Evaluation of the Consolidated Accounting Standards Relating to Theory and Practice

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The purpose of this study is to examine theoretical consistency and practical applicability focusing on the consolidated accounting standards. The convergence of accounting standards has been proceeding in the world. I focus on the conceptual framework, consolidated accounting standards, and financial reporting of listed companies in the European Union(EU) countries, Australia, and Japan. The conceptual framework of International Accounting Standards Board(IASB) adopted a group reporting entity concept and consolidated accounting standards had developed the control concept by the principles-based approach. I examined whether the consolidated accounting standard of IASB provides useful financial information to the information users by analysis of theoretical and empirical studies. The results of my study find that management discretion will be intervened into decision-making of the scope of consolidation because bright lines are not required in the control concept. However, the international convergence of consolidated accounting standards increases the earnings quality and the increasing the earnings quality bring to the value relevance of consolidated financial reporting.