Perceptions of external auditors, preparers and users of financial statements about the adoption of IFRS 8

2015 ◽  
Vol 16 (1) ◽  
pp. 2-27 ◽  
Author(s):  
Ghassan H. Mardini ◽  
Louise Crawford ◽  
David M. Power
Keyword(s):  
Financial Statements ◽  
Annual Reports ◽  
International Accounting ◽  
Reporting Standard ◽  
Accounting Standard ◽  
Content Type ◽  
External Auditors ◽  
Decision Usefulness ◽  
Ifrs 8 ◽  
The Impact

Purpose – The purpose of this paper is to explore the perceptions of external auditors, preparers and users (investors and analysts) of financial statements in Jordan about this new segmental reporting standard; a decision usefulness framework underpins the research. Design/methodology/approach – The objective of this study is to explore the perceptions of external auditors, preparers and users (investors and analysts) of financial statements in Jordan about this new segmental reporting standard; a decision usefulness framework underpins the research. Findings – The findings reveal that a majority of interviewees found that IFRS 8 was not a problematic standard, and that the management approach of IFRS 8 was an improvement on the previous standard – International Accounting Standard (IAS) 14R – because the information produced was seen as useful to users of financial statements. Moreover, the respondents indicated that there was an improvement in the quantity and quality of segmental information under IFRS 8 in annual reports for 2009; it was more understandable, relevant, reliable and comparable than the segmental information which had previously been reported. Research limitations/implications – No attempt was made to assess the usefulness of segmental information reported under IFRS 8 by Jordanian listed companies in their annual reports for other groups such as lenders, suppliers, customers, trade creditors and the general public (IASC, 1989). Thus, a survey about the impact of IFRS 8 on other groups may yield further insights about the decision usefulness of the new standard’s disclosures. However, Jordanians are not familiar with such research instruments and the culture within the society is relatively secretive (Piro, 1998). Practical implications – The findings of the current research should be valuable for international accounting standard setters at the International Accounting Standards Board. It provides some indication about the impact of this new standard. Originality/value – This research shows that segmental information reported under IFRS 8 is more useful for decision makers needs compared to segmental information that previously reported under IAS 14R. It also provides a great insight about the impact of this new segmental disclosure standard.

Instructional Case: Worldwide Shipping Corporation Ltd: Early or Late Adoption of a New International Accounting Standard?

1999 ◽  
Vol 14 (2) ◽  
pp. 211-231
Author(s):  
Peter Lee ◽  
Pearl Tan
Keyword(s):  
Financial Reporting ◽  
Financial Analysis ◽  
Balance Sheet ◽  
Financial Statements ◽  
Economic Consequences ◽  
International Accounting ◽  
Accounting Choice ◽  
Accounting Standard ◽  
The Impact ◽  
International Accounting Standard

The management of Worldwide Shipping Corporation Ltd (hereafter “Worldwide Shipping”) is confronted with a dilemma when a new international accounting standard on leases is introduced which contains a transitional provision allowing firms to defer implementation for a period of four years. Students are required to put themselves in the position of managers who have to weigh the adverse impact of early adoption of the new accounting standard against a responsibility for fair financial reporting. Worldwide Shipping is a multifaceted case that can be used as an accounting case study or a financial analysis study. The objectives of the case are threefold. First, it aims to provide students with a better understanding of the impact of off-balance sheet transactions (in this case, sale-leaseback contracts) on a firm's financial statements. Second, it requires students to examine implications of accounting choice on management compensation and debt-contracting costs, as well as the perplexing problem of recognition in financial statements vs. footnote disclosures. By putting students in the position of managers, the case increases students' awareness of the possible economic consequences arising from accounting choice. Third, it provides students with a useful exercise in the mechanics of effecting a change in accounting method using the retroactive method.

Quality and quantity of FTSE-100 segmental information reporting

2019 ◽  
Vol 32 (3) ◽  
pp. 326-343 ◽  
Author(s):  
Ghassan H. Mardini ◽  
Sameh Ammar
Keyword(s):  
Financial Reporting ◽  
Boards Of Directors ◽  
Stock Exchange ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
Information Reporting ◽  
Ifrs 8 ◽  
The Uk ◽  
The Impact

Purpose This study aims to explore the impact of international financial reporting standard no. 8 (IFRS 8) on segmental information reporting (SIR) after the post-implementation review (PIR) issued by international accounting standards board (IASB). This impact is examined in relation to quality and quantity as SIR dimensions represent, respectively, the level of reported items and segments. As a complement to this, the chief operating decision maker (CODM) identity is considered to understand the patterns of SIR dimensions. Design/methodology/approach The SIR of the UK financial times stock exchange 100 (FTSE-100) listed companies over the period 2013-2016 is the research’s scope. Several criteria were developed to ensure a representative research sample. A disclosure index approach was used facilitating the use of content analysis for data collection, which pertained to the dimensions of SIR published by the FTSE-100 following IFRS 8 PIR. Findings The IFRS 8 PIR has had several implications shaping the growing trend that is underpinned by the SIR dimensions published by FTSE-100 companies. First, the SIR quantity dimension positively corresponds over 2013-2016, but it still does not meet IASB’s demands. This, secondly, also applies to the quality dimension of SIR to uncover inconsistency with the existing knowledge being held regarding the introduction of IFRS 8. More specifically, the response of the FTSE-100 to mandatory and voluntary items seems to be in transition of substitution. Third, CODM’s identity was an insightful dimension in rationalising the understanding through the aforementioned dimensions. It is undertaken by boards of directors or executive committees and the case of the latter is associated with more disclose in relation to the CODM’s identity. Practical implications These findings reveal implications to: academics undertaking further research about IFRS 8 PIR to challenge or endorse this conclusion, using similar or alternative approaches; the stakeholders’ decision-making process; and policymakers to re-think the structure of mandatory and voluntary items. Originality/value This paper provides empirical evidence on the quality and quantity of SIR published by FTSE-100 companies following IFRS 8 PIR.

Political uncertainty and the choice of external audit: international evidence from private firms

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omar Farooq ◽  
Harit Satt ◽  
Basma El Fadel
Keyword(s):  
Institutional Environment ◽  
Financial Statements ◽  
Private Firms ◽  
Political Uncertainty ◽  
External Audit ◽  
High Exposure ◽  
Content Type ◽  
External Auditors ◽  
The Impact

PurposeThis paper documents the impact of political uncertainty on the decision of private firms to use external auditors to verify their financial statements.Design/methodology/approachThe authors use the data from 141 countries and the pooled logistic regression to test our arguments. The data is provided by the World Bank's Enterprise Surveys and is collected during the period between 2006 and 2019.FindingsThe results show that firms with high exposure to political uncertainty are more likely to use external auditors to verify their financial statements. The results are robust across various sub-samples and hold when we use alternate proxy for political uncertainty. The results are also robust after controlling for potential endogeneity concerns. The authors also find that the effect of political uncertainty on the choice of external audit is more pronounced for firms that are headquartered in countries with weak institutional environment. The authors document significant role of democracy, rule of law and accountability in determining the relationship between political uncertainty and the choice of external audit.Originality/valueThe authors believe that theirs is one of the initial attempts (if not the first) to investigate the effect of political uncertainty on the choice of external audit among the private firms in developing countries.

scholarly journals The extent of segmental reporting and its value relevance: cross-country evidence

2018 ◽  
Vol 8 (2) ◽  
pp. 279-299 ◽  
Author(s):  
Ghassan H. Mardini ◽  
Yasean A. Tahat ◽  
David M. Power
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Annual Reports ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Equity Prices ◽  
Policy Makers ◽  
Content Type ◽  
Share Prices ◽  
Ifrs 8

Purpose The purpose of this paper is to examine the extent of segmental reporting disclosure and its value relevance to a sample of Qatari and Jordanian listed companies following the implementation review of the International Financial Reporting Standard (IFRS) 8. This was the first standard to be subjected to a post-implementation review. Annual reports are initially analyzed to investigate the level of segmental information that was published by companies in these two countries. Design/methodology/approach Using the Ohlson (1995) model, the study employs regression analysis to test the hypotheses relating to the value relevance of the segmental disclosures uncovered. In addition, one-way ANOVA and Kruskal-Wallis tests are used to investigate any variation in segmental reporting among sectors. Findings The findings indicate that the amount of segmental information disclosed by the sample firms differs across sectors. Moreover, the segmental information provided (including the number of segments and the amounts of disclosure) is value relevant and can explain the variations in firms’ share prices. Practical implications The results of the current investigation have implications for policy makers, including the International Accounting Standards Board, as well as for accounting regulators in Jordan and Qatar. They suggest that the segmental disclosures supplied under IFRS 8 are value relevant for equity prices in a developing country context. Compliance with IFRS 8 should thus be monitored to ensure that all firms provide the segmental disclosures that they are meant to supply under the terms of the standard. Originality/value This paper is one of the few to provide empirical evidence on the role of segmental reporting following the post-implementation review that was conducted for IFRS 8.

scholarly journals The Effects on Financial Leverage and Performance: The IFRS 16

2018 ◽  
Vol 11 (8) ◽  
pp. 76
Author(s):  
Francesca Magli ◽  
Alberto Nobolo ◽  
Matteo Ogliari
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Listed Companies ◽  
Accounting System ◽  
Financial Leverage ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Accounting Standard ◽  
And Performance ◽  
The Impact

This paper analyses the potential impacts of the introduction of a new accounting standard, International Financial Reporting Standard 16 (IFRS 16) – Leases, on financial leverage and performance of entities. This new accounting standard was introduced on 13 January 2016, and will become effective on 1 January 2019; it will have material impacts on the financial statements of listed companies adopting IFRS and change the basic principles of the current accounting system. Our aim is to estimate the impacts of the application of IFRS 16 on listed issuers of financial statements and the different impacts that the new standard could have in different activity sectors. This research estimates the effects of IFRS 16 on the ratios of debt/total assets, EBITDA/revenues and debt/equity. The conclusions summarize the effects on entity performance and net financial position. The research shows that in the financial statements of the lessee, there will be important changes. In particular, in the balance sheet, there will be an increase in lease assets, an increase in financial liabilities and a decrease in equity, while in the income statement, there will be an increase in EBITDA and an increase in finance costs. The impact of the application of IFRS 16 will be different depending on the use of operating lease contracts among the different business sectors. Leases are an important and flexible source of financing; listed companies, using IFRS and U.S. GAAP, are estimated to have around US$ 3.3 trillion in lease commitments. Finally, this study aims to analyse the possible impacts of communication of entities, focusing on alternative performance measures.

Accounting for certified emission reductions (CERs) in India

2019 ◽  
Vol 28 (2) ◽  
pp. 365-389
Author(s):  
Praveen Kumar ◽  
Mohammad Firoz
Keyword(s):  
Secondary Data ◽  
Financial Statements ◽  
Annual Reports ◽  
Accounting Standard ◽  
Content Type ◽  
Reporting Practices ◽  
Know How ◽  
Certified Emission Reduction ◽  
Disclosure Rate ◽  
Very High

Purpose The purpose of this paper is to analyse the certified emission reduction (CERs) disclosure and reporting practices followed by Indian firms. Design/methodology/approach The study is based on all 131 Indian firms who received the CERs under the CDM of UNFCCC. The content analysis is being used to examine the recognition, measurement, presentation and disclosure of CERs within the financial statements. Findings The study found that there is generally no uniformity of accounting for CERs. The firms adopted a diversity of accounting practices. More specifically, majority of companies (40.46 per cent) recognised CERs as the other income; a very high non-disclosure rate (91.60 per cent) for valuation of CERs inventories was found as only four companies (3.05 per cent) provided accounting treatment for CERs inventories at lower of cost or net realisable value followed by three companies (2.29 per cent) accounted for these inventories at Net realisable value at the end of the reporting period; similarly, a very high non-disclosure rate (92.36 per cent) for how companies account for expenses incurred in earning these credits was found. Research limitations/implications The study will be useful for a wide array of audiences ranging from accounting standard setter to the auditors. The present analysis is based on secondary data, as we examined only annual reports of the sample companies to know how they recognise their earned CERs within the financial statements. So, we did not cover the opinions of various key persons of companies like an accountant, auditors etc. which could be a limitation of this study in validating CERs disclosure practices followed by the Indian firms. Originality/value To the best of the author's knowledge, the present study is a first of its kind to analyse the carbon credit disclosure practices in the context of a developing country.

An empirical analysis of an application of an alternative measurement model on international accounting standard 33, earnings per share

2020 ◽  
Vol 33 (2) ◽  
pp. 381-390
Author(s):  
John E. McEnroe ◽  
Mary Mindak
Keyword(s):  
Financial Accounting ◽  
International Accounting ◽  
Accounting Standard ◽  
Content Type ◽  
Earnings Per Share ◽  
The Us ◽  
Price Earnings Ratio ◽  
The Usa ◽  
The Impact ◽  
International Accounting Standard

Purpose The purpose of this paper is to investigate the empirical effects of modifying the calculation of the diluted earnings per share (EPS) number in an international compared to the US accounting setting. The diluted EPS calculation originated in the US Accounting Principles Board Opinion No. 15 (APB 15) and continues in both the US Statement of Financial Accounting Standard No. 128 (SFAS 128), EPS and International Accounting Standard 33 (IAS 33) EPS. Our analysis of the treatment of dilutive warrants and options versus other dilutive convertible securities extends the work of McEnroe and Sullivan (2018), hereafter referred to as McEnroe and Sullivan, 2018 and provides more insight into the impact on the international accounting regulatory environment. Using the McEnroe and Sullivan, 2018 proposed alternative EPS model, we investigate revising the EPS model and analyzing the impact on international data observations. Design/methodology/approach The authors selected our sample from the Compustat Fundamentals Annual Database – North America Daily file. Although using the Global – Daily file would be ideal, the data the authors need to make the alternative EPS calculations is not available in the Global database. The authors pulled data for the years 2010 through 2016 for both the USA and international companies. The authors eliminated companies based upon the criteria described later in the paper (which is comparable to the data restrictions set in McEnroe and Sullivan, 2018). Findings The results are comparable to the results of the US study. The authors find an average increase in diluted EPS to be 4.57 per cent and the median increase to be 2.43 per cent. McEnroe and Sullivan, 2018 found the average increase in diluted EPS to be 5.72 per cent and the median increase to be 3.81 per cent. The authors do not find a significant difference in the overall average percentage increase when looking across all of the years in the data set and comparing the USA to international observations. Overall, the authors further extend the previous conclusion of McEnroe and Sullivan, 2018 that both the USA and international standard setters should consider the alternative diluted EPS model for accounting regulation. Research limitations/implications The study consists of a sample of 262 international firms. An extended study, of all firms subject to International Accounting Reporting Standards (IFRS) might be used by the International Accounting Standards Board and then stratified by country to see if the capital structure of a particular nation’s securities is particularly impacted by the results. Practical implications As McEnroe and Sullivan, 2018, p. 499 state, the Financial Accounting Standards Board (FASB) avers that the price-earnings ratio of an equity is perhaps the most frequently cited business statistic in equity analysis. The authors cite one source Kuepper, (2018), that it is “one of the most popular metrics” on the international level of stocks using IFRS. Given that the denominator, in the price-earnings ratio is the focus of our study, as in the case McEnroe and Sullivan, 2018, the results have implications for the further study and revision of IAS 33. Social implications Again, as in the case of McEnroe and Sullivan, 2018, if currently reported diluted EPS results in lower equity prices than under the proposed model, an effect might be higher debt and equity costs. Since the authors are unaware of any rationale for the current treatment, the authors feel that the current formulation is less than optimal and that the issue of its provisions should be examined. Originality/value A review of the literature found no other study other than McEnroe and Sullivan, 2018 undertaking the issue.

Federal public finance accounting standard “Employee Payments”

2020 ◽  
pp. 5-10
Author(s):  
Olga Shinkareva
Keyword(s):  
Public Finance ◽  
Public Sector ◽  
Financial Reporting ◽  
Financial Statements ◽  
Employee Benefits ◽  
Reporting Standard ◽  
Accounting Standard ◽  
Disclosure Of Information

The article is devoted to the analysis of the Federal Accounting Standard of Public Finance “Payments to Personnel”, which will be applied in the conduct of accounting and reporting from January 1, 2021, including medical state and municipal institutions. The article considers the main provisions of this standard — peculiarities of recognition and evaluation of objects of personnel benefits accounting, termination of their recognition, as well as disclosure of information on objects of personnel benefits accounting in accounting financial statements. This standard is compared with the International Public Sector Financial Reporting Standard 39 “Employee Benefits”

Influence of human resource capital information disclosure on investors’ share investment intentions

2017 ◽  
Vol 46 (3) ◽  
pp. 551-571 ◽  
Author(s):  
Sugumar Mariappanadar ◽  
Alma Kairouz
Keyword(s):  
Performance Management ◽  
Human Resource ◽  
Information Disclosure ◽  
Banking Sector ◽  
Strategic Human Resource Management ◽  
Annual Reports ◽  
Individual Investors ◽  
Content Type ◽  
Investment Intentions ◽  
The Impact

Purpose The purpose of this paper is to apply the strategic human resource management (HRM) perspective to investigate the schematic relationship between the dimensions of human resource (HR) capital information and intentions to use such information in individual investors’ decisions relating to investing equities in the banking industry. Design/methodology/approach A two-stage empirical study was conducted in 2010 using a four-part HR capital disclosure questionnaire, which was developed and validated in stage 1 (n=145) of the study. In stage 2 (n=157), current or previous shareholders in one of the Australian banking sector corporations participated in the study. The collected data were analyzed using confirmatory factor and logistic regression analyses. Findings The findings of this explorative study highlight that the individual investors’ perception on the importance of performance management dimension of HR capital information has varied impacts on their intentions to use such information in investment decisions to buy, hold on to, or sell stocks. Practical implications This study has made an important contribution to the strategic HRM and behavioral finance literature that the human capital information facilitates the propensity to avoid regrets in selling shares too early (dispositional effect bias) to achieve utility benefits in future which is different from the findings of financial information disclosure study. Originality/value A recent critical review of HR disclosure indicated that most of the published articles on HR capital have used company annual reports for data source. However, this is the first study that attempts to understand the impact of HR capital disclosure information on investment intentions from individual investors’ schema rather than drawing data from company annual reports.

The impact of audit reforms on objectivity during the performance of non-audit services

2014 ◽  
Vol 29 (3) ◽  
pp. 222-236 ◽  
Author(s):  
Richard G. Brody ◽  
Christine M. Haynes ◽  
Craig G. White
Keyword(s):  
Audit Quality ◽  
Content Type ◽  
Auditor Liability ◽  
Internal Auditors ◽  
External Auditors ◽  
Regulatory Perspective ◽  
External Auditor ◽  
The Impact ◽  
Practical Implications ◽  
Non Audit Services

Purpose – This research aims to explore whether recent audit reforms have improved auditor objectivity when performing non-audit services. Design/methodology/approach – In two separate experiments, the authors tested whether external and internal auditors' inventory obsolescence judgments are influenced by their client's (or company's) role as the buyer or seller in an acquisition setting. Findings – External auditors assessed the likelihood of inventory obsolescence objectively, regardless of their consulting role in the acquisition setting. Internal auditors assessed the likelihood of inventory obsolescence as higher when consulting for the buyer than when consulting for the seller, consistent with the supposition that the buyer would prefer to write-down inventory and negotiate a lower purchase price, whereas the seller would prefer the inventory not be written down. Practical implications – From a regulatory perspective, external auditors may be relying too much on the work of internal auditors if internal auditors' lack of objectivity as consultants extends to their assurance role. Originality/value – This paper extends prior research in the area of internal and external auditor objectivity and is the first paper to include both subject groups in the same experiment. It also addresses the current policy issues that may have a significant effect on audit quality and auditor liability.

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