Fair Valuation of Liabilities

ABSTRACTA project to develop an Accounting Standard for Insurance, with the aim of enhancing understandability, relevance, reliability and comparability of general purpose financial reporting for insurance worldwide, is being progressed by the International Accounting Standards Board. The basis of the proposals is that assets and liabilities be shown at fair values (market values for quoted instruments). This paper, prepared by a Working Party established by the Life Board of the United Kingdom actuarial profession, summarises and comments upon a number of the principal features of the proposals, as they have emerged up to September 2001. The paper goes on to consider how a system of reporting for prudential regulatory purposes might be built upon a fair value general reporting base, summarising the thinking of a number of other bodies, proposing certain principles and suggesting lines of development. The appendices to the paper discuss a number of issues in further depth and present some illustrative results of some investigations into applying fair value methods in practice. The emphasis of the paper is on reporting for life assurance business, although many of the principles apply equally to general insurance.

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The IASB and ASBJ Conceptual Frameworks: Same Objective, Different Financial Performance Concepts

Accounting Horizons ◽

10.2308/acch-50902 ◽

2014 ◽

Vol 29 (1) ◽

pp. 199-216 ◽

Cited By ~ 9

Author(s):

Carien van Mourik ◽

Yuko Katsuo

Keyword(s):

Financial Performance ◽

Conceptual Framework ◽

Financial Reporting ◽

Accounting Standards ◽

General Purpose ◽

International Accounting Standards ◽

Conceptual Frameworks ◽

Accounting Standard ◽

Decision Usefulness

SYNOPSISThis paper illustrates that, despite their general agreement on the decision-usefulness objective of general purpose financial reporting, the Accounting Standard Board of Japan (ASBJ) and the International Accounting Standards Board (IASB)'s conceptual frameworks are based on two different concepts of financial performance. By identifying and contrasting the two financial performance concepts and their impact on the rest of the frameworks and by explaining the thinking that underpins the ASBJ's chosen financial performance concept, it contributes to a debate about the role of financial performance concepts in fulfilling the decision-usefulness objective. Such a debate is pertinent to the revision of the IASB's Conceptual Framework, which is scheduled for completion in 2015.

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Accounting Concepts in Company Law

European Company and Financial Law Review ◽

10.1515/ecfr-2021-0019 ◽

2021 ◽

Vol 18 (3) ◽

pp. 398-427

Author(s):

Jesper Seehausen

Keyword(s):

Financial Reporting ◽

Accounting Standards ◽

Fair Value ◽

Company Law ◽

International Accounting Standards ◽

Reporting Standards ◽

Financial Reporting Standards ◽

Eu Legislation ◽

Starting Point ◽

Pros And Cons

Abstract Taking as a starting point Peter Hommelhoff’s argumentation that accounting law is, in many respects, linked to company law, the purpose of this article is to discuss one perspective of the links between accounting law and company law: accounting concepts in company law. After a brief outline of the existing EU legislation on accounting and a discussion on whether accounting law is part of company law, some examples of accounting concepts in company law – i. e. examples of accounting concepts that have been ‘implemented’ in company law – are discussed, drawing on the Consolidated Company Law Directive (CCLD) and the Shareholder Rights Directive (SRD 2) as well as the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS). These examples are related party transactions, consideration other than in cash and fair value, serious loss of the subscribed capital as well as a few other examples. It is also discussed whether accounting concepts in company law are a ‘good’ or a ‘bad’ thing. Balancing the pros and cons, in the author’s opinion, it is mostly positive that accounting concepts are used in company law in areas where this makes sense – and hence, in the author’s opinion, accounting concepts in company law are mainly a ‘good’ thing.

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Valuing An Emerging International Technology Company

Journal of Business Case Studies (JBCS) ◽

10.19030/jbcs.v7i1.1586 ◽

2011 ◽

Vol 7 (1) ◽

Cited By ~ 1

Author(s):

John Zimmerman

Keyword(s):

Balance Sheet ◽

Cumulative Effect ◽

Fair Value ◽

Financial Accounting ◽

Publicly Traded ◽

Accounting Standard ◽

Financial Valuation ◽

Accounting Principle ◽

Fair Valuation ◽

Interim Period

The requirements of Financial Accounting Standard Board (FASB) 142 provide an excellent opportunity to examine various financial valuation methods used to determine a company’s value. Under FASB 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but instead tested for impairment at least annually in accordance with the provisions. Any impairment loss has to be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in an organization’s first interim period. The impairment test requires an accurate and fair valuation of the asset in question. This case is based upon the valuation dilemma faced by Integrated Silicon Solution (NASDAQ: ISSI), a publicly traded international technology company, in late 2008. ISSI had made several acquisitions and carried substantial goodwill. Since ISSI was publicly traded, a public market value was available but the financial crisis of 2008 caused the company to consider other methods, as is allowed under FASB 142. The case uses both the income and comparable market approaches to arrive at a fair value, and this value is used to determine if impairment for the goodwill the company carried on its balance sheet existed.

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MENGUPAS PERSOALAN STANDAR AKUNTANSI KEUANGAN - GOODWIL DI BERBAGAI NEGARA : SUATU PENDEKATAN STUDI LITERATUR

Jurnal Riset Akuntansi Dan Bisnis Airlangga ◽

10.31093/jraba.v2i2.48 ◽

2017 ◽

Vol 2 (2) ◽

Author(s):

Deddy Kurniawansyah

Keyword(s):

Research Method ◽

Intangible Assets ◽

Accounting Standards ◽

Financial Statements ◽

Fair Value ◽

Financial Accounting ◽

International Accounting Standards ◽

Fair Value Accounting ◽

Literature Study ◽

Accounting Standard

This literature study explains and describe the development of the concept of goodwill from the perspective of accounting by observing and describing until the development at this time, discusses differences in accounting standards of goodwill applicable in some countries, and explains the things that contradict the goodwill. This research method used qualitative with literature study. The results of this study are in some countries, the concepts and rules on goodwill accounting have undergone various changes, including international accounting standards issued by the IASC. Initially goodwill is capitalized and amortized over no more than 20 years. But, along with the increasing use of fair value accounting in accounting standards, thetreatment for goodwill also experienced a shift that is eliminated by the amortization method is replaced by doing impairment test to goodwill. The results of this study contribute as add to the treasury of financial accounting literature, especially accounting treatment of goodwill as intangible assets in the financial statements of various countries such as Indonesia, America and the England.Keyword :Goodwiil, Impairment, Financial Accounting Standard

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Using arguments and myths to lobby over controversial accounting issues: evidence from Japan

Pacific Accounting Review ◽

10.1108/par-01-2019-0003 ◽

2020 ◽

Vol 32 (3) ◽

pp. 355-390

Author(s):

Noriyuki Tsunogaya ◽

Andreas Hellmann

Keyword(s):

Financial Reporting ◽

Financial Services ◽

Accounting Standards ◽

Fair Value ◽

Network Effect ◽

International Accounting Standards ◽

Content Type ◽

Generally Accepted Accounting Principles ◽

Financial Reporting Standards ◽

Stakeholder Groups

Purpose This study aims to examine the (overt) arguments and (covert) myths the Business Accounting Council (BAC) members have used to lobby over controversial accounting issues, such as the application of fair value accounting (FVA) and the adoption of International Financial Reporting Standards (IFRS) in Japan. Design/methodology/approach The authors used a content analysis to examine 85 statements included in multiperiod BAC meeting minutes and 68 articles prepared by International Accounting Standards Board (IASB) representatives from Japan. Findings The results reveal that together with the arguments, myths were created and amplified by opponents of FVA and the Financial Services Agency to hide the latter’s strong regulatory power. They created these myths, using covert stories of the importance of manufacturing activities and tax accounting (for small- and medium-sized enterprises [SMEs]), to oppose mandatory IFRS adoption in Japan and, thus, to maintain vested rights in preparing the Japanese generally accepted accounting principles and Japanese accounting standards for SMEs. Originality/value First, this study contributes to the lobbying literature by focusing on the coalition (network) effect of influential stakeholder groups. Second, although lobbying activities have been investigated mostly using comment letters, this study reviews multiperiod BAC meeting minutes and articles prepared by IASB representatives from Japan. Third, the study examines both overt arguments and covert myths, both of which are important in unmasking the fundamental structures of power within influential organizations, such as government agencies and standard-setters.

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Challenges with the financial reporting of biological assets by public entities in South Africa

South African Journal of Economic and Management Sciences ◽

10.4102/sajems.v19i1.1339 ◽

2016 ◽

Vol 19 (1) ◽

pp. 139-149 ◽

Cited By ~ 3

Author(s):

Deon Scott ◽

Christa Wingard ◽

Marilene Van Biljon

Keyword(s):

South Africa ◽

Public Sector ◽

Financial Reporting ◽

Fair Value ◽

Financial Information ◽

Annual Reports ◽

Eastern Cape ◽

Accounting Standard ◽

The Public ◽

Growth Initiative

Fair value accounting of biological assets in the public sector was introduced with the adoption of the public-sector-specific accounting standard: Generally Recognised Accounting Practice (GRAP) 101. The public sector currently reports on various bases of accounting. Public entities and municipalities report in terms of accrual accounting, and government departments report on the modified cash basis. The lack of a uniform basis of accounting impedes the comparability of financial information. The implementation of GRAP 101 in the public sector is important in facilitating comparability of financial information regarding biological assets. This paper is based on a content analysis of the annual reports of 10 relevant public entities in South Africa and specifically details the challenges that public entities encounter with the application of GRAP 101. These challenges, and how they were addressed by a public entity that adopted and applied GRAP 101, namely the Accelerated and Shared Growth Initiative South Africa – Eastern Cape (AsgiSA-EC), are documented in this research.

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ONE FINANCIAL REPORTING GLOBAL LANGUAGE: THE ULTIMATE GOAL?

Jurnal Riset Akuntansi dan Keuangan ◽

10.17509/jrak.v5i1.6731 ◽

2017 ◽

Vol 5 (1) ◽

Author(s):

Amelia Limijaya

Keyword(s):

Financial Reporting ◽

Accounting Standards ◽

Reporting Quality ◽

Financial Reporting Quality ◽

International Accounting Standards ◽

Political Aspect ◽

Accounting Standard ◽

The Us ◽

Global Language ◽

Accounting Standard Setting

This article aims to analyse the extent to which international accounting standards is applied and whether it is the ultimate goal. Up until the end of 2016, approximately there are 84% of the 149 jurisdictions analysed which require IFRS for all or most domestic publicly accountable entities. This may indicate that we are not that much further from having a single set of globally-accepted accounting standards. However, there is more to financial reporting than just accounting standards alone, such as the political aspect of accounting standard-setting, translation issues surrounding IFRS adoption, the US position and the complexity of financial reporting. Improving financial reporting quality needs more than just having global accounting standards, rather, it is also essential to consider the preparers’ incentives and other institutions surrounding the firm. Stakeholders need to broaden the perspective when viewing financial reporting, so that it will not be focused merely on accounting standards alone.

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El modelo de valor razonable: La aproximación de las cifras contables a los valores de mercado (The fair value model: The aproach of the accounting figures to the market values)

TEC Empresarial ◽

10.18845/te.v8i3.2079 ◽

2014 ◽

Vol 8 (3) ◽

pp. 41

Author(s):

Eduardo Sosa Mora

Keyword(s):

Financial Reporting ◽

Theory Of The Firm ◽

Financial Statements ◽

Fair Value ◽

Reporting Standards ◽

Market Prices ◽

Financial Reporting Standards ◽

Market Values ◽

Future Events ◽

Value Model

Desde hace muchos años, en el ámbito académico y en el profesional de la contabilidad, se debate acerca de la importancia de que los estados financieros presenten los activos y pasivos de acuerdo con sus valores de mercado, con el fin de lograr una mejor aproximación a los valores económicos de las empresas. Esto ha propiciado que, en las Normas Internacionales de Información Financiera (NIIF), haya adquirido relevancia el modelo del valor razonable, según el cual los activos y pasivos se miden por sus valores de mercado. La adopción de este modelo significa la instrumentación de la teoría del valor de la empresa y una mayor aproximación de la contabilidad a la teoría de las finanzas, cuyos beneficios deben sopesarse con los riesgos asociados a la obtención de cifras contables a partir de precios de mercado y de supuestos acerca de eventos esperados en el futuro. Este artículo expone los alcances de la adopción de ese modelo en el esfuerzo por lograr que los estados financieros representen fielmente las realidades económicas de las empresas. Abstract Since many years ago in the Accounting academic and professional circles there is a debate about the importance that the financial statements represent the assets and liabilities according with their market values, in order to get a better approximation to the economic values of the enterprises. Because of this the fair value model has gained relevance in the International Financial Reporting Standards (IFRS). According with this model, the assets and liabilities are measured by their market values. The adoption of this model means the implementation of the theory of the firm and a greater approximation the Accounting to the Financial Theory, whose benefits must be weighted with the risks of getting accounting figures by using market prices and assumptions about future events. This paper expounds the scopes of adopting this model in the effort to assure that the financial statements represent faithfully the economic realities of the enterprises.

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THE ACCOUNTING STANDARDS AND FINANCIAL REPORTING IN ALBANIA

CBU International Conference Proceedings ◽

10.12955/cbup.v4.748 ◽

2016 ◽

Vol 4 ◽

pp. 092-097

Author(s):

Rezarta Shkurti ◽

Brunilda Duraj

Keyword(s):

Financial Reporting ◽

Small And Medium Enterprises ◽

Accounting Standards ◽

Current Status ◽

International Accounting Standards ◽

Accounting Standard ◽

Non Profit ◽

National Accounting ◽

Financial Reporting Standards ◽

Medium Enterprises

Albania implemented its first set of 14 National Accounting Standards (NAS), which were prepared in compliance with the International Financial Reporting Standards, in 2009. The 15th standard, specifically the Accounting Standard for financial reporting by micro-entities, was added to this set in 2011 and a 16th standard, relating to the reporting for non-profit enterprises, was added in 2015. In 2014, the National Accounting Council of Albania (NACA) performed a major revision of this existing framework of NAS. The focus of this paper is to analyze the current status, as well as the development of accounting and financial reporting in Albania for the Small and Medium Enterprises (SMEs). An international standard of financial reporting for SMEs was issued by the International Accounting Standards Board but was not fully endorsed by the European Community, nor by the NACA, who instead chose to revise their current NAS. In this study, we provide a general overview of the accounting regime and platforms currently applied in Albania, by focusing on the changes over the recent years. We also depict the main differences between the IFRS for SMEs and the NAS in Albania in treatment of several elements of the financial statements.

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The Foundations for a General Theory of General Purpose Financial Reporting for Business

10.26686/wgtn.16967464 ◽

2021 ◽

Author(s):

◽

David Sutton

Keyword(s):

General Theory ◽

Financial Reporting ◽

Central Element ◽

Accounting Standards ◽

Fair Value ◽

General Purpose ◽

Historical Cost ◽

Legitimate User ◽

Valuation Method ◽

Value Measurement

Accounting standards setters have progressively moved towards decision-useful, investor-focused fair value accounting standards for general purpose financial reporting (GPFR). With some qualification, the case is made that this development is positive for accounting as a discipline. This paper develops a referent theory of accounting to contextualize standards setters' implicit direction, derived from existing research and literature. A central element in the development of this theory is the case made for 'investor-as-GPFR user'. Against this, stakeholder theory and positive accounting theory will be identified as confounding influences on the development of a general theory of accounting. The argument is for the investor, both current and potential, as the sole legitimate user of GPFR. The practical implications of the theory are considered against the prevailing debate over optimal accounting valuation method; the debate between fair value measurement and historical cost. The case is made that a number of ostensible dichotomies in accounting thought, such as between relevance and accountability, are substantially reconcilable. The mutual exclusivity often implied of accounting information relevance and accountability-cum-reliability is rejected. The development of a general theory of accounting is timely as such a referent theory is necessary to legitimize standards setting and secure accounting's place in an increasingly diverse financial information market. Inferentially, trends in the evolution of fair value standards reflect the dominant concern to meet threats to the discipline as a whole; this standard setting trend qualified in speed and degree by the narrow interests of 'constituents'.

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