Conservatism and Accounting Assymetry in Internatioal Accounting
The paper surveys relevant accounting methods dealing with information asymmetry, uncertainties, and harmonization implications on less developed capital markets. The quality of accounting information is related to more aggressive or more conservative accounting policy approaches. A strong impact is assumed to be given by following factors: low market liquidity, underestimation of bad debt, pre-mature revenue recognition, transfers of risks and ownerships ; accounting oriented on tax purposes, introduction of maximum allowable depreciation rates, unadjusted differences in employees’ benefits relevant to labor legislation ; non recognition of contingency reserves for long term litigations. We draw special attention to recent International Financial Reporting Standards (IFRS) convergence to United States Generally Accepted Accounting Principles (US GAAPs), especially in harmonizing with the Financial Accounting Standards Boards statement (FAS) 130: Reporting comprehensive income (in revised IAS 1) and FAS 157 Fair value measurement. A Critical Accounting Policy Choices Index for Bosnia and Herzegowina (CAPCBIH) resulted in a very poor performance presenting significant gap in recognizing environment specifics. Furthermore, the importance of revised International Standards on Assurance Engagements (ISAE) and re-enforced role of auditors in assessing relevance of management estimates is stressed.