Reply to the discussions of using control charts to monitor financial reporting of public companies

2004 ◽  
Vol 5 (2) ◽  
pp. 135-137
Author(s):  
Richard B. Dull ◽  
David P. Tegarden
Keyword(s):  
Financial Reporting ◽  
Control Charts ◽  
Public Companies

scholarly journals Unconditional conservatism in Brazilian public companies and tax neutrality

2017 ◽  
Vol 28 (74) ◽  
pp. 197-212 ◽  
Author(s):  
Juliana Pinhata Sanches do Vale ◽  
Sílvio Hiroshi Nakao
Keyword(s):  
Financial Reporting ◽  
Institutional Environment ◽  
Adoption Process ◽  
Accounting System ◽  
Public Companies ◽  
Publicly Traded Companies ◽  
Tax Neutrality ◽  
Financial Reporting Standards ◽  
Tax Legislation ◽  
Reported Earnings

ABSTRACT Law n. 11,638/2007 legitimized the International Financial Reporting Standards (IFRS) adoption process in Brazil and introduced an accounting system detached from tax purposes in the country. This law aims to reduce the influence of tax law on accounting standards and improve the quality of financial reporting, as IFRS are considered to be higher quality standards. International literature shows a reduction in earnings quality in environments where accounting and tax rules are strongly linked. Moreover, the influence of tax legislation on financial accounting is seen to encourage unconditional conservatism, a bias with no advantages for financial market efficiency. Thus, tax neutrality is expected to provide a more favorable institutional environment for quality financial reporting by detaching corporate accounting from tax accounting. In light of the above, this study aims to verify whether the advent of tax neutrality influences unconditional conservatism in Brazilian public companies. The methodology used involves panel data regressions. The sample consists of non-financial publicly-traded companies with information published in Economática® covering 2002 to 2014. The results show differences in the relationship between taxation and financial reporting between firms that are subject to different levels of monitoring in the Brazilian stock market. Evidence of unconditional conservatism is only found in companies that are subject to greater market monitoring. In this group, it is observed that taxation does not induce unconditional conservatism in reported earnings, which is expected in a tax neutrality context.

Impact of XBRL on Voluntary Adopters' Financial Reporting Quality and Cost of Equity Capital

2018 ◽  
Vol 15 (2) ◽  
pp. 45-65
Author(s):  
Tienshih Hsieh ◽  
Jean C. Bedard
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Cost Of Capital ◽  
Interactive Effect ◽  
Reporting Quality ◽  
Equity Capital ◽  
Financial Reporting Quality ◽  
Cost Of Equity Capital ◽  
Public Companies ◽  
Expected Benefits

ABSTRACT We investigate whether corporate governance quality explains differences in financial reporting quality and cost of capital following the XBRL Voluntary Filing Program (VFP) launched by the SEC. Research on the effects of voluntary XBRL adoption remains valuable, as a bill recently introduced in Congress could revert the majority of U.S. public companies to voluntary compliance. Further, such research informs investors, researchers, and regulators in other countries that do not yet require XBRL. We hypothesize that the likelihood of achieving XBRL's expected benefits is greater in companies with stronger corporate governance. For instance, such companies might implement XBRL in ways that substantially improve information gathering and reporting; or make better use of XBRL to enhance its benefits, regardless of implementation strategy. Results confirm the expected interactive effect of voluntary XBRL adoption and corporate governance strength on both financial reporting quality and cost of capital. These findings suggest that not all voluntary adopters benefited from XBRL; rather, only those with superior corporate governance show measurable benefits during our study period.

Developing a Government Reporting Taxonomy

2016 ◽  
Vol 30 (2) ◽  
pp. 49-81 ◽  
Author(s):  
Neal M. Snow ◽  
Jacqueline L. Reck
Keyword(s):  
Financial Reporting ◽  
Municipal Government ◽  
Financial Statements ◽  
Bond Market ◽  
Empirical Approach ◽  
Municipal Bond ◽  
Data Accessibility ◽  
Public Companies ◽  
Private Investors ◽  
Over Time

ABSTRACT The municipal bond market is a $3.7 trillion market with approximately 75 percent of the market held by private investors (SEC 2012). Municipal bondholders and potential buyers do not have the same level of information as those investors choosing to invest in public companies. This inequity is, in part, the result of poor data accessibility. Frequently the data provided are in a format that does not allow easy comparison across governments or over time. To increase comparability and consistency in government reporting we build a government financial reporting taxonomy using the empirical approach. The completed taxonomy has 194 terms that cover financial statements filed by municipalities. Expert analysts and preparers in government reporting reviewed the completed taxonomy. This study has implications for the municipal reporting market and those entities that regulate them by providing a validated municipal government financial reporting taxonomy.

Financial Reporting Fraud: Public and Private Companies

2016 ◽  
Vol 1 (1) ◽  
pp. A27-A41 ◽  
Author(s):  
A. Scott Fleming ◽  
Dana R. Hermanson ◽  
Mary-Jo Kranacher ◽  
Richard A. Riley
Keyword(s):  
Financial Reporting ◽  
Primary Objective ◽  
Private Company ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
Multivariate Tests ◽  
Public Company ◽  
Public Versus Private ◽  
Financial Reporting Fraud

ABSTRACT This study uses survey data gathered by the Association of Certified Fraud Examiners (ACFE) and provided to the Institute for Fraud Prevention (IFP) to examine differences in the profile of financial reporting fraud (FRF) between private companies and public companies. Although private companies represent a significant portion of the economy, largely due to lack of data on these companies, most research on FRF examines only public companies. The primary objective of this study is to determine how private company FRF is different from FRF in public companies. Our multivariate tests reveal that public companies have stronger anti-fraud environments, are more likely to have frauds that involve timing differences, tend to experience larger frauds, have frauds that involve a larger number of perpetrators, and are less likely to have frauds that are discovered by accident. Overall, it appears that the stronger anti-fraud environment in public companies leads public company FRF perpetrators to use less obvious fraud methods (i.e., timing differences) and to involve larger fraud teams to circumvent the controls. These public company frauds are larger than in private companies, and their larger size may make them more likely to be detected through formal means, rather than by accident. Based on the results, we encourage auditors and others to be particularly attuned to the unique risks of the public versus private setting.

Human Resources Information Systems Role in Sarbanes Oxley (SOX) Compliance

2009 ◽  
pp. 471-476
Author(s):  
Kathryn J. Ready ◽  
Milorad Novicevic ◽  
Monica Evans
Keyword(s):  
Human Resource ◽  
Financial Reporting ◽  
Standard Operating Procedure ◽  
Public Companies ◽  
Business World ◽  
Resource Information ◽  
Business Operations ◽  
Sarbanes Oxley ◽  
Human Resources Information Systems ◽  
It Departments

Compliance with the Sarbanes-Oxley Act (SOX) has become a new indispensable standard operating procedure for public companies competing in the business world of the 21st century. The SOX compliance is crucial for capital market stakeholders that want to ensure transparent insights into the companies’ business operations and financials following the revelation of significant fraud in financial reporting by Enron, HealthSouth, WorldCom, and Global Crossing. From the onset the demands of SOX compliance have resulted in increased responsibilities from companies’ finance and accounting departments. For more effective compliance and monitoring, the human resource (HR) and information technology (IT) departments need to be more strategically involved (Deloitte & Touche, 2003). One tool that may ease the companies’ burden of SOX compliance is the human resource information system (HRIS), provided its role is expanded beyond the traditional scope of ensuring Equal Employment Opportunity (EEO)m compliance and supporting payroll systems (Fletcher, 2005).

14. Meetings and investor engagement

Company Law ◽  
2019 ◽  
pp. 339-374
Author(s):  
Lee Roach
Keyword(s):  
Financial Reporting ◽  
Institutional Investors ◽  
Majority Vote ◽  
General Meeting ◽  
Annual General ◽  
Annual General Meeting ◽  
Private Companies ◽  
Class Meeting ◽  
Public Companies ◽  
The Uk

This chapter examines the role and importance of general meetings, the significant body of procedural rules by which general meetings are run, and the extent to which a company's members actually engage with general meetings. Members make decisions in one of two ways: through a resolution or by unanimous assent. A resolution is simply a vote that requires a specified majority vote in its favour in order to be passed. The resolutions of public companies must be passed at meetings, whereas resolutions of private companies can be passed at meetings or via a written resolution. Two forms of general meeting existed: the annual general meeting and extraordinary general meetings. In some cases, however, companies are required to hold a class meeting in which only one class of member is entitled to attend. To encourage institutional investors to engage more, the Financial Reporting Council (FRC) has published the UK Stewardship Code.

scholarly journals LIFO Distortion in the Oil Industry – Revisited

2017 ◽  
Vol 6 (3) ◽  
pp. 56
Author(s):  
June Li ◽  
Megan Y. Sun
Keyword(s):  
Financial Reporting ◽  
Accounting Information ◽  
Oil Industry ◽  
Public Companies ◽  
Information Distortion ◽  
Publicly Traded Companies ◽  
Financial Reporting Standards ◽  
Inventory Turnover ◽  
Primary Focus ◽  
Inventory Method

LIFO (Last in First out) inventory method has been widely used by US publicly traded companies for its tax advantages in many years. However, LIFO is expected to be repealed with the impending acceptance ofIFRS(the International Financial Reporting Standards) by theSEC. The repeal of LIFO will significantly increase the tax liabilities of those companies previously using LIFO. One hardest hit industry by repeal of LIFO is oil industry. Our study investigates the use of LIFO inventory method in oil industry from 2008 through 2015. The primary focus of this study is the accounting information distortion as a result of using LIFO. We document severe accounting information distortion in the areas of working capital and inventory turnover. Though not as severe, we also observe very significant distortions in the areas of gross profit and current ratio. The accounting information gets increasingly distorted from 2008 to 2011. However the trend reverses from 2012 to 2015. Each of the Obama administration’s budgets proposals proposed the elimination of LIFO for inventories. We believe the findings of our research have significant implications for the policy makers. In addition, a full adoption ofIFRS, which prohibits LIFO, is unlikely in the near future. Non-public companies who are not under the jurisdiction of theSECmay still continue to use LIFO after the adoption of IFRS. 

Audit Partner Tenure and Audit Planning and Pricing

2010 ◽  
Vol 29 (2) ◽  
pp. 45-70 ◽  
Author(s):  
Jean C. Bedard ◽  
Karla M. Johnstone
Keyword(s):  
Financial Reporting ◽  
Audit Quality ◽  
Internal Controls ◽  
First Year ◽  
Public Companies ◽  
Audit Opinion ◽  
Audit Firm ◽  
Audit Planning ◽  
Sarbanes Oxley ◽  
Client Knowledge

SUMMARY: This paper investigates the association between audit engagement partner tenure and audit planning and pricing. Prior archival research from countries requiring partner signature on the audit opinion provides mixed results on the implications of partner tenure for audit quality. While variation in audit quality based on partner tenure implies some difference in the conduct of the engagement, prior research has not yet addressed whether engagement processes differ based on partner tenure. Using proprietary data from a large audit firm, we find that planned engagement effort increases following partner rotation, suggesting that new partners invest effort to gain client knowledge in the first year on the engagement. We also examine planned realization rates, finding them to be lower following partner rotation. This implies that new partners’ investments in client knowledge are not compensated by clients. We also find higher planned realization rates on audits having the same engagement partner for more than five years, a longer tenure than is now allowed for public companies following the Sarbanes-Oxley Act. We obtain these results while controlling for client risks that affect audit planning and pricing, including those related to financial reporting, management integrity, and internal controls.

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