Convergence of Accounting Standards to International Standards and Earnings Management in Brazilian Companies

Convergence of Accounting Standards to International Standards and Earnings Management in Brazilian Companies

Caio Eduardo Silva Mulatinho (Federal Rural University of Pernambuco, Brazil), Dimmitre Morant Vieira Gonçalves Pereira (Federal University of Paraíba, Brazil), José Augusto de Medeiros Monteiro (Federal University of Alagoas, Brazil), Laura Araújo Leal (Group Moura, Brazil), Marcleide Maria Macêdo Pederneiras (Federal University of Paraíba, Brazil), Marcelo Victor José de Barros Ribeiro (Federal University of Pernambuco, Brazil) and Rodrigo G. Amaro (Federal Rural University of Pernambuco, Brazil)
DOI: 10.4018/978-1-5225-7817-8.ch012

Abstract

This chapter sought to highlight the main challenges of the initial adoption of accounting standards converged to international standards applied to public companies and treasury-dependent companies and how the results of economic agents in public and private companies in Brazil are managed. Relevant legislation, norms, pronouncements, interpretations, and guidelines of competent bodies were analyzed through bibliographical and documentary research. The results demonstrated that between the two processes of accounting convergence to which such entities must submit, there are conflicts of terms and technical accounting procedures to assist these entities to the process of accounting convergence. Regarding earnings management, it was found that there is an earnings management in both sectors; however, the public sector reaches a high number of citizens, while the private sector is limited to stakeholders; however, both sectors, in some cases, multiplicity of components of the public sector, resembles the private sector.
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Accounting Convergence

With the intensification of operations in global level after the second World War, due to regulatory differences in accounting between countries, companies now have the need to reconcile the different accounting information elaborated in the different countries where they operate with the accounting standards adopted by the headquarters of the controlling company (Schroede, Clark, & Cathey, 2005).

Key Terms in this Chapter

Intervention: It is mediation as a preponderant factor in solving problems.

Deliberate: It is the act of deciding through reflexive actions.

Convergence: Point of agreement between several related objectives.

Manipulation: Specific control of actions and results within public and/or private organizations.

Earnings Management: Act to manage actions that seek results confuences.

Public Sector: A certain part of the state that performs the work of delivering goods and services to the population that contributes its taxes.

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