IFRS & US GAAP – Group 5, FMI Raleigh


General Introduction
Accounting : an essential service information tool for executives, shareholders and third parties, both to make decisions and to allow comparison of the performance of companies

I. How was the accounting system before the globalization started ?
1/ Management accounting: a necessary discipline in a competitive world
a) What does lead the world to a globalization of standards ?
b) Some example of difficulties due to difference between accounting systems.
c) The gap between now and before : 5 bests benefits of the transition

2/ Presentation: US GAAP and IFRS
a) Brief presentation of the norms
They are based on different normative approaches: an approach based on rules for U.S. GAAP and approach by the principles to IFRS.
Is one approach  more relevant than the other to regulate the behavior of  management accounting data?
b) Principal Convergence/divergences between US GAAP and IFRS
c) Who managed to set up this norms ? Principals leaders-actors.

3/ The ambiguity consequences of the 2 approaches
a) Practical issues should be resolved in the real world of global financial reporting
b) Why US GAAP are less dominant in the world
c) Recommandation : ensuring the public interest by a more balance standards

Deeper Option : Wherein the financial crisis leads to changes in accounting standards ?

II. Globalization and International Accounting Standards
1/ What are the IFRS
• Quick history
• How spread it is today

2/ What is US GAAP
• Brief comparison with IFRS
• Convergence not that easy to implement

Globalization push to an accounting standardization
3/ How benefit it is to set an international common financial reporting standards?
• From international investors side
• From companies side

4/ Why it is a common goal for international institution and top world’s governance?
• G20 expectations
• Benefits impact in the world’s economy

III. Case Study: IFRS Adoption In Korea
1/ The IFRS Adoption Process in Korea
a) Driven factors
b) Decision to adopt
c) Preparatory steps

2/ Implementation: Challenges and Responses
a)Principle-based standards
b)Effects of IFRS adoption
c) Indirect Effects

3/ Lessons learned and advice to future adopters
a)Lessons Learned
b)Advice to prospective IFRS adopters

References – Part I/ :











French websites – Part I/:






References – Part II/:








References – Part III :



The failure of Wal–Mart in the key German market – Group 5, FMI Raleigh

The main issue Wal-Mart had in Germany was that they did not adapt their business model to the needs of German employees and consumers and therein were unable to set themselves apart and have exploding profits as they did in the U.S. In Germany, they were not able to offer customers any compelling value proposition in comparison with its local competitors because they did not do their research on what motivated German consumers to buy and were therefore unable to attract them with an innovative approach to retailing. Their entry-by-acquisition strategy was fundamentally flawed when they acquired the deteriorating Spar and therefore tarnished their own brand image. There was also the issue with the CEOs for Wal-Mart working in Germany who were not knowledgeable about the language, culture, and regulations and exhibited an “astounding degree of ignorance with regard to the manifold complexities and the legal and institutional framework of the German retail market ignoring the strategic advice presented by Wertkauf executives, thereby encouraging them to leave.”

Wal-Mart was also incapable of adapting their store model to German needs because, “Germans like to see the advertised discount products upfront – without having to ask the store assistant. This implies that the discount products must be placed at the eye level. Instead Wal-Mart chose to use its US style merchandise display strategy – where premium priced products are kept at eye level and discount products are kept at higher shelf or in the bottom racks. This irritated the German shoppers.” Wal-Mart failed to stay true to its value propositions: “We sell for less – always”, “Everyday low prices” and “Excellent service” because their strong competitors, mainly Aldi and other hard discounters, were able to easily match their price cuts. The management was also unable to stay focused on both short and long term operations because of the high employee turnover rate. They also completely disregarded the laws and regulations Germany had with regards to labor and food sales and merchandising.

The lessons Wal-Mart learned through their attempted acquisitions in Germany is that they must respect the laws and regulations regarding food sales and labor, they must respect unions’ laws, they must do more primary research in regards to culture and language and have more domestic management and employment, the must respect the interests of the company acquired (Massmart), and they must also do their research on the inflation rates and the economy so as not to destabilize it with prices that are too low.

References to go further :
Business Week
NY Times