Standard setting in times of technological change: accounting for cryptocurrency holdings

PurposeThis paper explores how the International Accounting Standards Board (IASB) has dealt with the emerging issue of accounting for cryptocurrencies by investigating its constituents' expectations and the motivations underlying its regulatory response.Design/methodology/approachThe theoretical lens of regulatory space is used to analyse the four-year debate around cryptocurrency holdings and informs the extensive thematic analysis of public documents, meetings recordings and comment letters on the topic.FindingsFacing national standard setters' initiatives to regulate accounting for cryptocurrency, the IASB defended its position in the regulatory space through an agenda decision based on ewct 2xisting standards, which was finalised by the International Financial Reporting Standards Interpretation Committee (IFRS IC) despite criticism from constituents and Board members.Research limitations/implicationsThe paper provides insights into the IASB approach to a regulatory vacuum regarding a new class of items, which derive from a new and rapidly-evolving technology. Disruptive technology impacts the contested arena of accounting regulation, in which the constituents ask for new solutions and the IASB tries to resist such pressures, while defending its position.Practical implicationsThe paper sheds light on the growing importance of agenda decisions in the IFRS environment and on the limits of the IASB long regulatory process in the circumstance of emerging accounting issues deriving from rapidly-evolving technology.Originality/valueThis investigation is timely and relevant as it considers the regulatory issues arising from disruptive technological innovations (i.e. cryptocurrency), shedding light on the limits of regulatory processes in times of technological change.

The Joint Effect of Presentation Format and Disclosure Balance on Investors’ Reactions to Sensitivity Disclosures of Hedging Instruments

Derivative-related risk disclosure has been a key issue in accounting regulation and research, and sensitivity analysis is the most popular form of quantitative derivative-related disclosure. In an experiment, we find that, relative to disclosing potential losses only, disclosing both potential gains and potential losses associated with hedged items and derivatives leads to favorable investor reactions when information about net risk after hedging is omitted from the disclosure, but not when net risk is shown. We further show that disclosing net risk in addition to hedged-item and derivative risks is as effective at lowering investors’ risk perceptions as disclosing potential gains. Finally, we demonstrate that disclosing net risk and disclosing potential gains affect investors’ judgments through different mechanisms. Our results have important implications for investors, managers, and regulators.

Financial accounting for deferred taxes: a systematic review of empirical evidence

Deferred taxes—resulting from differences between financial and tax accounts—have been a long-standing, contentious issue in financial accounting regulation, practice, and research. Debates on concepts and standards have been accompanied by doubts around whether and the extent to which deferred taxes provide relevant information for financial statement users and are employed by firms to manage their earnings. This paper systematically reviews the body of empirical evidence that has emerged over the last three decades on deferred taxes in the fields of value relevance and earnings management. A bibliographic analysis and a narrative synthesis are presented within a thematic categorization framework. Key results indicate that existing research focuses on the US setting. There is substantial evidence for the value relevance of various deferred tax items but limited evidence that firms use deferred taxes to manage their earnings. The findings suggest implications for both future research and the regulatory debate.

Does regulatory enforcement improve continuing disclosure? The municipal securities market case of the Municipalities Continuing Disclosure Cooperation (MCDC) initiative

PurposeThis paper analyzes the impact of increased federal regulatory enforcement from the SEC's Municipalities Continuing Disclosure Cooperation (MCDC) initiative on municipal debt issuers continuing disclosure practices.Design/methodology/approachWe analyze the changes in continuing disclosure practices by estimating a series of difference-in-differences regressions based on variables representing issuers' changes in regulatory risk after the MCDC. The continuing disclosure data are hand-collected for 827 cities over a seven-year period.FindingsThe empirical findings indicate that increased regulatory enforcement has a significant impact on continuing disclosure compliance. We find increased enforcement has no impact on issuers that already have a higher probability of being monitored by federal regulators. We also find that an increase in continuing disclosure compliance does not automatically increase continuing disclosure timeliness.Practical implicationsThe MCDC lacks monetary penalties for noncompliant bond issuers and no direct regulatory consequences exist for untimely disclosure. Our findings suggest that regulatory enforcement should be followed by adequate sanctions to emphasize the credibility of the enforcement threat and the SEC should consider requiring bond issuers to commit to the timely disclosure of significant information in offering documents.Originality/valueThis paper extends prior studies by analyzing regulatory risk in the market, and the ability of regulation to reduce disclosure compliance deficiencies in the municipal market. By focusing on the MCDC, this study is able to disentangle the impact of regulatory enforcement from the changes in accounting regulation.

Accrual of depreciation of fixed assets: novations of Federal Accounting Standard 6/2020 “Fixed assets”

The article considers the features of the depreciation of fixed assets according to the new Federal Accounting Standard 6/2020 “Fixed Assets”, which becomes mandatory for use starting from the financial statements for 2022, the organization of the non-state sector of the economy, including private medical companies. It is noted that a new concept appears — liquidation value, which directly affects the amount of depreciation. There are differences in depreciation methods compared to the current Accounting Regulation 6/01 “Fixed Assets accounting”. A formula for calculating the amount of depreciation when using the reduced balance method is proposed. Practical examples of calculation of depreciation amount according to Federal Accounting Standard 6/2020 are considered.

Is it possible to improve methods of intellectual property valuation?

Purpose: The purpose of this study is to identify ways to improve or simplify the quality and accuracy of IP valuations via accounting regulation improvements. Methodology/approach: This research relies on qualitative research methods such as case law analysis and comparative research of accounting standards and approaches. Findings: Evidence from this study points towards the conclusion that financial statements currently only reflect a historic financial record of the particular business, profoundly biased by a conservative tangible assets perspective. The central thesis of this study is that it makes sense to adopt a comprehensive intellectual property valuation strategy to ascertain the specific value of the intangible assets since the comprehensive application of valuation models is likely to yield superior results to using them separately. Research limitations/implications: Although the proposed approach seeks to bring more clarity to the valuation process while simplifying the appraisal of intellectual property assets, its efficacy is subject to increased transparency, a maturing intellectual property market, and credible data availability. Originality/value: This study makes a valuable contribution to research on methods that facilitate accurate intellectual property valuation while offering an alternative valuation model which combines the strengths of individual valuation models.

WAYS FOR IMPROVING OF FISCAL-ACCOUNTING REGULATION TO THE CONTEXT OF AGRICULTURAL EXPORTS IN UKRAINE ACCORDING TO THE WORLD TRENDS

The object of research: the procedural order of fiscal and accounting regulation of revenues from export agricultural products (export receipts, the export duty). Investigated problem: obtaining stable and repetitive connection between the accounting part, the fiscal part of the regulation and exports of agricultural goods with possibility of improvement. The main scientific results: it is revealed that the first stage of fiscal-accounting regulation of exported agricultural products is transactions’ accounting on accounts. It should be noted that, after the abolition of the mandatory sale in Ukraine, there is no need to apply the distributive account in export of agricultural products. It will help to reduce the time of enrollment the currency and its using by exporters for their needs. It is determined too, that the second stage of the regulation is the export receipts and revenues from the export duty. Moreover, using economic (mathematical) modeling, based on correlation-regression analysis, it is illustrated positive effects for reducing of export duty rates on revenues from export agricultural products in Ukraine. The area of practical use of the research results: Government of Ukraine in formation of export strategy, and exporters – in the context of accounting. Innovative technological product: the regulation technology of the cyclical accounting and fiscal parts in agricultural exports with using modeling econometric analysis for determination of direction of its development. Scope of the innovative technological product: Ukraine’s Government practice in using mathematic modeling for determination of trends of agricultural exports.