My name is Anne de Smit, 23 years old and I graduated for my master Accountancy last July. Since the end of August I am working for EY. From student to the working life At the end of August, a new adventure started. I said goodbye to the student life and entered the real working life. A couple of months later I can really say my life has changed. I replaced my bike by a new car, my sneakers by high heels and having a good night sleep is only possible in the weekend now. Especially in the beginning it took some time getting used to the working life. In my student life, I had few contact hours at the University and did many extracurricular activities besides my study. I was treasurer at T.S.A.V. Parcival, editor in chief of Faces-Online at Asset | A&F and I was an active member at student association I*ESN. I loved to sport and being busy with different things. Therefore, I decided to do my master in two years instead of one. In my extra year I did an internship at the intern audit department at Rabobank. The purpose of this was to gain knowledge and experience as it was not entirely clear for me what an accountant exactly does. Through the internship at Rabobank I got a better view about what an accountant actually does and I knew since that internship that accountancy was certainly something for me. After my internship I completed some deficiency courses for my Post-Master Accountancy and have been very active for Faces-Online. During this period, I interviewed multiple CFO’s and a CEO of big companies. This experience definitely helped me to give me more courage in contact with clients and I have had quite some interesting conversations with leaders of companies. Currently, I am still busy doing a lot different things, but now at the office or at the clients instead of at the University. The knowledge I have gained during my student life certainly is of great value for me today. My extracurricular activities, my bachelor Business Administration and my Master in Accountancy help me in all practical issues at the office today. Besides, I learn a lot of my fellow colleagues. That is one of the best parts of the job: “You get to know a lot of new people who want to help you with your development by working together on different cases.” That is one of the key things I found out at my employer. Before I decided to work for EY I have broadly oriented myself. By participating in in-house days and accountancy days organized by A&F, I connected with a lot of different employers to get a clear view about the differences between these employers. That is one of the reasons why I did my graduate internship at an office of the famous ‘Big Four’. At the end I got the opportunity to start at EY and I am sure this was the right decision. Post-Master Accountancy Besides my work I started my Post-Master Accountancy which means I am still a student for one day in the week. The Post-Master takes a lot of my spare time. Every week I have to hand in a case which usually takes at least a couple of hours to complete. A solid planning is needed considering I still want to work out and do fun things with my friends in my spare time. The famous student expression ‘starting on time’ certainly is applicable to this situation. Even more when you do not want to work until midnight. The working life took some time to getting used to, but I am slowly getting used to it. During the week I am working hard with my team and I learn a lot of things every day. In the evening there is still some time to go to the gym or do something for my study. At the moment of writing, I am looking forward to my journey to United States of America next week. A chance which I am aware of not everybody gets. I am very pleased to get this opportunity and therefore it is time to seize it!
Overview Big Four Audit Rotation
Overview Dutch listed companies and their external accountant (Deloitte, EY, KPMG or PwC). Public interest entities, in the Netherlands referred to as OOB’s (ondernemingen van openbaar belang), are obligated to rotate of audit firm after a period of 10 years from 1st January 2016. OOB’s include Dutch publicly listed (at a European stock exchange) companies, insurance companies and banks. Naturally a tensed discussion has risen between different parties. Most OOB’s and audit firms are not pleased with the future obligation to rotate and claim it will do more harm than good on their quality of financial reporting. The government is determined to implement this new rule to increase the quality of financial reporting. OOB’s and audit firms claim that it is costly to change audit firm and quality will be lost. Quality, they say, will be lost due to the fact that the new audit firm isn’t as capable as the former audit firm from the start to conduct a high quality audit. It will take time to gain the required knowledge about a company to conduct a high quality audit and therefore high quality financial reporting. Others, mostly political parties, argue this statement and claim that rotation will increase independence of audit firms and OOB’s and therefore improve the quality of financial reporting. Below you can find an overview of the first changes that have already taken place due to the mandatory audit rotation: *No liability accepted for errors. If you find any errors or have more information about upcoming changes please contact us via info@asset-accountingfinance.nl.
Insight with Nienke de Wit
Nienke de Wit, Chairman Accounting Insight 2014, was asked to give us some insight regarding her experience at Asset | Accounting & Finance. She mentioned to have gained both social and business experiences. If you would like to learn more about why she became an Active Member or why she believes you should attend Accounting Insight, you can read her story. Who are you and what do you study? I am Nienke de Wit, Chairman of the ‘Accounting Insight 2014 committee’. I just started my master in Accounting. Last year I graduated from my bachelor in Business Administration Why did you join Asset | Accounting & Finance? I joined Asset | Accounting & Finance in January 2014. I was in my last year of my bachelor and decided I wanted to be involved in something besides my bachelor studies. I decided to take a look at the committees that Asset Accounting & Finance offered. After some well thought out considerations I decided to choose Accounting Insight because its details fit my interests very well. I wanted some extra challenges besides the lectures I had during my study. Next to that, I also wanted to meet new people at Tilburg University and I always got the impression that Asset | Accounting & Finance was a really nice study association. And I was right! Why did you join Accounting Insight? I wanted to gain more knowledge and experience in accounting and organizing an event. Accounting Insight suited my interests’ the most because you are continuously involved in topics that are up to date in the accounting news. What is the purpose of you and your committee organizing Accounting Insight? Accounting Insight is an event to help bridge the gap between the academic lectures given at Tilburg University and the practical situations that individuals are exposed to in companies. During lectures, students only get theoretical information from books, while during Accounting Insight there will be topics discussed that are more applied and relevant to the accounting world today. What and when is Accounting insight? Accounting insight is the 6th of November this year. During Accounting Insight multiple statements will be discussed which are focused on fields related to accounting. At this event you will hear the opinions of several important speakers, who all are very experienced in their own profession. The speakers are from four different categories, these are business, government, accountants and academic. Students are invited to participate and discuss the statements with the speakers and this makes the event interactive and interesting. Another element of Accounting Insight are the speeddates at the beginning of the evening. Students can choose to sign up and join the speeddates which give them opportunity to get in personal contact with the companies: KMPG, EY, Joanknecht & van Zelst and Wesselman. Have you gathered any benefits from being involved in this committee? The cooperation and collaboration required in a team is one thing that I learned whilst being involved in this committee and it is something I really liked doing. Another aspect of the committee that I really liked is that I had a lot of contact with the high profile speakers and professors that will attend the event. During your study it is hard to come in touch with important CEO’s and CFO’s and I had fortunate chance to visit them. Which guest speakers will there be at Accounting Insight? Gosse Boon will be one of the guest speakers. He is a registered accountant and CFO from Nutreco. Jan ten Kate, RA will also attend the event. He is the CFO from Amsterdam Commodities. Another guest speaker is Jan Dalhuisen, managing partner from EMEA Deloitte. A professor in accountancy at Nyenrode Business University, Marcel Pheijffer will be present as well. Finally, Henk Nijboer, member of the parliament for the PvdA and spokesman for Finance will attend and speak at Accounting Insight. Which companies will be present at the event? The key companies that will be present are the big 4 accountancy firms: KPMG, EY, PWC and Deloitte. Besides these four companies we will have some other very interesting firms attending the event, these are Joanknecht & Van Zelst, Wesselman and NBA. How did you develop the event? What were the processes from beginning to end to organize Accounting Insight? The first thing we did as a committee was establish the different topics to address and then we started contacting possible speakers. This was harder than we expected at first, but in the end we managed to find some seriously interesting and enthusiastic speakers. During the process we came to the conclusion that we would not focus on one specific subject, but rather on many different and relevant statements. We decided to organize the evening in a ‘house of commons’ setting. When this was all finalized we started looking for sponsors for the event. Once we found our sponsors it was time to cross our t’s and dot our i’s. This meant starting the promotion of the event! What are the benefits to participants of the Accounting Insight evening? Why should students participate? The students who have chosen to participate in the speeddates have a huge advantage because they have the opportunity to network and come in direct contact with companies that they could be working for in the future. For the other students it is an interesting and informative evening that will provide important insight into accountancy topics. They additionally have the chance to get actively involved in the discussion about very relevant and interesting issues. And besides that, how often do you have the chance to get into a conversation with a CEO or professor? Discuss your experience with regards to the contact with companies and speakers for the event? I thought it was very interesting and I learned a lot from it. It was nice to visit the companies for which the speakers will be representing on the event night. Most of the contact was made through the secretaries of the speakers,
An overview of differences between Dutch Accounting Standards and IFRS
1. Overall Approach There are fundamental differences in the overall approach between sets of accounting standards. The first fundamental difference is whether accounting standards are principles-based. Principles-based accounting standards are developed based on specific principles or objectives that govern financial reporting that is ‘useful’ to decision makers. For instance, the matching principle that expenses be matched with revenues. Rules-based standards are the counterpart of principles-based accounting standards. Although rules-based standards are based on principles, they include more exceptions to these principles and more detailed implementation guidance. Both IFRS and DAS are considered principles-based accounting standards. Perhaps driven by the litigious environment in the USA, USGAAP is believed to be more rules-based. A perceived benefit of rules-based standards is greater comparability of financial statements (Schipper, 2003). Another fundamental difference is the option to deviate from the set of accounting standards. Deviation from a set of accounting standards being applied is commonly referred to as true-and-fair-view-override (TFVO). The essence of accounting standards is providing guidance in a way that reflects economic reality and provides a true and fair view. Under IFRS the TFVO is only permitted in extremely rare circumstances to achieve a true and fair view. IFRS than requires specific disclosures with respect to the TFVO. Departure from DAS is required (!) if necessary to provide a true and fair view and there is no requirement to disclose this departure. Under DAS the TFVO is required whereas under IFRS it is almost forbidden. Absent the requirement to disclose deviation from DAS it is difficult to quantify the use of the TFVO to assess whether this is actual difference between DAS and IFRS (de facto difference) or whether this is merely a difference ‘on paper’ (de jure difference). Early research on the implementation of TFVO across EU member states in Europe shows that only 10 out of 400 listed companies across Europe used TFVA (van Hulle, 1997, p. 716). Research on listed firms reporting under UKGAAP, with a similar TFVO as DAS, substantiates its limited use (Livne and McNickols, 2009). Livne and McNickols (2009) attribute this limited use in part to the high cost involved. For instance, litigation cost, conflict with auditors, and scrutiny by analysts and institutional investors. 2. Strictness Specific accounting standards with a set of accounting standards generally address the following issues: recognition and measurement of transactions, presentation, and disclosure. Recognition/ measurement pertain to when a transaction has to be recognised (derecognised) on (from) the primary overviews. Primary overviews are the statement of financial position (balance sheet), the (comprehensive) income statement, the statement of changes in equity, and the cash flow statement. For instance, IFRS requires that when financial instruments are being recognised on the balance sheet they are measured at fair value. Presentation is where and how transactions need to presented on in the primary overviews. For instance, IFRS requires the comprehensive income statement to minimally consist of a number of defined items. Disclosure requirements are additional disclosures in notes on specific transactions presented on the face of the primary overviews. For instance, IFRS and DAS require a movement schedule of tangible fixed assets that includes investments, divestures, and depreciation. Several detailed comparisons have been made between IFRS and DAS (e.g. Ernst & Young, 2013; Deloitte, 2013). One way of comparing differences between sets of accounting standards is by their strictness. Based upon the Ernst & Young (2013) publication I present an overview of differences in strictness of DAS and IFRS.[1] From this table it follows that IFRS is stricter in 241 requirements compared to 111 requirements were DAS is stricter. In 80 requirements IFRS and DAS are contradictory. These differences will be discussed per topic below. Table 1. Differences between DAS and IFRS Issues IFRSstricter DASstricter IFRS and DAS contradictory Total Presentation 33 53 15 101 Recognition and Measurement 152 30 65 247 Disclosure 56 28 0 84 Total Differences 241 111 80 432 This table is based on the 2013 Ernst & Young publication: Vergelijking IFRS met Nederlandse wet- en regelgeving. 2.1 Presentation Contrasting the notion that IFRS is overall stricter, DAS is stricter with respect to the presentation of primary overviews. This is not surprising. Under DAS there are specifically defined sets of primary overviews. IFRS does not provide specific guidance for the presentation of the primary overviews. IFRS merely states the minimum required items in the primary overviews and includes the requirement that additional items are required when it is relevant to the understanding of the entity’s financial position or performance. Another general difference is that IFRS requires 2 years of comparative information on the statement of financial position. In table 2, I present a breakdown of the differences between IFRS and DAS per topic. The table shows that especially equity and financial instruments are topics with significant differences between DAS and IFRS. Especially presentation of items within equity is strictly defined under DAS. For instance, this refers to legal reserves to restrict dividend pay-out to equity holders of unrealised gains to avoid expropriation of debt holders by equity holders. With respect to the presentation of financial instruments IFRS is stricter and is related to for instance detailed guidance on the classification of a financial instrument as debt or equity. 2.2 Recognition and Measurement Given that most differences between sets of accounting standards are related to recognition and measurement, most professional publications focus thereon. Areas with major differences between IFRS and DAS are fixed assets and impairments, financial instruments, investments and consolidation, and business combinations. Derivative financial instruments under IFRS are in principle measured at fair value whereas under DAS it is a policy choice to measure them either at book value of fair value. With respect to fixed assets there are for instance differences how to account for goodwill. Under IFRS goodwill is not depreciated whereas under DAS it is a policy choice how to account for goodwill (depreciation, recognition in equity, recognition in the profit & loss). Also, goodwill and other intangible assets that are not depreciated have to be tested