The PhD research project of Raquel Wille Sarquis, accounting student of FEAUSP (School of Economics, Business and Accounting of USP), was one of five papers selected by IAAER (International Association for Accounting Education & Research), which has received funding from the program "Informing the IASB standard setting process". The program is developed jointly with KPMG and IASB (International Accounting Standards Boarding), London-based. Raquel competed with projects of very high international level of researchers from around the world on matters related to the accounting standards that are under discussion in the IASB.
IAAER is a non-profit organization that promotes excellence in teaching and research in accounting, encouraging universities around the world to improve accounting standards. Starting in March 2018, the program runs until October 2019. The five selected projects will be presented at three international events, two in London at IASB headquarters and one in Miami, USA, during the International Accounting Section Annual Meeting, promoted by the American Accounting Association. The first event in London took place on September 24, 2018.
With the title "Elimination of Accounting Choices and the Comparability of Financial Statements: the Adoption of IFRS 11 - Joint Arrangements", the project of doctoral student Raquel Wille Sarquis was developed jointly with her supervisor, Professor Ariovaldo dos Santos (FEAUSP ), the co-coordinator Isabel Lourenço, professor at ISCTE-IUL, in Portugal, and Professor Guillermo Braunbeck (FEAUSP). The objective of this paper is to analyze the impacts of eliminating the proportional consolidation method as an alternative for the measurement of investments in joint ventures.
Until January 2013, before the issuance of the IFRS 11 standard, companies could record the participation in joint ventures by both proportional consolidation and equity accounting. The use of the first method prevailed in countries such as France and Brazil, and the second in countries like Australia and the United Kingdom. With the change, only equity accounting method became allowed. This decision of IASB (International Accounting Standard Board), according to Raquel Sarquis, caused much controversy. Opponents believe that the accounting method of proportional consolidation produced information of greater usefulness, mainly in relation to the level of indebtedness of the company.
According to Raquel Sarquis, the IASB's decision to eliminate proportional consolidation "was heavily influenced by pressures from FASB (Financial Accounting Standards Board), which never accepted proportional consolidation. One of the main arguments used by IASB to justify the elimination of this method is that the existence of accounting choices for the treatment of investments in joint ventures was harming the quest for comparability. "
Raquel Sarquis' work is focused on assessing whether the IASB's decision has resulted in an improvement in the level of comparability of the financial information of companies that have investments in joint ventures. To do so, it used a sample of 2,059 companies from 26 different countries. The period of analysis comprises 2005 to 2016. According to it, a database was built with information collected manually on the accounting practices used by each of these companies, in each of the 12 years analyzed.