scholarly journals The Effects on Financial Leverage and Performance: The IFRS 16

2018 ◽  
Vol 11 (8) ◽  
pp. 76
Author(s):  
Francesca Magli ◽  
Alberto Nobolo ◽  
Matteo Ogliari
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Listed Companies ◽  
Accounting System ◽  
Financial Leverage ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Accounting Standard ◽  
And Performance ◽  
The Impact

This paper analyses the potential impacts of the introduction of a new accounting standard, International Financial Reporting Standard 16 (IFRS 16) – Leases, on financial leverage and performance of entities. This new accounting standard was introduced on 13 January 2016, and will become effective on 1 January 2019; it will have material impacts on the financial statements of listed companies adopting IFRS and change the basic principles of the current accounting system. Our aim is to estimate the impacts of the application of IFRS 16 on listed issuers of financial statements and the different impacts that the new standard could have in different activity sectors. This research estimates the effects of IFRS 16 on the ratios of debt/total assets, EBITDA/revenues and debt/equity. The conclusions summarize the effects on entity performance and net financial position. The research shows that in the financial statements of the lessee, there will be important changes. In particular, in the balance sheet, there will be an increase in lease assets, an increase in financial liabilities and a decrease in equity, while in the income statement, there will be an increase in EBITDA and an increase in finance costs. The impact of the application of IFRS 16 will be different depending on the use of operating lease contracts among the different business sectors. Leases are an important and flexible source of financing; listed companies, using IFRS and U.S. GAAP, are estimated to have around US$ 3.3 trillion in lease commitments. Finally, this study aims to analyse the possible impacts of communication of entities, focusing on alternative performance measures.

scholarly journals Differences Between New Ifrs and Us Gaap Lease Standards and their Effects on Publicly Listed Companies

e-Finanse ◽  
2020 ◽  
Vol 16 (2) ◽  
pp. 14-23
Author(s):  
Karolina Winiarska
Keyword(s):  
Stock Exchange ◽  
Balance Sheet ◽  
Financial Statements ◽  
Listed Companies ◽  
Global Scale ◽  
International Accounting Standards ◽  
Financial Metrics ◽  
Warsaw Stock Exchange ◽  
And Performance ◽  
The Impact

Abstract Leases are quite relevant to a large number of enterprises. Due to the fact that a lease reduces an entity’s exposure to risks inherent in asset ownership, it is a widely used method of obtaining access to property, plant and equipment. At the beginning of this article sources of existence of various international accounting standards as well as primary incentives (estimation of unrecognized lease obligations) to change the previous widespread lease standards used by publicly listed companies are mentioned. The IASB and FASB aware of the importance of this issue, put forward new similar accounting solutions. Despite the joint effort, there are some discrepancies between promulgated IFRS 16 and ASC 842. In the article they are divided into three groups of differences (basic, accounting and other lease issues). The main objective of this article is to point out those differences between new lease standards, as well as their distinct effects on the reporting entities’ financial statements and crucial financial metrics. In particular, the impact of operating lease capitalization on the Warsaw Stock Exchange entities’ assets by sector indices, as well as on EBITDA by industries on the global scale are presented. The article involves research methods such as: analysis of literature, global accounting regulations and financial statements, as well as comparison and deduction methods. The new lease standards have significant impact on those reporting entities with a great number of previous off balance sheet leases. Therefore, Polish sectors such as WIG-ODZIEZ, WIG-TELKOM and WIG-MOTO as well as global industries such as retail, airline and health care are the most affected. This paper may be useful for many users of financial statements (e.g. potential investors), because it provides information about effects of changed lease standards on financial position and performance of the most affected reporting entities.

Instructional Case: Worldwide Shipping Corporation Ltd: Early or Late Adoption of a New International Accounting Standard?

1999 ◽  
Vol 14 (2) ◽  
pp. 211-231
Author(s):  
Peter Lee ◽  
Pearl Tan
Keyword(s):  
Financial Reporting ◽  
Financial Analysis ◽  
Balance Sheet ◽  
Financial Statements ◽  
Economic Consequences ◽  
International Accounting ◽  
Accounting Choice ◽  
Accounting Standard ◽  
The Impact ◽  
International Accounting Standard

The management of Worldwide Shipping Corporation Ltd (hereafter “Worldwide Shipping”) is confronted with a dilemma when a new international accounting standard on leases is introduced which contains a transitional provision allowing firms to defer implementation for a period of four years. Students are required to put themselves in the position of managers who have to weigh the adverse impact of early adoption of the new accounting standard against a responsibility for fair financial reporting. Worldwide Shipping is a multifaceted case that can be used as an accounting case study or a financial analysis study. The objectives of the case are threefold. First, it aims to provide students with a better understanding of the impact of off-balance sheet transactions (in this case, sale-leaseback contracts) on a firm's financial statements. Second, it requires students to examine implications of accounting choice on management compensation and debt-contracting costs, as well as the perplexing problem of recognition in financial statements vs. footnote disclosures. By putting students in the position of managers, the case increases students' awareness of the possible economic consequences arising from accounting choice. Third, it provides students with a useful exercise in the mechanics of effecting a change in accounting method using the retroactive method.

scholarly journals ANALISIS PENERAPAN AKUNTANSI BERBASIS AKRUAL DALAM PENYAJIAN LAPORAN KEUANGAN PADA BADAN PENGELOLA KEUANGAN DAN ASET DAERAH PROVINSI SULAWESI UTARA

2020 ◽  
Vol 15 (2) ◽  
pp. 167
Author(s):  
Anastasya A. Lasabuda ◽  
Jenny Morasa ◽  
Victorina Z. Tirayoh
Keyword(s):  
Government Regulation ◽  
Financial Statements ◽  
Financial Statement ◽  
Accounting System ◽  
Financial Reports ◽  
Government Accounting ◽  
North Sulawesi ◽  
And Performance ◽  
Regional Budgets ◽  
The Impact

All government entities using funds from national and regional budgets must prepare financial reports referring to government accounting standards which regulated in government regulation No 71 in 2010 and start begin on 2015. The regional goverment financial reports required to be properly according to applicable regulation. Financial reports regional was a responsibility and performance picture in an accounting periods. The purpose of this study was to analyze the accrual basis implementation of SAP No 71 years 2010 and to know the impact ot the financial statement presentation on BPKAD in North Sulawesi Province. Methods used is descriptive qualitative, through observation, interview, analysis and make inferences. The research results showed the application of the base accrued in BPKAD of North Sulawesi Province in the presentation of the financial statements was in accordance with SAP No 71 years 2010. The impact caused by the accounting system based accrual that this report financial more than easier, quick and integrated, and can tell about information budget expended and can be monitored directly by the management to decision maker.

Perceptions of external auditors, preparers and users of financial statements about the adoption of IFRS 8

2015 ◽  
Vol 16 (1) ◽  
pp. 2-27 ◽  
Author(s):  
Ghassan H. Mardini ◽  
Louise Crawford ◽  
David M. Power
Keyword(s):  
Financial Statements ◽  
Annual Reports ◽  
International Accounting ◽  
Reporting Standard ◽  
Accounting Standard ◽  
Content Type ◽  
External Auditors ◽  
Decision Usefulness ◽  
Ifrs 8 ◽  
The Impact

Purpose – The purpose of this paper is to explore the perceptions of external auditors, preparers and users (investors and analysts) of financial statements in Jordan about this new segmental reporting standard; a decision usefulness framework underpins the research. Design/methodology/approach – The objective of this study is to explore the perceptions of external auditors, preparers and users (investors and analysts) of financial statements in Jordan about this new segmental reporting standard; a decision usefulness framework underpins the research. Findings – The findings reveal that a majority of interviewees found that IFRS 8 was not a problematic standard, and that the management approach of IFRS 8 was an improvement on the previous standard – International Accounting Standard (IAS) 14R – because the information produced was seen as useful to users of financial statements. Moreover, the respondents indicated that there was an improvement in the quantity and quality of segmental information under IFRS 8 in annual reports for 2009; it was more understandable, relevant, reliable and comparable than the segmental information which had previously been reported. Research limitations/implications – No attempt was made to assess the usefulness of segmental information reported under IFRS 8 by Jordanian listed companies in their annual reports for other groups such as lenders, suppliers, customers, trade creditors and the general public (IASC, 1989). Thus, a survey about the impact of IFRS 8 on other groups may yield further insights about the decision usefulness of the new standard’s disclosures. However, Jordanians are not familiar with such research instruments and the culture within the society is relatively secretive (Piro, 1998). Practical implications – The findings of the current research should be valuable for international accounting standard setters at the International Accounting Standards Board. It provides some indication about the impact of this new standard. Originality/value – This research shows that segmental information reported under IFRS 8 is more useful for decision makers needs compared to segmental information that previously reported under IAS 14R. It also provides a great insight about the impact of this new segmental disclosure standard.

scholarly journals Impact of the IFRS Adoption on Financial Assets and Liabilities. Empirical Evidence from Bucharest Stock Exchange

2015 ◽  
Vol 8 (2) ◽  
pp. 69-90
Author(s):  
Maria Carmen Huian
Keyword(s):  
Stock Exchange ◽  
Balance Sheet ◽  
Financial Statements ◽  
Accounting System ◽  
Financial Assets ◽  
Ifrs Adoption ◽  
Income Statement ◽  
Before And After ◽  
The Individual ◽  
The Impact

AbstractThe aim of this paper is to study the impact of the transition to IFRS on financial assets and liabilities reported by non-financial companies listed on the Bucharest Stock Exchange. It uses data from the individual financial statements for the comparative year 2011, prepared under both Romanian accounting standards (RAS) and IFRS. Through a set of financial ratios involving information from balance sheet, income statement and cash flow statement, we study how the IFRS adoption affected financial assets and liabilities. We also test the empirical correlation between profitability (measured by ROE) and financial assets/ liabilities before and after the transition to IFRS. We find that financial instruments are very little affected by the change in the accounting system. However, the association between ROE and financial assets/ liabilities is of greater intensity for the IFRS data.

scholarly journals THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARD (IFRS) ADOPTION ON KEY FINANCIAL RATIOS IN NIGERIA

2020 ◽  
Vol 8 (4) ◽  
pp. 289-300
Author(s):  
Adedoyin Isola Lawal ◽  
Ezekiel Oseni ◽  
Abiola A. Babajide ◽  
Bukola Lawal-Adedoyin ◽  
Faith Bonetipin
Keyword(s):  
Financial Reporting ◽  
Unit Root Test ◽  
Financial Statements ◽  
Substantial Effect ◽  
Least Square ◽  
Financial Ratios ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Ifrs Adoption ◽  
The Impact

Purpose: This study examined the effects of the adoption of the International Financial Reporting Standard (IFRS) on the quality of financial statements of agro-allied firms in Nigeria. Methodology: Battery of unit root test techniques and co-integration tests were deployed to examine the existence of long-run impact of relevance and reliability of financial reporting as provoked by IFRS adoption. The study made use of Panel Fully Modified Least Square techniques to examine the nature of the relationship between the Pre-IFRS and Post-IFRS adoption periods. Main Findings: The study noted that IFRS adoption has a substantial effect on the reliability and relevance of financial statements. Implications: The findings of this study help in shedding light on the impact of the IFRS on financial statements' reliability and relevance of listed agro-allied firms in Nigeria. Novelty: This study offers a unique understanding of the impact of IFRS adoption on financial ratios in Nigeria.

scholarly journals International Financial Reporting Standard (IFRS) Adoption and Its Impact on Financial Reporting: Evidence from Listed Nigeria Oil and Gas Companies

2020 ◽  
Vol 9 (1) ◽  
pp. 464
Author(s):  
Murtala Zakari
Keyword(s):  
Financial Reporting ◽  
Oil And Gas ◽  
Financial Statements ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Financial Reports ◽  
Significance Level ◽  
Ifrs Adoption ◽  
Oil And Gas Companies ◽  
The Impact

This study seeks to investigate the impact of IFRS adoption on financial reporting in Nigeria Oil and Gas sector; whether it leads to significant financial reporting improvement in terms of value addition and quality; whether it reduces information asymmetry and increases investors’ confidence and understanding of the financial reports. To achieve this, data were collected from financial statements prepared using IFRS for the periods 2012-2016, and financial statements prepared using Nigeria GAAP for the periods 2007-2011, i.e. pre and post IFRS adoption in Nigeria for a period of 5years each. Analysis was conducted to test for the significance level of ROE, PAT/Sales, CA/CL, and debt-to-equity using mean, standard deviation of ratios, and T-test (paired) for both periods. The researcher found that Nigerian GAAP is more attractive and promising to shareholders than IFRS. In the same vein, IFRS is more attractive and promising to long term lenders than Nigerian GAAP. The study concludes that there is no significant financial reporting difference and quality as well as increased comparability and investors/shareholders return on investment, in adopting IFRS compare to the Nigerian GAAP by the listed Oil and Gas companies of Nigeria.

scholarly journals Preliminary impact of IFRS 9 implementation on the Lebanese banking sector

2021 ◽  
Vol 20 (3) ◽  
pp. 369-401
Author(s):  
Darine Dib ◽  
◽  
Khalil Feghali
Keyword(s):  
Banking Sector ◽  
Current Account Deficit ◽  
Research Question ◽  
Balance Sheet ◽  
Theoretical Aspect ◽  
Capital Inflows ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Ifrs 9 ◽  
The Impact

Research Question: What is the impact of the new requirements of the expected credit loss (ECL) model on the Lebanese banking sector? Motivation: In spite the expansion of research in respect of International Financial Reporting Standard N0. 9 (IFRS 9) in the past few years, it is still in its infancy in developing countries. Meanwhile, empirical IFRS 9 studies for banks is yet considered little as compared to the theoretical aspect. Our study seeks to fill this gap by testing the impact of IFRS 9 on the Lebanese banking sector. This paper is the first comprehensive attempt to empirically assess the estimated impact of IFRS 9 as disclosed in the 2017 financial statements. Idea: This study examines if the increase in provision based on the new ECL is strongly positively related to the average credit losses for the last 5 years, the current provisions level for the loans portfolio, the portfolio of investment securities, and the portfolio of liquid assets. Data: The data were collected from 19 consolidated banks representing 91% of the total consolidated balance sheet of all Lebanese banks. Tools: To test study’s hypotheses, we applied linear regression using SPSS. Findings: Two main results can be derived: First, we found that the impact of the new ECL model is not material to the banks’ equity if we consider the excess regulatory provisions booked in anticipation of IFRS 9. Second, we found that the increase in provision based on the ECL model is strongly positively related to the portfolio of investments securities and negatively related to the historical credit loss ratio. Contribution: Empirical IFRS 9 studies for banks is yet considered little as compared to the theoretical aspect. Our study seeks to fill this gap by testing the impact of IFRS 9 on the Lebanese banking sector. The Lebanese banks are an interesting case because they play a key role in the Lebanese economy, acting as the main channel for capital inflows into the country and financing the largest part of the government’s current account deficit.

scholarly journals International Financial Reporting standard for Small and Medium-sized entities

2012 ◽  
Vol 5 (1) ◽  
pp. 54
Author(s):  
Z Koppeschaar
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Small Companies ◽  
Small Company ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Accounting Standard

<p>The International Financial Reporting Standard for Small and Medium-sized entities (IFRS for SMEs) was published as a standard by the International Accounting Standards Board (IASB) during July 2009. During 2007 South Africa became one of the first countries and the first country in Africa to early accept the proposed accounting standard (exposure draft of an IFRS for SMEs). The accounting standard will probably also be accepted by numerous other countries. The aim of this article is to investigate the applicability of this accounting standard. The results indicated that the IFRS for SMEs remains too comprehensive for the majority of small companies. The IFRS for SMEs does not satisfy the needs of South African users of small company financial statements, and as a result the accounting requirements should be simplified.</p><p><strong>KEYWORDS:</strong> Financial accounting; Financial reporting requirements; IFRS for SMEs; Small companies; Users of financial statements; Small company financial statements.</p>

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