair to tax companies based
on different financial statements since the application of the standards is mandatory only for the
listed companies? On the other hand, the primary objectives of IASs are to serve the needs of the
capital markets. As investors have different information needs than the tax authorities, it is time
to recognize the diverse purposes of financial reporting and tax accounting.
A critical question is whether a large multinational company should be comparable with a small
local company and whether differences that exist between large and small businesses and among
the needs of their users are eliminated by using standards. The main user groups of financial
statements identified by the literature are ‘employees, managers, providers of loan finance, trade
creditors and the Inland Revenue’ (Page, 1984; Barker and Noonan, 1996; Collis and Jarvis,
2000). Paolini and Demartini (1997), based on an Italian survey, identify two main user groups:
tax authorities and banks (representing the public interest) and management. Riistama and
Vehmanen (2004) argue that the needs of small companies’ accounts’ users differ from user
needs in large companies. Chaveau et al. (1996) found identical evidence. They state that small
business financial reports are most relevant to internal management and external bankers and
creditors. There are diverging goals to the main users of accounts. According to John and
Healeas (2000) statutory accounts were not perceived as useful for decision making: “very few of
the owner-managers have a proper understanding of the contents of statutory accounts. … They
31
often take the view that the statutory accounts are of no practical use for decision making and
prefer to use the management accounts and a cash flow forecast”. Friedlob and Plewa (1992)
indicate that because financial information is cost-free to users of financial statements, they want
more rather than less. Certified Public Accountants contended that disclosure is more important
for public than for privately held companies, and significantly more important for large publicly
owned companies than for small publicly owned companies.
Lippitt and Oliver (1983) mention ways in which the financial information needs of small
businesses can differ from those of large businesses. First, the numbers of buyers and sellers on
the capital market of small businesses is different and changes in ownership may make financial
reports less appropriate. Second, the management of a small business is often in hands of one or a
few individuals, who perform multiple management roles. Such managers are familiar with most
aspects of the business and so on, they are more independent upon formal financial information
than the others in large businesses. Thirdly, because of the limited access of a small business to
capital markets, the role of bankers and other creditors is rather significant. A main argument is
that users of public company statements usually depend on such statements for their information.
However, owners and creditors of privately owned enterprises can often ask and receive
additional information whenever requested (Chazen and Benson, 1978, p. 49).
Harvey and Walton (1996) suggest that financial statements of larger companies reflect more
complex transactions than small companies’ accounts, which implies that more extensive
disclosures are appropriate.
Bollen (1995) said that IASs could become mandatory for all types of firms. “But the
enforcement of such regulations in the small firm sector, given the large number and
heterogeneity of firms would provide an immense task for any regulator”. A number of studies
indicate considerable non-compliance with financial disclosure regulations in the small firm
sector (Ingram et al., 1977, Robert, Ramsay and Sutcliffe, 1986). Given the relatively minor
attention paid to securing compliance with small firm accounting regulations, Bollen argues that
the usefulness of mandatory accounting disclosures by small firms can be questioned.
32
2.2 Empirical studies
2.2.1 The global harmonization
A study for harmonization was written by Jose A. Lainez, Susana Callao and Jose I Jarne
(University of Saragossa) and their main aim was to measure the degree of harmonization which
exists across each element of the different national reporting requirements. They concentrated
their research on Australia, Belgium, Canada, France, Germany, Italy, Japan, Luxembourg,
Holland, Spain, Switzerland, UK and US. The writers took the elements (the work has done by
IOSCO). They considered necessary to underline the diversity which existed among
requirements; requirements can be classified into two categories, periodical reporting
requirements and additional reporting requirements. They calculated the weighted average of all
the items aiming to obtain a numerical average. This average in accordance with a scale would
indicate the degree of requirement of the stock market regulations of the different countries for
each of the specific requirements.
Then, they performed the statistical analysis evaluating the level of requirement and
harmonization. In this step, they performed non-parametric tests as Friedman’s and Wilcoxon’s
and in the next step, they adopted an indicator known as Van der Tas C-index for quantifying the
level of harmonization. At the end, they measured the level of global harmonization that exists
between the thirteen countries.
They detected differences among the countries but they concluded that harmonization of
reporting requirement is an impulse towards the harmonization of financial information.
Emmanuel N. Emenyonu and Sidney J. Gray (1996) examined the results of an effort made to
reduce the diversity in accounting practices internationally. They examine a 20-year period from
1971/1972 to 1991/1992. Firstly, they used the Chi-square (x2) test (Siegel and Castellan, 1988)
to make an accounting measurement on practices used by companies. After that, they constructed
a harmony index which provided a range of values. This index was the I-index is stated as
follows:
I-index = )1/(121
1
)*....*.*(
mm
n
i
fififi
where fi is the relative frequency, m is the number of countries and n is the number of alternative
accounting methods.
33
The Chi-square test measures the extent to which the preferences of some independent groups
are matched and the I-index measures the extent to which the accounting practices of companies
across countries are concentrated around one or more alternatives. The results showed that the
impact of efforts to reduce international accounting diversity over the period studied have been
indifferent.
Another study examines the motivations and characteristics of firms complying with IAS. Both
International Accounting Standards Committee (IASC) and accounting researchers had a special
interest about this examination because they wanted to detect the merits of mandating IAS by
multinational firms.
The procedures that are used were the non-parametric Wilcoxon test and the Logit regression
model. The first is used to analyze the characteristics of IAS firms in comparison to those of non-
IAS firms and the Logit regression model to test the relationship between a firm's compliance
with IAS and the hypothesized explanatory variables. Under the Logit model, the odds of a
firm’s compliance with IAS are described by the conditional ratio of:
P (Gj /Xj) / (1-P(Gj /Xj))
where P(Gj /Xj) is the probability of being a member of G given Xj.
The results indicate that the magnitude of a firm's foreign operations, its financing policy,
membership of certain geographical and trade blocks in the European Union (EU), and multiple
listing on foreign stock exchanges are significantly associated with multinationals' compliance
with IAS.
An effort to measure harmonization was also urgent in ASEAN region. ASEAN countries
represent a market greater than European Union and from all the point of view, they needed tools
to facilitate the relationship between investors and companies. The financial reports needed to be
understood easily by the readers from different countries. These parties could obtain benefits
from harmonized accounting standards.
Ira Yuta Chairas and Wirawan E.D. Radianto concluded that accounting harmonization in
ASEAN region was advantageous but also there were some obstacles achieving harmonization.
The advantages of accounting harmonization, in general, was the cost saving, the
comprehensiveness and comparability, and there were also other advantages to regional
harmonization for the ASEAN countries. They have studied the process of accounting
harmonization at three different levels, the international, regional and national levels and they
concluded that has been given a great deal of attention when adopting international standards and
the effort has been successful.
34
2.2.2 Herfindahl index and I harmonization
Many researchers have made studies on the subject of harmonization that were published and are
directed at either a country level or company level. Studies that compare the accounting systems
of two or more countries have done so using a wide range of techniques. One approach has been
a descriptive comparison of the standards (e.g. pensions (Needles et al., 1991), foreign currency
translation (Mehta and Thapa, 1991), software costs (Scarbrough and Sakurai, 1993), leases
(Vergoosen, 1992), and segment reporting (Ahadiat and Stewart, 1992). These methods show us
the similarities and differences in the current standards. The studies also prove how standards are
set within a country or countries. For example, Gorelik (1994) compares Canada, the UK, and the
US to determine if current standards are becoming more aligned with each other.
Another approach used to research harmonization has used factor analysis. This technique that
ranks countries into groups based on the similarities of the accounting practices that comprise the
countries' national accounting systems. Frank (1979), Nair and Frank (1980, 1981), McKinnon
and Janell (1984), Doupnik and Taylor (1985), Doupnik (1987), Salter et al. (1994), and Rahman
et al. (1996) evaluated the similarities and deviations among accounting standards allowed by
various countries. Most of these studies used factor analysis to cluster countries based on the
similarities of the accounting practices they permit.
Evans and Taylor (1982), van der Tas (1988), Emenyonu and Gray (1992), Herrmann and
Thomas (1995), Emenyonu and Gray (1996) studied the annual reports from companies in
different countries to determine the level of harmony between accounting practices. The reports
covered years from 1975 to1980 but the statistical tests are limited.
Evans and Taylor reported that the percent of compliance by year did not appear to change for
most of the standards. This led the authors to assume that no harmonization has occurred.
However, this may not imply a lack of harmony because for many of the standards companies
were in compliance. For others, the level of compliance depended on the country. Evans and
Taylor made no comment regarding what influenced the changes in compliance. They concluded
that the IASC standards have had little impact on the use of accounting practices.
Van der Tas (1988) introduced the use indices as an operational measure of harmony.
These indices measure the degree of concentration around a particular practice. The H index may
be used to determine the level of concentration, within a country, for a particular accounting
method. An index of one indicates uniformity; this means that all companies choose the same
method.
35
This index is calculated as follows:
H =
n
i
ip1
2
where pi is the relative frequency of accounting method i and n is the number of alternative
accounting methods.
The relative frequency of use for a method is the percent of companies within a country (sample)
using that practice. The index will increase when there is more use for one or a limited number of
alternatives. This occurs because high frequencies have more weight in the calculation than low
frequencies. As an example, assume two methods are acceptable for a certain transaction. If 70
percent of the companies select method A and 30 percent apply method B, the H index will equal
0.58 or (0.702+ 0.302 = 0.58).
Van der Tas testified by giving related examples how this index could be used to indicate trends
in companies when using accounting practices. An example he presented used Accounting
Trends and Techniques, published by the American Institute of Certified Public Accountants. He
calculated the H index for investment tax credit, deferral or flow-through method. Graphing the
H index by year, he presented a discussion of how the index increased.
Van der Tas modified the H index to measure the concentration of use for companies from more
than one country. The I index, measures the level of comparability for accounting practices used
by companies from across countries. For two countries this index is calculated as follows:
Ι +
n
i
ii ff1
21
where fi is the relative application frequency of method i in country 1 (or 2) and n is the number
of alternative accounting methods.
As an example of this calculation, assume two countries and two accounting methods. If 60
percent of the companies in country 1 use method A and 40 percent use method B, and if 80
percent of the companies in country 2 use method A and 20 percent use method
B, the I index will equal 0.5600 [(0.60 * 0.80) + (0.40 * 0.20) = 0.5600].
36
To compute the level of concentration between more than two countries the formula is adjusted
further as follows:
Ι=
11
1
21 ....
mn
i
imii fff
where fi is the relative frequency of method i in country 1 to country m, n is the number of
alternative accounting methods, and m is the number of countries.
Afterwards the publication of article of Van der Tas, several studies have used these indices to
determine the level of harmony, like Emenyonu and Gray (1992, 1996) and Herrmann and
Thomas (1995). Overall, their results have indicated that the level of harmony, based on the I
index, differs depending on the accounting practice being analyzed.
Van der Tas made comments on a study written by Tay and Parker, in 1990. Tay and Parker
compared six studies in the field of international accounting. Two studies refer to attempt
measuring harmonization (Nair & Frank, 1981, and van der Tas, 1988) and the other four
measured the degree of compliance with the International Accounting Standards Committee
(IASC).Τhey used the methods that previously had been used by Nair and Frank.
The studding of international harmonization on the one side and compliance with IASs on the
other means a trial to set international standards close to harmonization. But the results showed
two different phenomena. When an IAS allows different methods to be applied and companies
apply these different methods, the compliance with the IAS may be high, but when the different
methods are applied, the degree of harmony may be low. If a group of companies apply the same
method, the degree of harmony is high. The degree of compliance with IASs, however, may be
low when that method is not allowed by the IAS.
The first study of Nair and Frank (1981) provide methods for measuring harmonization, de jure
harmonization (disclosure and measurement). They classify countries into five groups with
respect to each accounting method or disclosure issue. These five categories are: required
(application of this accounting method or the disclosure of this particular information
respectively is required in this country), predominant practice, minority practice, no application,
not permitted. According to Nair and Frank, the movement toward harmonization is defined as a
movement in the direction taken by a majority of countries toward requiring (or prohibiting) a
given accounting practice.
37
This method was a little complicated. There were problems for the terminology, data problems
and it mixed up accounting regulations and accounting practices. The five categories incorporate
both regulations and practices which implied that neither de jure harmony, nor de facto harmony
was measured. As concerning the de jure measurement of harmony the approach was incorrect.
They start by looking at a particular measurement method, while the starting point for measuring
measurement harmony should be a particular sort of transaction or event to be accounted for by
alternative measurement methods.
For measuring the de facto harmonization,, they used two methods provided by Van der Tas
(1988) namely the H index and the C index. The H index is calculated as the square of the
relative frequencies of each of the alternative measurement methods for a particular sort of
transaction or event, applied by companies. In this way a concentration of the companies on one
or only a few alternative measurement methods leads to a higher H index, indicating an increase
in the degree of harmony. Unfortunately, the comments upon the H index concerns the fact that
this index is a concentration index for which no significance tests have been derived to indicate
how trivial or significant (statistically) variations in index values are and they do not discuss the
other de facto measurement harmony method, the C index.
The C index is a ratio, calculated as the number of comparable pairs of financial reports divided
by the total number of pairs of financial reports. So there is no problem in applying the usual
statistical significance tests. The C index has many advantages. First of all, it is able to include
the effect on the degree of de facto measurement harmony of multiple reporting and the
disclosure of additional information in the notes on the accounts enabling the reader to reconcile
the financial report into a report based upon an alternative measurement method. Secondly,
movements in the C index can be tested for their significance and can be correlated with
movements in explaining variables such as the introduction of a standard.
The conclusion reached from the argument presented above is that it is not possible to develop a
method for measuring both de jure harmony and de facto harmony. There was a need to develop
different methods for measurement and disclosure issues. Tay and Parker argue that
measurement studies should focus on actual reporting practices rather than regulation, that is, on
de facto rather than de jure harmonization. These are, however, two different phenomena, each
pursuing different goals.
Tay and Parker (1990) in a review of harmonization studies stated that the comparison of
accounting practices and monopoly industries has ‘intuitive appeal.’ They maintain that the
indices are a useful method of tracing changes in harmony over time. A disadvantage, which Tay
38
and Parker commented on, is that statistical tests of significance have not been developed to
determine when an index indicates that harmony exists. That is, does the H index have to equal
one to indicate that harmony has been achieved? Is an index of 0.9 equivalents to 1?
We meet a lot of definitions given from all the researchers about what may be harmony.
Harmony has been defined by Tay and Parker (1990) as:
…a state indicated by a clustering of companies around one or a few available methods
. . . any point on the continuum between the two states of total diversity and uniformity,
excluding these two extremes.
Harmonization has been defined in previous studies as:
…the coordination of pre-existing rules of a different and sometimes conflicting nature (Van
Hulle, 1989),
…a process of increasing the comparability of accounting practices by setting bounds to their
degree of variation (Nobes, 1991),
… (a process) is a movement away from total diversity of practice (Tay and Parker, 1990).
The above definitions indicate that harmonization is a process. Harmony is a state, which will
also be referred to as a level. When the degree of concentration for an accounting method
increases the state of harmony increases and harmonization has occurred. The term
disharmonization may be used to refer to decreases in the level of harmony over time.
3. DATA
The research method deals with the method of collecting, processing, and analyzing the gathered
information. There are two methods for collecting data, primary and secondary data collection.
Primary data is material collected by us and secondary data is material that has already
documented.
Primary data is information obtained from original sources like surveys, information,
questionnaires and observations. In this research, we have decided to obtain primary data by
internet.
Secondary data is data that has already been collected, such as research reports, books, articles,
statistical reports and internet information. However, the quality and usefulness of the secondary
data could be difficult to evaluate. First of all, it is necessary to consider the original data.
39
Secondary data can be divided into two groups, internal and external. Internal secondary data is
available within the organization and external secondary data is provided by sources outside the
organization such as reports, magazines and books.
When exploring secondary data, we need to be careful to the documents used, paying attention to
source, originator, reasons for writing the document and the circumstances in which they were
made. The advantages of secondary data are validity because they are more objective than
primary data.
Our study used both primary and secondary sources such as articles in journals and research
reports, annual reports, books, electronic databases, and internet documents. This lead us perform
an objective study. Using all these, there is answer to many questions and gives the reader a
spherical aspect about the subject invested.
Annual reports constitutes the basis of this study were obtained from the internet database. The
data contained in the annual reports consist of historical and current financial data, ratios,
company profiles, stock price information, and accounting practices. The accounting practices
section contains variables for 3-year period such as the accounting method used for depreciation,
goodwill, research and development, and inventories. The national accounting systems present a
vast array of potential practices that could be included in the study. In order to test for harmony
the accounting procedures selected had to provide a subset of methods that were common
between the groups of listed companies selected. If we figured practices that did not consist of a
subset of common practices, the results would produce diversity and no harmonization. Each of
the following procedures selected met these criteria: depreciation, inventory and financial
statement.
In order to determine if the adoption of IASs has increased the level of harmony, it was important
to gather data before as well as after the change in standards. In order to perform the statistical
tests it is important to have pre- and post-adoption years as possible. As mentioned above, the
internet provides historical information for many years, although in some cases the information
contained does not cover the entire period. Using the data formed in 2003 and 2004 (pre-change),
we can make a comparison with the practices formed after the adoption of IASs (2005).
Complete data was available for 46 Greek companies who adopted IASs in 2005.
A sample of Greek companies using local accounting standards was used in order to determine if
the change in harmony among the companies was a result of the change from local GAAP to
IASs. From the sample selected, 45 Greek companies used local standards in 2004 and only one
used IASs.
40
In appendix A, Table A1 lists the companies included in the sample categorized whether they
used local standards or IASs in 2004. Only one of the companies presented using IASs in our
sample. In Tables A2 and A3 are provided the sectors and the rate of attendance of companies in
the sector. Tables A4 and A5 present the average assets and average sales for the period choosen
(2003 to 2005). Finally, Tables A6 to A14 present numerical the methods using by companies
when they trended the local standards or the IASs. It is important to refer to these methods.
Using the local standards the inventory methods are LIFO, FIFO, Weighted Average, Successive
Balance, Low Price and others. The depreciation methods that are presented before 2005 for the
most of the companies in the sample are Straight Line, Reducing Balance, Stable, Historical
Cost, Market Price and others. Finally, we need to mention the methods used to form a financial
statement and these methods are the Cost Basis method, the Historical Cost and others.
The adoption of IASs prescribes the methods could be used by companies. The writer of financial
reports must construct those reports using specific methods. For the valuation of inventories,
he/she must adopt the FIFO or Weighted Average method (IAS 2). He can not estimate the exact
amounts by using LIFO. The depreciation methods used are the straight - line method, the
declining method and finally the method of produced units (IAS 16). The method of Historical
cost is the main accounting convention adopted by the companies. It is rare to be used another
method (IAS 1).
41
4. METHODOLOGY
The calculation of the H index from a sample of companies is viewed as an attempt to measure
the H index for the sum of Greek companies and not only the companies’ choosen. So, we need
to set a hypothesis to detect the level of harmonization of the sample selected. The results will
express the majority of Greek companies.
Hypothesis 1
We will practice a test to determine if the adoption of IASs by companies in Greece has positive
results, so we can face an increased harmonization. The H index, a measure of the degree of
concentration for the use of a particular accounting practice, will be calculated over the 3- year
period for our sample. Hypothesis 1 will examine whether or not the level of comparability
among the sample group of Greek companies has changed. This period includes 2 years of using
local standards and 1 year of using IASs.
H1: There is no association between the year and the level harmony, as measured by the H index,
for the 3-year period 2003-2005.
Hypothesis 1 will be tested using the Spearman correlation coefficient. This statistic may be used
to test for trend between a bivariate sample of (Xi,Yi) pairs. For this study Xi is the fiscal year-
end and Yi is the H index. If we reject the Hypothesis 1, this will imply that the level of harmony
between companies has changed. An increasing trend of the index will indicate that
harmonization has occurred and a decreasing trend of the index will indicate the
disharmonization; movement toward total diversity has occurred.
42
5. RESULTS
The research that became with regard to the methods used by the companies of our sample, led us
to create the following tables. We present ten tables that show which methods had been adopted
by the companies at the 3-year period 2003 to 2005.
INVENTORY METHODS (2003)
COMPANY NAME LIFO FIFO WEIGHTED
AVERAGE
SUCCESSIVE
BALANCE
LOW
PRICE OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS SA
TOTAL 0 2 16 1 5 5 17
TOTAL % 0,00 4,35 34,78 2,17 10,87 10,87 36,96
Table 3: Methods used by the companies for calculating the inventories in 2003.
43
As we can see, there are seven different methods for calculating the inventories using local
standards, LIFO, FIFO, weighted average, successive balance, low price and many others. The
research show that the companies of the sample use different methods.The majority of the firms
did not discose the method used (36,96%). Many firms have adopted the weighted average
method, a percentage of 34,78%, while only 10,87% used the low price or other methods. There
is a low percentage, only 4,35%, for the use of FIFO and 2,17% use the successive balance
method. None of the companies use the LIFO method (0%). (Table3).
DEPRECIATION METHODS (2003)
COMPANY NAME
STRAIGHT
LINE
REDUCING
BALANCE STABLE
HISTORICAL
COST
MARKET
PRICE OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY
SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION
SYSTEMS SA
TOTAL 0 2 3 1 31 3 6
TOTAL % 0,00 4,35 6,52 2,17 67,39 6,52 13,04
Table 4: Methods used by the companies for calculating the depreciation in 2003.
44
It is clear that the main mass of the sample use the market price method. The percentage of
67,39% is smashing to make any comment about this. Six companies (13,04%) did not disclose
the method used.The other methods centralized low percentages, like 6,52% the stable and other
methods and 4,35% the reducing balance method. Only one company (2,17%) use the historical
cost method and no one the straight line method (Table 4).
FIN.STATEMENT METHODS (2003)
COMPANY NAME
COST
BASIS
HISTORICAL
COST OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS
SA
TOTAL 32 0 0 14
TOTAL % 69,57 0,00 0,00 30,43
Table 5: Methods used by the companies for presenting the financial statements in 2003.
45
The majority of the companies (69,57%) use the cost basis method for presenting the financial
statement reports. It seems like a method acceptable while there is no preference for the historical
cost or other methods. Again a great number of companies did not disclose the method used
(30,43%) (Table 5).
INVENTORY METHODS (2004 LOCAL)
COMPANY NAME LIFO FIFO
WEIGHTED
AVERAGE
SUCCESSIVE
BALANCE
LOW
PRICE OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION
SYSTEMS SA
TOTAL 0 2 11 1 8 5 18
TOTAL % 0,00 4,44 24,44 2,22 17,78 11,11 40,00
Table 6: Methods used by the companies for calculating inventories in 2004.
46
The scene in year 2004 does not seem to be different than in 2003. A percentage of 40% did not
disclose the method used. The majority of the companies listed (11/45) use the weighted average
method (24,44%) and there is an increase in the percentage of low price method, from 10,87% to
17,78%. Five companies use other methods (11,11%), two companies use FIFO (4,44%) and
only one use the successive balance (2,22%). It is strange that none company in our sample used
the LIFO method neither in 2003 nor in 2004. There is an explanation. Companies tried to adapt
methods that lead them closely to the adoption of IASs. This preparation will make the adaption
more easy because LIFO is a method prohibited by IASs (Table 6).
DEPRECIATION METHODS (2004 LOCAL)
COMPANY NAME
STRAIGHT
LINE
REDUCING
BALANCE STABLE
HISTORICAL
COST
MARKET
PRICE OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS
SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY
SA
THESSALONIKI PORT
AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS
SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION
SYSTEMS SA
TOTAL 0 1 3 1 32 1 7
TOTAL % 0,00 2,22 6,67 2,22 71,11 2,22 15,56
Table 7: Methods used by the companies for calculating depreciation in 2004.
47
It is not a surprise that again the majority of the firms use the market price method. It is kwown
that several times the company does not change the methods used, so all the users of the financial
reports, internal and external, could read them without be confused. The results are predictable,
71,11% for the market price method and smaller percentages for the other methods - 6,67% for
the stable method and 2.22% for the reducing balance, the historical cost and other methods.
Seven firms did not disclose the method used (15,56%) and no one has used the straight line
method (Table 7).
FIN.STATEMENT METHODS (2004 LOCAL)
COMPANY NAME
COST
BASIS
HISTORICAL
COST OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS
SA
TOTAL 33 0 0 12
TOTAL % 73,33 0,00 0,00 26,67
Table 8: Methods used by the companies for presenting the financial statements in 2004.
48
The cost basis method is the most popular among the others concentrating the 73,33%. Thirty
three companies in a sample of 45 use this method. No else method is preferable. We can see
again that the 26,67% of the companies did not disclose the way of presenting the financial
statement reports (Table 8).
In this year there is a change. In 2004, some companies tried to adopt International Accounting
Standards because they will be forced to adopt them from 2005 and so on. The percentages above
are calculated in the sum of 45 companies, but the sample includes 46 companies. This happened
because only one company of our sample use IASs in 2004,meanwhile the other companies tried
to modulate the rationalities of the new standards.
The only company that has adopted the IASs in 2004 is OPAP (Table 9). It uses the weighted
average method for calculating the inventories, the stable method for calculating the
depreciations and the historical cost basis for the presentation of the financial statement reports.
Substantially, the company is forced to follow the methods suggested by the International
Accounting Standards.
INVENTORY METHODS (2004 USING IAS)
COMPANY NAME LIFO FIFO
WEIGHTED
AVERAGE
SUCCESSIVE
BALANCE LOW PRICE OTHER NOT DISCLOSED
OPAP
DEPRECIATION METHODS (2004 USING IAS)
COMPANY NAME STRAIGHT LINE REDUCING BALANCE STABLE HISTORICAL COST MARKET PRICE OTHER NOT DISCLOSED
OPAP
FIN.STATEMENT METHODS (2004 USING IAS)
COMPANY NAME COST BASIS HISTORICAL COST OTHER NOT DISCLOSED
OPAP
Table 9: Methods used when adopting IASs (2004)
After this, it is quite easy to understand that all the companies who adopt International
Accounting Standards have the same attitude. As we can see in Table 10, forty one companies
use the weighted average method for calculating the inventories (89,13%), while only the 2,17%
use the FIFO and the successive balance methods. The LIFO, low price or other methods are not
49
choosen (0%) and 6,52% did not disclose the method. Forty five from forty six companies use
the stable method for depreciations (97,83%) and there are not prefered any other methods. Only
one company (2,17%) did not disclose the method used (Table 11).
INVENTORY METHODS (2005)
COMPANY NAME LIFO FIFO
WEIGHTED
AVERAGE
SUCCESSIVE
BALANCE
LOW
PRICE OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS
SA
TOTAL 0 1 41 1 0 0 3
TOTAL % 0,00 2,17 89,13 2,17 0,00 0,00 6,52
Table 10: Methods used by the companies for calculating inventories using IASs (2005).
50
DEPRECIATION METHODS (2005)
COMPANY NAME
STRAIGHT
LINE
REDUCING
BALANCE STABLE
HISTORICAL
COST
MARKET
ORICE OTHER
NOT
DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY
SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS
SA
TOTAL 0 0 45 0 0 0 1
TOTAL % 0,00 0,00 97,83 0,00 0,00 0,00 2,17
Table 11: Methods used by the companies for calculating depreciation using IASs (2005).
51
The same percentages are meeting in Table 12 where the 100% of the companies use the
historical cost basis method to present their financial statements. No one else method is choosen.
This means that there is harmonization because the H index is equal to one. This is the main goal
of the adoption of IASs. All companies are going to use the same standards, so their financial
reports will be easily read by all the users from all the countries.
FIN.STATEMENT METHODS (2005)
COMPANY NAME COST BASIS HISTORICAL COST OTHER NOT DISCLOSED
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS SA
TOTAL 0 46 0 0
TOTAL % 0,00 100,00 0,00 0,00
Table 12: Methods used by the companies for presenting the financial statements using IASs (2005).
52
Results of Hypothesis 1
The H index was calculated for each sample of Greek companies, for the 3-year period (2003-
2005). The numerical results of the Spearman correlation tests are summarized in Table 13.
Hypothesis 1 addressed whether or not the comparability within the sample of Greek companies
that adopted IASs has harmonized.
Comparison of H indices Spearman correlation results
Index 2003
Index 2005 Correlation p value
Depreciation
Greek IASs 0,92719 0,95707 .764 0,046**
Greek local 0,48214 0,5358 .935 0,002***
Inventory
Greek IASs 1 0,79978 .167 0,720
Greek local 0,28356 0,26617 .991 0,000***
Fin.statement
Greek IASs 1 1 .645 0,117
Greek local 0,57659 0,60885 .998 0,000***
*significance level: p< .10
**significance level: p< .05
***significance level: p<.01
Table 13: Comparison of H indices Spearman correlation results
The results for depreciation indicate that the adoption of IASs has increased the level of harmony
for the sample of our companies (92,7% to 95,7%). The depreciation H index had a statistically
significant positive correlation (0,764 at a significant level of 5%) over the 3-year period. Also
the control sample concerning Greek local had a statistically significant positive correlation
(0,935 at a significant level of 1%) indicating less improvement to harmonization index. For this
accounting practice it can be concluded that the adoption of IASs has increased the level of
harmony among the sample companies.
This is not the case with any of the other accounting practices examined. Inventory experienced
the opposite affect that is disharmonization occurred. More specific, the H index had a statistical
negative correlation with year, from 0,28356 to 0,26617 (-0,991 at a sign level of 1%) for the
53
greek local, and 1 to 0,79978 (-0,167 with a p value of 0,720 which is insignificant). This was not
the case for the control group.
The H index for the control group remains stable for IASs where the changes were not
statistically significant. On the contrary for financial statements, Greek local indicates an increase
in level of harmony for the sample of our companies. H index had a statistically significant
positive correlation equals to 0,998 at a significant level of 1%. The changes in the index were
primarily created as the companies went from not disclosing the inventory method used to
disclosing the method used. Therefore, while the trend in the index is negative the sample did
increase disclosure of this practice.
The H index for financial statement cost basis, for either group, did not change significantly. All
the companies of the sample use historical cost (73,33% use histrical cost while the 26,67% not
disclosed).
In summary, tests for Hypothesis 1 indicate that harmonization did occur among depreciation
methods utilized, but disharmonization resulted as more companies began to disclose inventory
practices. The adoption of IASs did not result in any changes to the level of harmony for
financial statement cost basis nor could it be determined that it is the only factor that created the
positive trend for consolidation methods used.
The above are confirmed from the Table 14 that describes the trend for H index for 2003 and
2005.
H index of harmonization trend
Greek only IASs only Difference
Depreciation 0,48214 0,95707 0,47493
Inventory 0,28356 0,79978 0,51622
Fin.statement 0,57659 1 0,42341
Table 14: H index of harmonization trend
The difference for depreciation show that there is an improvement of harmonisation of models at
the percentage of 47,4%. The same, we face for the inventory. The trend is over 50% (51,6%)
and the comparison between Greek only and IASs only show harmonization. The result of the
difference for the financial statement reports gives the same trend. The percentage of 42,3%
show that the companies of the group have achieved their objective. When using IASs only the H
54
index was 1 that means that all the companies use the same method. This is the main target when
adopting IASs, the harmonization. The trend of index of harmonisation shows that the companies
that adopted international accountant standards improved in double their indicators. The adoption
of IASs was the primary factor in increasing the level of harmony and the test indicates that
harmonzation has occurred.
6. CONCLUSIONS
This study examined the impact of using IASs on the comparability of three accounting practices.
We can understand that there was little evidence that the adoption of IASs was the primary factor
in increasing the level of harmony. While a majority of the tests indicate that harmonization has
occurred, it could not be determined that these changes were the result of using IASs.
International harmonization of accounting is a much-debated issue. A competitive global
atmosphere has forced companies and countries to rethink their strategies. In the context of this
new world order, accounting must respond to the challenge of providing useful and timely
information or otherwise face the consequences of being sidestepped in favour of better
information techniques. The need to review the accounting theory formulation process is more
urgent in the case of developing countries, which generally have lagged behind in the race for
international and economic prominence.
Efforts have been made by a number of organizations to reduce the differences between
accounting systems. The coordination of efforts, to compile an international set of standards, was
formalized in 1973 by the International Accounting Standards Committee (IASC). The
harmonization is concerned with reducing the diversity that exists between accounting practices
in order to improve the comparability of financial reports prepared by companies from different
countries. Harmonization occurs as more companies choose to prepare financial statements using
the same accounting practice. The terms increased comparability and harmonization will be used
interchangeably.
So, the adoption of IASs is a serious matter. It will not be so difficult to be accepted by the
Greek companies. These principles are well defined and provide the best control of the
accounting and financial side of a firm. An increase in the level of harmony indicates that
financial reporting practices of the Greek companies have become more aligned with companies
from other countries.
55
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63
APPENDIX A
LIST OF ANNUAL REPORT
COMPANY NAME USING LOCAL STANDARDS
USING
IAS
KRIKRI SA
DROMEAS SA
SIDENOR SA
KTIMA KOSTAS LAZARIDIS SA
ALLATINI SA
SIDMA SA
ELAIS SA
MEVAKO SA
STELIOS KANAKIS SA
NEORION HOLDINGS SA
GEN.TROFIMON SA
MYTILINEOS HOLDINGS SA
KATSELIS SA
ELVE SA
ELTRAK SA
ETEM SA
GOODY'S SA
MOTOROIL HELLAS
ELINOIL SA
ZAMPA SA
THEMELIODOMI SA
FOLLI-FOLLIE SA
GR. SARANTIS SA
YALCO SA
PLIAS CONSUMER GOODS SA
RILKEN SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
BIOKARPET SA
ALSINCO SA
VARVARESSOS SA
CYCLON HELLAS SA
ELMEC SA
HELL.FABRICS SA
GERMANOS IND.SA
MINERVA SA
BIOTER SA
OPAP SA
INFORMER SA
DELTA SA
BIOSSOL SA
BLUE STAR MARITIME SA
SANYO HELLAS HOLDINGS SA
INFOQUEST SA
RADIO KORASIDIS SA
LOGISMOS INFORMATION SYSTEMS SA
TOTAL 45 1
TOTAL % 97,83 2,17
Table A1: A list of Greek companies using local standards or IASs in 2004
64
LISTED COMPANIES
SECTORS
RETAIL
GERMANOS IND SA
OIL AND GAS
MOTOROIL HELLAS
ELINOIL SA
PERSONAL AND HOUSEHOLD GOODS
ZAMPA SA
YALCO SA
RILKEN SA
MINERVA SA
SANYO HOLDINGS SA
PLIAS CONSUMER GOODS SA
GR. SARANTIS SA
DROMEAS SA
BIOKARPET SA
FOLLI-FOLLIE SA
ALSINCO SA
VARVARESSOS SA
ELVE SA
RADIO KORASIDIS SA
ELMEC SA
HELL.FABRICS SA
TRAVEL AND LEISURE
GOODY'S SA
BLUE STAR MARITIME SA
OPAP SA
TECHNOLOGY
INFORMER SA
INFO-QUEST SA
LOGISMOS INFORMATION SYSTEMS SA
CHEMICALS
CYCLON HELLAS SA
BASIC RESOURSES
MYTILINEOS HOLDINGS SA
SIDENOR SA
SIDMA SA
ETEM SA
CONSTRUCTION AND MATERIALS
BIOSSOL SA
BIOTER SA
THEMELIODOMI SA
65
Table A2: Listed companies per sector
% PARTICIPATION PER SECTOR
SECTORS NUMBER OF COMPANY %
RETAIL 1 2,17
OIL AND GAS 2 4,34
PERSONAL AND HOUSEHOLD GOODS 16 34,78
TRAVEL AND LEISURE 3 6,52
TECHNOLOGY 3 6,52
CHEMICALS 1 2,17
BASIC RESOURSES 4 8,73
CONSTRUCTION AND MATERIALS 3 6,52
FOOD AND BEVERAGE 8 17,39
INDUSTRIAL GOODS AND SERVICES 5 10,86
Table A3: % participation per sector
LISTED COMPANIES
SECTORS
FOOD AND BEVERAGE
KTIMA KOSTAS LAZARIDIS SA
DELTA SA
ALLATINI SA
ELAIS SA
KRIKRI SA
STELIOS KANAKIS SA
KATSELIS SA
GEN.TROFIMON SA
INDUSTRIAL GOODS AND SERVICES
ELTRAK SA
NEORION HOLDINGS SA
MEVAKO SA
PIRAEUS PORT AUTHORITY SA
THESSALONIKI PORT AUTHORITY SA
66
GREEK USING LOCAL 2003-2004
COMPANY NAME AVERAGE ASSETS AVERAGE SALES
KRIKRI SA 23.571.500,00 € 21.043.000,00 €
DROMEAS SA 46.859.941,68 € 16.881.458,10 €
SIDENOR SA 522.850.512,07 € 501.005.957,92 €
KTIMA KOSTAS LAZARIDIS SA 28.427.255,05 € 6.037.806,87 €
ALLATINI SA 73.703.000,00 € 45.936.000,00 €
SIDMA SA 108.939.292,30 € 117.775.861,80 €
ELAIS SA 130.644.273,90 € 212.466.647,60 €
MEVAKO SA 23.989.207,74 € 12.679.468,30 €
STELIOS KANAKIS SA 12.653.871,70 € 13.201.631,50 €
NEORION HOLDINGS SA 264.929.000,00 € 196.534.500,00 €
GEN.TROFIMON SA 69.442.500,00 € 67.797.000,00 €
MYTILINEOS HOLDINGS SA 439.801.000,36 € 295.613.510,46 €
KATSELIS SA 66.618.452,16 € 54.024.254,06 €
ELVE SA 35.326.756,48 € 29.561.142,82 €
ELTRAK SA 95.294.000,00 € 101.222.000,00 €
ETEM SA 136.195.107,90 € 97.186.523,50 €
GOODY'S SA 133.251.500,00 € 144.609.500,00 €
MOTOROIL HELLAS 857.466.000,00 € 2.031.257.500,00 €
ELINOIL SA 66.117.000,00 € 323.285.000,00 €
ZAMPA SA 15.575.430,80 € 3.690.682,80 €
THEMELIODOMI SA 291.290.000,00 € 172.950.000,00 €
FOLLI-FOLLIE SA 244.943.476,50 € 177.600.329,00 €
GR. SARANTIS SA 270.704.860,80 € 255.522.107,50 €
YALCO SA 50.344.000,00 € 46.045.500,00 €
PLIAS CONSUMER GOODS SA 59.350.000,00 € 48.172.500,00 €
RILKEN SA 28.642.670,00 € 31.431.025,00 €
PIRAEUS PORT AUTHORITY SA 255.525.500,00 € 145.627.000,00 €
THESSALONIKI PORT AUTHORITY SA 112.711.000,00 € 43.012.000,00 €
BIOKARPET SA 151.123.890,00 € 84.410.245,00 €
ALSINCO SA 18.614.140,00 € 14.322.845,00 €
VARVARESSOS SA 64.696.094,15 € 29.540.532,50 €
CYCLON HELLAS SA 49.246.000,00 € 126.442.000,00 €
ELMEC SA 157.527.335,20 € 120.159.929,90 €
HELL.FABRICS SA 164.941.915,00 € 90.969.260,00 €
GERMANOS IND.SA 532.902.721,40 € 783.422.175,00 €
MINERVA SA 25.413.000,00 € 21.136.000,00 €
BIOTER SA 174.953.140,00 € 112.135.850,00 €
67
INFORMER SA 64.650.000,00 € 34.735.000,00 €
DELTA SA 897.069.565,13 € 688.006.987,50 €
BIOSSOL SA 18.188.494,00 € 8.621.981,60 €
BLUE STAR MARITIME SA 433.077.000,00 € 130.126.000,00 €
SANYO HELLAS HOLDINGS SA 226.395.000,00 € 177.453.500,00 €
INFOQUEST SA 342.411.000,00 € 478.681.500,00 €
RADIO KORASIDIS SA 236.804.500,00 € 180.590.000,00 €
LOGISMOS INFORMATION SYSTEMS SA 10.048.890,65 € 3.648.445,90 €
GREEK USING IAS'S-IFRS'S
OPAP SA 789.293.000,00 € 968.201.500,00 €
Table A4: Average assets and sales using local standards (2003-2004)
GREEK USING IAS 2005
COMPANY NAME AVERAGE ASSETS AVERAGE SALES
KRIKRI SA 28.425.085,00 € 25.373.986,00 €
DROMEAS SA 53.472.000,00 € 16.114.000,00 €
SIDENOR SA 1.313.904.344,00 € 957.045.619,00 €
KTIMA KOSTAS LAZARIDIS SA 39.507.484,22 € 6.350.502,22 €
ALLATINI SA 77.651.655,00 € 45.380.474,00 €
SIDMA SA 148.778.000,00 € 124.214.000,00 €
ELAIS SA 134.774.000,00 € 226.355.000,00 €
MEVAKO SA 31.610.408,23 € 17.492.283,51 €
STELIOS KANAKIS SA 15.552.574,06 € 14.252.410,79 €
NEORION HOLDINGS SA 316.547.000,00 € 164.550.990,00 €
GEN.TROFIMON SA 104.423.000,00 € 69.074.000,00 €
MYTILINEOS HOLDINGS SA 1.175.439.000,00 € 746.628.000,00 €
KATSELIS SA 73.911.200,62 € 55.754.976,91 €
ELVE SA 38.970.172,21 € 43.690.455,49 €
ELTRAK SA 98.486.000,00 € 94.360.000,00 €
ETEM SA 194.309.360,00 € 109.264.649,00 €
GOODY'S SA 150.913.000,00 € 146.256.000,00 €
MOTOROIL HELLAS 1.398.301.000,00 € 3.237.376.000,00 €
ELINOIL SA 108.852.885,84 € 447.958.987,86 €
ZAMPA SA 16.328.000,00 € 2.281.000,00 €
THEMELIODOMI SA 226.640.306,16 € 38.867.207,21 €
FOLLI-FOLLIE SA 334.791.355,89 € 222.796.934,45 €
GR. SARANTIS SA 217.559.039,60 € 208.661.993,31 €
YALCO SA 54.580.000,00 € 46.946.000,00 €
PLIAS CONSUMER GOODS SA 59.959.105,00 € 32.233.619,00 €
RILKEN SA 26.987.420,00 € 28.927.650,00 €
PIRAEUS PORT AUTHORITY SA 232.827.212,24 € 139.978.021,68 €
THESSALONIKI PORT AUTHORITY SA 118.930.491,00 € 47.462.190,00 €
BIOKARPET SA 177.397.136,43 € 96.158.597,28 €
ALSINCO SA 17.664.321,42 € 14.303.441,29 €
VARVARESSOS SA 70.604.595,33 € 27.615.360,85 €
68
Table A5: Average
assets and sales using IASs (2005)
APPENDIX B
CYCLON HELLAS SA 79.697.000,00 € 188.280.000,00 €
ELMEC SA 253.777.725,00 € 173.564.644,00 €
HELL.FABRICS SA 168.000.150,00 € 88.207.230,00 €
GERMANOS IND.SA 672.471.135,00 € 1.025.531.613,00 €
MINERVA SA 33.935.000,00 € 22.545.000,00 €
BIOTER SA 174.057.000,00 € 75.697.000,00 €
OPAP SA 965.686.000,00 € 3.695.234.000,00 €
INFORMER SA 62.502.036,00 € 31.017.517,00 €
DELTA SA 1.032.691.923,00 € 694.397.000,00 €
BIOSSOL SA 15.776.367,79 € 9.399.462,92 €
BLUE STAR MARITIME SA 414.530.000,00 € 133.380.000,00 €
SANYO HELLAS HOLDINGS SA 173.431.534,16 € 121.225.241,29 €
INFOQUEST SA 392.997.000,00 € 532.979.000,00 €
RADIO KORASIDIS SA 207.007.250,13 € 106.929.592,99 €
LOGISMOS INFORMATION SYSTEMS SA 9.114.698,70 € 3.016.610,91 €
69
Framework for the Preparation and Presentation of Financial Statements
IFRS 1 First-time adoption of International Financial Reporting Standards
IFRS 2 Share-based payment
IFRS 3 Business combinations
IFRS 4 Insurance contracts
IFRS 5 Non-current assets held for sale and discontinued operations
IAS 1 Presentation of financial statements
IAS 2 Inventories
IAS 7 Cash flow statements
IAS 8 Accounting policies, changes in accounting estimates and errors
IAS 10 Events after the balance sheet date
IAS 11 Construction contracts
IAS 12 Income taxes
IAS 14 Segment reporting
IAS 16 Property, plant and equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee benefits
IAS 20 Accounting for government grants and disclosure of government
assistance
IAS 21 The effects of changes in foreign exchange rates
IAS 23 Borrowing costs
IAS 24 Related party disclosures
IAS 26 Accounting and reporting by retirement benefit plans
IAS 27 Consolidated and separate financial statements
IAS 28 Investments in associates
IAS 29 Financial reporting in hyperinflationary economies
IAS 30 Disclosures in the financial statements of banks and similar financial
institutions
IAS 31 Interests in joint ventures
IAS 32 Financial instruments: Disclosure and presentation
IAS 33 Earnings per share