أثر تطبيق معيار الإبلاغ المالي الدولي رقم (9) في جودة مخرجات النظام المحاسبي لشركات التأمين في الأردن = The Impact of Applying International Financial Reporting Standard (IFRS 9) on the Quality of the Accounting System Outcomes of the Insurance Companies in Jordan

This study aimed to explore the expected effect of applying the International Financial Reporting Standard (IFRS) 17 Insurance Contracts on the quality of financial reports. The study followed the exploratory descriptive analytical approaches. A questionnaire was developed and distributed to a sample of 120 financial employees in all insurance companies in Jordan. It concluded that the expected impact of applying the standard on the quality of financial reports was significant, especially on the comparability of financial reports, and faithful representation. It was found that there is an expected, statistically significant and positive effect between the application of the standard, and the quality of financial reports in general, and the expected influence of applying the standard and each of comparability, faithful representation, relevance, verifiability, timely, and understandability respectively. The study recommends the application of the standard in the specified time, work to create appropriate conditions, and the need to follow objective assumptions from the company's management for the estimation of cash flows when applying the standard.

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Methods of Calculation of Expected Credit Losses Under Requirements of IFRS 9

Journal of Corporate Finance Research / Корпоративные Финансы | ISSN 2073-0438 ◽

10.17323/j.jcfr.2073-0438.13.4.2019.74-86 ◽

2019 ◽

Vol 13 (4) ◽

pp. 74-86

Author(s):

Alfiya Vasilyeva ◽

Elvina Frolova

Keyword(s):

Credit Risk ◽

Financial Reporting ◽

Time Lag ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

Macroeconomic Factors ◽

Credit Risks ◽

Ifrs 9 ◽

The Impact ◽

Credit Losses

The most important area of work for financial market regulators including International Accounting Standards Board is to clarify the metrics of credit assessment. This problem became particularly relevant after the financial crisis of 2008, when the insolvency of approaches to the assessment of credit risks adopted under the then international financial reporting standard IFRS (IAS) 39 became apparent, since credit losses on financial instruments were taken into account by the “loss model”, and therefore, the asset was recognized as financially impaired due to the fact of credit quality deterioration and significant time lag. From 1 January 2018 of a new international financial reporting standard IFRS9 IFRS 9 is based on a different approach — the principle of “expected credit losses” (ECL). The transition to IFRS 9 is intended to strengthen the banking system by increasing reserves , the banking system’s stability can be increased also. The new business model radically changes the approach to the formation of reserves, including by taking into account the impact of macroeconomic indicators on their value. According to various estimates, the scale of increase in reserves ranges from 30% to 50%. The purpose of this article is to systematize the methodological principles and approaches that underlie the requirements of IFRS 9 (basic and simplified and POCI approaches), as well as a comparison of the main methods for assessing the probability of default and expected credit losses (Weibul distribution, migration matrix, generator matrix ) In the framework of this article, the authors formulated criteria for the transfer of assets between the stages of credit risk (stage), and also formulated the principles for calculating expected credit risks for each stage, taking into account macroeconomic factors. This article is of practical value, as it can be the basis for the development of methods for calculating the expected credit risks of corporate clients of commercial banks, and can also be used to improve credit risk management models.

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The Effects of International Financial Reporting Standards on Reporting Quality of Financial Institutions in Ghana

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v10i2.16851 ◽

2020 ◽

Vol 10 (2) ◽

pp. 94

Author(s):

Edmond Amissah ◽

Paul Hammond ◽

Reginald Djimatey

Keyword(s):

Earnings Management ◽

Financial Institutions ◽

Financial Reporting ◽

Emerging Market ◽

Reporting Quality ◽

Insurance Companies ◽

Reporting Standard ◽

Ifrs Adoption ◽

The Impact

This study sought to examine the reporting quality of financial institutions in Ghana after adopting International Financial Reporting Standard (IFRS) as its official national reporting standard. Using a fixed effect logistic regression, the study compares the earnings management of banks and insurance firms before and after IFRS adoption on reporting quality. The data used was drawn from 51 financial institutions made up of 23 universal banks and 28 insurance companies observed over the period 2003 to 2014. The empirical results indicate that financial institutions exhibit more earnings management during the post-adoption era which is interpreted as a decline in the quality of financial reporting among financial institutions in Ghana. The results documented in this study add to the dearth of literature and contributes to the debate on IFRS adoption and its related impact on reporting quality (earnings management) among financial institutions from the perspective of an emerging market. The study is unique in the sense that it includes the insurance industry where the literature is largely silent especially, on the impact of IFRS adoption by countries on the African continent. Furthermore, unlike previous studies, this paper considers both listed and non-listed firms.

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The relationship between corporate governance mechanisms and IFRS 7 compliance: evidence from an emerging market

Corporate Governance ◽

10.1108/cg-06-2016-0129 ◽

2017 ◽

Vol 17 (3) ◽

pp. 446-465 ◽

Cited By ~ 8

Author(s):

Ben Kwame Agyei-Mensah

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Emerging Market ◽

Risk Disclosure ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

Content Type ◽

Ifrs 7 ◽

The Impact

Purpose This paper aims to investigate compliance with risk disclosure requirements under International Financial Reporting Standard (IFRS 7) by firms listed on the Ghana Stock Exchange (GSE) over a three-year period. Specifically, the paper examines the extent, quality and determinants of risk disclosure compliance with IFRS 7. Design/methodology/approach The study uses 90 firm-year observations for the period 2011-2013 for firms listed on the GSE. Each annual report was individually examined and coded to obtain the extent and quality of corporate risk disclosure index. Descriptive analysis was performed to provide the background statistics of the variables examined. This was followed by regression analysis, which forms the main data analysis. Findings The results indicate that over the three years, the extent of compliance with IFRS 7 is, on average, 53 per cent, which is very low; the quality of the disclosures is, on average, 33 per cent, which is also very low. The regression results suggest that proportion of non-executive director (PNED) is significantly and positively associated with the extent of risk disclosure compliance under IFRS 7. Board size was found to be significantly and positively associated with quality of risks disclosure compliance. Originality/value This is the first study in Ghana that considered the impact of corporate governance factors on the extent and quality of IFRS 7 risk disclosure compliance. The findings of this study will help market regulators in Ghana in evaluating the adequacy of the risk disclosures by listed firms.

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Adapting the Default Weighted Survival Analysis Modelling Approach to Model IFRS 9 LGD

Risks ◽

10.3390/risks9060103 ◽

2021 ◽

Vol 9 (6) ◽

pp. 103

Author(s):

Morne Joubert ◽

Tanja Verster ◽

Helgard Raubenheimer ◽

Willem D. Schutte

Keyword(s):

Survival Analysis ◽

Financial Reporting ◽

Proportional Hazards ◽

Proportional Hazards Model ◽

Survival Curve ◽

Cox Proportional Hazards ◽

Cox Proportional Hazards Model ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

Ifrs 9

Survival analysis is one of the techniques that could be used to predict loss given default (LGD) for regulatory capital (Basel) purposes. When using survival analysis to model LGD, a proposed methodology is the default weighted survival analysis (DWSA) method. This paper is aimed at adapting the DWSA method (used to model Basel LGD) to estimate the LGD for International Financial Reporting Standard (IFRS) 9 impairment requirements. The DWSA methodology allows for over recoveries, default weighting and negative cashflows. For IFRS 9, this methodology should be adapted, as the estimated LGD is a function of in the expected credit losses (ECL). Our proposed IFRS 9 LGD methodology makes use of survival analysis to estimate the LGD. The Cox proportional hazards model allows for a baseline survival curve to be adjusted to produce survival curves for different segments of the portfolio. The forward-looking LGD values are adjusted for different macro-economic scenarios and the ECL is calculated for each scenario. These ECL values are probability weighted to produce a final ECL estimate. We illustrate our proposed IFRS 9 LGD methodology and ECL estimation on a dataset from a retail portfolio of a South African bank.

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Accounting Standards and Earnings Quality — Evidence from Registered ADRs

Review of Pacific Basin Financial Markets and Policies ◽

10.1142/s0219091518500224 ◽

2018 ◽

Vol 21 (04) ◽

pp. 1850022

Author(s):

Yaseen S. Alhaj-Yaseen ◽

Kean Wu ◽

Leslie B. Fletcher

Keyword(s):

Financial Reporting ◽

Earnings Quality ◽

Accounting Standards ◽

Securities And Exchange Commission ◽

High Quality ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

The Us ◽

Us Gaap

This paper examines the changes in earnings quality of registered American Depositary Receipts (ADRs) as a result of switching accounting standards. We aim to shed light on the potential impact of International Financial Reporting Standard (IFRS) adoption on US firms. A suboptimal approach to achieve this goal is through examination of US firms’ surrogates such as ADRs. Unlike previous studies, we made a distinction between registered and unregistered ADRs and affirmed that registered ADRs are the closest surrogates with which to conduct our analysis because they are exclusively required to adhere to the Securities and Exchange Commission (SEC)’s stringent disclosure requirements. When cross-listing their equity on the US exchanges, foreign issuers can file their financial reports with the SEC using IFRS, US GAAP (generally accepted accounting principles), or their domestic GAAP with reconciliation to US GAAP. An improvement in earnings quality is documented when ADRs adopt US GAAP or IFRS versus domestic GAAP. However, when the comparison is made between US GAAP and IFRS, no difference in earnings quality is documented. These results indicate that switching to high-quality accounting standards is likely to improve earnings quality. This improvement is maximized when the difference between reporting standards is high and minimized if otherwise. Our conclusion is that the adoption of IFRS in the US is unlikely to change earnings quality of local issuers. Moreover, we drew a distinction between reconciliation with and adoption of high-quality accountings standards and find that while the former can enhance earnings quality, the latter can further improve it.

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Internal model for IFRS 9 - Expected credit losses calculation

Ekonomski pregled ◽

10.32910/ep.69.3.4 ◽

2018 ◽

Vol 69 (3) ◽

pp. 269-297 ◽

Cited By ~ 2

Author(s):

Hrvoje Volarević ◽

Mario Varović

Keyword(s):

Financial Reporting ◽

Internal Model ◽

Balance Sheet ◽

Analytic Hierarchy ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

External Data ◽

Simple Implementation ◽

Ifrs 9 ◽

Credit Losses

This article explores and analyzes the implementation problem of International Financial Reporting Standard 9 (IFRS 9) which is in use from 1 January 2018. IFRS 9 is most relevant for financial institutions, but also for all business subjects with a significant share of financial assets in their Balance sheet. The main objective of this article is the implementation of new impairment model for financial instruments, which is measurable through Expected Credit Losses (ECL). The use of this model is in correlation with a credit risk of the company for which it is necessary to determine basic variables of the model: Exposure at Default (EAD), Loss Given Default (LGD) and Probability of Default (PD). Basel legislation could be used for LGD calculation while PD calculation is based on specific methodology with two different solutions. In the first option, PD is taken as an external data from reliable rating agencies. When there is no external rating, an internal model for PD calculation has to be created. In order to develop an internal model, authors of this article propose application of multi-criteria decision-making model based on Analytic Hierarchy Process (AHP) method. Input data in the model are based on information from financial statements while MS Excel is used for calculation of such multi-criteria problem. Results of internal model are mathematically related with PD values for each analyzed company. Simple implementation of this internal model is an advantage compared to other much more complicated models.

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Quality and quantity of FTSE-100 segmental information reporting

Accounting Research Journal ◽

10.1108/arj-05-2017-0093 ◽

2019 ◽

Vol 32 (3) ◽

pp. 326-343 ◽

Cited By ~ 1

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.

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The Value of Discretion in Africa: Evidence from Acquired Intangible Assets Under IFRS 3

The International Journal of Accounting ◽

10.1142/s1094406020500080 ◽

2020 ◽

Vol 55 (02) ◽

pp. 2050008

Author(s):

Abongeh A. Tunyi ◽

Dimu Ehalaiye ◽

Ernest Gyapong ◽

Collins G. Ntim

Keyword(s):

Financial Reporting ◽

Intangible Assets ◽

Value Relevance ◽

Managerial Discretion ◽

African Countries ◽

Target Firm ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

Main Hypothesis

This paper examines the value of managerial discretion in financial reporting by exploring the value relevance of intangible assets acquired in business combinations (AIA) before and after the 2008 International Financial Reporting Standard (IFRS) 3 amendment. The 2008 IFRS 3 amendment gave managers the discretion to recognize previously unrecognized intangibles in the target firm, hence, we posit that if managerial discretion improves the quality of financial reporting, we should observe an increase in the value relevance of AIA after the amendment. Our empirical analysis is based on a dataset of 603 mergers announced between 2004 and 2016, across seven African countries. Consistent with our main hypothesis, we find that the value relevance of AIA, predominantly acquired goodwill (AGW), increased after the amendment, suggesting that managerial discretion improves the quality of financial information. Our results further show that the value of discretion is moderated by the underlying institutional quality, with the value relevance of AIA being greater in high-quality institutional contexts. Our findings are robust to alternative measures of AIA, alternative models for testing value relevance, and various controls for endogeneity. Overall, our findings have important implications for accounting standard-setters, governments, investors, and practitioners.

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Cross-country determinants of IFRS for SMEs adoption

Journal of Financial Reporting and Accounting ◽

10.1108/jfra-12-2018-0118 ◽

2020 ◽

Vol 18 (1) ◽

pp. 147-168

Author(s):

Salma Damak-Ayadi ◽

Nesrine Sassi ◽

Moujib Bahri

Keyword(s):

Law Enforcement ◽

Financial Reporting ◽

Joint Effect ◽

Institutional Factors ◽

Reporting Standard ◽

International Financial Reporting Standard ◽

Private Companies ◽

Content Type ◽

Trading Networks

Purpose The purpose of this study is to identify the influence of environmental and institutional factors on the adoption of the International Financial Reporting Standard for small and medium-sized entities (IFRS for SMEs). This study used the neo-institutional theory and the economic theory of networks to explain why countries choose to adopt IFRS for SMEs. Design/methodology/approach This study is based on logistic regression analysis to investigate 177 countries, including 77 jurisdictions that adopted IFRS for SMEs between 2009 and 2015. Findings The findings confirm that the adoption of IFRS for SMEs is significantly related to law enforcement quality, culture, trading networks and economic growth. At the institutional level, coercive and normative isomorphism was found to be positively associated with IFRS for SMEs adoption. The results show also that the quality of the audit has no significant effect on the adoption of IFRS for SMEs. However, the joint effect of the quality of audit and quality of law enforcement is significantly related to the adoption of IFRS for SMEs. Practical implications The study contributes to a better understanding of the factors influencing the implementation of IFRS for SMEs standard across the globe and could be used to predict a country’s decision to adopt this standard. Originality/value This study contributes to the literature on international accounting harmonization by examining both environmental and institutional factors that influence the adoption of IFRS for unlisted private companies.

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