Financial reporting for commercial service charges in the retail sector

2015 ◽  
Vol 33 (2) ◽  
pp. 152-172 ◽  
Author(s):  
Andrew Holt ◽  
Timothy Eccles
Keyword(s):  
Financial Reporting ◽  
Third Party ◽  
Retail Sector ◽  
Content Type ◽  
Reporting Practices ◽  
Code Of Practice ◽  
Reporting Requirements ◽  
Service Charge ◽  
Shopping Centres ◽  
Retail Shopping

Purpose – The purpose of this paper is to assess whether financial reporting practices for commercial service charges in the UK retail sector match the best practice requirements of the Royal Institution of Chartered Surveyors (RICS) Code of practice for commercial service charges. This assessment was performed by benchmarking commercial service charge documents provided to retail occupiers at UK shopping centres against the RICS Code’s financial reporting requirements. Design/methodology/approach – Data were generated from direct analysis of actual service charge documents supplied to commercial retail occupiers. This ensures authenticity by removing reliance upon third party reporting of said data. The paper uses a sample size that is representative of the financial reporting practices for commercial service charges at UK shopping centres. Findings – Levels of compliance with the financial reporting requirements of the RICS Code of Practice for commercial service charges are found to be poor, especially in terms of the disclosure of the accounting policies used during the preparation of the service charge accounts. These results contrast with claims by the professional body. Research limitations/implications – The work analyses service charge documents prepared during 2010-2012 by 44 managing agents and 87 landlords at 126 UK retail shopping centres located in Great Britain. Content analysis was utilised to interpret the data and required some subjective judgement by the researchers. Originality/value – Data are original and the paper provides a unique benchmarking test for assessing Code compliance. This contrasts markedly with the anecdotal evidence offered by the profession in defending current standards of practice and whilst the paper has limitations, it is the largest and most in-depth study of commercial service charge practices at UK retail shopping centres.

Professional standards and accounting change

2015 ◽  
Vol 17 (3) ◽  
pp. 198-225
Author(s):  
Andrew Derek Holt
Keyword(s):  
Financial Reporting ◽  
Office Buildings ◽  
Professional Service ◽  
Content Type ◽  
Code Of Practice ◽  
Reporting Requirements ◽  
Service Charge ◽  
Shopping Centres ◽  
The Uk ◽  
Code Compliance

Purpose – This research aims to continue previous work by the author in the field of commercial service charge management in the UK, offering a unique cross-sectoral comparison in this paper. While prior studies have approached only one sector, this study analyzes both retail and office sectors in the UK. It examines the financial reporting and administrative practices of managing agents and the overall quality of commercial service charge documents, through which it offers commentary on the standard of professional service in service charge provision. It achieves this by benchmarking performance achieved against the accounting requirements of the UK RICS Code of Practice, Service Charges in Commercial Property. Design/methodology/approach – Data were hand collected from analysis of actual service charge documents supplied to commercial retail occupiers at 100 UK office buildings and 100 UK shopping centres during the period of 2010-2013. This process ensures authenticity by removing reliance upon third-party reporting of the said data and offers a uniquely detailed longitudinal sample. Findings – Overall levels of compliance with the financial reporting requirements of the RICS Code of Practice for Commercial Service Charges were poor in both sectors over the period of 2010-2013. Of specific concern was the widespread failure to disclose the accounting policies used during the preparation of the service charge accounts; knowing whether the accounts are prepared using an accruals or cash basis is essential for occupier decision-making purposes. Overall, the results from this study contrast with claims by the professional body that levels of “best practice” are increasing across the service charge industry. Research limitations/implications – The work analyzes service charge documents prepared during 2010-2013 for 100 office buildings and 100 retail shopping centres located in the UK. While the sample sizes utilized are relatively small, the paper provides a unique in-depth longitudinal analysis of commercial service charge documents that produces findings with high levels of generalizability. Content analysis was utilized to interpret the data and required some subjective judgement by the researcher. Originality/value – The study provides a comprehensive longitudinal study of accounting and financial reporting practices for commercial service charges in the UK retail and office sectors. Sector data are original, and the paper provides a unique benchmarking approach for assessing Code compliance at each building. This structured longitudinal approach to benchmarking differs markedly from the largely anecdotal evidence offered by the profession when defending current levels of Code compliance. In addition, the paper also provides individual compliance scorecards for 695 service charge documents in order to assess compliance with nine “core” financial reporting requirements of the RICS Code. Its chief value lies in establishing actual practice standards that can be taken up as a driver for improvement – by tenants, agents, landlords and the wider profession.

scholarly journals Leases as inhibitors of best practice in service charge management

2019 ◽  
Vol 37 (2) ◽  
pp. 275-286
Author(s):  
Andrew Derek Holt ◽  
Timothy Stephen Eccles
Keyword(s):  
Best Practice ◽  
Legal Framework ◽  
Content Type ◽  
Commercial Property ◽  
Code Of Practice ◽  
Service Charge ◽  
Practical Management ◽  
Real Estate Management ◽  
The Relationship

Purpose The relationship between the owner and an occupier of a commercial property is determined by the lease, inasmuch as it sets out the legally enforceable duties and obligations of each party. However, it is only that, a legal framework; it is not a practical management handbook on how best to operate the premises and generate an amicable business relationship. The purpose of this paper is to consider the role of the lease in reinforcing and disrupting the generation of best practice within real estate management. Design/methodology/approach The paper examines actual leases to understand the service charge and how data pertinent to it is collected, disseminated and interpreted by both parties in carrying out their activities within and about the property. This is then benchmarked against provisions of the Service Charge Code of Practice. Findings Despite a number of incarnations of a code of practice on service charges during the lifetime of the leases examined, the research finds a troublingly small uptake of its ideas within new leases. Practical implications The findings predict future problems in the practical management of multi-tenanted properties, coupled with a call that leases are written to the Code’s requirements. Originality/value No such lease examination has been undertaken to date.

scholarly journals Heritage reporting by the Australian public sector

2019 ◽  
Vol 32 (2) ◽  
pp. 612-631 ◽  
Author(s):  
Peir Peir Woon ◽  
Bikram Chatterjee ◽  
Carolyn J. Cordery
Keyword(s):  
Public Sector ◽  
Financial Reporting ◽  
Public Management ◽  
Information Needs ◽  
New Public Management ◽  
Content Type ◽  
For Profit ◽  
Reporting Requirements ◽  
New Public ◽  
Proposed Model

Purpose The purpose of this paper is to contribute to the future development of heritage reporting in Australia. Public sector reporting of heritage has been a long-standing issue, due to shortcomings in (sector-neutral) for-profit-based financial reporting standards. Australia’s sector-neutral approach does not meet public sector users’ information needs. The authors develop a heritage reporting model to balance community and other stakeholders’ interests and address prior critiques. Design/methodology/approach The paper reviews heritage reporting requirements in Anglo-Western Countries, and analyses commentaries and research publications. It evaluates the existing reporting requirements in the context of new public management (which focusses on information and efficiency) and new public governance (NPG) (focussing on balancing interests and quality). Findings The paper proposes an NPG-based heritage reporting model which includes indicators of performance on the five UNESCO (1972) dimensions and operational guidelines issued by UNESCO (2015). These are identification, presentation, protection, conservation and transmission. The proposed model is consistent with the notion of US SFFAS 29 (the standard for Federal entities). Not all heritage must be capitalised and hence attachment of monetary value, but detailed disclosures are necessary. Research limitations/implications The authors expect the proposed heritage reporting model to better serve users of heritage information compared to the present Australian Accounting Standards Board 116: Property, Plant and Equipment. Originality/value The authors’ proposed model of heritage reporting attempts to answer Carnegie and Wolnizer’s (1995, 1999) six questions, addresses decades of concerns raised in previous literature and provides a new perspective to heritage reporting based on NPG that should better serve users’ needs.

Quality reporting of corporate philanthropy

2017 ◽  
Vol 22 (4) ◽  
pp. 486-506 ◽  
Author(s):  
Carmen Valor ◽  
Grzegorz Zasuwa
Keyword(s):  
Financial Reporting ◽  
Corporate Philanthropy ◽  
Financial Reports ◽  
Content Type ◽  
Quality Reporting ◽  
Reporting Practices ◽  
Corporate Websites ◽  
Fortune 100 ◽  
Accounting Model ◽  
Corporate Social

Purpose The purpose of this paper is twofold: first, to outline a framework for corporate philanthropy (CP) reporting that could help differentiate between symbolic and substantive reporting; and second, to test whether the reporting practices of large corporate donors are symbolic or substantive. Design/methodology/approach First, to construct a framework for CP reporting, the authors draw from research on corporate social responsibility communication, CP and reputational capital-building. Second, the philanthropy disclosures found in non-financial reports of the largest donors from the list of Fortune 100 corporations were examined using content analysis. Findings The theoretical framework identifies key ingredients of disclosure quality such as goals, causes, support, partners and impacts. The empirical findings show that disclosures regarding CP are more symbolic than meaningful. The largest donors provide descriptive information regarding the CP plan that primarily focuses on projects and causes. However, they fail to provide an explicit account of their decisions and the results of their philanthropic activities. Research limitations/implications The framework could also be applied with small changes to other communication outlets including social media and corporate websites. Originality/value This paper addresses an important gap in non-financial reporting research: the lack of a CP accounting model. To the authors’ knowledge, the framework developed in this paper represents the first conceptualization of the quality of CP disclosure that may enable scholars to differentiate symbolic from substantive CP and in this way advances the debate on CP communication. This framework can also help companies sincerely engaged in philanthropy to benefit from these activities.

scholarly journals Impression management and self-presentation dissimulation in Portuguese chairman’s statements

2016 ◽  
Vol 21 (3) ◽  
pp. 388-408 ◽  
Author(s):  
Jonas Oliveira ◽  
Graça Azevedo ◽  
Fátima Borges
Keyword(s):  
Social Psychology ◽  
Impression Management ◽  
Financial Reporting ◽  
Corporate Image ◽  
Self Presentation ◽  
Content Type ◽  
Scarce Resources ◽  
Reporting Practices ◽  
Goal Relevance ◽  
Psychology Theory

Purpose – Drawn on social psychology theory of impression management (IM), the purpose of this paper is to assess the way Portuguese managers build their narratives in chairman’s statement (CS) to manage stakeholders’ perceptions on corporate image, in a period of time of scarce resources. Design/methodology/approach – The paper’s theoretical framework draws on elements of social psychology theory of IM developed by Leary and Kowalski (1990). Through the use of the two-component model of IM (impression motivation and impression construction) the 45 CSs of Portuguese non-finance companies were content analysed to understand how managers build their voluntary communication strategies. Findings – Results indicate that organisational outcome does not influence the adoption of IM strategies. But public visibility and consumer proximity are crucial factors in explaining them. Larger companies with high consumer proximity present themselves in a favourable way, but consistent with an overall reading of the annual report. These companies show a higher level of verbosity, consistent to the argument of retrospective rationality. Originality/value – The present study goes beyond Merkl-Davies et al. (2011) work and obtains insightful knowledge on the influence of goal relevance of impression in three different perspectives: company’s public visibility, company’s dependency from debtholders, and consumer proximity. Moreover, the analysis uses a period of scarce resources and a European Latin country, with no tradition in publishing CSs, but that recently has changed its financial reporting practices from an institutional code-law logic to an institutional common-law logic. A research setting like this has not been studied hitherto.

GAAP-adjusted earnings disclosures by New Zealand companies

2015 ◽  
Vol 27 (3) ◽  
pp. 329-352 ◽  
Author(s):  
Liz Rainsbury ◽  
Carol Hart ◽  
Nonthipoth Buranavityawut
Keyword(s):  
New Zealand ◽  
Financial Reporting ◽  
Global Financial Crisis ◽  
Relevant Information ◽  
Annual Reports ◽  
Content Type ◽  
Future Earnings ◽  
Reporting Practices ◽  
Financial Reporting Standards ◽  
The Global Financial Crisis

Purpose – This paper aims to examine motivations for the reporting of generally accepted accounting practice (GAAP)-adjusted earnings by New Zealand companies. Design/methodology/approach – The study uses multivariate analysis of data from New Zealand company annual reports for the period from 2004 to 2012. Findings – Evidence suggests that management of some New Zealand firms are motivated to use GAAP-adjusted earnings to provide a more favourable impression of earnings. However, across firms, these adjusted earnings provide a better predictor of future earnings and provide more value-relevant information to the market than GAAP earnings. Thus, a desire to disclose a more accurate indicator of permanent earnings appears to be a strong factor in the reporting of GAAP-adjusted earnings. Research limitations/implications – The study uses firms listed on the New Zealand share market. The number of firms examined is small, but we compensate by studying the entire population, thus avoiding sampling issues. The results suggest that New Zealand’s regulatory response of recommending guidelines for reporting alternative earnings measures is appropriate. Originality/value – The study contributes to the literature on the relationship between reporting statutory earnings and non-GAAP earnings. It uses a period that includes three major events in the New Zealand economy and reporting environment: the adoption of international financial reporting standards, a change in tax law and the global financial crisis. Recognition of these events allows us to better interpret the GAAP-adjusted reporting practices taken by managers.

Independent monitoring and review functions in a financial reporting context

2017 ◽  
Vol 25 (2) ◽  
pp. 268-290 ◽  
Author(s):  
Albertus Louw ◽  
Warren Maroun
Keyword(s):  
Empirical Evidence ◽  
Financial Reporting ◽  
Financial Statements ◽  
Reporting Standards ◽  
Content Type ◽  
Reporting Practices ◽  
Financial Reporting Standards ◽  
Corporate Reporting ◽  
Independent Review

Purpose Independent monitoring and review bodies have become a defining feature of the professional accounting and auditing space. Exactly how these institutions function to improve the quality of the corporate reporting or audit function is, however, poorly understood. Consequently, the purpose of this study is to provide empirical evidence on how the activities of an independent review process functions on individual preparers, auditors and those charged with an organisation’s governance. Design/methodology/approach The study is an interpretive one. Data are collected using semi-structured interviews and analysed by the researchers. Findings The review function performed by an independent body results in companies being more aware of the need for compliance with the applicable financial reporting standards. Independent reviews also act as a process of examination which functions at the level of the individual accountant, auditor or director. These subjects of regulation report an added sense of accountability to their respective employer and profession and a heightened awareness of the need for high-quality corporate reporting. Research limitations/implications Independent monitoring and review bodies are not just symbolic displays which reassure uninformed users that the quality of financial statements are sound. Examination of financial statements and identification of non-compliance with the applicable financial reporting standards drive actual changes in reporting practices. Originality/value This study complements the predominantly positivist financial reporting research which does not deal with precisely how the work of regulatory bodies operates on the subjects of regulation. The research makes an important practical contribution by providing empirical evidence in support of laws and regulations which promote independent review of the accounting profession.

scholarly journals Service charge management at the dawning of the age of the professional statement

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Timothy Stephen Eccles
Keyword(s):  
Regulatory Regime ◽  
Sensitive Information ◽  
Property Management ◽  
Content Type ◽  
Code Of Practice ◽  
Service Charge ◽  
Management Consultancy ◽  
Valid Data ◽  
Research Questions ◽  
Charge Management

PurposeThe paper provides a snapshot analysis on the state of service charge management at the point in which its regulatory framework by RICS changed from a voluntary code of practice to a mandatory professional statement.Design/methodology/approachThe data consist of a unique eight-year longitudinal study of service charge statements and practice (2010–2017). Because of the confidential nature of such business-sensitive information, this is a priceless study of real-world practice over such a long period and is able to illustrate both annual compliance and the year-on-year changes. Given this, it is recognised that data are skewed in favour of compliance because they are derived from an actively managed portfolio.FindingsThe results continue to illustrate long-running problems of non-compliance with “required” metrics. Given the inherent bias in the data, this is especially difficult to excuse. The paper also analyses the results in the light of the new RICS professional statement, which requires mandatory compliance. Whilst some of the metrics are advisory, there remain questions over how RICS might realistically enforce so many practitioners to change their existing performance and how willing the institution might be to actually prosecute failure. It also revisits the issue of institutionalised benchmarking of standards. Intriguingly, there are islands of almost perfect compliance, which offers an interesting contrast and raises further research questions on why some practitioners provide such exemplary work.Research limitations/implicationsThe data are derived from the clients of a UK property management consultancy. This does preclude any randomness to the sampling. However, the richness of the data and the methodology adopted provide valid data.Originality/valueThis work offers both unique data and an eight-year longitudinal analysis, but also a timely comparison with the requirements within a new RICS professional statement. This shift in regulatory regime reinforces the value of the work.

Culture and financial reporting quality in GCC countries: what do we know about tribal culture?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saeed Rabea Baatwah ◽  
Khaled Salmen Aljaaidi ◽  
Ehsan Saleh Almoataz ◽  
Zalailah Salleh
Keyword(s):  
Financial Reporting ◽  
Boards Of Directors ◽  
Fixed Effects ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Sensitivity Analyses ◽  
Content Type ◽  
Reporting Practices ◽  
Tribal Culture ◽  
Gcc Countries

PurposeAlthough the effect of culture on financial reporting practices has been addressed in earlier studies, the existing empirical evidence totally neglects an important dimension in Gulf Cooperation Council (GCC) markets: tribal culture. The authors fill this gap in the literature using Oman as the setting.Design/methodology/approachThe authors collect data for 583 company-year observations for companies listed on the Omani capital market, 2007–2014. The authors run a two-way fixed effects panel data regression to test their hypothesis.FindingsTribal culture has a negative effect on financial reporting quality (FRQ), measured by both accrual-based and real earnings management. The findings are robust under a variety of sensitivity analyses. In additional analysis, the findings confirm that tribal culture negatively moderates the effectiveness of internal monitoring mechanisms and is associated with low-quality auditing. Further, the authors find tribal culture associated with delayed financial information.Originality/valueTo the authors' knowledge, the study makes several contributions to the literature because it is the first archival evidence linking tribal culture with FRQ. It is the first to show that the effect of corporate governance mechanisms on FRQ is moderated by tribal culture. The study has valuable implications for policymakers, regulators, boards of directors and auditors in GCC countries as well as in countries with similar cultures.

Sustainable corporate governance and non-financial disclosure in Europe: does the gender diversity matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Giuseppe Nicolò ◽  
Giovanni Zampone ◽  
Giuseppe Sannino ◽  
Serena De Iorio
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Board Of Directors ◽  
Financial Reporting ◽  
Gender Diversity ◽  
Women Directors ◽  
Theoretical Understanding ◽  
Content Type ◽  
Reporting Practices ◽  
The Impact

PurposeRecent regulatory changes in Europe have promoted non-financial reporting practices (e.g., Directive, 2014/95/EU) and gender diversity in decision-making positions. Special attention is devoted to promoting the gender balance on corporate boards as a key mechanism to enhance corporate governance effectiveness and better address multiple stakeholders' needs. With this in mind, this study intends to examine the impact of boardroom gender diversity on Environmental Social Governance (ESG) disclosure practices in the European listed firms' context.Design/methodology/approachThe study applies different panel data models on an extended sample of 1,392 firms from 21 European Union (EU) countries for six years (2014–2019).FindingsFindings allow to spotlight the positive role exerted by the presence of women directors on the boards in enhancing ESG disclosure, both at the overall and specific (individual ESG scores) level.Research limitations/implicationsPolicymakers and regulators might consider the study's evidence as a stimulus to continue in promoting strategic actions and reforms that foster gender equality and balance in corporate decision-making positions.Practical implicationsCreating a heterogeneous and diversified board of directors may support implementing a “sustainable corporate governance” recently claimed by the EC.Originality/valueThe study contributes to the literature by disentangling the links between gender diversity and ESG disclosure over a period that covers a long season of European regulations and measures that affected both non-financial reporting practices and the board of directors' composition. Accordingly, it can contribute to enhancing the practical and theoretical understanding of the pivotal role that gender diversity may exert in strengthening corporate governance and, in turn, corporate transparency and accountability behaviours about non-financial issues.

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