scholarly journals Fair Value Measurement in Financial Reporting

2012 ◽  
Vol 3 ◽  
pp. 84-90 ◽  
Author(s):  
David Alexander ◽  
Carmen Giorgiana Bonaci ◽  
Razvan V. Mustata
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
Fair Value Measurement ◽  
Value Measurement

The effect of accounting methods on financial reporting quality

2018 ◽  
Vol 60 (6) ◽  
pp. 1401-1411
Author(s):  
Andrain Hadiyanto ◽  
Evita Puspitasari ◽  
Erlane K. Ghani
Keyword(s):  
Financial Reporting ◽  
Palm Oil ◽  
Reporting Quality ◽  
Fair Value ◽  
Financial Information ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Historical Cost ◽  
Fair Value Measurement ◽  
Value Measurement

Purpose This study aims to examine the relationship between accounting measurement method of biological asset and financial reporting quality. Specifically, this study examines whether using fair value method or the historical cost method on biological asset provides different financial reporting quality. Design/methodology/approach This study uses data from 38 agricultural companies that are members of the Roundtable on Sustainable Palm Oil. The annual reports of 38 companies from the Palm Oil Growers over a five-year period starting from 2011 to 2014 are analysed. Findings This study shows that companies using historical cost measurement produce less reliable and less relevant information compared to the companies that are using fair value measurement. Research limitations/implications The results in this study imply that the use of fair value measurement improves the quality of financial information. Practical implications This study supports IASB’s justification of developing IAS 41 as the principle-based standard that better represents the financial information related to biological asset and subsequently lead to good accountability and harmonisation practices. Originality/value This study provides evidence on the best measurement to be used in agriculture activities using a larger sample size of few countries. In addition, this study contributes to the existing literature on the effect of accounting methods on financial reporting quality.

scholarly journals A Retrospective View Of The IFRS Conceptual Path And Treatment Of Fair Value Measurements In Financial Reporting

2011 ◽  
Vol 9 (3) ◽  
Author(s):  
Stephen B. Shanklin ◽  
Debra R. Hunter ◽  
Craig R. Ehlen
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Theoretical Concept ◽  
International Standards ◽  
Financial Reporting Standards ◽  
Retrospective View ◽  
Fair Value Measurement ◽  
Value Reporting ◽  
Value Measurement

International Financial Reporting Standards (IFRS) require some assets, liabilities and equity instruments to be measured at fair value (IASB ED/2009/5). Thus begins the Fair Value Measurement IASB 2009 Exposure Draft. The IFRS requirement for fair value reporting has actually existed since 1975, due to the adoption of pronouncement IAS 2 (IASC/IAS 2 1975). This standard required that Inventory be valued at fair value less costs to sell for both reporting and disclosure purposes. But, as is the case in the history of many accounting standards and practice, the devil has always been in the details. This paper explores a brief historical path of fair value accounting within the venue of international accounting standards. Because of the impending plan of convergence and harmonization, plus potential global acceptance of standards of reporting and content, both the IASB and FASB have extensively explored the relevance and reliability of fair value reporting as compared with the more traditional costbased system. This exploration has been controversial because it goes to the very heart of the centuries-old cost-based foundation of financial accounting. In spite of the ongoing controversy of fair value versus historical cost accounting and the multiple uses and requirements of the fair value theoretical concept in IFRSs, there has been no definitive guidance on the various alternative calculations and appropriate uses of these differing representations of fair value. As the comment period closes on a second exposure draft directed at resolving Fair Value Measurement, this retrospective view of the international standards moves through the past standards and into the future methodology of reporting fair value. With FASBs latest exposure draft on fair value currently pending, the convergence opportunity of a more closely defined concept and its subsequent use in global practice is quite possibly at hand.

DISCUSSION ASPECTS OF PROPERTY VALUATION FOR TAX PURPOSES

2019 ◽  
pp. 64-75
Author(s):  
R. Volchek
Keyword(s):  
Real Estate ◽  
Property Rights ◽  
Financial Reporting ◽  
Fair Value ◽  
The State ◽  
National Standard ◽  
Comparative Approach ◽  
Property Valuation ◽  
Fair Value Measurement ◽  
Value Measurement

The author's vision on the process of estimating the value of real estate objects for the purposes of taxation is given. It is established, that the current norms of valuation of property for taxation purposes, established by the main regulator of valuation activity in Ukraine − the State Property Fund of Ukraine, deprive transparency the process of valuation of property in our state, and offset personal accounting judgments when assessing real estate. Opacity and distortion of the current norms of normative legal acts regulating the process of valuation of property and property rights in Ukraine, as well as the norms of the International Financial Reporting Standards (further − IFRS) 13 «Fair Value Measurement» during the valuation of real estate objects, consists, according our opinion, representatives of the State Property Fund of Ukraine during the approval of property valuation reports for tax purposes are based on the estimated value of the objects, which should be determined solely on the basis of the prices of real estate offers and solely by means of a comparative approach. But, IFRS 13 «Fair Value Measurement» and National Standard 1 «General Principles of Valuation of Property and Property Rights» demand to determine the value of objects of evaluation in three methods: costly, cost-effective and comparative. Recommendations are introduced, implementation of which will allow to observe the transparency and correctness of determining the value of property for tax purposes.

Financial Reporting Disclosure Practices: Particular Case of Fair Value Measurement

2013 ◽  
Vol 20 (1) ◽  
pp. 123-124
Author(s):  
Maria Ionela Damian ◽  
Jiří Strouhal ◽  
Carmen Giorgiana Bonaci ◽  
Razvan V. Mustata
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
Fair Value Measurement ◽  
Value Measurement

Challenges in auditing fair value measurement and accounting estimates

2020 ◽  
Vol 18 (1) ◽  
pp. 51-75
Author(s):  
Babajide Oyewo ◽  
Ebuka Emebinah ◽  
Romeo Savage
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Fair Value ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
Significant Difference ◽  
Accounting Estimates ◽  
Fair Value Measurement ◽  
Value Measurement

Purpose Following the issuance of International Financial Reporting Standard 13 on fair value measurement (which became operational from January 2013), this study aims to investigate post-implementation challenges in the audit of fair value measurement and accounting estimates in the Nigerian context. Design/methodology/approach Data-collection was through a structured-questionnaire administered on 400 auditors from diverse backgrounds in terms of audit firm size, international affiliation and global presence. Findings Empirical data obtained from 277 auditors were analysed using descriptive statistics, factor analysis, one-way ANOVA, cluster analysis, independent sample t-test and one-way multivariate analysis of co-variance. It was observed that the two highest-ranking and most-prevalent challenges of auditing fair value measurement and accounting estimates are the tendency for managers to manipulate earnings owing to the inability of auditor to effectively test fair value estimates; and the difficulty in testing unobservable inputs due to the application of assumptions and judgement in arriving at estimates by preparers of financial reports. Originality/value While there is no significant difference in the perception of auditors on the audit challenges associated with fair value measurement and accounting estimates, there is a significant difference in the magnitude of audit challenges faced in verifying fair value measurements and accounting estimates across industry sectors. Concerned stakeholders (including but not limited to accounting regulators, auditing standard setters, audit firms, researchers) are importuned to come up with robust and pragmatic measures to curtain these challenges, as the inability of auditors to rigorously verify fair value estimates may jeopardize the very essence of fair value measurement which is to elevate financial reporting quality.

scholarly journals The Use of Fair Value Measurement in Financial Reporting: A Literature Review

2019 ◽  
Vol 36 (2) ◽  
pp. 489 ◽  
Author(s):  
Constancio Zamora-Ramírez ◽  
José Morales-Díaz
Keyword(s):  
Literature Review ◽  
Financial Reporting ◽  
Fair Value ◽  
Fair Value Measurement ◽  
Value Measurement

Desde hace unos cuarenta años, el valor razonable se ha venido utilizando cada vez más en las normas emitidas por el IASB y por el FASB. En este sentido, ha existido un gran debate con relación a la relevancia y a la fiabilidad del valor razonable como método de valoración. En principio, los marcos conceptuales del IASB y del FASB se basan en el Paradigma de la Utilidad, y el valor razonable debería aplicarse si ofrece información relevante a los inversores. En el presente artículo revisamos las investigaciones previas en torno al valor razonable (centrándonos en el área de instrumentos financieros y la relevancia del valor razonable). Hemos clasificado los artículos en líneas de investigación y hemos analizado principales conclusiones obtenidas en cada línea. Los autores concluyen que el valor razonable es el modelo que mejor refleja las actividades de gestión de riesgo. La información que ofrece el valor razonable es generalmente relevante para los inversores. La evidencia es mayor en los valores razonables clasificados en los Niveles 1 y 2.

Content and context: “fair” values in China

2017 ◽  
Vol 30 (2) ◽  
pp. 352-377 ◽  
Author(s):  
Ferdinand Balfoort ◽  
Rachel Francis Baskerville ◽  
Rolf Uwe Fülbier
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
Governance Structure ◽  
Future Research ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Fair Value Measurement ◽  
Western Market ◽  
Value Measurement ◽  
The Impact

Purpose The evolution of International Financial Reporting Standards (IFRS) was nurtured by economists and accountants loyal to the philosophical basis of what is often referred to as “Western” market economies, being classical and neoclassical contracting theories. The purpose of this paper is to illustrate how a particular Asian cultural attribute (guānxì ) impacts on the efficacy of fair value measurement. Design/methodology/approach Using a literature review and research of studies of the adoption of IFRS in China, studies of both guānxì and fair value in Chinese accounting research, this study unbundles Williamson’s governance structure and contracting theory to examine how guānxì is positioned orthogonally to fair value (market-oriented valuation) principles for financial reporting. This is followed by a case study of the events surrounding the collapse of China Medical Technologies. Findings Guānxì is integral to Asian economies and economic transactions. Resulting conditions, characterised by relational contracting, may not meet the qualitative characteristics of neutrality and faithful representation in fair value measurement of assets and liabilities. The same may be true when insider or “trusted party transaction” values prevail for large ticket transactions among entities in any jurisdiction. Research limitations/implications Future research on the impact of guānxì may be constrained by its often hidden, and yet dynamic, character; and the varieties of its manifestations. Originality/value This study highlights how difficult it may be to achieve both comparability and relevance in the asset and liability recognition and measurement rules in Asian (and possibly also other) economies adopting accounting principles that are developed in a Western context.

scholarly journals The Critical Aspect on Fair Value Accounting and its Implication to Islamic Financial Institutions

2015 ◽  
Vol 1 (3) ◽  
pp. 210
Author(s):  
Safri Haliding
Keyword(s):  
Financial Institutions ◽  
Financial Reporting ◽  
Financial Institution ◽  
Accounting Standards ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Fair Value Measurement ◽  
Islamic Financial Institutions ◽  
Value Measurement ◽  
Critical Aspects

Recently, fair value measurement and its implication in accounting standards have been increasing (Ramanna, 2006). One of the important aspects of financial reporting is measurement (Barth, 2007). Barlev and Haddad (2003) state that the fair value accounting(FVA) paradigm replaced the historical cost accounting (HCA) in the development of accounting standards that FVA is more value relevant that HCA probably did not provide the real financial information and income. However, previously studies mention that fair value accounting suffers from some serious limitations and disadvantages such as issues in market approach, income approach, and cost approach. Al-Yassen and Al-Khadash (2011) argue that accounting standard setters such as the International Accounting Standards Board (IASB) UK and the Financial Accounting Standards Board (FASB) U.S as well as other national accountingstandard setters provide high attention and long-term ambition to use fair value accounting as full measurement in all financial instruments. Islamic Financial Institutions (IFIs) that have different objectives and principles as well as have different financial products with conventional financial institution. This paper tries to explore critical aspects of the fair value accounting andits implications to Islamic Financial Institutions implications. This study concludes that that fair value accounting measurement provides many critical aspects to be implemented to Islamic Financial Institutions (IFIs). Additionally, AAOIFI proposed cash equivalent value as respond to fair value measurement that cash equivalent value when the attribute condition are present such as the relevance, reliability and understandability of the resulting information. Furthermore, fully adopting International Financial Reporting Standards (IFRS) issued by IFRSIASB, there will no specific standards for unique functions of Islamic Financial Institutions. Inaddition, the paper may be recommended to work together among Muslim countries to unity the potential harmonizing one set accounting standards for Islamic Financial Institutions such as AAOIFI?s standards.

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