Auditor style and common disclosure deficiencies : evidence from SEC comment letters

Mapping Intimacies ◽

10.32469/10355/63609 ◽

2017 ◽

Author(s):

◽

Matthew Baugh

Keyword(s):

Decision Making ◽

Financial Statements ◽

Financial Statement ◽

Potential Hazard ◽

Net Benefit ◽

Auditor Tenure ◽

Policies And Procedures ◽

Prior Literature ◽

Comment Letters ◽

Decision Errors

Prior literature documents that auditor style increases financial statement comparability, implicitly making financial statements more useful to outsiders. Auditor style results from policies and procedures that centralize decision-making within the audit firm. A potential hazard of centralized decision-making is the propagation of decision errors throughout the entity. I predict, and find evidence to suggest, that auditor style is associated with a set of common disclosure deficiencies among clientele as measured by receipt of similar SEC comment letters. Clients also converge in both style and disclosure deficiencies as auditor tenure increases. Further, after changing auditors, clients appear to assume the style and disclosure deficiencies of the subsequent auditor. These results provide the first evidence that auditor style, while potentially a net benefit to users of the financial statements, has potential costs as well.

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PENGARUH CAR, LDR DAN ROA TERHADAP LABA PERUSAHAAN PERBANKAN TERDAFTAR DI BURSA EFEK INDONESIA

Journal of Business Economics ◽

10.35760/eb.2018.v23i1.1813 ◽

2018 ◽

Vol 23 (1) ◽

pp. 72-85

Author(s):

Lasminisih ◽

Emmy Indrayani

Keyword(s):

Decision Making ◽

Multiple Regression ◽

Stock Exchange ◽

Financial Statements ◽

Capital Adequacy ◽

Financial Statement ◽

Return On Assets ◽

Capital Adequacy Ratio ◽

A Company ◽

Future Plans

Company financial statement can be used to monitor the performance of a company. Financial statements are also used as a means for decision making so that the company can anticipate future plans. The purpose of this study was to find out the effect of Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR) and Return on Assets (ROA) on profit changes percentage of Banking Companies. The number of sample companies used in this study was 27 Banks listed in the Indonesia Stock Exchange with observation periods from 2007 to 2008. The method used in this study was multiple regression. The results of this study have indicated that CAR, LDR, and ROA gave significant effects on changes in Banks profit so that Banking Companies performances can be measured. Keywords: CAR, LDR, ROA, Profit

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Impact of financial statements for financial decision-making

Open Science Journal ◽

10.23954/osj.v5i2.2260 ◽

2020 ◽

Vol 5 (2) ◽

Author(s):

Saddeq Abdulshakour

Keyword(s):

Decision Making ◽

Relative Weight ◽

Financial Statements ◽

Decision Makers ◽

Financial Statement ◽

Financial Decisions ◽

Financial Decision Making ◽

Vision 2030 ◽

Study Population ◽

Financial Decision

The study aimed to know the effects of analysis of financial statements on financial decisions, and the degree of benefit from them, and to identify what financial statements, what is its importance for the institutions within the framework of the Kingdom's Vision 2030 of ideas and trends, and to identify the contribution of financial statement analysis to financial decision-making. The study was based on the descriptive and analytical approach, and the study population consisted of all financial decision makers. The study was based on a simple random method (70) of financial decision makers. The study was based on the questionnaire and consisted of the following axes (financial statements in companies, financial decision-making, the effects of analysis of financial statements on financial decision-making). The study came out with a number of results, the most important of which are: There is approval by the respondents to all paragraphs of the first axis "financial statements in companies", with a relative weight of 82.8%. There is an agreement by the respondents on all paragraphs of the second axis "making financial decisions in companies", with a relative weight of 81.3%. There is strong approval by the respondents on all paragraphs of the third axis "the effects of analysis of financial statements on financial decision-making", with a relative weight of 86.4%. The financial statements are a key tool to know the financial position of the company, so they must be accurate and reliable before being published by management. The lack of credibility in the financial statements leads to mistrust in the company by investors, and does not give them the possibility to diagnose and make sound decisions. In light of the previous results, the study recommended the following: • Organizing several forums, conferences and forums to clarify the mechanism of preparing the financial statements and how to analyze them, and the need to raise awareness of financial decision makers about the importance of financial statements in the financial decision-making process.

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ANALISIS PENYAJIAN LAPORAN KEUANGAN BERDASARKAN PENERAPAN STANDAR AKUNTANSI KEUANGAN ENTITAS TANPA AKUNTABILITAS PUBLIK PADA PT. FORTUNA INTI ALAM

GOING CONCERN : JURNAL RISET AKUNTANSI ◽

10.32400/gc.12.01.17131.2017 ◽

2017 ◽

Vol 12 (01) ◽

Author(s):

Marddyanto Dwi Saputra ◽

Jullie J. Sondakh ◽

Treesje Runtu

Keyword(s):

Decision Making ◽

Cash Flow ◽

Descriptive Analysis ◽

Accounting Standards ◽

Financial Statements ◽

Financial Accounting ◽

Financial Statement ◽

Public Accountability ◽

Financial Situation ◽

Chartered Accountants

The financial statements in principle are the result of the accounting process used to communicate the financial situation to internal and external parties that are aimed at decision making. The importance of the financial statements, then the financial statement should be prepared carefully and without errors. Financial Accounting Standards generally are not in accordance with entities whose accountability is not as significant. Therefore, the Institute of Indonesia Chartered Accountants (IAI) has issued Financial Accounting Standards Entity Without Public Accountability (SAK ETAP) intended for entities that do not have significant public accountability and publish financial statements for general purposes for external users. This study aims to analyze the implementation of ETAP in the presentation of PT. Fortuna Inti Alam’s financial statement. The method used in this study is comparative descriptive analysis. Results of this research is based on the financial statements of 2016 show that PT. Fortuna Inti Alam has implemented ETAP but it is not fully complete yet. The Company has not presented Statement of Owner’s Equity, Cash Flow Statement, and Notes to Financial Statements. This research suggests that companies can prepare components of other financial statements in accordance with applicable standards.Keywords : Financial Statements, SAK ETAP.

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Athletes in the intangible in the financial statements of Football: Comparison of the practices of Brazilian and European Clubs

Revista Intercontinental de Gestão Desportiva ◽

10.51995/2237-3373.v11i1e110010 ◽

2021 ◽

pp. 1-15

Keyword(s):

Decision Making ◽

Qualitative Analysis ◽

Financial Statements ◽

Professional Football ◽

Real Situation ◽

Descriptive Content ◽

Economic Achievement ◽

Football Clubs ◽

Policies And Procedures ◽

Legal Texts

This is a historic challenge in the accounting area: how to translate the values that these athletes represent to their teams into numbers and data. They are active, of course. The question is: how to classify them and, mainly, measure their economic achievement for the clubs they defend. Although new specific devices aim to make the task simpler, general regulations in the Brazilian scenario, such as the non-possibility of revaluing assets, hinder the identification of the real situation and the value of the main assets of national clubs: professional players. The article aimed to perform a qualitative analysis of the accounting policies and procedures recognized in the accounts of Brazilian professional football clubs in relation to the registration, amortization and impairment of the intangible with athletes, comparing them to three international teams. Palmeiras, Corinthians and Flamengo were the national teams selected in comparison to Manchester United (ING), Borussia Dortmund (ALE) and Barcelona (ESP). The research concludes that the degree of disclosure and information contained in the pieces varies according to the market, the regulations in force at the site and, mainly, the structuring of the teams' properties, with the best performing clubs having greater descriptive content and information in their Tales. Although a good part of the texts and reports are limited to a reproduction of policies and practices explained in norms and legal texts, without offering the accounting users useful information for their decision making.

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Role of Financial Statement in Investment Decision Making Process

Journal of Balkumari College ◽

10.3126/jbkc.v9i1.30094 ◽

2020 ◽

Vol 9 (1) ◽

pp. 105-108

Author(s):

Suraj Bhujel

Keyword(s):

Decision Making ◽

Investment Decision ◽

Financial Statements ◽

Vital Role ◽

Financial Statement ◽

Quality Information ◽

Decision Making Process ◽

Investment Decision Making

It is believed that financial statements are the key documents for any organizations for the investment decision making. Investment decision making depends upon the quality information obtained by the various sources and it is concluded in this research which is based on the findings that financial statement plays a vital role in investment decision making and recommends that no investment decision should be taken without the consideration of a company’s financial statements.

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Transaction-based lending and accrual quality

Managerial Finance ◽

10.1108/mf-01-2019-0012 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Stephen Gray ◽

Arjan Premti

Keyword(s):

Earnings Quality ◽

Financial Statements ◽

Financial Statement ◽

Cost Of Debt ◽

Accrual Quality ◽

Content Type ◽

Income Statement ◽

Prior Literature ◽

The Cost

PurposeThis study examines how lenders modify their behavior and their use of traditional, transaction-based lending models in credit decisions when faced with low earnings quality.Design/methodology/approachTo measure the earnings quality, following Bharath, Sunder and Sunder (2008), the authors use three measures of accrual quality and combine them into a simple parsimonious measure of accrual quality. Subsequently, the authors apply the incremental R-square approach used by Kim and Kross (2005) to determine the degree to which lenders modify their reliance on financial statement ratios when faced with low accrual quality.FindingsConsistent with prior literature, this study shows that the cost of debt is higher when accrual quality is low. In addition, this study extends prior literature by showing that lenders decrease their reliance on income statement data to make credit decisions as accrual quality decreases.Originality/valueThis paper broadens existing literature on the pricing of information risk in capital markets by being the first to show that lenders modify their reliance on financial statement data when faced with low-quality accruals. In addition, this paper extends the findings of Billings and Morton (2002) and demonstrates to managers the futility of using accrual manipulations to obtain more favorable credit terms. Lastly, this paper aids regulators and standard setters who seek to improve the usefulness of financial statements by showing that creditors do not appear to be misled by reporting choices that lower the quality of accruals.

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Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Release No. 2016-003, Proposed Auditing Standard—The Auditor's Report on an Audit of Financial Statements when the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards

Current Issues in Auditing ◽

10.2308/ciia-51651 ◽

2016 ◽

Vol 11 (1) ◽

pp. C26-C40 ◽

Cited By ~ 1

Author(s):

Marcus M. Doxey ◽

Stephen H. Fuller ◽

Marshall A. Geiger ◽

Willie E. Gist ◽

Karl E. Hackenbrack ◽

...

Keyword(s):

Financial Statements ◽

Auditor Independence ◽

Data Availability ◽

Financial Statement ◽

Specific Information ◽

Reporting Standard ◽

The Public ◽

Auditor Tenure ◽

Public Company ◽

Auditor Reporting

SUMMARY On May 11, 2016 the Public Company Accounting Oversight Board (PCAOB) issued a request for comment on Proposed Auditing Standard—The Auditor's Report on an Audit of Financial Statements when the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards, a reproposal of its August 2013 proposed auditor reporting standard. The reproposal retains the pass/fail model of the existing auditor's report while seeking to enhance the form and content of the report. The reproposal solicited public comment on the following significant changes to the existing auditor's report: (1) add a description of “critical audit matters” that provides audit-specific information about especially challenging, subjective, or complex aspects of the audit as they relate to the relevant financial statement accounts and disclosures, (2) add a statement about auditor independence and the phrase “whether due to error or fraud” when describing the auditor's responsibilities to obtain reasonable assurance about whether the financial statements are free of material misstatements, (3) add a statement related to auditor tenure, and (4) standardize the form of the auditor's report, requiring the opinion be the first section of the auditor's report and requiring section titles to guide the reader. The comment period ended on August 15, 2016. This commentary summarizes the participating committee members' views on the alternatives presented in the request for comment. Data Availability: The concept release, proposed and reproposed rules, and supplemental information are available at: http://pcaobus.org/Rules/Rulemaking/Pages/Docket034.aspx

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The role of the notes to the financial statements in corporate decision-making

Corporate Ownership and Control ◽

10.22495/cocv15i4c1p1 ◽

2018 ◽

Vol 15 (4-1) ◽

pp. 138-148 ◽

Cited By ~ 1

Author(s):

Veronika Fenyves ◽

Zoltán Bács ◽

Zoltán Zéman ◽

Elvira Böcskei ◽

Tibor Tarnóczi

Keyword(s):

Decision Making ◽

Text Mining ◽

Financial Statements ◽

Primary Objective ◽

Financial Statement ◽

Primary Activity ◽

Informative Part ◽

Information Technology Services ◽

Technology Services

For the analyses, we used the notes to the financial statements of companies with Hungarian headquarters, which are regulated by the Accounting Act and which have information-technology services as their primary activity of the business. The primary objective of our research was to examine the extent to which the enterprises investigated fulfill their obligations determined by the Accounting Act to disclose all needed information in the general and informative parts of the notes to the financial statement. The analysis was performed using text mining, and the results were evaluated with non-parametric statistical methods. Based on the analysis, we can state that the investigated companies presented proportionally less information in the general part of the notes to the financial statements as compared to the informative part. However, even the highest frequency did not exceed 70%. Based on the χ2 test, we can state that the frequency of occurrence of the majority of information sought using text mining significantly differs by company type, and this difference mostly occurred amongst Ltds and Lps, in favor of Ltds. As a conclusion, it can be deduced that the investigated companies do fully not meet the legal requirements for the information provided in the notes to the financial statements. This incompleteness may cut down on the decision-making ability of the companies concerned.

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The Quality of Local Government Financial Statements and The Use of Financial Information in Decision Making

Journal of Accounting Auditing and Business ◽

10.24198/jaab.v3i1.25605 ◽

2020 ◽

Vol 3 (1) ◽

pp. 73

Author(s):

Raden Muhammad Rachmansyah Shadiqiawan ◽

Sri Mulyani

Keyword(s):

Decision Making ◽

Local Government ◽

Hypothesis Testing ◽

Local Governments ◽

Financial Statements ◽

Financial Information ◽

Financial Statement ◽

Government Decision ◽

Testing Data

Financial statements contain information that is very helpful for users in making decisions. This study examines whether there are differences in the use of financial statement information decision making between the local government that obtain unqualified and qualified opinion for their financial statements. This study used the Mann Whitney test for hypothesis testing. Data was collected through a survey using a questionnaire on five local governments in West Java.The results of this study indicate that there are no significant differences in the use of financial statement information for local government decision-making, both in local governments that obtain unqualified and qualified opinions for their financial statements. This study also found that the financial statements most often used as a basis for decision making in the two groups of local governments are budget realization statement.

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Miscommunication Of Uncertainties In Financial Statements: A Study Of Preparers And Users

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v3i1.2733 ◽

2011 ◽

Vol 3 (1) ◽

Author(s):

Kim Capriotti ◽

Bobby E. Waldrup

Keyword(s):

Decision Making ◽

Financial Statements ◽

Financial Statement ◽

Font Size ◽

Communication Mode ◽

Accounting Disclosures ◽

Factors Influencing ◽

Regional Bank ◽

Loan Officers ◽

Significant Factors

The focus of this study is management's communication of uncertainty (attested to by auditors) and the potential for miscommunication due to the communication mode used in accounting disclosures. Two hypotheses are addressed to determine if financial statement users differentiate among three levels of uncertainty (using SFAS No. 5 as a vehicle for study), and whether their judgments differ when numerical probabilities replace the prescribed verbal expressions in communicating these uncertainties. The participants for this study are drawn from commercial loan officers from a major regional bank. Results lend evidence that both the level of uncertainty and the mode of communication are significant factors influencing the level of risk revision in an uncertainty exercise.  Support is found that miscommunication may exist between the preparers and users of financial statements. However, support is not found that the “vagueness” of SFAS No. 5 verbal expressions of uncertainty is detrimental to users’ decision-making abilities.

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