Map of East Asia

East-Asia
Accounting Roundtable

February 13–15, 2000

Sponsored by:
AAA Globalization Initiatives Committee
City University of Hong Kong
National University of Singapore

The first East-Asia Accounting Roundtable was held in Singapore from February 13-15, 2000. The purpose of the roundtable was:

  • To provide an opportunity for professional and academic leaders from East-Asia regions to network with each other.
  • To promote dialogue on emerging professional and educational issues facing accounting professionals and academics in East-Asian regions.
  • To provide an opportunity for professionals and academics from East-Asian regions and the United States to work together to solve difficult accounting professional and educational issues in East-Asian regions.

The meeting was held because it was believed that as we enter the 21st Century, it is more important than ever that we work together to help each other. The pace of change in the world is faster than ever before. With increasingly available methods of communication and transportation, the world is getting smaller. We all become better when the accounting and accounting education in one country improves. Only through dialogue with each other can we improve.

The roundtable was sponsored by the American Accounting Association's Globalization Initiatives Committee (Joanna Ho and Steve Albrecht, co-chairs), City University of Hong Kong, and the National University of Singapore. Invitations to attend were extended to one professional and one educational representative from 10 East-Asian regions and the United States. Representatives to the roundtable were from the following regions:

The invited representatives from the Philippines did not attend.

The meeting convened on the evening of February 13th with a reception, opening remarks by Professor Wong Kie Ann of the National University of Singapore, and a dinner. On February 14th, professional and academic delegates from each country addressed the following 10 questions:

  1. Do you have a formal association of academic accountants? If so, please describe the association and its activities.
  2. Do you have a formal association of professional accountants? If so, please describe the association and its activities.
  3. How much interaction is there between the academic and professional associations and how much interaction is there between both associations and the government?
  4. What are the major professional issues facing your region?
  5. What are the major academic issues facing your region?
  6. What do you see as the major accounting research issues and what kind of help do you need to conduct them?
  7. What kind of help could you use from academic and professional accountants from other regions and what kind of help could you offer to others?
  8. Are you interested in more interaction with professionals and academic accountants in other regions and what form do you think that interaction should take?
  9. Do you think an accounting roundtable format like this is worthwhile to continue? If so, how often?
  10. Would your region have an interest in coordinating an accounting roundtable meeting in Asia in the future? Would your region be interested in participating in an accounting summit meeting that includes accounting representatives from all over the world?

Each country's presentations lasted between 30 and 45 minutes. Summaries of their presentations, written by each country's delegates, are included in the links above. These presentations took the entire first day of the conference.

The format on February 15th was different and included roundtable discussions of the most important issues that were raised the first day. As the country delegates presented on the first day, the U.S. representatives took notes of the most important professional and education issues that were discussed. Before the delegates arrived on the 2nd day, these issues were written on flip charts and hung around the room. The delegates were then given the opportunity to add additional topics to the professional, education, and research lists. Once everyone was convinced that all the major issues that had been discussed were identified, delegates were each distributed 4 large green dots and 4 small yellow dots. They were told to paste the large green dots on the two professional and two educational topics they felt were most critical and important for their country. They then posted the smaller, yellow dots on two additional professional and education issues that they felt were also important, but not as critical as the first two. Each green dot was then given a weighting of 2 and each yellow dot was given a weighting of 1, allowing for a total score and ranking for each issue. The following are the professional and educational issues ranked in order of importance by the delegates (issues with 0 points were raised by delegates but received no votes):

Professional Issues (Ranked in order of importance)

  1. Corporate governance issues 21 points
  2. Harmonization of accounting principles, IAS, U.S. and country-specific standards 20 points
  3. Accounting's role in preventing another Asian Crisis 9 points
  4. Appropriate educational standards for professionals 9 points
  5. Continuous professional development (CPD) issues 9 points
  6. Mutual recognition of professional licenses 7 points
  7. Internal control 6 points
  8. Changing role of accounting in society and business 4 points
  9. Cooperation between accountants in different countries 3 points
  10. Integrity of accounting professionals and standards 3 points
  11. Code of Ethics (e.g., Advertising rules) 3 points
  12. Adequacy of accounting disclosures 3 points
  13. Appropriate level of government oversight & involvement 2 points
  14. Acceptance of F/S and audits in other countries (Legend problem) 2 points
  15. Survival of local CPA firms vs. Big 5 2 points
  16. Need for conceptual framework 2 points
  17. Rule-based vs. Disclosure-based standards 1 point
  18. Insufficient number of professionals in country 1 point
  19. Criticism of Audits/Litigation threat 1 point
  20. Image of professional accountants 0 points
  21. Independence of professionals 0 points
  22. Lack of professional standards and quality of standards 0 points
  23. Difficulty of professional examination 0 points
  24. Expectation gap between professionals and public 0 points

Education Issues (Ranked in order of importance)

  1. Teaching life-long skills instead of just content 25 points
  2. Integration of technology in education 19 points
  3. Low quality of students/Competence of graduates 8 points
  4. Opportunities to work with other academics 6 points
  5. Insufficient interaction with professionals 6 points
  6. Interaction with other associations and government 5 points
  7. Number of credits for graduates/educational requirements 4 points
  8. Outdated curriculum 4 points
  9. Faculty compensation 3 points
  10. Graduates not becoming CPAs and joining CPA firms 3 points
  11. Recruiting professional accountants to teach 3 points
  12. Combining majors (accounting with I/S or law) 3 points
  13. Lack of good empirical research 2 points
  14. Insufficient number of academically qualified faculty 2 points
  15. Need to broaden competence of students 2 points
  16. Need for additional academic journals 1 point
  17. Not enough educational opportunities for students 0 points
  18. Expectation gap in what professionals want and what students have 0 points

Research Issues (Not ranked in order of importance)

  1. All of the professional issues provide fruitful avenues for research
  2. Valuation of high-tech companies
  3. Accounting for intangibles
  4. Impact of de-regulation
  5. Litigation on audit quality
  6. Accounting for forecasts
  7. Accounting for complex transactions (SWAPS, etc.)

Once the issues were identified and ranked, there was discussion about those issues deemed to be most important.

Corporate Governance
Corporate governance was deemed to be a very important topic. Most of the discussion centered on the trade-offs between imposing too many controls vs. allowing freedom to operate, what are the appropriate kinds of corporate governance controls, the roles of internal controls in corporate governance, the role of Boards of Directors and Audit Committees and the various policies of the different countries. Malaysia has an interesting approach in that it requires all corporate directors to undergo mandatory education and training. All of the countries except Taiwan and the PRC required audit committees, at least for some companies (Indonesia only for banks), but most felt that in many cases audit committees were just a formality and their roles weren't well defined. The Taiwan stock exchange does require audit committees for listed companies. It was clear that the kinds of directors (inside vs. outside) that can sit on audit committees and the roles the audit committees played differed considerably across countries. While the PRC doesn't have formal audit committees, they do require companies to have supervisory boards that are comprised of employees, management, government employees and others. Many of the countries only required audit committees for very large companies (e.g., Japan and Korea.) There was also considerable discussion of the role of audits in the East-Asian cultures. Companies in countries such as Japan conduct formal investigations of individuals before they hire them and so there is a presumption of trust that makes audits a perceived needless exercise. That feeling was especially strong when the East-Asian countries were isolated and before the Asian crisis. With the growing number of multinational companies entering East-Asian countries, the Asian crisis, and other factors, however, the attitude about audits is changing to where they are becoming more accepted.

Harmonization
It was obvious there were very strong country feelings about the issue of harmonization of accounting standards. The discussions centered around three primary issues: (1) International Accounting Standards vs. U.S. standards, (2) countries being forced by the International Monetary Fund and others to follow IAS, and (3) IAS vs. country-specific standards. Some delegates thought it unfair that the U.S. stock exchanges and the Securities and Exchange Commission required companies to convert to U.S. GAAP before they could be listed on U.S. exchanges. Others felt that if foreign countries wanted to list on U.S. exchanges, they should be required to use the same standards as U.S. companies. It was mentioned that IOSCO countries were going to adopt IAS and that the Securities and Exchange Commission of the U.S. was considering allowing the use of IAS. It was basically concluded that we have two global standards: U.S. GAAP and IAS. There was also significant discussion of whether or not uniform standards were even appropriate given different country cultures, standards, and types of companies. What most delegates agreed on that some kind of balanced harmonization is needed with adequate disclosures of differences. There was a strong feeling that requiring U.S. GAAP or even IAS imposed a significant burden, especially on developing countries. There was also discussion that IAS is currently being reorganized and that the U.S. will probably play a bigger role, thus allowing for a convergence of U.S. and IAS standards. It was concluded that IAS represents compromised standards and that they allow for more flexibility than U.S. standards. The drivers of the standards-litigation and "buyer-beware" philosophies were also discussed. As countries have more litigation and place a bigger burden on investors and creditors to protect themselves, more specific standards are needed.

Teaching Skills vs. Knowledge
By far the highest-ranking educational issue was the perceived need to change accounting education so that more skills (and less memorization of facts) were taught. The skills that were discussed included such things as continuous learning, communication (reading, writing, listening, speaking), analytical, research, and flexibility (ability to adapt to change.) Delegates felt that in the fast-paced world of change, transferable skills were much more valuable to students than spending time on topics which will become outdated and which they will forget. The East-Asian delegates felt that Asians don't speak up enough, that Americans are not good team players, and that students in China need more professional judgment as opposed to such as strong compliance attitude. A comparison was made between an educational approach that provides students coverage of all standards and requires them to learn the standards (trained-monkey approach) and an approach that teaches students how to analyze standards and find answers when they don't have the answer memorized. It was concluded that the second approach is much superior and is what university education is supposed to be all about. We are not technical schools teaching a basic set of rule-based accounting. Jan Williams, president of the AAA, mentioned that in the U.S., he serves on a committee that is looking at the kinds of skills that should be taught on the CPA examination. He said the committee has identified 39 skills students should have and that they have grouped them into 7 categories, 3 of which will be covered on the CPA exam: (1) analytical skills, (2) research skills, and (3) communication skills. It was concluded that we cannot train everyone for everything, but that we are spending far too much time lecturing and not enough time focusing on skills. There was some concern expressed by delegates that professors are not trained to teach skills and that we must help them learn how to teach. The academics need the professionals to help them.

Follow-up to Meeting
It was determined that the proceedings of the first EAAR would be published on the AAA web page and copies would be sent to all delegates. It was also determined that the meeting was very useful and that annual meetings of the group (with the addition of Viet Nam and the Philippines) should be held. Four regions volunteered to host the next meeting: Thailand, China, Taiwan, and Malaysia. The group voted to hold the next meeting in Bangkok, Thailand in September of this year with a second follow-up meeting in the Peoples Republic of China in September of 2001. All the delegates felt that we should do everything possible to continue the dialogue started in this meeting and that, for future meetings, one or two more delegates per country should probably be invited.

Prepared by:
Steve Albrecht
February 16, 2000

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