Sabtu, 05 Mei 2012

CHAPTER 10 THE INTERNATIONAL ACCOUNTING I HARMONISAS


A.    Harmonization and Standardization Understanding Differences in Accounting Standards Applicable.
Harmonization" is a process to improve the compatibility (suitability) accounting practices by setting limits on how large these practices may vary. Harmonization of standards will be free of conflicts of logic and can improve the comparability (comparability) of financial information originating from various countries.
Efforts to harmonize accounting standards have been started long before the establishment of Accounting Standards Committee (International Accounting Standards Committee – IASC) in 1973. Harmonization efforts increased during the 1990s, the international accounting harmonization is now one of the important issues faced by the makers of accounting standards, capital market regulators, stock exchanges and those who prepare or use financial statements.
Sometimes people use the term harmonization and standardization as if both have the same meaning. However, contrary to the harmonization, standardization generally means the determination of a group of rigid rules and narrow and may even be the application of a single standard or rule in any situation. Standardization does not accommodate the differences between countries, and therefore more difficult to be implemented internationally. Harmonization is much more flexible and open; not use one size fits all approach, but to accommodate some of the differences and have experienced great progress internationally in recent years.
Comparability financial information is a concept that is more apparent than harmonization. Financial information generated from the system of accounting, disclosure and audit different or comparable if it has a similarity in the way in which users can compare the financial statements (at least in some aspects) without the need to familiarize themselves with more than one system.
Harmonization includes harmonization of accounting (1) accounting standards (which relates to the measurement and disclosure), (2) disclosures made ​​by public companies related to securities offerings and listing on the stock exchange, and (3) auditing standards.

B.     Explaining the Pros and Cons of International Harmonization of Accounting Standards.
International Harmonization Profit
Proponents say that the harmonization of international harmonization (even standardization) has many advantages. Sir Bryan Carsberg, former Secretary General of the IASC, wrote the following on the month of September 2000:
Cautious approach to analyze the desire for international harmonization shows that the costs and benefits vary from case to case. Those who use English as their mother may feel fortunate that English be the language that is widely used around the world. However, although it can be done, we can not obtain an agreement that the British or other common language should be used to replace the 6800 or more languages ​​currently used in the world. We recognize that language is the vehicle of an irreplaceable cultural and distinct culture that removal would cause huge losses in the field of literature and other cultural expressions.

How to harmonize taxation and social security system? Businesses will have considerable benefits in planning, systems and training costs, and so of harmonization. But this case shows us that the harmonization of other losses. Taxation and social security system has a strong influence on economic efficiency. Different systems have different effects. The ability to compare how the different approaches in different countries led countries capable of increasing their own system. Countries competing and competition forced them to adopt an efficient system through the operation of such market power. Approval of the tax system will be like the establishment of a cartel and would eliminate the benefit to be gained from inter-state competition.

A recent article also supports the existence of a "global GAAP" harmonized. Some of the benefits mentioned include:
·         a global capital market and investment capital can move across the world without any fuss. High-quality financial reporting standards that are used consistently throughout the world will improve the efficiency of capital allocation.
·         Investors can make better investment decisions; portfolio will be more diverse and less financial risk.
·         Companies can improve strategic decision-making process in the field of mergers and acquisitions.
·         The best ideas arising from the standards-making activity can be deployed in developing high-quality global standard.

Criticism of the International Standards
Internationalization of accounting standards is also drawn criticism. In early 1971 (before the establishment of IASC), some argue that the determination of international standards is a very simple solution for complex problems. At the international standard of doubt can be flexible to overcome differences in background, tradition, and national economic environment, some people argue that this will be a challenge that is politically unacceptable to national sovereignty.
Some other observers argue that the international accounting standard-setting is essentially a tactic of the accounting firm that provides accounting services to expand its market internationally. Multinational firm is said to be critical in the implementation of international standards on national environmental standards which are to be seen much more different and complex. Also, because the international financial institutions and international markets precision to use international standards, only the large international accounting firms are able to meet this demand.
Furthermore, it feared that the adoption of international standards will lead to "standards overload." Companies have to respond to pressure the composition of national, social, political, and economic growing and increasingly prepared to meet the additional international regulations are complicated and costly. Related argument is the concern of national politics often influence the accounting standards and that influence international politics will again lead to the inevitable compromise of accounting standards.
However, some argue that currently there are international capital markets are well developed which has grown rapidly in recent years without a Global GAAP. One commentator argues:
Harmonization of international accounting principles is unlikely to materialize. Too many national groups have different interests to defend embedded their own standards and practices that have evolved from a historical perspective and is very different. There is no single dominant party which is strong in the harmonization proposal. No competent authorities have the ability to define Global GAAP adoption .... I would argue that Global GAAP difficult to achieve because of institutional barriers in the standard setting process and therefore there is no real need to encourage the growth of international capital markets are healthy.

C.    Understanding the Meaning of Reconciliation and Recognition of Joint (reciprocal) of the Accounting Standards Difference.
Some proponents argue that international harmonization will help to solve the problems associated with cross-border financial report of the State.
Two other approaches are proposed as a possible solution is used to solve problems related to the content of cross-border financial statements: (1) reconciliation, and (2) mutual recognition (which is also referred to as "reciprocity" / reciprocity). Through reconciliation, a foreign firm can prepare financial statements using accounting standards the State of origin, but must provide a reconciliation between the accounting measures (such as net income and shareholders' equity) in the State of origin and in countries where financial statements are reported. For example, the U.S. Capital Market Commission (SEC) allows foreign companies registered to use the principles of accounting other than U.S. GAAP basis financial statements are presented. However, the SEC also requires disclosure of the reconciliation.
Mutual recognition occurs when the regulator outside the country of origin to receive the financial statements of foreign companies which are based on the principles of country of origin. For example, the London Stock Exchange accept the financial report based on U.S. GAAP for the reporting made ​​by foreign companies. Reciprocity does not increase the cross-country comparisons of financial statements and can lead to "unequal playing field" which allows foreign companies to apply less stringent standards than those applied to domestic firms.

Evaluation
National differences in the underlying factors that lead to differences in accounting, disclosure and audit practices increasingly narrow as the capital and product markets become increasingly international. Many companies have adopted IFRS voluntarily. These companies see the economic benefits of adopting the accounting and disclosure standards are internationally credible in the eyes. Expand the company's voluntary disclosure to be made ​​in accordance with IFRS to answer the demand from institutional investors and other users of financial statements. The success of harmonization efforts by the international organization can demonstrate that harmonization occurs as a natural response to economic forces.

Application of International Standards
International accounting standards are used as a result of (a) an international treaty or a politician, (b) voluntary compliance (or being pushed in a professional), or (c) a decision by the national accounting standards-making body. Implementation of EU directives relating to the accounting originated from an international political agreement. The more the number of companies decided that the best interests of companies to use IFRS, although not required. Many states today have allowed the company to base their financial statements in IFRS and some countries require.
Efforts of other international standards in accounting is essentially voluntary. Those standards will be accepted or not depends on the people who use the accounting standards. Current international standards and national standards are not the same, do not be a problem, but when these two different standards, national standards should be the first reference (to have the advantage). For example, multinational companies may use international standards as well as receive and use the national standards. When companies megadopsi more than one set of accounting standards, a result which is that they often have to be borne must publish a set of reports for each set of accounting standards which they adopt. This is done in the context of convergence of national accounting standards and international accounting standards.

D.    Identifying Organizations to Promote Harmonization and has a important role in Setting International Accounting Standards.
Six organizations have become a major player in the determination of the international accounting standards and in promoting international harmonization of accounting:
1.      International Accounting Standards Board (IASB)
International Accounting Standards Board (IASB), formerly the IASC, the standards-making body of an independent private sector was established in 1973 by professional accounting organizations in nine countries and restructured in 2001. Before the restructuring, the IASC issued 41 International Accounting Standards (IAS) and a Framework for the Preparation and Presentation of Financial Statements. IASB objectives are:
a.       To develop in the public interest, a set of global accounting standards are of high quality, understandable and can be applied which requires high quality information, transparent, and comparable in the financial statements and other financial reporting to help participants in capital markets and other users in making economic decisions.
b.      To encourage the use and application of these standards are strict.
c.       To bring the convergence of national accounting standards and International Accounting Standards and International Financial Reporting Standards in the direction of high-quality solutions.

The core standards of IASC and IOSCO  Agreement
IASB (and formerly IASC) has sought to develop accounting standards that will be received by the securities regulatory bodies around the world. As part of that effort, the IASC adopted a work plan to produce a core set of comprehensive high-quality standards. In July 1995 the Technical Committee of IOSCO his approval to the plan as follows:
Council (IASC) has developed a work plan approved by the Technical Committee which, if successfully completed will result in IAS comprising a comprehensive set of core standards. The completion of this comprehensive standard that is acceptable to the Technical Committee (IOSCO) allows approval of the Technical Committee for the use of IAS in the collection of capital and the needs of cross-border listing of shares across global markets. IOSCO approved IAS 7, Statement of Cash Flows, and has given an indication to the IASC that 14 of the International Accounting Standards that exist now do not require additional improvements, provided that other standards are successfully completed.

Structure of the IASB's New
IASB Council established a Working Group on Strategies (Strategy Working Party, SWP), which considers how should the strategy and structure of the IASC after completing the program of work of this standard. In September 1988, SWP approved a discussion paper "Shaping IASC for the Future" to encourage and focus discussion. In November 1999 the IASC Board unanimously approved a resolution supporting the proposed new structure that essentially are: (1) The IASC will be established as an independent organization, (2) the organization will consist of two main bodies, and the Trusteeship Council, and the Interpretation Committee fixed (now known as International Financial Reporting Interpretation Committee) and the standards Advisory Council, and (3) the trust will appoint board members, conduct surveillance and gather the necessary funds, while the board has sole responsibility for setting accounting standards.
Restructured IASB met for the first time in April 2001. IASB, after reorganization, will include the following entities.Top of Form
1.         Guardian Agency. IASB has 19 trustee: six from North America, six from Europe, four from the Asia / Pacific, and three from other regions (depending on the determination of the overall geographical balance). Trustee agency lifted a board member, International Financial Reporting Interpretation Committee and Standards Advisory Council. The Trust is responsible for collecting funds and to monitor and megevaluasi priorities and IASB operations.
2.         Council IASB. Council to establish and improve standards of financial accounting and reporting efforts. Council comprises 14 members, appointed by the Mayor to give "the best available combination of technical expertise and background of international business experience and relevant market conditions." All board members are salaried employees of the IASB: 12 ​​people working full time and two people can work part time. Seven of the members have full time responsibility for developing relationships with national standards making body. (The goal is to build partnerships with national bodies because everything works together to achieve convergence of accounting standards around the world). The members are appointed for a period of five years, and can be renewed only once.
3.      Standards Advisory Council. Standards Advisory Board, appointed by the Trustees, consisting of "thirty or more members, which has a geographical and professional backgrounds are different, who are appointed to three-year renewable." Standards Advisory Board generally meets three times each year. Responsibilities is to provide views on the council "organizations and individuals within the council on major standard-setting projects" and to provide "other counsel" to the board or a trust.
4.      International Financial Reporting Interpretation Committee (IFRIC). IFRIC comprises 12 members appointed by the trust. IFRIC interpret "the application of International Accounting Standards and International Financial Reporting Standards in the context of the IASB Framework," issued a draft interpretation and evaluate the comments above and obtain board approval for the final interpretation.

IASB to follow the process of setting accounting standards. For each standard to be established, the council published a "Draft Statement of Principles" or other discussion document containing a range of possible provisions in these standards as well as arguments in favor or against one another. Furthermore, the Board issued an "Exposure Draft" to obtain public comment, and then examine the arguments presented during the process of providing comments before settling on the final form of the standard. An Exposure Draft and final standards will be issued if eight of the members of the board gives approval to do so.

Recognition and support for the IASB
International Financial Reporting Standards has now been widely accepted around the world. For example, the standards (1) is used by many countries as a basic national accounting terms, (2) is used as an international benchmark in most major industrial countries and emerging market countries to make his own standards, (3) accepted by many stock exchanges and regulatory bodies that allow foreign or domestic companies to submit financial statements prepared under IFRS, and (4) is recognized by the European Commission and other supranational bodies. In 1995, the European Commission approved the IFRS. Rather than amend the existing directive, the EC determined that the EU should be in line with efforts to IASC / IASB and IOSCO that led to the international harmonization of accounting standards more widely. Almost all EU companies whose shares are listed on leading stock exchanges have to use IFRS in preparing financial statements no later than 2005.

U.S. Capital Market Commission's response to the IFRS
The SEC did not accept IFRS as the basis of the submitted financial statements by listed companies shares on U.S. stock exchanges. However, the SEC is in the increasing pressure to make the U.S. capital markets more accessible to non-US makers report, SEC has expressed support for the purpose of the IASB to develop accounting standards used in the financial statements used in cross-border offerings. However, the SEC also stated that three conditions must be met by the company before the SEC can accept IASB standards. By declaring these three conditions (in the following list), the SEC has shown great flexibility in terms of how far to accept the use of IFRS by foreign issuers.
1.       Standards must include the core accounting provisions that determine a comprehensive basis of accounting and generally accepted.
2.       Standards should be high quality, resulting in comparability and transparency, and provide full disclosure.
3.       Standards must be interpreted and applied strictly.

Comparison between IFRS and Accounting Principles Content Other Comprehensive
Various analyzes have been compared with the IFRS accounting principles other content. There are several motivations for this analysis. The regulators and standard makers in most countries want to know the level of concordance between the State of origin and IFRS principles, the extent to which the principles in the State of origin should be revised to be in accordance with IFRS or the extent to which IFRS is acceptable to use the country of origin as a reference standard.
The U.S. Financial Accounting Standards Board (FASB) has initiated a major project that compares the IAS (time) with the U.S. standard in 1995, and published a detailed report in 1996 and 1999. Project Comparison between IASC and U.S. GAAP FASB is part of a plan for international activities, which include the promotion of international comparability of accounting standards. The main objective of this study is to provide information in assessing the acceptability of IAS for the registration of securities in the United States.

2.       EUROPEAN UNION (EUROPEAN UNION-EU)
Treaty of Rome established the EU in 1957, with the aim to harmonize the legal and economic systems of States members. Per month of May 2004, EU comprises 25 members (Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and England. In contrast to the IASB has no power to require the implementation of accounting standards, the European Commission (EC, the EU ruling body) has full authority over the accounting directive to all member countries.
One goal is to achieve the integration of EU financial markets of Europe. To achieve this goal, the EC has introduced a directive and take a huge initiative to achieve a single market for:
·         Acquisition of capital within the EU;
·         Creating a common legal framework for securities and derivatives markets are integrated;
·         Achieve a single set of accounting standards for companies whose shares are listed.

Of the few that exist, many people who consider that the Directive Fourth, Seventh, and Eighth is the most historic and most important substantive.

Directive Fourth, Seventh and Eighth
Fourth EU directive, issued in the year 1978, a single set of accounting rules of the most extensive and comprehensive in the basic framework of the EU. Both public and private companies that exceed a certain minimum size criteria should be obeyed. Provisions of the Fourth Directive applies to the accounts of individual companies and include the rules of the form of financial statements, disclosure provisions, and valuation rules. Fourth directive also requires financial statements to be audited. The aim is to ensure that European companies to disclose information that is comparable and equivalent in its financial statements.
Seventh directive, issued in 1983, addresses issues consolidated financial statements. At that time, the consolidated financial statements are the exception and not a liability. Consolidation is normal in Ireland, the Netherlands, and Britain, while Germany requires consolidation (just) above the existing subsidiaries in Germany. However, consolidation is rare in other parts of Europe. Seventh Directives require the consolidation of business groups in the amount above a certain size, determines the disclosure in the notes and the directors report, and it does require an audit. Because of this consolidation as a relatively new legal provisions, Member States are given broad leeway and a lot of options to enter the Seventh Directives into national law firms of each country.
Eighth Directive, issued in 1984, discussed various aspects of professional qualifications that are authorized to carry out the audit as required by law (mandatory audit). Basically, this directive determines the minimum qualifications of auditors. Eighth directive is not related to mutual recognition of auditors in an EU country other EU countries. This directive also does not discuss the establishment of professional freedom among EU countries. Training must be completed under the supervision of an auditor who has been appointed. There should be independence, but the Eighth Directive gives discretionary powers to the EU countries to determine the conditions of independence.

Is Harmonization efforts have so far?
Fourth and Seventh Directives have dramastis influence over financial reporting across the EU, namely bringing the accounting in all members of the EU member States to stage a good uniformity and relatively adequate. Directive is to harmonize the presentation of profit and loss account (income statement) and balance sheet and increase the minimum additional information in the record, specifically the influence of tax rules on disclosure of the reported results. This directive to accelerate the development of accounting in many EU countries and also affect the accounting in the State of non-EU neighbors.
The success of harmonization efforts at the EU-20 to a bad end is still in question. Some have questioned whether the accounting harmonization directive complies with the intent at the time the directive was issued.
Karel van Hulle, Head of Accounting and Audit Unit of the European Commission, explains that there are some difficulties as follows:

It must be admitted that the appeal had been achieved through the harmonization process is far from perfect. First of all, the main accounting directives contain a minimum of rules. This directive not discuss a number of accounting issues that are important. Second, the provision of the Directive is not always interpreted in the same manner by the Member States. A number of problems associated with interpretation of the Directive has been discussed by the Contracts Committee for Accounting Directives. Other questions that remain unanswered. Very difficult to reach agreement on these questions because the text of the Directive is to leave some space interpretation of the Member States are not prepared to compromise on this interpretation. Common words of some provisions in the Accounting Directives are important reasons why the European Commission has not brought some of these questions before the European Court for final decision.

3.       International Organization of the Capital Market Commission (IOSCO)
International Organization of the Capital Market Commission (The International Organization of Securities Commissions-IOSCO) consists of a number of regulatory bodies of capital markets in over 100 countries. According to the IOSCO budget bookkeeping:

Capital market authorities decided to work together in ensuring better market regulation, both at domestic and international, to maintain a fair marketplace, efficient and healthy:
·         To exchange information with each other based on their experience to encourage the development of the domestic market.
·         Uniting efforts to create standards and effective surveillance of international securities transactions.
·         Provide assistance together to ensure market integrity through the application of strict standards and effective enforcement against offenses.

IOSCO has worked extensively in international disclosure and accounting standards to facilitate the ability of firms to raise capital efficiently through the global securities markets. In 1998, IOSCO published a set of non-financial disclosure standards, which in turn allows the company to use the same one prospectus to offer shares or listed on one of the world's major capital markets.
An IOSCO technical committee to focus on multinational disclosure and accounting. Its main purpose is to facilitate a process that can be used by publishers world-class shares to raise capital in the most effective and efficient at all that there is a demand for capital market investors. The Committee is working with the IASB, among others, by providing input to the IASB projects. A working group completed the study in 1998 to recommend that facilitate multinational equity offerings. The report recommends "that the regulator can be encouraged, where consistent with its legal mandate and objectives of investor protection, to facilitate the use of a single disclosure document, whether through harmonization of standards, mutual or otherwise."

4.       International Federation of Accountants (IFAC)
IFAC is a world-class organization that has 159 member organizations in 118 countries, representing more than 2.5 million accountants. Founded in 1977, IFAC's mission is "to support the development of the accountancy profession with harmonized standards so that the accountant Dapa provide consistently high quality services in the public interest."
IFAC Council, which meets every 2.5 years to have a representative from each IFAC member organizations. The Assembly has a council, composed of individuals who hail from 18 countries, elected for 2.5 years. This council, which meets two times each year, setting policy and overseeing IFAC operations. Daily administration conducted by the IFAC Secretariat, located in New York, which has a staff of accounting professionals from around the world.
Most of the professional work done by committee remains IFAC. At the time of this writing, the committee remains consist of:
1.       Auditing Standards Board and the international insurance
2.       Suitability
3.       Education
4.       Ethics
5.       Professional Accountants in Business
6.       Public secto
7.       The International Auditors

Sometimes IFAC Council appoint a special task force to discuss important issues. At the end of 2002 there were two task forces:
·         Rebuilding Public Confidence in Financial Reporting (Credibility)
·         Small and Medium Practices

Auditing and Assurance Standards Board International (International Auditing and Assurance Standards Board) issued in the IFAC International Auditing Standards (International Standards on Auditing-ISA), which consists of the following groups:
·         The Introduction
·         Responsibility
·         Planning
·         Internal Control
·         Audit Evidence
·         Use of the Work of Others
·         Audit Conclusions and Reporting
·         Special Area
·         Related Services

IFAC has had a close relationship with other international organizations, such as the IASB and IOSCO. The financial statements of companies audited by the increasing number of compliance by IFAC International Auditing Standards.




5.       Intergovernmental Working Group of the United Nations expert in the International Standards for Accounting and Reporting (Isar)
Isar was formed in 1982 and is the only inter-governmental working group to discuss accounting and auditing at the corporate level. Particular mandate is to encourage the harmonization of national accounting standards for companies. Isar realize this mandate through discussion and adoption of best practices, including those recommended by the IASB. Isar is an early supporter of the environment reporting and a number of recent initiatives focused on corporate governance and accounting for small and medium sized companies. Isar also has conducted technical assistance projects in several areas, such as accounting reform and retraining at age Federation, Azerbaijan and Uzbekistan, as well as designing and developing distance learning programs in accounting for African countries that speak French.

6.       Organization for Economic Cooperation and Development (OECD)
OECD is an international organization advanced industrial countries-oriented market economy. Activities carried out by the implementing agency, the Council of the OECD, and a network consisting of 200 committees and working groups. Publication called Financial Market Trends, published two times a year, discussing trends and prospects in international and domestic financial markets that exist in the major OECD regions. Description and analysis of the structure and rules of the securities market is often published as a special publication of the OECD or in the Financial Market Trends. With a membership consisting of the advanced industrial countries is greater, the OECD is often a formidable opponent against the other bodies (such as the United Nations or the International Confederation of Free Trade Union) which has a tendency to perform acts contrary to the interests of member-members.

E.       Describe a new approach to the European Union and relate it to the European financial market integration.
In 1995 the EC adopted a new approach towards harmonization of accounting, known as the New Accounting Strategy. Commission announced that the EU needs to move precisely in order to provide a clear signal that companies are trying to do the recording in the United States and other world markets will still be able to survive in the EU accounting framework. EC also stressed that the EU strengthens its commitment to the international standard-setting process, which offers the most efficient and quick solutions to problems faced by companies operating on an international scale.
In 2000, the EC adopted a new financial reporting strategy. The interesting thing about this strategy is the proposed rule that all EU companies listed in regulated markets, including banks, insurance companies and SME (small and medium sized enterprises), prepare consolidated accounts in accordance with IFRS. EU Parliament approved this proposal and the EU Council adopted the necessary legislation. This regulation affects approximately 7000 listed EU companies (compared with nearly 300 listed EU companies to use IFRS in 2001). This proposal is designed "to encourage cross-border trade in financial services and thereby create a market that is completely integrated, with the help of making financial information more transparent and can be easily compared."
In order to be legally binding, IFRS must be adopted by the EC. Which is included in the above rule is "endorsement mechanism" and the formation of two layers of settings Committee of Accountancy (Accounting Regulatory Committee-ARC), an EU body with representatives from Member States. To an IFRS will first technical examination and opinion by the Financial Reporting Advisory Group Settings Europe (European Financial Reporting Advisory Group-EFRAG), a private sector organization comprised of auditors, compilers of financial statements, national standards makers and other interested parties other. Then the ARC to recommend whether IFRS can (or can not) based on whether IFRS is adopted in accordance with the European directive in the public interest and conducive to European countries. Ratification of the EC end of this process.
Endorsement of IFRS by the EC began in 2003 through the adoption of all IASB standards and interpretations that exist (except for IAS 32 and 39, which is being revised). Fourth and Seventh Directives also amended in 2003 to eliminate inconsistencies between the old directive with IFRS.
Finally, there have been developments that are intended to strengthen enforcement of IFRS in Europe. In 2003, the Committee of European Securities Regulators adopt Standard 1 on Financial Information. This standard contains 21 principles which aimed to develop and implement a similar approach in the enforcement of IFRS throughout the EU.


Referensi:
  1. Choi, Frederick D.S., and Gerhard D. Mueller, 2005., Akuntansi Internasional – Buku 1, Edisi 5., Salemba Empat, Jakarta.
  2. Choi, Frederick D.S., and Gerhard D. Mueller, 2005., Akuntansi Internasional – Buku 2, Edisi 5., Salemba Empat, Jakarta.


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