Accounting Regulation and Regulation of Accounting: Theories and the Brazilian Case of Convergence to IFRS

Abstract

The convergence process of national accounting practices into international standards requires significant changes on accounting regulation. Brazil has many examples of that: the creation of the Brazilian Accounting Standards Committee (CPC), the issuance of the Federal Law 11.638/07, the January 14th Letter to the Market issued by the Brazilian Securities Exchange Commission (CVM), the translation of the Framework for the Preparation and Presentation of Financial Statements (issued by the International Accounting Standards Board), translated by CPC and approved by CVM. It is expected that accountants and auditors are working hard to understand and to get familiar with new standards to adopt and audit them on their firms and/or clients. However, as important as to adopt and audit the adoption of International Financial Reporting Standards (IFRS), it is important to understand changes on accounting regulation. Although, there are not been discussed the incentives and consequences of this accounting regulation tsunami in the Latin-American context. This theory-based paper examines the Brazilian IFRS convergence experience in an interdisciplinary perspective. All five theories of regulation examined (Public Interest, Capture, Interests Group, Reale's, and Habermas') are concurrent among them but are helpful in examining IFRS convergence phenomenon; in some cases they provide complementary explanations.

Keywords: Accounting Regulation, Regulation of Accounting, Public Interest Theory, Capture Theory, Interest Groups Theory, Tridimensional Theory, Habermas' Approach, Accounting Theory

JEL Classification: G38, H22, L51, M41, M44, M47