scholarly journals 5.8. New model of insurance contract measurement as the factor for the improvement of the quality of financial statements

2020 ◽  
Author(s):  
М.Б. Арчакова-Ужахова
Keyword(s):  
Interest Rates ◽  
Critical Analysis ◽  
Financial Statements ◽  
Insurance Contract ◽  
Economic Environment ◽  
New Model ◽  
Insurance Contracts ◽  
Ifrs 4 ◽  
The Impact

Статья посвящена проблемам реформирования учета страховых договоров в соответствии с требованиями международных стандартов финансовой отчетности (МСФО). Прежний подход к учету предполагал отсутствие единой последовательной учетной политики в отношении страховых договоров, разрешал применять учетные практики тех стран, в которых находится эмитент страхового договора, что влекло за собой ряд проблем. Автор статьи исследовал специфику и провел критический анализ требований нового стандарта МСФО (IFRS) 17, оценил преимущества нового подхода, а также последствия внедрения и влияние стандарта на транспарентность финансовой отчетности компании-страховщика. The article deals with issues related to the problems of reformation of insurance contracts’ accounting. The existing Standard, IFRS 4, allows insurers to account differently for insurance contracts they issue, even if those contracts are similar. Further, many insurers’ financial statements lack regular updates of the value of insurance obligations to reflect the effect of changes in the economic environment, such as changes in interest rates and risks. The author of the research has made critical analysis of requirements of the new standard, measured the impact of new rules at the transparency of financial statements.

scholarly journals The IFRS 17 contractual service margin: a life insurance perspective

2021 ◽  
Vol 26 ◽  
Author(s):  
W. Yousuf ◽  
J. Stansfield ◽  
K. Malde ◽  
N. Mirin ◽  
R. Walton ◽  
...  
Keyword(s):  
Life Insurance ◽  
Market Value ◽  
Financial Statements ◽  
Insurance Contract ◽  
Accounting Standard ◽  
Insurance Contracts ◽  
Ifrs 4 ◽  
Insurance Perspective ◽  
To Come

Abstract IFRS 17 Insurance Contracts is a new accounting standard currently expected to come into force on 1 January 2023. It supersedes IFRS 4 Insurance Contracts. IFRS 17 establishes key principles that entities must apply in all aspects of the accounting of insurance contracts. In doing so, the Standard aims to increase the usefulness, comparability, transparency and quality of financial statements. A fundamental concept introduced by IFRS 17 is the contractual service margin (CSM). This represents the unearned profit that an entity expects to earn as it provides services. However, as a principles-based standard, IFRS 17 results in entities having to apply significant judgement when determining the inputs, assumptions and techniques it uses to determine the CSM at each reporting period. In general, the Standard resolves broad categories of mismatches which arise under IFRS 4. Notable examples include mismatches between assets recorded at current market value and liabilities calculated using fixed discount rates as well as inconsistencies in the timing of profit recognition over the duration of an insurance contract. However, there are requirements of IFRS 17 that may create economic or accounting mismatches of its own. For example, new mismatches could arise between the measurement of underlying contracts and the corresponding reinsurance held. Additionally, mismatches can still arise between the measurement of liabilities and the assets that support the liabilities. This paper explores the technical, operational and commercial issues that arise across these and other areas focusing on the CSM. As a standard that is still very much in its infancy, and for which wider consensus on topics is yet to be achieved, this paper aims to provide readers with a deeper understanding of the issues and opportunities that accompany it.

scholarly journals Modifications of the basic approach of insurance contracts measurement

2020 ◽  
pp. 64-69
Author(s):  
М. Б. Арчакова-Ужахова
Keyword(s):  
Interest Rates ◽  
Financial Statements ◽  
Economic Environment ◽  
Basic Approach ◽  
Insurance Contracts ◽  
The Impact

Статья посвящена проблемам унификации учета и представления в финансовой отчетности информации о страховых договорах в соответствии с требованиями нового стандарта МСФО (IFRS) 17. Автор статьи исследовал специфику применения модифицированных подходов к учету договоров страхования, провел критический анализ требований, лежащих в их основе, оценил преимущества, последствия внедрения и влияние применения подхода, основанного на распределении премий, и подхода, применяемого к договорам с переменным страховым вознаграждением, на транспарентность финансовой отчетности компании-страховщика. The article deals with issues related to the problems of accounting and presentation in financial statements information relating to insurance contracts. Further, many insurers’ financial statements lack regular updates of the value of insurance obligations to reflect the effect of changes in the economic environment, such as changes in interest rates and risks. The author of the research has investigated the specific features of the modified approaches, critically analyzed the requirements, strengths and weaknesses of the variable-fee and premium allocating approaches, measured the impact of new rules at the transparency of financial statements.

scholarly journals Evaluating the quality of remote sensing products for agricultural index insurance

PLoS ONE ◽  
2021 ◽  
Vol 16 (10) ◽  
pp. e0258215
Author(s):  
Benson K. Kenduiywo ◽  
Michael R. Carter ◽  
Aniruddha Ghosh ◽  
Robert J. Hijmans
Keyword(s):  
Remote Sensing ◽  
Remote Sensing Data ◽  
Well Being ◽  
Insurance Contract ◽  
Index Insurance ◽  
Sensing Data ◽  
Insurance Contracts ◽  
The Impact ◽  
Economic Well Being

Agricultural index insurance contracts increasingly use remote sensing data to estimate losses and determine indemnity payouts. Index insurance contracts inevitably make errors, failing to detect losses that occur and issuing payments when no losses occur. The quality of these contracts and the indices on which they are based, need to be evaluated to assess their fitness as insurance, and to provide a guide to choosing the index that best protects the insured. In the remote sensing literature, indices are often evaluated with generic model evaluation statistics such as R2 or Root Mean Square Error that do not directly consider the effect of errors on the quality of the insurance contract. Economic analysis suggests using measures that capture the impact of insurance on the expected economic well-being of the insured. To bridge the gap between the remote sensing and economic perspectives, we adopt a standard economic measure of expected well-being and transform it into a Relative Insurance Benefit (RIB) metric. RIB expresses the welfare benefits derived from an index insurance contract relative to a hypothetical contract that perfectly measures losses. RIB takes on its maximal value of one when the index contract offers the same economic benefits as the perfect contract. When it achieves none of the benefits of insurance it takes on a value of zero, and becomes negative if the contract leaves the insured worse off than having no insurance. Part of our contribution is to decompose this economic well-being measure into an asymmetric loss function. We also argue that the expected well-being measure we use has advantages over other economic measures for the normative purpose of insurance quality ascertainment. Finally, we illustrate the use of the RIB measure with a case study of potential livestock insurance contracts in Northern Kenya. We compared 24 indices that were made with 4 different statistical models and 3 remote sensing data sources. RIB for these indices ranged from 0.09 to 0.5, and R2 ranged from 0.2 to 0.51. While RIB and R2 were correlated, the model with the highest RIB did not have the highest R2. Our findings suggest that, when designing and evaluating an index insurance program, it is useful to separately consider the quality of a remote sensing-based index with a metric like the RIB instead of a generic goodness-of-fit metric.

scholarly journals Statutory audit in Slovakia – significant phenomenon of global European changes

2020 ◽  
Vol 74 ◽  
pp. 06006
Author(s):  
Denisa Domaracká ◽  
Veronika Kňažková
Keyword(s):  
Financial Reporting ◽  
Global Economy ◽  
Financial Statements ◽  
Legislative Regulation ◽  
Significant Phenomenon ◽  
The Subject ◽  
The Impact ◽  
Regulation Changes ◽  
Audit Performance

The changing global economy environment also affected the area of statutory audit. Nowadays, statutory audit faces the significant changes not only because of the processes of digitization and automation in accounting and auditing, but because of increased and tightened legislative regulation, too. The most important aspects of financial reporting and auditing are subject to EU Regulations and EU Directives. For this reason, the issue of legislative regulation changes in field of statutory audit in Slovakia has become the subject of our article. Currently, the proposal of amending and supplementing Act. No 431/2002 Coll. on Accounting, as amended underwent an interdepartmental comment procedure. The proposal includes the changes on requirements for statutory audit. This article examines the current proposal to change (mainly increase) the conditions for performing the mandatory statutory audit of financial statements in Slovak audit environment. Our goal is to clarify the reasons and implications behind the changes of Slovak legislation as well as the impact of these changes on audit performance in Slovakia. We believe conducting statutory audits in accordance with the applicable legislation accepted and implemented at international European level can contribute to transparency and improve the quality of audit performance. In order to achieve the goal, it was necessary to choose a purposeful work methodology and research methods.

scholarly journals A literature review on the impact of IAS/IFRS and regulations on quality of financial reporting

2016 ◽  
Vol 6 (4) ◽  
pp. 102-114 ◽  
Author(s):  
Newman Wadesango ◽  
Edmore Tasa ◽  
Khazamula Milondzo ◽  
Ongayi Vongai Wadesango
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Financial Statements ◽  
Conclusive Evidence ◽  
Financial Reporting Quality ◽  
International Accounting Standards ◽  
Ifrs Adoption ◽  
The Impact

The International Accounting Standards Board (IASB) in its objectives and preamble, presume that IFRS adoption and perceived compliance to regulatory framework is associated with increased financial reporting quality. Based on these assumptions, this desktop study reviewed several documents to determine whether the IFRS adoption has led to increased financial reporting quality in Zimbabwe. The researchers reviewed literature on how the IAS/IFRS and regulations affect the financial reporting quality of listed companies. The factors around IFRS adoption were identified (mandatory, voluntary and convergence) and discussed in relation to the financial reporting quality. Evidence from previous studies conducted in line with this same issue shows that there is no conclusive evidence on how IFRS and regulations affect the financial reporting quality. Issues to be addressed in further studies include the importance of financial statements prepared under IFRS framework and the importance of compliance with accounting and auditing requirements.

scholarly journals Analysis on the Effects of Quality of Financial Statements, Over GDP Forecasting Models. An Empirical Cross-Country Approach

2020 ◽  
Vol 15 (3) ◽  
pp. 236-260
Author(s):  
Burca Valentin ◽  
Mates Dorel ◽  
Bogdan Oana
Keyword(s):  
Economic Growth ◽  
Financial Reporting ◽  
Structural Changes ◽  
Causal Relation ◽  
Forecast Error ◽  
Financial Statements ◽  
Institutional Framework ◽  
Gdp Growth ◽  
The Impact

Abstract Under increasing macroeconomic uncertainty, governments base their economic policies on high-precision GDP estimates. The models considered based on building-up government budgets incorporate main drivers of economic growth, identified along a large range of empirical studies, mostly focused on economic productivity, factor accumulation, human capital, innovation and transfer of technology, structural changes, or institutional framework. However, there is little evidence related to the impact of accounting and assurance regulation on economic growth. Our study attempts to assess the significance of causal relation between forecasting error on GDP growth and quality of accounting standards, respectively quality of financial statements. The study analyzes the causal relation between country level measures of quality of financial reporting, synthetized by Isidro et. al. (2019), and the measure of GDP growth estimate mean error. Our results confirm a significant impact of quality of the output of financial reporting practice, related to disclosure quality and asymmetric timeliness. The results remain similar, even after controlling for accounting convergence influence. Checking for robustness of the model, we observe the main drivers of one year ahead GDP forecast error are related to institutional framework to issue high quality standards and enforce them properly. The results emphasize once again the role of economic development and corresponding complexity of economic activities and political framework impact on accounting regulation and subsequently on macroeconomic measures.

Qualitative Financial Statement Disclosures: Legal and Ethical Considerations

2004 ◽  
Vol 14 (3) ◽  
pp. 433-451 ◽  
Author(s):  
William E. Shafer
Keyword(s):  
Empirical Test ◽  
Financial Statements ◽  
Financial Statement ◽  
Corporate Management ◽  
Ethical Considerations ◽  
Corporate Executives ◽  
Illegal Acts ◽  
The Impact ◽  
A Company

Abstract:There is a long-running debate among legal scholars regarding the propriety and enforceability of SEC attempts to mandate disclosures of antisocial or illegal corporate activities that do not materially impact a company’s financial statements. This debate was recently revived by the issuance of SEC Staff Accounting Bulletin 99, Materiality in Financial Statements (SEC 1999), which suggests that quantitatively immaterial information relating to unlawful transactions or regulatory non-compliance should be considered for disclosure. This issue has important implications for the accounting profession, although it has generally been ignored in the accounting literature. This paper reviews legal and ethical considerations raised by the issue of qualitative disclosures, and also presents the results of a preliminary empirical test of the impact of such disclosures on financial statement users’ judgments. The results of this study indicate that investors consider the nondisclosure of immaterial illegal acts to be unethical, and reject suggestions that such information lacks moral intensity. The results also suggest that immaterial illegal acts have a significant effect on investors’ perceptions of the quality of corporate management and the likelihood of investment in a company. This effect was more pronounced when the illegal act was combined with self-dealing on the part of corporate executives.

scholarly journals ASSESSMENT OF THE POTENTIAL OF AUDITING FIRMS IN THE CONTEXT OF DEVELOPING ECONOMIC CRIMES

2020 ◽  
Author(s):  
Dimitriy Grytsyshen ◽  
◽  
Zhanna Prokopenko ◽  
Tetiana Kochyn ◽  
Volodymyr Tsependa ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Legal Framework ◽  
Audit Firm ◽  
Corporate Scandals ◽  
Functional Value ◽  
Functional Features ◽  
Labor Resources ◽  
The Impact

The article proves that the number one issue in the development of the information society is not the amount of information, but its quality, and it is the audit of confirmation of this quality through the assessment of the risks of its reduction. It is specified that in this direction it is important both the innovative method of auditing the financial statements for quality, and the resources needed to perform all defined audit procedures. It is revealed that according to the model the content of audit tasks changes, and there is a need to transform its methodology. The impact of negative financial reporting and auditing results on the securities markets was assessed by studying corporate scandals in Ukraine and the world. The characteristics of corporate scandals in terms of falsification of financial statements and methodology and organization of audit are given. The directions of transformation of institutional audit support as a tool for evaluating financial statements and its results as components of the information resource for internal and external users are identified. The analysis of the legal framework in the field of quality control of services provided by audit entities allowed to form the institutional aspects of quality assurance of audit activities and to establish the functional features of the relevant institutions. The organizational-hierarchical interrelations are defined, and also the functional value in system of maintenance of quality of auditing activity of subjects of regulation of auditing activity in Ukraine is defined. The relationship between the quality of the audit and the audit of the quality of financial statements is substantiated. It is established that the key resource of economic activity of the audit firm is the labor resources that form the human resources and determine the quality of the audit service. It is characterized that the quality of the audit service depends on the effectiveness of the audit entity as a subject of external independent financial control in the context of the relevant public functions and as a business entity whose main purpose is to make a profit. It was found that the efficiency of use and formation of economic resources by the audit firm depends on all the effects associated with its operation.

scholarly journals Foreign banks management in the context of a pandemic: problems and solutions

E-Management ◽  
2020 ◽  
Vol 3 (3) ◽  
pp. 4-12
Author(s):  
Sh. U. Niyazbekova
Keyword(s):  
Interest Rates ◽  
Financial Statements ◽  
Capital Requirements ◽  
The Philippines ◽  
Foreign Banks ◽  
World Health ◽  
Physical Interaction ◽  
Management Actions ◽  
General Decline ◽  
The Impact

The article discusses the problems encountered by enterprises in the financial sector in the context of the COVID-19 pandemic. The paper gives examples of management actions of the largest banks in Italy, Brazil, South Korea, China, Portugal, Singapore, the USA, the Philippines and Russia. World Health Organization has advised the population to use contactless payments and reduce the turnover of banknotes to a minimum. The coronavirus has increased the desire of customers to use digital services, making it an urgent need. In fact, the pandemic has led to the fact that Bank customers, who are increasingly afraid to spend time in public places, should be able to conduct banking operations without physical interaction with Bank offices. By implementing fully digital remote customer service, banks must ensure that both routine and unique (one-time, specific) banking processes will be performed without loss or disruption. Under these circumstances, financial institutions will be required to disclose information about the impact of the coronavirus pandemic on their operations in financial statements based on the relevant disclosure standards (Generally Accepted Accounting Principles, GAAP and United States Securities and Exchange Commission, SEC). Disclosure of financial statements may include risk factors such as Fund depreciation, reduced liquidity, and other aspects.The downward trend in interest rates as required by governments and national banking regulators may affect the profitability of banks. Along with a General decline in business activity, this will lead to a decrease in Bank profits. Analysts’ concerns have already resulted in a sharp drop in the share prices of many firms, which creates another problem because some deferred tax assets, such as net operating losses (NOL), are not fully accounted for in the Bank’s regulatory capital requirements. National governments impose industry-specific tax requirements on capital market enterprises, but the challenges they will face when filing and paying direct and indirect taxes are likely to be similar to those faced by other industries.

scholarly journals ФОРМУВАННЯ ОБЛІКОВОЇ ПОЛІТИКИ ЗА ПРИНЦИПОМ БЕЗПЕРЕРВНОСТІ ДІЯЛЬНОСТІ ПІДПРИЄМСТВ

2021 ◽  
pp. 74-81
Author(s):  
Олена Сергіївна Юрченко
Keyword(s):  
Financial Reporting ◽  
Information Needs ◽  
Accounting Standards ◽  
Financial Statements ◽  
Fair Value ◽  
The Real ◽  
Real Value ◽  
The Impact ◽  
Accounting Policy

Formulation of the problem. Based on the study, the prerequisites, features and components of the formation of accounting policies in the context of business continuity are revealed. The purpose of the article is to substantiate the theoretical and methodological and organizational provisions of accounting policy formation in the context of the implementation of the concept of continuity. The object of research is the process of formation of accounting policy and its impact on the quality of corporate financial reporting information. Methods used in the study: scientific knowledge, method of generalization, comparison, logical - meaningful, methods of induction and deduction. The main hypothesis is that the formation of accounting policies aimed at determining the regulations of accounting and reporting from the standpoint of reflecting complete and reliable information about the real value of assets and liabilities will help reconcile the interests of all stakeholders. Presenting main material. The article identifies the prerequisites, directions and elements of the formation of accounting policies on the principle of continuity of enterprises. Provisions on the development of theoretical and methodological foundations for the formation of accounting policies of enterprises on the basis of risk-oriented approach are revealed. The necessity of valuation of assets and liabilities according to the criteria: fair, discounted and market value of enterprises is substantiated and the methodological support of valuation of financial instruments in accounting is revealed. Originality and practical significance are proposals for the formation of methodological and organizational support and recommendations for the measurement of assets and liabilities at fair value in order to improve the quality of financial statements. Research findings. The formation of accounting policy in the context of the principle of continuity is based on the requirements of International Accounting Standards and National Accounting Standards and depends on the needs of management, methods and techniques of accounting. In the process of developing an accounting policy, it is necessary to take into account the information needs of various stakeholders to disclose information in corporate financial statements. The introduction of theoretical and methodological provisions for the formation of elements of accounting policy on the principle of continuity will meet the information needs of different users, improve the quality of financial reporting and assess the impact of accounting policies on the real value of enterprises in the future.

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