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International Financial Reporting A Comparative
Approach 3rd Edition Pauline Weetman Digital Instant
Download
Author(s): Pauline Weetman, Paul Gordon, Clare Roberts
ISBN(s): 0273681184
Edition: 3
File Details: PDF, 6.69 MB
Year: 2005
Language: english
Fully updated to reflect the ongoing changes in international accounting standards, International Financial
Third Edition
Reporting contrasts the processes of convergence on global harmonisation with the continuing causes of
national diversity in accounting and accountability. It analyses the work of the International Accounting

A Comparative Approach
International Financial Reporting
Standards Board in setting internationally applied standards (IFRS) of measurement and disclosure.

Key Features
• Chapters on research in international
accounting, commended by users of previous
editions.
• Coverage of use of accounting information by
global market participants.
• Includes examples of accounting practices
drawn from the published accounts and
reports of multinational companies such as New to this edition
Heineken, Kingfisher, Kodak and Wal-Mart. • Increased focus on accountability in
• A chapter on ‘issues in multinational corporate reporting, particularly the
accounting’ provides a comparative discussion impact of the Sarbanes-Oxley Act.
of national practices in relation to IFRS. • Focus on the whole annual report
including narrative reporting.
• The development of financial
reporting practices across Europe is
integrated in one chapter with
International Financial Reporting: A
particular reference to Poland as the
Comparative Approach is ideal for advanced
largest economy entering the EU in
undergraduate and postgraduate students of
the 2004 enlargement.
accounting and international business,
studying in any country throughout the
world.

Clare Roberts BSc MSc PhD is Professor of Accounting at the University of

Aberdeen. She has held permanent teaching positions in the UK at Glasgow and
Exeter Universities, and visiting positions in the US at Texas A & M University and
the University of California Santa Barbara, and in Australia at Newcastle University,
New South Wales.
Pauline Weetman BA (Oxon) BSc PhD CA is Professor of Accounting at the
ROBERTS
University of Strathclyde and was formerly Dean of Faculty and Professor of
Accounting at Heriot-Watt University. She received the British Accounting
WEETMAN
Association’s Distinguished Academic Award in 2005.
GORDON
Paul Gordon BA MA FCA is Lecturer in Accounting and Finance at Heriot-Watt
University, having held positions at Glasgow, Aberdeen and Wales (Bangor).

www.pearson-books.com
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IFR_A01.QXD 20/11/2005 05:42 PM Page i

International Financial Reporting

IFR_A01.QXD 20/11/2005 05:42 PM Page ii

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IFR_A01.QXD 20/11/2005 05:42 PM Page iii

Third Edition

International Financial Reporting

A Comparative Approach

CLARE ROBERTS
PAULINE WEETMAN
PAUL GORDON
IFR_A01.QXD 20/11/2005 05:42 PM Page iv

Pearson Education Limited

Edinburgh Gate
Harlow
Essex CM20 2JE
England

and Associated Companies throughout the world

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First published in Great Britain by Financial Times Professional Limited 1998

Second edition 2002

Third edition 2005

© Pearson Professional Limited 1998

© Pearson Education 2002, 2005

The rights of Clare Roberts, Pauline Weetman and Paul Gordon to be

identified as authors of this work have been asserted by them in accordance
with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in

a retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without either the prior
written permission of the Publishers or a licence permitting restricted copying
in the United Kingdom issued by the Copyright Licensing Agency Ltd,
90 Tottenham Court Road, London W1T 4LP.

ISBN-10: 0-273-68118-4
ISBN-13: 978-0-273-68118-2

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

10 9 8 7 6 5 4 3 2
09 08 07 06 05

Typeset by 68 in 9/12 Stone.

Printed by Ashford Colour Press Ltd., Gosport.

The publisher’s policy is to use paper manufactured from sustainable forests.

IFR_A01.QXD 20/11/2005 05:42 PM Page v

Contents

Preface xii
Acknowledgements xvii
Publisher’s acknowledgements xix
Plan of the book xxi

Part 1 SETTING AND REGULATING INTERNATIONAL FINANCIAL

REPORTING STANDARDS

Introduction to Part 1 3

1 Developing global accounting standards 5

Learning outcomes 6
1.1 Introduction 6
1.2 Global accounting standards: support and opposition 6
1.3 Organizations supporting international cooperation 11
1.4 The IASCF and the IASB 16
1.5 Operation of the IASB 19
1.6 The IASB standards 21
1.7 Changing styles of setting international standards 25
1.8 IASB framework 32
1.9 Multinational companies 37
Summary and conclusions 45
Questions 46
References and further reading 47

2 International financial reporting standards 50

Learning outcomes 51
2.1 Introduction 51
2.2 Disclosure and presentation 52
2.3 Asset recognition and measurement 63
2.4 Liability recognition and measurement 70
2.5 Financial instruments: assets and liabilities 75
2.6 Recognition of economic activity 79
2.7 Measurement of inflation 83
2.8 Group accounting 84
2.9 Specialist organizations and industries 90
v
IFR_A01.QXD 20/11/2005 05:42 PM Page vi

Contents

Summary and conclusions 91

Questions 92
References and further reading 93

3 Confidence and assurance 94

Learning outcomes 95
3.1 Introduction 95
3.2 Improving the credibility of financial reporting 96
3.3 Auditing and assurance 102
3.4 Corporate governance and financial reporting 108
3.5 Corporate Social Responsibility 115
3.6 Regulating compliance 120
3.7 A research perspective 124
Summary and conclusions 127
Case study 3.1 Corporate governance: Germany 128
Case study 3.2 Corporate governance: Japan 129
Case study 3.3 Corporate governance: UK 131
Case study 3.4 Corporate governance: US 132
Case study 3.5 Corporate governance: Kenya 133
Case study 3.6 Corporate governance: Poland 134
Questions 135
References and further reading 136

Part 2 CONTRASTING HARMONIZATION AND DIVERSITY

ACROSS FINANCIAL REPORTING SYSTEMS

Introduction to Part 2 141

4 Institutional and external influences on accounting

rules and practices 143
Learning outcomes 144
4.1 Introduction 144
4.2 Factors influencing the development of accounting systems 145
4.3 The political and economic system 146
4.4 The legal system 150
4.5 The taxation system 152
4.6 The corporate financing system 154
4.7 The accounting profession 159
4.8 Other influences 161
Summary and conclusions 164
Case study 4.1 Accounting in Turkey: external influences 164
Case study 4.2 Accounting in ASEAN: external influences 165
Questions 166
References and further reading 168

vi
IFR_A01.QXD 20/11/2005 05:42 PM Page vii

Contents

5 Cultural influences on accounting rules and practices 170

Learning outcomes 170
5.1 Introduction 171
5.2 Defining culture 171
5.3 Culture and business 180
5.4 Culture and accounting 183
5.5 Is culture an important influence on accounting? 187
Summary and conclusions 189
Case study 5.1 Accounting for related parties in the UK and Tanzania 190
Questions 193
References and further reading 194

6 The classification of accounting systems 196

Learning outcomes 196
6.1 Introduction 197
6.2 Reasons for classifying accounting systems 198
6.3 Types of classification schemes 198
6.4 Inductive classifications of accounting systems 203
6.5 Deductive classifications of accounting systems 210
6.6 What conclusions can be drawn? 220
Summary and conclusions 221
Questions 222
References and further reading 223

7 Measuring harmonization and diversity 225

Learning outcomes 226
7.1 Introduction 226
7.2 Sources of differences between accounting systems 226
7.3 The importance of increasing harmonization in accounting
systems 229
7.4 Similarities and differences in reported figures 231
7.5 Similarities and differences in the accounting methods used 238
7.6 Similarities and differences in information disclosure 247
7.7 Good news, bad news and earnings ‘conservatism’ 255
Summary and conclusions 260
Case study 7.1 Daimler–Benz: Reconciliation of earnings from German
to US GAAP 260
Case study 7.2 A simulation study of UK and French accounting 261
Questions 263
References and further reading 264
Appendix 7.1 A further explanation of how to calculate the C-index 268
Appendix 7.2 Empirical studies on voluntary disclosure 270

vii
IFR_A01.QXD 20/11/2005 05:42 PM Page viii

Contents

Part 3 SIGNIFICANT INFLUENCES ON INTERNATIONAL

ACCOUNTING PRACTICES

Introduction to Part 3 285

8 The United States of America 287

Learning outcomes 288
8.1 Introduction 288
8.2 The country 288
8.3 Development of accounting regulation 290
8.4 Institutions 294
8.5 External influences 304
8.6 Comparison with IFRS 304
8.7 The accounting system 308
8.8 Gray’s accounting values 342
Summary and conclusions 344
Questions 345
References and further reading 346

9 The European Union 349

Learning outcomes 350
9.1 Introduction 350
9.2 Origins and nature of the EU 350
9.3 How laws are made 353
9.4 Impact of IASB Standards on accounting in the EU 353
9.5 The IAS Regulation 355
9.6 Company law directives 358
9.7 The Fourth Directive 362
9.8 The Seventh Directive 367
9.9 Modernization of the Directives 369
9.10 Recommendation on environmental issues 370
Summary and conclusions 371
Questions 371
References and further reading 372
Appendix 9.1 Formats in the Fourth Directive 374

Part 4 FROM NATIONAL TO INTERNATIONAL STANDARDS

Introduction to Part 4 381

10 Accounting in EU member states 385

Learning outcomes 386
10.1 Introduction 386

viii
IFR_A01.QXD 20/11/2005 05:42 PM Page ix

Contents

10.2 The countries 387

10.3 International standards; national choices 389
10.4 Institutional influences 396
10.5 External influences 415
10.6 Oversight and assurance 417
10.7 Accounting issues 424
10.8 Comparative research studies 434
Summary and conclusions 436
Questions 437
References and further reading 438

11 The United Kingdom 441

Learning outcomes 442
11.1 Introduction 442
11.2 The country 442
11.3 Development of accounting regulation 444
11.4 Institutions 447
11.5 External influences 458
11.6 Oversight and assurance 460
11.7 Accounting issues 465
11.8 Gray’s accounting values 473
Summary and conclusions 475
Questions 476
References and further reading 477

12 Japan 480
Learning outcomes 480
12.1 Introduction 481
12.2 The country 482
12.3 Development of accounting regulations 484
12.4 Institutions 495
12.5 External influences 501
12.6 Accounting regulations and the IASB 502
12.7 Information disclosure 508
Summary and conclusions 510
Questions 511
References and further reading 512

13 China 514
Learning outcomes 515
13.1 Introduction 515
13.2 The country 516
13.3 Development of accounting regulation 517
13.4 Institutions 523

ix
IFR_A01.QXD 20/11/2005 05:42 PM Page x

Contents

13.5 External influences 534

13.6 Accounting regulations and the IASB 535
13.7 The accounting system 541
13.8 Hong Kong China 547
13.9 Gray’s accounting values 553
13.10 Empirical studies 554
Summary and conclusions 556
Questions 557
References and further reading 559
Appendix 13.1 Accounting System for Business Enterprises 561
Appendix 13.2 Differences between Hong Kong GAAP and US
GAAP: CNOOC Ltd 564

Part 5 INFORMING INTERNATIONAL EQUITY MARKETS

Introduction to Part 5 573

14 Investors and listed companies 575

Learning outcomes 576
14.1 Introduction 576
14.2 Approaches to international equity investment 576
14.3 Future demand for and supply of international equity investments 582
14.4 Benefits of foreign stock market listing 585
14.5 Listing behaviour of companies 589
14.6 Empirical research into stock market listing choices 597
14.7 Other users of financial statements 599
14.8 Methods of reporting to foreign users 600
Summary and conclusions 605
Questions 606
References and further reading 607

15 Transparency and disclosure 611

Learning outcomes 611
15.1 Introduction 612
15.2 The meaning of ‘transparency’ 612
15.3 Narrative reporting in the US 615
15.4 Management reports in other countries 623
15.5 Corporate social responsibility (CSR) reports 629
15.6 Remuneration reports 634
15.7 Comparative research into disclosure 637
Summary and conclusions 642
Questions 643
References and further reading 644

x
IFR_A01.QXD 20/11/2005 05:42 PM Page xi

Contents

16 Issues in multinational accounting 647

Learning outcomes 648
16.1 Introduction 648
16.2 Defining a group 649
16.3 Acquisition and uniting of interests 657
16.4 Goodwill 665
16.5 Associates and joint ventures 667
16.6 Segment reporting 670
16.7 Foreign currency translation 681
Summary and conclusions 691
Questions 692
References and further reading 693

Index 695

Supporting resources
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For instructors
● Complete, downloadable Learning Resources
● PowerPoint slides that can be downloaded and used as OHTs

For more information please contact your local Pearson Education sales representative
or visit www.pearsoned.co.uk/roberts

xi
IFR_A01.QXD 20/11/2005 05:42 PM Page xii

Preface

Introduction
This third edition takes as its theme ‘increasing harmonization in financial statements;
mixed comparability and diversity in assurance and corporate reporting’.
January 2005 marked a significant stage in the move towards acceptance of interna-
tional financial reporting standards (IFRS) as the basis for harmonizing financial state-
ments. It was the date from which listed companies in member states of the European
Union (EU) were required to apply IFRS in their consolidated financial statements, in
place of the accounting standards of their home countries. Beyond Europe other coun-
tries have taken a range of attitudes. Some have adopted the IFRS in full; some have
revised their national standards to incorporate the main aspects of IFRS with some local
variation; others are still considering their options.
The third edition of this book reflects the contrasting forces of the focus on global
harmonization, on the one hand, and the desire to retain some element of national
identity control, on the other hand. The national identity remains most apparent in the
regulation of assurance of the quality of financial statements and in the wider narrative
reporting that accompanies the financial statements.
In an ideal world there would be no further scope for a comparative study of inter-
national financial reporting because harmonization would be complete. In reality, dif-
ferences persist. Although the International Organization of Securities Commissions
(IOSCO) endorsed IFRS in 2000, it left an option for individual securities commissions
to scrutinize the IFRS and add further conditions to them. The IASB has faced the chal-
lenge of establishing confidence in its independence as a standard setter, while having
no direct powers of enforcement or scrutiny. In the period from 2000 to 2005 we
observed the legislators of two major economic groupings (the EU and the US) using the
language of ‘convergence’ while preserving territorial positions. The European
Commission retained its right of political control over the legal process across member
states. The Securities and Exchange Commission of the United States awaited reassur-
ance about mechanisms for enforcement of high-quality international accounting
standards that would retain a level playing field for US companies.
The challenge to accounting standards took a new direction following the collapse of
a major US company, Enron, which showed that even the US accounting standards were
not immune from criticism. It seemed that the mechanisms of corporate governance
and regulatory oversight were inadequate to protect stakeholders. Further corporate
scandals indicated that problems of this kind could exist in large listed companies in
countries beyond the US.
Corporate failures caused a major loss of confidence for investors in global markets.
To restore confidence, the processes of corporate governance and assurance (including
audit) have been revised significantly in many countries, although regulation remains
primarily under national laws. We are now aware that the implementation of any system

xii
IFR_A01.QXD 20/11/2005 05:42 PM Page xiii

Preface

of financial reporting is critically dependent on the quality of the corporate governance

and assurance mechanisms of the national regulator.
As a separate aspect of accountability for social and environmental matters, there has
been increasing emphasis on corporate social reporting (CSR) to the point where high-
quality CSR information is seen as essential by those evaluating investment possibilities.
Information about responsibilities to employees, customers, communities and society in
general is now a common feature of many annual reports. It is part of the wider focus
on narrative reporting to explain the activities of the business.
In this third edition we aim to provide insight into the areas of comparability, and
the persistence of diversity, in the corporate annual reports of listed companies across
global markets. We also indicate how national diversity may continue to be significant
for non-listed companies and for reporting in a national context. All the developments
we have described in this introduction are fascinating to researchers and we have built
into the third edition a wide range of examples of research studies in this area that will
be of interest to students and may offer ideas for their own future research projects.

Aim of the book

This text aims to bring to undergraduate and postgraduate courses in accounting and
finance an awareness of similarities and differences in accounting practices and an abil-
ity to analyze the causes and consequences of those similarities and differences. There is
a strong emphasis placed on IASB Standards as the focus of comparison.
The book aims also to familiarize students with the growing body of research into
international accounting practices, giving detailed explanation of research methods that
may encourage students to apply such techniques in project work.

Structure of the book

The book is divided into five modules (Parts 1 to 5) each of which deals with a sepa-
rate aspect of international corporate reporting. The full text is suitable for a full
15-week semester but the modular structure allows lecturers to plan selectively for
shorter courses.
The third edition starts in Part 1 by describing in Chapter 1 the achievements of the
IASB in establishing its position as an international standard setter and explaining in
Chapter 2 how the IFRS have developed to be more rigorous in application. Chapter 3,
entirely new to this edition, provides a new feature by exploring the complex framework
of assurance mechanisms that have been established to give credibility to international
and national reporting practices. It reflects the actions taken by a wide range of institu-
tions, both statutory and voluntary, to restore confidence in financial reporting after the
Asian economic crisis and the collapse of Enron in the US.
Part 2 presents the well-regarded analytical focus of the book by setting the analytical
framework for the study of accounting practice and explaining the methods used in var-
ious types of comparative reporting study. The institutional framework is described in
Chapter 4, covering in general terms the influence of the political system, the economic
system, the legal system, the tax system, the financing system and the accounting pro-
fession. Cultural influences on accounting rules and practice are critically evaluated in
Chapter 5 using well-known academic sources. Classification of accounting systems, as
presented in Chapter 6, provides a framework indicating international similarities and

xiii
IFR_A01.QXD 20/11/2005 05:42 PM Page xiv

Preface

differences. Practical approaches to measuring international differences in accounting

rules and practices are presented in Chapter 7, drawing on methods established in the
research literature that are suitable for student project applications.
Part 3 describes two powerful forces that are shaping the development of interna-
tional standards: the US with its system of US GAAP and the EU with 25 member states
committed to the application of IFRS from 2005. The accounting system in the US is a
rival to the IFRS as a potential global accounting system. The approach taken by the EU
in undertaking to require all listed companies to use IFRS from 2005 has given a major
endorsement to IFRS.
Part 4 describes how a selection of countries have moved towards adoption of IFRS.
We have included in our selection two countries with strongly established capital mar-
kets (UK and Japan), three countries with established capital markets in Europe (France,
Germany and The Netherlands) and two countries that are still at relatively early stages
of development of capital markets (Poland and China). In these country chapters we
relate accounting developments to the institutional environment within which account-
ing practice operates. We recognize that whatever selection we make does not please
everyone; to meet this concern there is further information on other countries in the
Lecturer’s Guide provided to accompany this edition.
Part 5 takes us to the international capital markets with a discussion in Chapter 14 of
the motivations and strategies of investors and listed companies who operate across
national boundaries in investing and in issuing shares. Chapter 15 is new to this edition
and reflects the growing importance of narrative reporting in achieving transparency in
financial reporting. The chapter explains and illustrates the range of approaches taken
by companies to improve transparency through disclosure. Chapter 16 is also new to
this edition and explains the significant achievements of IFRS in bringing harmoniza-
tion to accounting regulation and practice in three areas: business combinations;
segmental reporting; and foreign currency translation.

Particular features
We have retained from previous editions the features that students and lecturers have
identified as particularly helpful:

● there is a strong emphasis on IASB Standards as a basis for convergence of accounting

measurement and disclosure, with explanation of how the IASB is receiving careful
and serious attention from standard-setting authorities in many countries;
● experienced researchers show how the methods used in research papers may be under-
stood and applied in undergraduate honours and postgraduate courses;
● linking themes across chapters explain harmonized accounting and national reporting
differences in the context of an institutional framework, a cultural perspective and
a comparison with IFRS;
● examples of accounting practices drawn from published accounts;
● names of major companies in each country are given as a guide to students intending
to investigate further;
● case studies are drawn from practice and from research studies to illustrate the general
points of principle contained in early chapters;
● end-of-chapter questions encourage students to analyze and compare the information
within and between chapters;
● an accompanying Lecturer’s Guide assists students and lecturers in the practical explo-
ration of the wealth of material available for study of aspects of international

xiv
Exploring the Variety of Random
Documents with Different Content
 HARMFUL.

THE HOBBY.

It will follow the sportsman and seize a Quail in front of him, according
to the late Howard Saunders, but Lord Lilford demurred to this, and said a
Hobby will wait on over ranging dogs, on the chance of a young or
moulting Skylark, but never attack game birds, as it could not hold them. It
is a terror to Larks as well as Swallows, but it does some good in reducing
the numbers of cockchafers and dragonflies, which are favourite articles of
its diet, with other small insects.
In our country it never makes a nest for itself, but it takes possession of
one that has been built by a Crow, Magpie or other bird, in a tree. The
female has a curious habit of brooding on an empty nest or upon eggs of the
Kestrel before she lays her own. In autumn it leaves the woodlands to take
to the open country.
Cowley wrote:

“Like larks when they the tyrant hobby spy,

Some wonderstrook, stand fix’d, some fly.”
And Dryden:

“Larks lie dar’d to shun the hobbies’ flight.”

The Hobby is as big as a small pigeon, but has a slenderer body. The tip
of the wing reaches to the end of the tail or even beyond it. Legs and cere
are yellow. The eyes are dark brown, with a keen expression. The serrated
bill is yellowish at its base, but black at the tip, which is strongly curved.
The back is slate-coloured, while breast and belly are marked with black
longitudinal stripes on a light ground. The Hobby builds its nest in the tops
of high trees in small woods. The eggs number three or four, and are
marked with thick rusty-brown spots and streaks on a ground-colour of pale
buff.

USEFUL.

THE KESTREL.

The Kestrel.
(Falco tinnúnculus.)
The Kestrel also has a beautiful flight; but it is not able to catch small birds
when on the wing. It is a master in the art of remaining in one spot in the
air, with a very slight apparent motion of the wings. It stops suddenly in its
flight at about the height of an ordinary church tower, bends its spread tail
stiffly downwards and beats rapidly with its wings. It often poises itself in
this way over meadows, cornfields and moorlands, and marks with its
brown, sharp eyes any mouse or marmot that slips out of its hole.
Sometimes it finds a brood of young birds, and these it does not spare.
Crickets, grasshoppers and lizards also fall a prey to this hunter, but mice
form its chief diet, and for this reason the bird is useful. When it has caught
sight of its prey from a height in the air it suddenly closes its wings and
drops, but when quite near the ground it spreads them again, and thus picks
up its victim. It eats the smaller insects out of its claws while flying; but
larger prey it carries to a quiet spot. Its twittering cry is often heard; it
sounds like “Klee, klee, klee.” It leaves Hungary in severe winters. The
Kestrel is the most numerous of the birds of prey in that country, where it is
quite at home, even in the rush and noise of towns.

The Kestrel is commonly known as the Wind-hover, on account of its

habit of hanging motionless in the air against the wind. It has a very
graceful flight. This Falcon is quite the commonest of the British birds of
prey, and we should have still more of these useful Falcons in our country
were it not for the prejudice and ignorant ideas of so many of our
gamekeepers and farmers. In Scotland the former are becoming much more
aware of the harmlessness and the usefulness of the Kestrel. Considering
the fact that the creatures forming its principal food are mice, it is strange
that our agriculturalists have not valued its services sooner. The
gracefulness of its flight makes it an interesting point in a landscape. It is as
well known to country children in our Southern counties as is the Cuckoo.
If their nest is robbed before the full number of eggs is laid the pair will
remove such eggs as are left to the next suitable empty nest they can find
and proceed with their family duties there. The Kestrel is a pleasanter bird
to keep as a pet than others of his family; it is easily tamed, and afterwards
can be kept at liberty, as it will come to call or whistle if it is fed regularly
at the same time and place. The late Lord Lilford, who knew more
practically about Falcons than most ornithologists said: “I cannot altogether
acquit the Kestrel of an occasional bit of poaching; a small Partridge or
Pheasant astray in the grass is no doubt too tempting a morsel to be resisted,
but any petty larceny of this sort may well be condoned on account of the
great number of field-mice and voles destroyed by these birds.” In Spain its
food consists chiefly of beetles.
A great many of our Kestrels leave us at the approach of winter when the
food they like best is too hard to find.

The Kestrel is about the same size as the Hobby, but is a slenderer bird,
and its tail is longer. The tail is of a beautiful grey colour and extends far
beyond the tips of the wings. Near its extremity it is adorned with a broad,
dark, transverse bar; the tip itself, however, is white. The back is reddish
with dark, triangular markings; the flanks light-coloured with black
longitudinal marks. The bill is curved from the base, and is short and
strongly hooked. Cere and feet are yellow. The tail of the female has several
narrow transverse bars, with tip as in the male. For nesting places the
Kestrel chooses by preference ruins, towers, and lofty crags, very seldom
selecting a site in a tree. It lays four or five eggs, rarely more than six. They
are thickly spotted and splashed with brownish-red on a light ground.

The Merlin or Stone-hawk (Falco æsalon) is the smallest bird of our

British Falcons. It breeds regularly on our moorlands, not in such numbers
in the South as beyond Derbyshire. In many parts of Wales too it nests. It is
fairly common too in the mountainous parts of Ireland. In the autumn the
dashing little fellow comes down to the coast and bays where he can prey
on Dunlins, Snipe and other waders. He has high courage and will kill birds
you would not think him capable of mastering. The Merlin will kill the
Skylark if pinched by hunger, but both he and the Hobby prefer birds of the
Finch family.

HARMFUL.
 THE MARSH-HARRIER.

The Marsh-Harrier.
(Circus œruginosus.)
(Formerly known as the Moor-Buzzard.)
The Marsh-Harrier is one of the shyest and most cunning of our birds of
prey. It immediately attracts attention by its size and its constant activity;
but it requires a good sportsman to get a shot at it. It is most easily got at
when feasting among the high grass at the edge of the reedy marsh; it then
forgets to be prudent and sometimes takes flight only too late. Early and late
it hovers over the borders of the marshes and reed-beds, sweeping, circling
without rest, now and then making a swift descent into the rushes and the
sedges and securing its prey. There is no small creature of the marsh, the
bog, the heath, or the moor that this bird will not take; it works special
destruction among the singing birds which nest among the reeds and
sedges. It does not wait for the young birds to be hatched, but is very clever
in breaking open the eggs and devouring the contents, always bringing them
on to dry land for the purpose.
The birds of the reed-land know this raider well, and as soon as the first
flap of his wing is heard the terrified Lapwings, Gulls, Terns, and others,
arise with loud cries and attack him tooth and nail. When brooding it lives
almost exclusively by egg stealing; later on the moor hens afford provender
for this insatiable thief. It leaves Hungary for the winter, but returns in early
spring. Its cry varies. In spring it is “kei, kei,” in autumn it is like that of the
Jay. The female utters a loud “pitz! pitz.”
This bird is common in the Hungarian marshes.
The drainage of our Eastern fens and the reclaiming of marshland in
Yorkshire, Lancashire, Shropshire, Dorset, Somerset, and some other
counties once frequented by this bird has caused it to become scarce where
formerly it used to breed freely. Sometimes a pair having wandered over
from Holland will try to rear a brood in our Norfolk Broads district, but the
sportsman—sic—and the collector will not allow them to succeed. In
Ireland the bird was formerly common enough about Lough Erne, along the
Shannon valley, in Co. Cork, and other districts, but during the last fifty
years the gamekeepers have nearly exterminated it by poison. It is known to
be a great destroyer of the eggs and young of Waterfowl, but during most of
the year it feeds on small mammals, frogs, and reptiles as well as birds.
This is the Duck-Hawk of the marshmen. When the sun is glinting
through the mist he may be seen gliding hither and thither, low down over
the grey-green flats. At noon he is high up in the clear blue sky. The tender
young ducks—called “flappers” are his favourite diet.
Jean Ingelow, in “The Four Bridges,” says:

“The bold Marsh-Harrier wets her tawny breast—

We scared her oft in childhood from her prey.”

The Marsh-Harrier is smaller and noticeably slimmer in build than the

Buzzard. The tail is long, the legs are long, thin, and bare of feathers, and
the claws sharp. The Head has something about it that suggests an Owl, for
the facial disk is conspicuous and the eyes glance forwards as well as to the
side. The bird’s plumage is brown, very dark in places: but the head is light-
coloured, being whitish in males and yellowish in females. Inhabiting reed-
beds, the bird builds its nest among reed-stems or bulrushes. The eggs, five
or less frequently six in number, are greenish-white in colour.

The Hen-Harrier.
(Circus cyaneus.)
The nest of the Hen-Harrier is built of roots and plant stems, is soft within
and is often placed on the ground; if in heather, or dried up marsh, it is often
a foot high. From four to six bluish-white eggs, sometimes yellowish-brown
or rufous markings, are laid.
This bird of prey has a light, sweeping flight. It leaves Hungary in
winter. It hunts alone and takes its food exclusively from the ground. This
consists of small mammals, especially mice, the bird is also particularly
fond of robbing the nests of such birds as build on the ground; it sucks the
eggs and devours the small downy creatures within them. It also takes the
little hares—in short, it is one of the most destructive birds in the fields
which it frequents and hunts over untiringly. On the other hand, there comes
a time when the number of field mice has increased beyond measure. Then
the Hen-Harrier joins the other birds of prey and destroys enormous
numbers of those enemies of the farmer. For this reason the species should
not be altogether exterminated.

Of late years the numbers of the Hen-Harrier have been greatly thinned
by game-preservers, and it only nests now on a few of our largest and
wildest moorlands and wastes. Even in Scotland it is fast decreasing so far
as nesting goes, whereas it was once plentiful there. Still there are a fairly
large number of young birds in the autumn, and then, too, the adult birds
come down from the higher-lying districts to the lowlands. It used
HARMFUL
 THE HEN-HARRIER.

to breed in the Fen-lands of East Anglia until the reclaiming of marsh lands
drove it away. As to this I may be allowed to quote again here from an old
ballad written before the fens were drained, it gives the feeling of the fen-
dwellers of that day.

“Come brethren of the water, and let us all assemble,

To treat upon this matter which makes us quake and tremble;
For we shall rue it, if it be true that fens be undertaken,
And where we feed on fen and reed, they’ll feed both beef and bacon.
. . . . . . . .
The feathered fowl have wings, to fly to other nations,
But we have no such things to help our transportation;
We must give place—oh, grievous case—to hornéd beast and cattle,
Except that we can all agree to drive them out to battle.”

“As a gamekeeper once said to me,” says ‘A Son of the Marshes,’ “The
sooner them big ’uns is gone or done for the better; there’s nothin’ but a
chow-row from morning to night. Our head ’un says they must be knocked
over, and the guv’nor he’s got the same tale. They can’t git at ’em no more
than we. It ain’t so much what they ketches, tho’ they tries hard at it, as
what they frightens off the fields; it spiles the shootin’. Them ’ere damned
great things hovers an’ swishes after the birds till at last the coveys makes
for the hedgerows an’ you has to git ’em out as if you was beatin’ for cocks.
We ain’t had none o’ them ’ere blue an’ ring-tailed hawks—harriers—’bout
here lately. They’re reg’lar wussers; they kills ’em dead at one clip, an’
takes ’em out in the middle o’ them big fields to eat ’em. They ain’t goin’ to
let you get near ’em, not they, an’ they wun’t fly over a place where you kin
hide. I’ve tried to git at ’em, but it all cum to nothin’. Them ’ere blue hawks
an’ ring-tails would circumvent the devil.”
The adult male has the upper parts a slatey-grey tone of colour, the rump
white, throat and breast bluish-grey—under parts white. The female is
brown above, the neck rufous-brown streaked with white—there is a
distinct facial ruff, giving the head an owl-like appearance, suggesting that
this species might be the link between Owls and Hawks—tail brown,
having five darker bars, hence the old name of Ring-tail given to the female
of this bird; under parts buff-brown with darker stripes. Length 21 inches.
The young resemble the female.
 CHAPTER IX.

Rational Bird Protection.

Only a savage, or an ignorant man, can harm or wish to get rid of a bird
before he has convinced himself that it is harmful. I have said already that
in the abstract there are no useful and harmful birds, as such. The bird exists
as a product of Nature, to fulfil, like everything else, the tasks allotted to it
by Nature and in Nature, which no other creature can perform.
It is man who makes the bird useful or hurtful to himself, when he tears
up the turf, and sows such seed as brings rich crops which serve the bird for
food; or when he plants an orchard or vineyard, where there was none
before. Therefore, for the good of the birds—and also of man—we must
carefully reflect what it is our duty to do and how we can best do it.
The Tits, Hedge Sparrows, Flycatchers and others whose industry know
no rest, do invaluable service to a sensible man; for while the most
observant and diligent gardener can only destroy those caterpillars’ nests
which meet his eye wholesale, these useful birds, hopping about, darting
and leaping, hanging and pecking, devour all the mischievous pests, even
when they are quite out of reach of man, and certainly out of his sight.
These services can even be estimated to a certain extent.
The tiny Wren consumes in one year more than three million insects in
different forms, either as eggs, chrysalis or perfect insects, which, if they
were allowed to propagate would result in countless numbers.
The Blue Tit, not much larger, destroys six and a half million insects in
one year. If it bring up a family of 12 to 16 young ones, it means that one
family of Tits puts about twenty-four million destructive insects out of the
power of doing harm. Whoever, therefore, either from cruelty or ignorance,
catches or kills these useful little birds does a great injury to the common
weal.
 THE RAIDING HAWK.

The insect world has great power everywhere, and where birds and other
insect-eating creatures are destroyed through ignorance there follows the
destruction resulting from the ascendancy of these pests which appear, not
in tens of thousands, but in millions. Twenty-one years ago any person who
had ventured on such an assertion would have been laughed at, but it is now
a well-known fact that some of the most renowned vineyards have been
entirely ruined by the Phylloxera, an insect which can scarcely be seen by
the naked eye.
In former times, when a great deal of uncultivated land covered the
plain, in its natural state, the air rang with the song of birds. Woods,
meadows, thickets and pools were thronged with the feathered songsters. In
the course of time, however, things have greatly changed; in many districts
the woods are thinned or grubbed up, the plough has torn up the meadows;
every little scrap of thicket has been hewn down; whole forests are being
cut down by degrees to supply the paper mills; and so the birds are losing
their nesting places, and death and destruction lurk in waiting for them on
their migrations. Devastating storms which overtake the immigrant flocks
often destroy the feathered wanderers in great numbers. This, however, is
the course of Nature, against which we are impotent.
After all the birds’ worst enemy is man, with his ignorance, or, still
worse, his cupidity. He has plundered the nest and destroyed the brood; he
grudges every grain of corn which the bird has richly deserved by its work
throughout the year.
Steamers and railroads make it possible for birds, which are caught by
millions, to be sent alive into the great cities as delicacies of the table. So,
from year to year, they are becoming rarer.
So much the more are we bound,—for the good of heart and soul, as
well as for the blessing of the land and its workers—to protect the useful
birds as much as we conscientiously can so that they may increase in
numbers.
Once, while on a journey to the Northern Ocean, I travelled the whole
length of Denmark. Moor, bog and sandhills cover great stretches of land.
Coarse heath grows over the sandhills. Poverty-stricken huts are scattered
here and there in these districts, the tenants of which live by turf cutting.
There is neither wood nor coal, so that the dried bog furnishes the sole fuel.
A small spotted cow is usually seen tethered with a long rope near the
cottage. This animal provides milk for the household. In front of the
dwelling, at a distance of about fifteen paces, a pole, from 13 to 20 feet in
height, is set up, at the top of which is fastened a nest-box for birds, and this
is usually inhabited by Starlings.
It was a pleasant sight, towards evening, that of the weary
turf-cutter, sitting on the little bench before his cottage,
smoking his pipe, bending down to talk to his child, and then,
with heartfelt pleasure, setting himself to watch the pair of
Starlings chattering on the nest-box, and enjoying life
generally. In many districts nest-boxes are fixed on fruit trees
in gardens and in every other suitable place, and in these dwell
all the best and most industrious workers—Tits, Flycatchers,
Redstarts and others.
There is a proverb which may be translated as follows:
“Take nest and eggs from brooding bird—no fruit is found, no
song is heard.” Also in the Bible we read: “If a bird’s nest
chance to be before thee in the way, in any tree or on the
ground, whether they be young ones or eggs, and the dam
sitting upon the young or upon the eggs, thou shalt not take
the dam with the young.”
We must guard the nests from evilly disposed men and from roving
predatory animals as much as lies in our power. But the real problem is this:
The landowner uproots bushes, fells old trees, prevents the nest building of
our most useful birds and cannot give back to them what they have lost. He
prevents the possibility of their collecting again and increasing, and
consequently from performing their useful duties, which are continually
increasing. Where, however, bushes and trees have been rooted up, new
ones may be planted, and the birds encouraged to return, although we
cannot replace them at once—for hundreds of years may pass before the
trees grow tall enough, and we cannot wait so long. Then we try to do by
artificial means what we cannot do by nature; and we must be careful to
study nature in our operations or we shall not succeed.
The Woodpecker, which lives in hollow trees, shows us how to build an
artificial nest.
Table V., Fig. 1, gives a section of the nesting-hole of a Woodpecker
built by himself.
Fig. 2 is a perfectly designed nest for Titmice.
Fig. 3 shows the same nesting-box complete, provided with entrance
hole and cover.
Fig. 4 shows an open nest-box for Flycatchers and a black Redstart.
The most important is that shown in 2 and 3 as it is specially arranged to
suit Titmice.
 Nest-boxes, and especially their holes, should, of course, be of different
sizes, according to the birds that are to inhabit them. The opening is always
round, and is of varying size according to the species. Many directions as to
these are given in a paper by Baron von Berlepsch, “On the Protection of
Birds Generally,” published by the German Association for the Protection
of the Bird World, and also by publications of the Royal Society for the
Protection of Birds in Hanover Square, London.

Nesting Boxes on Poles.

 The following are some approximate measurements for nest-boxes:—
For Titmice:
height, 11½ inches;
depth from back to front, 4½ inches;
diameter of round opening, 1¼ inches.
For birds of the size of a Starling:
height, 18½ inches;
depth back to front, 9 inches;
diameter of opening, 1¾ inches.
For Green Woodpeckers:
height, 19¾ inches;
depth back to front, 9 inches;
diameter of opening, 2⅜ inches.
The measurements for the Wild Pigeon are the same as these last, except
for the opening, which should be about 4½ inches wide.
Flycatchers and Wagtails require a box as shown in Fig. 4. This is 9
inches high, and has an opening about 4 inches square.
The edge of the entrance to a nesting-box should be rounded off, as in
the hole of a tree, to make it more natural to the bird’s feet.

The nesting-boxes should be fixed in orchards, gardens, and houses on

the edge of a forest, on the trunks of trees and branches, also on poles, and
fastened by means of strong flexible wire, or, still better, by screw-nails.
They should be placed perpendicularly, slightly inclined or crooked, but
never inclined backwards as the rain gets in and the Titmouse has sense
enough to avoid such a nesting-box. They should be fixed a little lower than
the average height of a man, and so arranged that the morning sun strikes
the entrance hole if possible. The box is an exact copy of the nest-hole of
the small spotted Woodpecker, and experience teaches us that the
unoccupied nest-holes are frequently used by the Titmouse. In spring the
Titmice not only fight among themselves for the possession of these nest-
holes, but also with the hosts of House Sparrows which strive to rob them
of the holes. These Sparrows come in crowds and make a great noise in the
place. Being of a powerful build, and provided with sharp beaks, the birds
finally oust the Titmice. To contravene the House Sparrow we must hang
the nest-box somewhat low, about one yard from the ground. The careful
and suspicious bird dares not trust himself in it. The Tree Sparrow, which
does not come too near the haunts of man, but hovers on the fringe of the
villages or street gardens, bushes and heaths, is a trusting bird, and not very
heavy. It likes nest-holes immensely, and attacks those which are placed
low, driving the Titmouse out. The Hedge Sparrow, again, lives on insects,
but he is not clean, and is no friend of the garden; therefore, when we find
him fighting with the Titmouse for possession of the nest-holes, we help to
oust the Hedge Sparrow in the interests of the garden and the wood.

SPARROWS HAVE OUSTED THE

TITMOUSE.

The following birds must be protected at nesting-time: The Great

Titmouse, the Blue Titmouse, the Coal
 A PLEASANT MEAL ON
THE SEEDS OF THE
SUNFLOWER: THORNS
BELOW TO KEEP THE CAT
AWAY.

Titmouse, the Marsh Titmouse, and Crested Titmouse, because all these
birds are likely nesting-box dwellers. The method organised by Baron von
Berlepsch, and used in Hungary by Minister Darányi, with slight
alterations, is intended to bring the vanishing singing birds back again. By
the use of different sized nest-boxes it is possible to collect different kinds
of birds. I know by experience that by arranging the bushes in close, twisted
branches we can get the useful and singing Whitethroats to build their nests.

The importance of a rational study of this question of the protection of

birds, with particular regard to their economic significance in given
districts, has been demonstrated in Southern Victoria in a remarkable
manner, where great mistakes have been made by settlers who seem to have
been desirous of encouraging our own British birds about their homesteads.
To take steps which resulted in the nesting of a colony of Fieldfares in a
district where they had so far been unknown to breed, as Baron von
Berlepsch did, was most advantageous, since the Fieldfares drove the
murderous Shrike from the field. Again, by fixing up artificial nesting-
boxes, made according to this great naturalist’s pattern—on stakes placed in
certain districts of North Germany, ninety per cent. of these became
inhabited by Titmice, until that time strangers to the region, where,
however, their services were most desirable.
On the other hand, Greenfinches, which were introduced into Southern
Victoria by Australian settlers twenty-five years ago, took possession of the
pine trees, which were the only trees that afforded enough shade and cover,
and were the nearest approach there to their usual

A FEEDING-PLACE FOR WET WEATHER.

As a rule only feed the birds when weather reasons prevent them procuring their own food.

nesting-places; and they drove away from the district the useful little native
Tits, which feed among these trees and have their own appointed work on
them. A correspondent of a Geelong paper writes again of the charming
sight of a number of English Blackbirds hopping about on a lawn beneath
the spraying water-hose, and busily feeding on the worms. Yet this same
bird is becoming a great nuisance to the fruit growers there. This is also the
case in New Zealand, where large prices are now being offered for dead
Blackbirds and their eggs. The Starling, again, which is so useful in our
own pasture lands, has been known to clear out a vineyard in Southern
Victoria in a single night. Thrushes are looked upon there as suspects, but
opinions are divided as to this bird.
We have already written about the Quails, imported into the canefields of
Hawaii, to be in their turn exterminated by the mongoose, who had been
brought there to eat up the devastating rats.
To sum up the whole matter, interference with the balance of Nature
must only be undertaken with knowledge and discretion; and those who
undertake it must study, and profit by the recorded experiences of our
accredited guides in this direction.
 IN CONCLUSION.
The scope and limits of the present work does not allow of the inclusion of
some of the chapters contained in the latest Hungarian edition, such as those
treating of the skeleton, the viscera, etc., nor can this be taken as adequately
representing the work of the Royal Hungarian Central Bureau of
Ornithology of which Mr. Herman is the Director. That work is arranged on
a regular scientific basis, and it includes that important investigation with
regard to the food of birds, which is carried on by a fully qualified
entomologist. The Bureau has its collection, which contains dried ingluvies,
i.e., contents of the stomachs of nearly 9,000 different species of birds;
skeletons, skins, eggs, nests and insects.
The Bureau has its meteorologist, its biologist, 267 corresponding
professional ornithologists, and as many as 326 foresters contributing the
results of their observations and experiences, besides a large number of
foreign correspondents. There is a huge collection of data for the members
of the regular staff to work from. These are written on separate slips, on
each of which is the name of the collector, his point of observation, the
character of the district in which this is carried on, the scientific name of the
species, and the date of observation. The migration of birds is also made the
subject of systematic observation.
An important publication, “Aquila,” serve well in keeping together these
different workers in connection with the Central Bureau, and the whole
expenditure of this office, including the publication of the journal is now
included in the Budget of the State.

In order to prevent the abuses which might arise from a general

invitation to send in specimens of the different species of birds for
examination, the Hungarian Minister of Agriculture has issued various
decrees which are enforced by law, the non-observance of which is
punishable by fines. The taking alive or killing of protected species is
allowed only for scientific purposes, and with permission obtained from the
authorities, and any person found employed in this work must be able, on
demand, to produce an order in writing from some Hungarian scientific
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