Five-year experience in quality control over cash flow statements in Russian companies

2020 ◽  
Vol 19 (10) ◽  
pp. 1945-1964
Author(s):  
M.A. Alekseev ◽  
M.Yu. Savel'eva ◽  
S.A. Dudin
Keyword(s):  
Quality Control ◽  
Cash Flow ◽  
Financial Analysts ◽  
Cash Flows ◽  
Economic Situation ◽  
Amount Of Information ◽  
Accounting Reports ◽  
Financial Transactions ◽  
Analytical Tools

Subject. The article considers the quality control over cash flow statements. Nowadays, audit procedures apply rather simple analytical tools to assess the reliability of this type of accounting reports. There is, therefore, an objective need to develop them. Objectives. The aim is to assess the quality of cash flow statements for the 5-year period from 2014 till 2018, and prove the interrelation between the scale of manipulation in accounting statements and the economic situation in the country and in the sector. Methods. The study employs theoretical and practical works of foreign and Russian scientists on accounting misstatements. Results. We use a large amount of information to develop and test a methodology for checking the quality of accounting reports, including the assessment of credibility of a statement as a whole, as well as its pats, i.e. cash flows from operations, investments, and financial transactions. Conclusions. It is recommended to use the offered methodology by audit companies and financial analysts to find out companies involved in accounting manipulation.

Misclassifying cash flows from operations: intentional or not?

2014 ◽  
Vol 22 (1) ◽  
pp. 18-32 ◽  
Author(s):  
Karen Lightstone ◽  
Karrilyn Wilcox ◽  
Louis Beaubien
Keyword(s):  
Cash Flow ◽  
Balance Sheet ◽  
Financial Analysts ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Future Research ◽  
Content Type ◽  
Statement Of Cash Flows ◽  
Case Basis

Purpose – The purpose of this paper is to investigate the accuracy and informational quality of the cash from operations section of the cash flow statement. Design/methodology/approach – This paper empirically tested the accuracy of the cash from operations reported by Canadian non-financial companies. The authors studied 262 companies at three different time periods providing 786 firm observations. For each observation, the balance sheet was used to confirm the figures reported in the statement of cash flows. In addition, the authors investigated management's disclosure of the particular working capital items. Findings – The findings suggest that in recent years, companies are more likely to overstate their cash flow from operations, thereby presenting a better financial picture than is supported by the balance sheet accounts. This would suggest that the investing or financing section would be correspondingly understated. The presence of acquisitions reduces overstatements, which may be the result of more auditor presence. Research limitations/implications – This paper extends previous research from documented single, isolated instances of cash from operations being misstated to include a significant sample with more generalizable findings. The data are Canadian which may limit the generalizability to other countries. Future research should address the extent to which financial analysts rely on the reported cash from operations figure. Practical implications – This preliminary study may have implications for financial analysts and others relying on the free cash flow figure. Originality/value – This study expands on previous research which has taken place only on a case-by-case basis.

scholarly journals RESEARCH APPROACHES TO MONETARY FLOW OPTIMIZATION SUBJECT TO SELECTED FACTORS AND CONTROL MEASURES REDUCING THE RISK OF BANKRUPTCY OF THE ORGANIZATION

2017 ◽  
pp. 109-119
Author(s):  
Lyudmila Ivanovna Fedorova ◽  
Svetlana Vyacheslavovna Dzhezheliy
Keyword(s):  
Cash Flow ◽  
Cash Flows ◽  
Control Measures ◽  
Managerial Decision ◽  
Flow Management ◽  
Managerial Decision Making ◽  
Cash Flow Management ◽  
Rational Management ◽  
And Control

In modern conditions the competitiveness of organizations is provided by rational management decisions, which are taken depending on various factors and their impact on the cash flows of the organization. The theme of the study of factors and control measures influencing cash flow management for reducing the risk of bankruptcy is in all respects one of the most controversial and much cited. In the course of study the authors have summarized the approaches of Russian and foreign authors towards the concept "cash flow", revealed certain problems in the quality of decisions, arranged the factors increasing the degree of their effectiveness and directly affecting the financial performance of the organization. Application in the work of the organization of individual elements ("morale") of the group of environmental factors and standards of internal reporting will improve the efficiency of managerial decision-making in part of cash flows from different activities.

scholarly journals Do Analysts’ Cash Flow Forecasts Improve Firm Value?

2020 ◽  
Vol 8 (4) ◽  
pp. 60
Author(s):  
Hyun Min Oh ◽  
Sam Bock Park ◽  
Jong Hyun Kim
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Earnings Quality ◽  
Financial Analysts ◽  
Market Participants ◽  
Economic Decision Making ◽  
Cash Flow Forecasting ◽  
Cash Flow Forecasts ◽  
Positive Effect

We examine whether analysts’ cash flow forecasts improve firm value. First, we analyze whether the joint issuance of financial analysts’ earnings and cash flow forecasts improve firm value. Second, we analyze whether the quality of analysts’ cash flow forecasts improve firm value. The empirical results of our study are as follows. First, the joint issuance of analysts’ earnings and cash flow forecasts has a significantly positive effect on firm value; providing cash flow forecasts reduces information asymmetry and increases earnings quality, thereby increasing corporate value. Second, the quality of analysts’ cash flow forecasts has a significantly positive effect on firm value; the more accurate cash flow forecasts are, the higher firm value is. Our study provides empirical evidence for that the conclusion that cash flow forecasting information produced by financial analysts provides useful information for capital market participants in economic decision making.

scholarly journals Determinants Of Firm Terminal Value: The Perspective Of North American And European Financial Analysts

2014 ◽  
Vol 13 (4) ◽  
pp. 793
Author(s):  
Pedro M. Nogueira Reis ◽  
Marion Gomes Augusto
Keyword(s):  
Cash Flow ◽  
Discount Rate ◽  
North American ◽  
Financial Analysts ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Arbitrage Pricing Theory ◽  
Explicit Analysis ◽  
High Level ◽  
A Company

Company valuation models attempt to estimate the value of a company in two stages: (1) comprising of a period of explicit analysis and (2) based on unlimited production period of cash flows obtained through a mathematical approach of perpetuity, which is the terminal value. In general, these models, whether they belong to the Dividend Discount Model (DDM), the Discount Cash Flow (DCF), or RIM (Residual Income Models) group, discount one attribute (dividends, free cash flow, or results) to a given discount rate. This discount rate, obtained in most cases by the CAPM (Capital asset pricing model) or APT (Arbitrage pricing theory) allows including in the analysis the cost of invested capital based on the risk taking of the attributes. However, one cannot ignore that the second stage of valuation that is usually 53-80% of the company value (Berkman et al., 1998) and is loaded with uncertainties. In this context, particular attention is needed to estimate the value of this portion of the company, under penalty of the assessment producing a high level of error. Mindful of this concern, this study sought to collect the perception of European and North American financial analysts on the key features of the company that they believe contribute most to its value. For this feat, we used a survey with closed answers. From the analysis of 123 valid responses using factor analysis, the authors conclude that there is great importance attached (1) to the life expectancy of the company, (2) to liquidity and operating performance, (3) to innovation and ability to allocate resources to R&D, and (4) to management capacity and capital structure, in determining the value of a company or business in long term. These results contribute to our belief that we can formulate a model for valuating companies and businesses where the results to be obtained in the evaluations are as close as possible to those found in the stock market.

scholarly journals The Impact of Operating Cash Flow and Current Ratio on the Profitability in Construction Industry

2020 ◽  
Vol 30 (1) ◽  
pp. 22-32
Author(s):  
Daniela Pordea ◽  
Delia David ◽  
Dorel Mateș
Keyword(s):  
Cash Flow ◽  
Statistical Significance ◽  
Cash Flows ◽  
Construction Companies ◽  
Performance Guarantees ◽  
Good Reputation ◽  
Operating Cash Flow ◽  
The Impact ◽  
Western Romania

AbstractThe quality of works and a good reputation on the market are the main factors that lead to the success of a construction business. That is why most of the projects carried out in this sector involve the provision of performance guarantees which are mainly constituted by retaining the amounts from each payment. This impacts the cash, but also the liquidity ratios of the entities. The purpose of our research is to analyze the influence of the operating cash flow and the current liquidity ratio on the profitability in the case of construction companies. For this, we have developed a linear regression model on cross-section financial data related to a single reporting year and obtained from construction companies in western Romania. The results we have obtained did not reveal statistical significance for the exogenous variables used in the model. However, we consider it important to deepen the problem of cash flows and the ability of construction companies to meet their short-term obligations in the context of retaining performance guarantees. Further research in this regard based on panel data for several financial periods could provide relevant results

scholarly journals The Impact Of Cash Flow Information On The Forecasts Provided By Financial Analysts, Considering The Quality Of Earnings

2011 ◽  
Vol 19 (1) ◽  
Author(s):  
Sylvie Deslauriers
Keyword(s):  
Cash Flow ◽  
Financial Analysts ◽  
Font Size ◽  
High Quality ◽  
Future Earnings ◽  
Flow Information ◽  
The Impact

<p class="MsoNormal" style="text-align: justify; margin: 0in 36.1pt 0pt 0.5in; mso-pagination: none;"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; font-size: 10pt; mso-bidi-font-style: italic; mso-ansi-language: EN-CA;" lang="EN-CA">In the present study, the impact of publishing more precise and better-structured cash flow information on financial analysts&rsquo; forecast will be examined<span style="color: blue;">.<span style="mso-spacerun: yes;">&nbsp; </span></span>Even though the change in standards presently under study may be principally deemed to be cosmetic, it does appear to have allowed financial analysts to generate more accurate forecasts of future earnings. An increase in the dispersion of these forecasts, more especially when dealing with enterprises providing a high quality of earnings, is also noted. </span></p>

scholarly journals RENCANA PENGEMBANGAN KAMPUNG CINA DI KOTA WISATA CIBUBUR UNTUK MENINGKATKAN DAYA TARIK PENGUNJUNG

2020 ◽  
Vol 1 (2) ◽  
pp. 2117
Author(s):  
Defita Andina Kandi ◽  
Priyendiswara A.B. Priyendiswara ◽  
Liong Ju Tjung
Keyword(s):  
Cash Flow ◽  
Product Life Cycle ◽  
Feasibility Analysis ◽  
Discounted Cash Flow ◽  
Lower Middle Class ◽  
Site Analysis ◽  
Development Plans ◽  
Space Requirements ◽  
Analytical Tools

The Ciangsana Tourism Village or better known as Chinese Village, located in Bogor Regency, West Java, has been established since 2002. The tour is crowded with tourists both from around Bogor and Jakarta, Depok, Tangerang, Bekasi and other areas. Tourism that has an area of 0.8 hectares has a target audience of middle and lower middle class economic people. The current tourism conditions of Chinese villages when viewed from the product life cycle are in a decline position and if left unchecked will result in unkempt and unattractive Chinese Village conditions and declining quality of service. Therefore, in this study a development plan will be made by knowing the feasibility of investing in making future development plans in Chinese villages using qualitative and quantitative approaches and conducting analyzes related to tourism development, such as site analysis and site analysis, object analysis similar, market analysis, space requirements analysis and investment feasibility analysis. The analysis was carried out using analytical tools namely descriptive, SWOT, benchmarking, crosstabulation, standard space requirements and discounted cash flow. This writing only shows the investment feasibility analysis to be used as a reference for making site plans. AbstrakKampung Wisata Ciangsana atau yang lebih dikenal Kampung Cina yang berlokasi di Kabupaten Bogor, Jawa Barat, telah berdiri sejak tahun 2002. Wisata ini ramai dikunjungi oleh wisatawan baik dari sekitar Bogor maupun Jakarta, Depok, Tangerang, Bekasi dan daerah-daerah lainnya. Wisata yang memiliki luas 0,8 hektar ini memiliki target pengunjung masyarakat ekonomi kelas menengah dan menengah bawah. Kondisi wisata Kampung Cina saat ini bila dilihat dari siklus hidup produk berada di posisi menurun dan apabila dibiarkan akan mengakibatkan kondisi Kampung Cina yang tidak terawat dan tidak menarik serta menurunnya kualitas pelayanan. Oleh karena itu, pada penelitian ini akan dibuat rencana pengembangan dengan cara mengetahui kelayakan investasi untuk membuat rencana pengembangan di Kampung Cina kedepannya dengan menggunakan pendekatan kualitatif dan kuantitatif serta melakukan analisis-analisis yang berkaitan dengan pengembangan wisata, seperti analisis lokasi dan tapak, analisis objek studi sejenis, analisis pasar, analisis kebutuhan ruang dan analisis kelayakan investasi. Analisis yang dilakukan menggunakan alat analisis yaitu deskriptif, SWOT, benchmarking, crosstabulation, standar kebutuhan ruang dan discounted cash flow. Penulisan ini hanya menampilkan analisis kelayakan investasi untuk dijadikan salah satu acuan pembuatan denah rencana tapak.

The structuring of cash flow information as part of strategic management accounting

2021 ◽  
Vol 22 (5) ◽  
pp. 509-523
Author(s):  
Lyudmila V. SHALAEVА
Keyword(s):  
Strategic Management ◽  
Cash Flow ◽  
Market Value ◽  
Cash Flows ◽  
Practical Significance ◽  
Strategic Management Accounting ◽  
Flow Information ◽  
Methodological Principles ◽  
Management Reporting

Subject. Considered together with assets, liabilities, financial results, cash flows give a comprehensive view of the company's position and its market value. Such estimates are important for strategic management and should be based on the reliable information, which may proceed from strategic management reporting. Objectives. I outline aspects for structuring the cash flow information as part of strategic management reporting. Methods. Practical recommendations are based on proceedings of the Russian and foreign scholars, methods of analysis, synthesis and generalization. Results. The article presents methodological principles for structuring the cash flow information, which are focused on aspects, subjects of strategic control and regulation, key strategic benchmarks of net cash flows, its balance, significance for key strategic values, as they shape the structure, content and purpose of the strategic management statement on cash flows. Conclusions and Relevance. The aspects for structuring the cash flow information help develop methodological principles for strategic management reporting and accounting and improve the quality of information supplied for strategic management. The findings are of practical significance for enhancing strategic management reporting on cash flows so as to improve the quality of available information for assessing the financial position and an increment of the market value of a company.

Assessing the Financial Reporting Consequences of Conversion to IFRS: The Case of Equity-Based Compensation

2010 ◽  
Vol 24 (4) ◽  
pp. 589-621 ◽  
Author(s):  
Mary Lea McAnally ◽  
Sean T. McGuire ◽  
Connie D. Weaver
Keyword(s):  
Financial Reporting ◽  
Stock Price ◽  
Intrinsic Value ◽  
Price Volatility ◽  
Fair Value ◽  
Cash Flows ◽  
Tax Benefits ◽  
The Difference ◽  
Accounting Reports

SYNOPSIS: The potential conversion of accounting standards from U.S. GAAP to International Financial Reporting Standards (IFRS) raises the issue of unknown financial reporting consequences. We consider one important accounting issue, namely equity-based compensation, and study how IFRS conversion will affect financial statements and the quality of reported numbers. The difference between the two standards is that IFRS reports tax benefits from equity-based compensation at their intrinsic value each period. This amounts to quasi fair-value accounting under IFRS compared to historic-cost accounting under GAAP. We develop and compare pro forma GAAP and IFRS accounting reports for a broad cross section of U.S. firms. We find that IFRS yields lower deferred tax assets and recognized tax benefits for approximately two-thirds of the option grants in our sample. Moreover, reported tax items will be more volatile under IFRS and these effects will be more pronounced for firms with greater option use and stock price volatility. Importantly, we find that IFRS tax items are better able to predict future cash flows. One conclusion is that IFRS improves the relevance, and thereby, the quality, of at least some reported numbers.

scholarly journals The role of accrual estimation errors to determine accrual and earnings quality

2016 ◽  
Vol 24 (2) ◽  
pp. 98-115 ◽  
Author(s):  
Javad Izadi Zadeh Darjezi
Keyword(s):  
Standard Deviation ◽  
Cash Flow ◽  
Earnings Quality ◽  
Cash Flows ◽  
Working Capital ◽  
Bottom Line ◽  
Significant Information ◽  
Accrual Quality ◽  
Content Type

Purpose Managers, investors and security analysts all pay special attention to the bottom line of income statements and they miss significant information included in accruals about the quality of earnings. A considerable portion of the earnings-quality literature examines the possibility of using the accruals to shift reported income among fiscal periods. One of the main roles of working-capital accruals is to adjust the recognition of cash flows. This paper aims to focus on earnings quality by examining the working-capital accruals quality using the method of Dechow and Dichev (2002). Design/methodology/approach Following the Dechow and Dichev (2002) model, the result of this paper shows that accrual quality is related to the absolute magnitude of accruals negatively. Also, the standard deviation of accruals, cash flows, sales and earnings is positively related to firm size. The result demonstrates and suggests that these observable firm characteristics can be used as instruments for measuring accrual quality. According to this framework, the author expects that the larger the unsigned abnormal accrual measure, the lower the earnings quality. Therefore, firms with low accrual quality have more accruals that are unrelated to cash flow realisations and so have more noise and less persistence in their earnings. Findings After examining earnings and accrual quality, this paper finds that average UK company behaviour was quite similar to the behaviour found earlier in the USA. This paper’s findings show that greater volatility of sales, cash flow, accruals and earnings results in a lower accrual quality. Without a doubt, some of the analysis in this paper, especially that using different equations to calculate working-capital accruals, leads us to a valuable improvement of the earlier studies. Originality/value In this paper, the author follows the method of Dechow and Dichev (2002) and define accrual quality as the extent to which accruals map into cash-flow insights based on the UK data. To find the quality of working-capital accruals, the author uses the standard deviation of the residuals as accrual quality that resulted from the author’s firm-specific OLS regressions of working-capital accruals based on last, current and one-year-ahead operating cash flow. Unlike prior research, to avoid a restriction to working-capital accruals, we use different equations to cover more items of working-capital accruals.

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