Appraisal of Accounting Standards vis-à-vis Corporate Governance Practices in Contending Potential Super Power Nations (India, Japan, Germany, Brazil, South Africa)

Posted: 15 Feb 2007

Date Written: February 13, 2007


In the global wave of reform, United Nations is no exception. On turn of new millennium, a debate began about expanding present permanent Security Council members. In race of gaining super power status, many big & powerful nations jumped into the fray. To be Super Power Nation, a permanent membership in Security Council of UNO, requirements are plenty but to count few; one's strength in political, military, economy, democracy, population, living standard and so on are counted.

To be sound economically, a nation should have strong, reliable, transparent, dynamic, growth oriented corporate. To be so, corporate is expected to be performing good corporate governance. Corporate Governance refers to structures and processes for directing and controlling companies. Collectively, these constitute a set of rules that govern the relationships among management, company shareholders, and other stakeholders. The rules of corporate governance aim to ensure that managers act in the best interests of their shareholders rather than simply acting in their own interests or those of a majority shareholder.

The corporate governance framework depends on the legal, regulatory, and institutional environment, more particularly in matters related to finance & accounting. The corporate governance framework should ensure that timely and accurate disclosure is made by way of financial statements on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company. Accounting Standards & Generally Accepted Accounting principles provide basic framework to record, process and disclose transactions & events.

The present Research aims as to perform appraisal of current Accounting Standard enforced and its potency, efficacy & role in good corporate governance among contending potential super power status nations, namely; India, Japan, Germany, Brazil & South Africa. The study includes relevant Accounting Standards that has strong nexus with Corporate Governance issues, e.g. Selection of Accounting Policies, Disclosure and Transparency, The Responsibilities of the Board, Relative Party Disclosures, Foreseeable Risk Factors and issues of conflicting interest between individual vs. corporate & corporate vs. society.

In era of globalization, there is a strong need for legislation and consensus globally to bring about uniformity, rationalization, comparability, transparency and adaptability in financial statements. And this underlines the need to have stringent norms for preparation and presentation of financial statements. The simple fact is that markets are integrating worldwide. Differences in accounting methodologies and reporting systems impose an increasing burden on economic efficiency. They may mislead markets and capital allocation. Convergence between IASB and US standards is just one step, albeit a big one, on the road towards high quality, understandable and enforceable global accounting standards. (As quoted from - Tommaso Padoa-Scioppa, as published in the Financial Times on 19 May 2006). This Research Project would also like to take stock of situation of convergence of Accounting Standards with that of International Accounting Standards as all contending nations have taken initiative to harmonize Accounting Standards with International Accounting Standards.

Objective: 1. To compare and provide critical analysis of relevant Accounting Standards (as mentioned in para 4) among contending nations. 2. To appraise potency & efficacy of relevant Accounting Standards in ensuring good corporate governance. 3. To take stock of the harmonization of Accounting Standards with that of International Accounting Standards.

Research Methodology: The proposed study is substantially on secondary data. The provision of relevant Accounting Standards for each country will be studied. Few (may be 2 to 3 from each country) Corporate Governance Report of selected company from each country will be analyzed. Open-end interview from different stakeholders (investors, managers, directors, stock exchange officers, auditors) within India will be conducted to measure their views about practicing corporate governance vis-à-vis Accounting Standards.

Limitations: The study is based on secondary available data from each country, from web sites, magazines, articles and research papers available on net.

Finding, Suggestions & Conclusion: The appraisal of relevant Accounting Standard in terms of its potency as regulatory force in performing good corporate governance may provide shortcomings. Due to different political, social and economic conditions of each country, the finding may be interesting. Comparison of each country's Accounting Standards may give best & worst, which may be optimized in harmonization with International Accounting Standards. In race of being getting permanent position in UNO, each country's leadership can take message what is expected and where they are, at least in terms for good corporate governance regulation, to make strong, stable & reliable corporate.

Keywords: Corporate Governance, India, Brazil, Japan, Germany, UNO, Super Power, Accounting Standards

JEL Classification: M41, M44, M47, G34

Suggested Citation

Sapovadia, Vrajlal K., Appraisal of Accounting Standards vis-à-vis Corporate Governance Practices in Contending Potential Super Power Nations (India, Japan, Germany, Brazil, South Africa) (February 13, 2007). Available at SSRN:

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