Do Financial Statement Users Judge Relevance Based on Properties of Reliability?

2012 ◽  
Vol 87 (4) ◽  
pp. 1335-1356 ◽  
Author(s):  
Kathryn Kadous ◽  
Lisa Koonce ◽  
Jane M. Thayer
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Firm Valuation ◽  
Financial Accounting ◽  
Financial Statement ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Representational Faithfulness ◽  
The Relationship

ABSTRACT Relevance and reliability (now referred to as “representational faithfulness”) are qualities of financial information that both the Financial Accounting Standards Board and the International Accounting Standards Board use in setting standards for financial reporting. Despite their importance, very little research has addressed how financial statement users apply these constructs. Via experiments set within the fair value context, we show that users do not view them as independent constructs. Instead, variations in properties that are associated with the reliability of a measurement influence users' assessments of the relevance of fair value. The relationship between assessed relevance and assessed reliability is unidirectional, in that factors underlying reliability influence judgments of relevance, but factors underlying relevance do not influence judgments of reliability. Our findings are important because inappropriate assessments of relevance can influence firm valuation. The results are particularly meaningful in the context of fair value because such measurements can vary widely in reliability. JEL Classifications: M41.

The American Accounting Association’s Financial Reporting Policy Committee’s Response to the Preliminary Views on Financial Statement Presentation

2010 ◽  
Vol 24 (2) ◽  
pp. 279-296 ◽  
Author(s):  
Mark Bradshaw ◽  
Carolyn Callahan ◽  
Jack Ciesielski ◽  
Elizabeth Gordon ◽  
Mark Kohlbeck ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Academic Research ◽  
Accounting Standards ◽  
Income Taxes ◽  
Financial Accounting ◽  
Financial Statement ◽  
Management Approach ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Discussion Paper

SYNOPSIS: The Financial Accounting Standards Board and the International Accounting Standards Board (hereafter, the Boards) issued the discussion paper Preliminary Views on Financial Statement Presentation in late 2008. The Boards propose to significantly reconfigure the presentation of financial statements to offer parallel statements with standardized partitions of each financial statement into five categories: business activities, financing activities, income taxes, discontinued operations, and equity. The allocation of transactions within these partitions will depend crucially on management’s assessment of each transaction (i.e., the management approach). In this paper we comment on the proposal, with particular emphasis on empirical evidence and relevant theories from academic research. We highlight benefits of the proposed changes as well as some possible concerns. We conclude that the objective of providing a cohesive picture of activities through a uniform standardization of each financial statement by activity is desirable, but the proposed criteria for how activities are categorized results in potentially aberrant or confusing outcomes. Thus, any dissatisfaction with the current financial statement format may be replaced with other criticisms. Finally, the current proposal relies on the effectiveness of the management approach, which can only be successful if managers embrace the proposed structure.

THE EVOLUTION OF THE RELATIONSHIP BETWEEN THE US FINANCIAL ACCOUNTING STANDARDS BOARD AND THE INTERNATIONAL ACCOUNTING STANDARD SETTERS: 1973–2008

2012 ◽  
Vol 39 (1) ◽  
pp. 1-51 ◽  
Author(s):  
Robert J. Kirsch
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
Working Relationships ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Accounting Standard ◽  
Staff Members ◽  
The Us ◽  
The Relationship

ABSTRACT Utilizing archival materials as well as personal interviews and correspondence with personnel of the Financial Accounting Standards Board (FASB) and International Accounting Standards Committee/Board (IASC/B), including former Board chairmen and staff members, this paper examines the development of the working relationships between the FASB and the IASC/B from their earliest interactions in 1973 through the transformation of the IASC into the IASB and the Convergence Program rooted in the 2002 Norwalk Agreement up to 2008.

Accounting for leases – lessons from COVID-19

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alan Teixeira
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Reporting Standards ◽  
Financial Accounting Standards Board ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Setting Process

Purpose The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have given relief to lessees in response to the coronavirus (COVID-19) pandemic. However, it is not clear why any relief from the requirements in International Financial Reporting Standards (IFRS) or the Accounting Standards Codification (ASC) should be necessary. The purpose of this paper is to highlight weaknesses in how the IASB and FASB developed their leases Standards, and why those Standards are not robust enough to cope with a shock to the economic system. Design/methodology/approach The COVID-19 relief suspends some features of the leasing requirements rather than changing them. What if other economic or regulatory events cause the same circumstances to arise? Findings Have COVID-19 exposed weaknesses in the leasing standards that should have been avoided when they were developed or is COVID-19 the problem? Originality/value Analysis of actual board discussions and staff papers is unusual and provides insights into the standard-setting process.

scholarly journals Ontwikkelingen in het conceptual framework

2013 ◽  
Vol 87 (9) ◽  
pp. 355-364
Author(s):  
Dick Van Offeren ◽  
Joop Witjes ◽  
Tim Verdoes
Keyword(s):  
Conceptual Framework ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Reporting Framework ◽  
International Accounting Standards Board

De International Accounting Standards Board (IASB) heeft recent het conceptual framework-project als kernproject aangemerkt. Het oorspronkelijke Framework for the preparation and presentation of financial statements (framework 1989) was aan een fundamentele herziening toe. Samen met de Financial Accounting Standards Board (FASB) heeft de IASB de eerste fase van het Conceptual framework for financial reporting (framework 2010) voltooid. In deze eerste fase worden twee onderwerpen besproken. Dit zijn het doel van financiële verslaggeving en de kwalitatieve kenmerken van financiële verslaggeving. Wij bespreken deze twee onderwerpen en gaan in op de verschillen tussen het framework 2010 en het framework 1989. Wij benadrukken het verschil in toepassingsgebied van de twee frameworks. Het framework 2010 is gericht op het ruimere begrip financial reporting, financiële verslaggeving en het framework 1989 was beperkt tot financial statements, jaarrekeningen.

scholarly journals An Evaluation Of The Implementation Of Fair Value Accounting: Impact On Financial Reporting

2011 ◽  
Vol 9 (1) ◽  
Author(s):  
Karen T. Cascini ◽  
Alan DelFavero
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
The United States ◽  
Financial Accounting ◽  
Financial Assets ◽  
Financial Accounting Standards Board ◽  
Continuous Change ◽  
Fair Value Accounting ◽  
The Cost

<p class="MsoNormal" style="text-justify: inter-ideograph; text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="color: #0d0d0d; font-size: 10pt; mso-themecolor: text1; mso-themetint: 242;"><span style="font-family: Times New Roman;">The accounting industry is in a state of continuous change.<span style="mso-spacerun: yes;">&nbsp; </span>In the United States, the historical cost principle has traditionally been the foundation of accounting.<span style="mso-spacerun: yes;">&nbsp; </span>Until recently, assets and liabilities have been required to be recorded at their acquisition prices, with the exception of designated financial assets and financial liabilities.<span style="mso-spacerun: yes;">&nbsp; </span>However, the Financial Accounting Standards Board (FASB) has now created accounting standards that are distant from the cost principle.<span style="mso-spacerun: yes;">&nbsp; </span>Statement of Financial Accounting Standards No. 157: Fair Value Measurements, issued in September 2006 (FAS157, now codified as ASC 820) and Statement of Financial Accounting Standards No. 159: The Fair Value Option for Financial Assets and Financial Liabilities, created in February 2007 (FAS159, now ASC 825-10-25), significantly increases the viability of fair value accounting. The purpose of this paper is to illustrate the benefits and pitfalls of fair value and the corresponding affects on various stakeholders. <span style="mso-spacerun: yes;">&nbsp;&nbsp;</span></span></span></p>

scholarly journals Why The SEC Is Delaying Adoption Of International Financial Reporting Standards

2013 ◽  
Vol 12 (2) ◽  
pp. 223 ◽  
Author(s):  
Clemense Ehoff Jr. ◽  
Dov Fischer
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Financial Accounting ◽  
International Financial Reporting Standards ◽  
International Accounting Standards ◽  
Reporting Standards ◽  
Financial Accounting Standards Board ◽  
Public Companies ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards

In 2002, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) formally began a process to converge Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The SEC has repeatedly delayed its decision on whether to adopt International Financial Reporting Standards as the financial reporting system for U.S. public companies, continue with the convergence project, or reject IFRS altogether. This paper will examine several key reports issued by the SEC and the Financial Accounting Foundation to gain further insight into 1) why the SEC has repeatedly delayed its decision, and 2) what the SEC will ultimately decide.

scholarly journals Financial Reporting Impact Of The Operating Lease Classification

2012 ◽  
Vol 28 (6) ◽  
pp. 1509 ◽  
Author(s):  
John Kostolansky ◽  
Dora Altschuler ◽  
Brian B. Stanko
Keyword(s):  
North America ◽  
Financial Reporting ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Operating Leases ◽  
The Impact

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are preparing to make changes to accounting standards for leasing that will have a significant impact on the financial statements of a large number of companies. The proposed standard will eliminate the operating lease classification, and if passed, companies using this classification will be required to report additional assets and liabilities on the balance sheet. This study estimates the impact of this change in accounting standards on the financial statements and several key financial ratios for an extensive sample of companies and industries from the Compustat North America database. It is important that users of financial statements understand and are prepared for these changes prior to implementation, particularly for industries in which operating leases are heavily utilized.

Standard-Setting Issues and Academic Research Related to the Accounting for Financial Asset Transfers

2007 ◽  
Vol 21 (1) ◽  
pp. 59-80 ◽  
Author(s):  
Katherine Schipper ◽  
Teri Lombardi Yohn
Keyword(s):  
Cross Section ◽  
Financial Reporting ◽  
Academic Research ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Future Research ◽  
Financial Asset ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board

A large number and cross-section of firms undertake financial asset transfers. The Financial Accounting Standards Board and the International Accounting Standards Board have been grappling with the appropriate accounting for financial asset transfers, especially with respect to derecognition—that is, when the assets should be removed from the transferor's balance sheet. This paper discusses the financial reporting issues surrounding financial asset transfers and summarizes the related academic research. It also discusses potentially useful future research that could provide insights for standard-setters and suggests some impediments to that research.

Issues in Lessor Accounting: The Forgotten Half of Lease Accounting

2011 ◽  
Vol 25 (2) ◽  
pp. 247-266 ◽  
Author(s):  
Mark P Bauman ◽  
Richard N Francis
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Decision Makers ◽  
Financial Accounting ◽  
Financial Statement ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Disclosure Quality ◽  
Residual Values ◽  
Lease Accounting

SYNOPSIS In July 2006, the International Accounting Standards Board and the Financial Accounting Standards Board (the “Boards”) added a leasing project to their agenda. In August 2010, the Boards jointly released an exposure draft proposing a “right-of-use” model for the recognition of lease-related assets and liabilities. In their deliberations, the Boards noted numerous studies focusing on lessee accounting, but very little research examining lessor-related topics. To address this gap in the literature, this paper identifies key reporting and disclosure issues associated with lessors, and suggests improvements that could be incorporated into lease accounting guidance. This study is based on an analysis of the financial statement disclosures of 57 of the 100 largest equipment lessors in the U.S. market. Disclosure quality, residual values, and the balance sheet impact of the proposal are examined, and numerous suggestions are offered to enhance the usefulness of lessor financial statement disclosures for decision makers.

scholarly journals Uma investigação e uma proposição sobre o conceito e o uso do valor justo

2007 ◽  
Vol 18 (spe) ◽  
pp. 09-18 ◽  
Author(s):  
Sérgio de Iudícibus ◽  
Eliseu Martins
Keyword(s):  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Sfas 133 ◽  
International Accounting Standards Board

Trata o presente artigo de uma investigação, no sentido de análise, do conceito do Fair Value (Valor Justo), tão debatido nos anos mais recentes e que promete ser, se generalizada sua aplicação nas demonstrações contábeis, uma verdadeira revolução valorativa. No decorrer do trabalho são analisadas, resumidamente, no que se refere aos aspectos mais importantes, as disposições e conceituações sobre Valor Justo apresentadas pelo IASB (International Accounting Standards Board), pelo FASB (Financial Accounting Standards Board) e pelas Normas Brasileiras. A análise efetuada tem um caráter inicialmente semântico, no sentido de expressar, da forma mais clara possível, o sentido das palavras contidas nas conceituações. Em seguida, é feita uma análise qualitativa, visando extrair e avaliar o efetivo impacto das conceituações no avanço das práticas contábeis. Inicialmente, é importante ressaltar que a conceituação de Valor Justo é bastante antiga. Em 1939, Kenneth MacNeal, em seu pioneiro trabalho, Truth in Accounting, já definia a expressão, de forma brilhante; na verdade, falava em fair and true, atribuindo às valorações, sempre, um significado econômico. A discussão sobre Valor Justo acentuou-se sobremaneira, ganhando até contornos sensacionalistas, a partir do SFAS 133, emitido pelo FASB em 1998. Através da análise e investigação assim procedidas, é avaliada, por comparação, a eficácia e "justeza" do conceito, ou melhor, conceitos, de Valor Justo em face dos critérios de Custo Histórico, Custo Corrente de Reposição e outros, já praticados há mais tempo pelos contadores. Sugere-se, ao final, um período de experimentação com informações complementares ao modelo tradicional, e não a pura e simples substituição deste último, permitindo então à Contabilidade Positiva o papel de, mediante suas pesquisas empíricas, avaliar a relação entre a utilidade e o custo dessas alternativas antes de qualquer precipitada decisão.

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