Team “IFRS Adoption: Compliance and Enforcement” Mid-Term Review February 2009, Valencia

1. Team “IFRS Adoption: Compliance and Enforcement”Mid-Term ReviewFebruary 2009, Valencia Markus Hitz (ER Tilburg), Elena de las Heras (exESR Porto), Liina Tamm (ESR Paris).

2. Enforcement and compliance Enforcement system Compliance (Accounting Quality) Public Auditors Enforcement Agency Private Shareholders, creditors Reporting entity (managers) determines influences

3. Regulatory Framework • Regulation (EC) No 1606/2002, Par. 16: requires member states to ‘take appropriate measures to ensure compliance with international accounting standards’ → i.e. to install effective mechanisms for the enforcement of IFRS accounting standards. • Coordinating and supervisory role for the Committee of European Securities Regulators (CESR), subcommittee on enforcement: • CESR “Standard No. 1 on Financial Information: Enforcement of Standards on Financial Information in Europe” 2003 • CESR, “Standard No 2 on Financial Information: Coordination of Enforcement Activities” 2004: • European database on enforcement issues • European Enforcers Coordination Sessions (EECS) • CESR 2007 review: diversity of enforcement mechanisms

4. Research on the role of enforcement • Recent research demonstrates that “law on the books”, i.e. the accounting standards per se, do not alone determine accounting quality and economic effects • “Reporting incentives perspective” • One major factor in determination of accounting quality is quality of enforcement: • Hope (JAR 2003) • Daske et al. (JAR 2008) • (…) Enforcement of IFRS matters!

5. Markus Hitz Home institution: University of Cologne (Germany) INTACCT institution: ER Tilburg (Netherlands)

6. Background Markus Hitz 10/2008 – 01/2009 INTACCT ER, Tilburg University Since 2/2005 Post doctoral researcher, University of Cologne 02/2005 PH.D. in business administration (accounting): “The decision usefulness of fair value accounting – a theoretical perspective” 01/1999 Diploma in Business Administration, University of Munich Post-doctoral supervisor: Christoph Kuhner (University of Cologne) INTACCT supervisor: Willem Bujink (Tilburg University)

7. Experience Markus Hitz Tilburg • Research-oriented atmosphere • Weekly research seminars • Departmental structure INTACCT • Cyprus seminar • Lancaster University • Cooperation and communication

8. Output Markus Hitz Research: • “Enforcement of IFRS: Determinants and Consequences of Error Announcements by the German Financial Reporting Enforcement Panel (FREP)” (with Jürgen Ernstberger) • “Press release disclosure of ‘pro forma’ earnings metrics by large German corporations – empirical evidence and impact of regulatory recommendations”, under review (2nd round), Accounting in Europe • “Relevance of academic research and researchers’ role in the IASB’sfinancial reporting standard setting”, forthcoming, Abacus (with Rolf Uwe Fülbier and Thorsten Sellhorn) Other: • INTACCT database on EU country-specific institutions and regulations

9. Future plans Markus Hitz Research: • Joint project with Ulf Brüggemann (ESR, Lancaster) and Thorsten Sellhorn (WHU Koblenz) on “Mandatory Adoption of IFRS – Empirical Evidence and unintended consequences” • Other current project on pro forma earnings disclosures, management compensation Career: • Post doctoral degree (“Habilitation”) 2009 • Job Market

10. Elena de las Heras Cristóbal Home institution: Autonomous University of Madrid (SPAIN) INTACCT institution: Porto University (PORTUGAL)

11. Background Elena de las Heras Nowadays University position at UAM 05/2007 07/2008 INTACCT ESR, Porto University 09/2005 06/2006 Visiting PhD student, Lancaster University From 09/2004 PhD student, UAM 06/2005 Business Administration Degree 01/2003 12/2003 Internship as an Auditor in Deloitte Doctoral supervisor: Leandro Cañibano (UAM INTACCT supervisor: José Moreira (Porto University)

12. Experience Elena de las Heras Porto: University and City • Database and Econometric software • Nice Office & Good Colleagues • Very nice City INTACCT • Research trainings, seminars & congress around Europe • Contacts around Europe (INTACCT members) • Open minded and new experiences

13. Output Elena de las Heras Research: • “The Effect of the Spanish Audit Act (44/2002) on the audit quality” • “Institutional factors of the Accounting-Policy Choice under IFRS/IAS Other: • INTACCT database on EU enforcement • ESR/ER group projects • Seminar and Conferences

14. Future plans Elena de las Heras • Future Research on IFRS • Publishing the two researcher papers already written • Cooperation with INTACCT members (research & mobility) • University Career: Recognised University Qualification

15. Lina Tamm Home institution: Turku School of Economics (Finland) INTACCT institution: HEC Paris Management School (France)

16. Background Liina Tamm Since 06/2008 INTACCT ESR, HEC Paris Management School Since 01/2008 PhD Studies, Turku School of Economics 2006 - 2007 MSc in Accounting, Erasmus University Rotterdam 2004 - 2007 Ernst & Young Baltic AS (Estonia) PhD Thesis: “Auditing quality and accounting quality” PhD supervisor: Hannu Schadewitz (Turku School of Economics) INTACCT supervisors: Herve Stolowy, Thomas Jeanjean and Cedric Lesage (HEC Paris Management School)

17. Experience Liina Tamm HEC Paris Management School: • PhD and Research Seminars • Excellent learning environment INTACCT: • Seminars and workshops • Knowledge and experience sharing • Connections

18. Output Liina Tamm Research: • Work in process : “Audit quality, auditor’s regulations environment in EU and the interaction with accounting quality” Other Activities: • ESR/ER group projects

19. Future Plans Liina Tamm Research: • Finish current project • New project on accounting quality After INTACCT (06/2009)  continue co-operation with INTACCT members; seminars, courses on core competencies in research methodologies; finish PhD; job market