Fair View Research Articles

Application of new approaches in recognizing leases on the part of the lessee in the selected companies in the Czech Republic

The paper aims to presents the views of the selected Czech SMEs on the individual problems of lease reporting on the side of lessee as a reaction to the project of the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), the concepts of which on reporting leases have been offered for the public discussion since the end of the year 2009. There are presented the author's views on the advantages and weaknesses of some of the proposed methods of reporting the lease contracts. These findings result from the performed comparisons of recording simplified specific lease contracts on operational lease from the business practice, reported according to the current IFRS methodology and the concept of the right of use, and from the comparison of views of specialists, in particular those published on the IASB and FASB websites. These views were further completed by the author with the partial results of the investigation made in 203 Czech SMES dealing with the suitability of the future application of these principles to SMEs (Small and Medium-sized Entities). The survey was conducted among the selected Czech companies whose leaders knew the problems of reporting operational and financial leases under the IAS/IFRS and were willing to study the concepts presented by the IASB and the FASB and other materials relating to leases. The analyzed entities generally believe that the application of the right to use the concept will lead to a true and fair view on the side of the lessee but the application of this concept is associated with inappropriate costs. Most respondents believe that the asset and liability should be recognised in one aggregated amount and the decreasing of the obligation and the asset amortization should be assessed separately. The best solution in the case of changes in the estimates is to use the historic incremental borrowing rate.

The Influence of Guest Perceptions of Service Fairness on Lodging Loyalty in China

This research is motivated by an important but largely unexamined question: how do guest perceptions of service fairness influence loyalty in a lodging context? To address this question, this study presents a conceptual model of service fairness and loyalty and tests that model using data collected from 601 customers of six hotels in China. Results support a multidimensional view of service fairness that comprises three dimensions. Two of those dimensions, distributive justice (fair outcomes) and interactional justice (fair treatment by staff), have larger effects on customer loyalty than does the third dimension, procedural justice (fair processes and procedures). A key implication is that hotel managers should train their employees to understand that guests’ evaluation of a service (and subsequent trust and loyalty) depends not only on specific service outcomes, but also on how guests feel they have been treated by employees.

Accounting Regulation in Malta

This paper considers the development of accounting rules in Malta, and traces the changing de jure requirement of a ‘true and fair view’ (TFV) in national legislation. This is done in three phases. The initial phase discusses financial reporting issues arising from the then ambiguous TFV wording in the Companies Act 1995. The changing TFV wording is compared to the UK Companies Act 1948 and to the European Community Directives being the basis of national company legislation. Due to the ever-increasing conflicts between IFRS and national legislation, ways how the local accounting profession has applied the TFV principle are then illustrated. The impact on the audit reports, arising from implementation of the IAS Regulation (1606/2002/EC) is discussed in the second phase. It is found that the IAS Regulation brought about a lack of clarity as to the applicable regulatory financial reporting framework for listed entities. In the third phase, the practical difficulties and issues that led to the recent development of a national financial reporting standard for smaller entities are examined in an international context. The possible implications of a second de jure imposition of a TFV, in this national standard, are put forward.

The effects of International Financial Reporting Standards on the notes of auditors

PurposeThis paper attempts to combine the developments in the accounting area with those in the auditing area. More specifically, it presents the effects of International Accounting Standards (IAS) on the auditor findings and report.Design/methodology/approachInternational Standards on Auditing (ISA) are revised in order to be accepted by the European Union as the common and formal auditing standards of the member states. The introduction of IAS has been one of the most significant developments in the history of the financial statements preparation and presentation. The effects of the application of these standards are present both on the valuation of the firm and on the presentation of its “true and fair view”. An extended analysis of the financial statements and the auditor reports is conducted.FindingsThe effects of International Financial Reporting Standards (IFRS) on the auditor reports and notes, for the first two years of their formal application, are analyzed. It is realized that the auditor notes and the equity adjustments they propose are positively related to the notes that accompany financial statements before the application of IFRS, whereas they are negatively related to the explanatory notes imposed by IFRS. The different role of the company's notes before and after the application of IFRS and the relevant change of the auditor notes are further examined.Originality/valueMost of the research focuses on the accounting effects of IFRS. In this study, it is attempted to combine the developments in the accounting area with the developments in the auditing area. ISA are revised in order to be accepted by the European Union as the common and formal auditing standards of the member states. Much research is being developed in this area, although the data available are yet very limited. Most of the research focus is on the accounting effects of IFRS.

Fair online load balancing

We revisit from a fairness point of view the problem of online load balancing in the restricted assignment model and the 1-? model. We consider both a job-centric and a machine-centric view of fairness, as proposed by Goel et al. (In: Symposium on discrete algorithms, pp. 384---390, 2005). These notions are equivalent to the approximate notion of prefix competitiveness proposed by Kleinberg et al. (In: Proceedings of the 40th annual symposium on foundations of computer science, p. 568, 2001), as well as to the notion of approximate majorization, and they generalize the well studied notion of max-min fairness. We resolve a question posed by Goel et al. (In: Symposium on discrete algorithms, pp. 384---390, 2005) proving that the greedy strategy is globally O(log?m)-fair, where m denotes the number of machines. This result improves upon the analysis of Goel et al. (In: Symposium on discrete algorithms, pp. 384---390, 2005) who showed that the greedy strategy is globally O(log?n)-fair, where n is the number of jobs. Typically, n?m, and therefore our improvement is significant. Our proof matches the known lower bound for the problem with respect to the measure of global fairness. The improved bound is obtained by analyzing, in a more accurate way, the more general restricted assignment model studied previously in Azar et al. (J. Algorithms 18:221---237, 1995). We provide an alternative bound which is not worse than the bounds of Azar et al. (J. Algorithms 18:221---237, 1995), and it is strictly better in many cases. The bound we prove is, in fact, much more general and it bounds the load on any prefix of most loaded machines. As a corollary from this more general bound we find that the greedy algorithm results in an assignment that is globally O(log?m)-balanced. The last result generalizes the previous result of Goel et al. (In: Symposium on discrete algorithms, pp. 384---390, 2005) who proved that the greedy algorithm yields an assignment that is globally O(log?m)-balanced for the 1-? model.

The True and Fair View Concept in Romania: A Case Study of Concept Transferabiility

There is an enormous literature relating to the true and fair view (hereafter TFV). We are concerned with how the concept is actually perceived by various actors in an emerging economy which has only recently joined the European Union, i.e. Romania. Romania has a code law system with an obvious preference for the legal form. Two main steps have been taken for the purpose of our study. First, textual analysis of all accounting regulations has been performed with respect to the provisions regarding the TFV concept. Second, nine in-depth semi-structured interviews have been conducted with top representatives of the Romanian regulator, preparers, auditors and professional bodies. The perception on TFV depends firstly on the category: for auditors, this is a guide or a vital concept, closely related to substance over form, relevance and usefulness for users, while for regulators and preparers, TFV is primarily compliance with the rules.

Modeling the Antecedents of Incomplete Contract Choice in Bilateral Trade: An Experimental Investigation

Whether a contract is complete or incomplete is treated as an exogenous factor in much accounting and economics research, even though the level of completeness of the contract is determined by the negotiating parties. This study conducts an experiment to explore the antecedents of contract choice in a trade setting. Results indicate that the choice of a complete versus an incomplete contract depends on the perceived riskiness of the incomplete contract, which is influenced by the perceived bargaining power and fairness preferences (namely, distributive and procedural fairness) of the contracting parties. A supplemental analysis of expected trade outcomes confirms that individuals do not choose between incomplete and complete contracts randomly. In other words, we find evidence that the choice between an incomplete and a complete contract is the result of a strategic decision influenced by the perceived power and fairness preferences of the contracting parties. Finally, consistent with prior research, we find evidence of self-interested views of fairness and that fairness preferences do not affect expected trade outcomes.

The Valuation And Reporting Of Reputation Risk Management Capability

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;" lang="EN-AU"><span style="font-family: Times New Roman;">The Financial Statements prepared and audited in today’s economic environment can be traced to the industrial era, when tangible assets such as machinery were the engines of growth. In this era, financial accountants endorsed or invented rules based on the historical cost doctrine that yielded values which had no counterparts in commercial reality – often book valuations were sheer fictions, and thus managing the risk associated with those valuations became a meaningless exercise. This was especially the case when intangible assets such as an organisation’s Brand Equity and Reputation were kept off the Balance Sheet, thus making the valuations even more fictitious. This has resulted today in knowledge-economy companies reporting book values widely divergent of market values. These fictitious financial reports were then audited, and the auditors were paid well by the preparers of the statements to hold that the statements gave a true and fair view of the state of affairs of the company. When some of these companies failed spectacularly due to the mismatch between commercial reality and reported values, the reason for failure was pinpointed to the irreparable damage to the company’s reputation due to the lack of adequate risk management procedures, resulting in a failure traced to an organisation’s products, services, information systems or external auditors. Since the spectacular collapses of Enron and WorldCom in the international stage, many countries have introduced either mandatory or voluntary corporate governance procedures. In the USA, SOX 404 makes mandatory the reporting of all significant risks in a company’s annual reports, albeit outside of the financial statements, as an off-balance sheet item. This paper argues that the overriding reason for governance is ultimately the safeguarding of an organisation’s reputation, and that this requires an integrated approach where the ‘accountees’ (corporations), and its investors and regulators are provided with appropriate information by the ‘accountors’, i.e. the accounting profession. It also argues that although the current professional accounting standards result in financial statements that are not adequate for the proper governance, an integrated approach can be taken where reputation risk can not only be managed and valued; it can also be incorporated in these financial statements. The paper provides a valuation model based on the premise that risk management should not be based on what the organisation has, but instead what the organisation can do, i.e. its capability to manage and enhance its reputation in order to ultimately generate incremental future cash flow. It then suggests an approach that auditors can take to determine its strategic capability of sustaining and generating value via reputation enhancement. Finally, the paper considers the role of the Risk Manager, and how an empowered open-book approach to communicating and financial reporting can provide significant motivational benefits in risk reduction and reputation enhancement that ultimately result in increased value. </span></span></p>

Global warming – Accounting for emissions and issues thereon

It is seen that companies across the countries lack a proper system for accounting and valuation of emissions because the government bodies and standard setters have not been in a position to arrive at a consensus on an acceptable treatment such that the matching concept convention is not violated. The current systems adopted in some countries are seen to cause mismatch in accounting and reporting. Emissions and the resultant effect on climatic changes are persistent problems as of date. While the role of the government is sought to be enhanced to include addressing issues concerning global warming, it is indeed challenging for the auditors as well since statutes do not require any such reports and the auditors might lack the expertise to provide such reports while adhering to ‘true and fair view’ reporting. With cooperation of all nations, emissions can be controlled to a certain extent provided political consensus is arrived at among the countries. The accounting and the auditing profession should equip itself with proper accounting framework and guidelines to address environment related issues without marring ‘true and fair view’ of financial statements.

Care work versus career work: Sibling conflict over getting priorities right

As the average age of the Canadian population continues to increase, and providing care at home to frail older adults becomes ever more prevalent, support for family and friend caregivers remains a key social policy issue. Economic support is an important consideration given the impact of caregiving on labour force participation. Yet the caregiving/paid work relationship is not always straightforward. While caregiving often restricts employment, limited attachment to employment may also influence the decision to provide care. Isabel's story, collected as part of a study of sibling views of fairness in sharing parent care as well as parent assets, provides a case study in how siblings give different priority to care work versus career work and what support needs arise including those related to sibling conflict over differing priorities. Isabel claims she sacrificed her career to care for her ailing mother while her siblings argue that through caregiving, Isabel was sheltered from the paid workforce.

Steht IPSAS im Widerspruch zur Finanzpolitik? Fallbeispiel Public Private Partnership zur Bedeutung von IPSAS für eine nachhaltige Finanzpolitik

Some Swiss experts argue that there are conflicting goals between IPSAS and fiscal policy. Switzerland uses additional depreciation, besides the amount depreciated on a systematic basis over useful life, in order to balance the income statement. For this reason, the Swiss Accounting Model does not fully apply the IPSAS-focus on «true and fair view». This contradicts the general notion that the true and fair view is the main contribution of accrual accounting to sustainable fiscal policy.

Material Misstatement of What? A Comment on Smieliauskas et al., ‘A Proposal to Replace “True and Fair View” with “Acceptable Risk of Material Misstatement” ’

This comment explores theoretical and practical aspects of the Smieliauskas et al. (2008), ‘A Proposal to Replace “True and Fair View” With “Acceptable Risk of Material Misstatement”, and develops the ideas outlined there. It is argued that these proposals are helpful, but theoretically incomplete. Theoretical developments relating to accounting aspects are offered, and proposed for others to take further. The pragmatic implications suggest difficulties in the operationalization of the ideas of the original paper in a world of multiple and inconsistent user needs.

Explaining Accounting Policy Choices of SME’s: An Empirical Research on the Evaluation Methods

Analyzing accounting issues relative to small and medium sized entities (SMEs) we found the influence of taxation as the main leitmotif in the Romanian literature. However, weak empirical evidence is provided to sustain this argument. In this paper we investigate the accounting policy choices of SMEs, particularly those related to the evaluation methods. Our purpose is to find some “pattern” in these decisions and to identify the main factors that trigger them. Data for the study was collected through a survey in which respondents were requested to indicate the degree to which each of the factors listed in the questionnaire influenced their choice of accounting methods. After controlling for size, we applied the principal component analysis technique in ascertaining the impact of factors. Our results though consistent with the reviewed literature, are still surprising. This is in the sense that while taxation seems to remain the strongest influence factor, the weakest happens to be the true and fair view (TFV) consideration. In finding some possible explanations to this, we leave this question open: is it possible that the overwhelming academic concept of TFV is an empty vessel for practitioners?

Community, Public Health and Resource Allocation

If ‘community’ is the answer, what is the problem? While questions undoubtedly arise in allocating resources to public health, such as ‘how much?’ and ‘to whom?’, we already have answers based on (i) the observation that disease and illness are bad, (ii) views of justice and fairness and (iii) an appreciation of market failure. What does the concept of community add to the existing answers? Not nothing, I shall argue, but not much either. In some cases, health providers should take advantage of ties of community to deliver services more effectively. The desire to preserve communities may have some minor implications for devolved health care funding. The value of community may set some limits to inequalities in access to health care. That’s about it. I do consider some other claims of behalf of the concept, e.g. that people would not support justice in health care without a sense of community; but I don’t find these claims very plausible. Finally, I point out some ways in which communities can be damaged by the promotion of public health understood as population health.

Věrný a poctivý obraz v Evropské unii

Příspěvek je věnovĂĄn diskusi k člĂĄnku Davida Alexandra a Evy Eberhartinger. Autoři tohoto člĂĄnku analyzovali problematiku věrnĂŠho a poctivĂŠho obrazu jako nadřazenĂŠ zĂĄsady v EU, a to prostřednictvĂ­m zkoumĂĄnĂ­ vzĂĄjemnĂŠho vztahu prĂĄva EU a nĂĄrodnĂ­ho prĂĄva členskĂŠ země. Nadřazenost zĂĄsady věrnĂŠho a poctivĂŠho obrazu je stĂĄle středem pozornosti direktiv EU a jejĂ­ dĹŻleĹžitost byla potvrzena i Radou pro mezinĂĄrodnĂ­ účetnĂ­ standardy v jejich revidovanĂŠm MezinĂĄrodnĂ­m účetnĂ­m standardu č. 1 v r. 2007 (viz § BC 23-30). Na konkrĂŠtnĂ­m příkladu Rakouska autoři podrobně zkoumali, zdali je při zahrnovĂĄnĂ­ věrnĂŠho a poctivĂŠho obrazu do nĂĄrodnĂ­ legislativy EvropskĂŠ prĂĄvo nadřazenĂŠ prĂĄvu danĂŠ země.

The Presence of Fraud: Causes and the Need for Fraud Policy (An Inference from Company and Allied Matters Act - CAMA)

This paper reviews the literature on the presence of fraud, causes and the need for fraud policy in order to evaluate, if it is the optimum role of the auditor to detect fraud in financial reporting. The paper aims to achieve two goals: first to provide updated information about the causes of fraud and the need for fraud policy, and second to identify the role of an auditor. Our review shows that the auditor’s major task is not to detect fraud in financial reporting system. The magnificent role of the auditor is to plan his audit so that he has a reasonable expectation of detecting material misstatements in the financial information resulting from fraud and in forming his opinion on such financial procedures designed to obtain evidence that will provide reasonable assurance that the financial information shows a true and fair view. We recommended that the responsibility for the prevention and detection of fraud still rests on management through an implementation and continued operation of an adequate system of internal control.

The code of silence and disciplinary fairness

PurposeThis paper aims to explore how police officer rank affects the relation between the extent of the code of silence and views of discipline fairness.Design/methodology/approachIn 2005, 150 police supervisors and 450 line officers from East Bohemia, the Czech Republic were surveyed, regarding crucial components of police integrity.FindingsSupervisor and line officer codes of silence are similar; whenever the codes differ, the supervisor code seems to be narrower. The majority of line officers and supervisors provided similar assessments of the expected discipline; they disagreed only regarding a small number of scenarios. The results clearly show a direct relation between how strongly police officers adhere to the code of silence and the way they view disciplinary fairness, regardless of their supervisory status.Research limitations/implicationsThe survey included only police officers from East Bohemia in the Czech Republic.Practical implicationsThe methodology can be utilized by police administrators to explore the contours of the code of silence in their agencies, police officers' views about appropriate and expected discipline, as well as the relation between the police officers' willingness to tolerate misconduct in silence, and their perceptions of the fairness of the expected discipline.Originality/valueStudies exploring the relation between the code of silence and discipline fairness are rare. This study contributes to this scarce literature along two dimensions: first, it provides an in‐depth analysis of the relation between the extent of the code of silence and views of discipline fairness in an emerging democracy; and second, it explores the effect of police officer rank on this relation.

The European Union Endorsement Process for International Financial Reporting Standards: A Telos-Based Analysis

The paper discusses the process for the endorsement of an IFRS in the European Union with regard to its compliance with teleological principles and with regard to the true and fair view. It begins with an exposition of the teleological principle under Roman law and its relationship to the true and fair view override, as known in the UK and in the EU. We then discuss firstly the telos-based criteria against which a new Standard is appraised during the endorsement process, and secondly the application of the true and fair view principle to the issue of which criteria an EU-endorsed IFRS should be appraised against as regards its application, using IFRS 3 as a specific illustration. The teleological principle is a crucial element in our conclusions. We show that this principle can be used, and in the EU is being used, to bypass democratic processes. The issues raised by this paper concern the operation of regulations designed to be, at least theoretically, context-neutral, within a specific legal and operational framework, that is, the European Union. But similar issues are likely to require consideration in other geographical areas, outside the European context.

Fair Air: Distributive Justice and Environmental Economics

Are fairness concerns of relevance to environmental economics and, if so, are they sufficiently structured to improve analysis in this field? On both of these questions, we answer in the affirmative, arguing that people's fairness views are based on both general rules and the context, where context refers to the set of variables and persons employed to interpretandapplytheprinciples.Thefairnessrulesanalyzedareaccountability(i.e.,rewards that are proportional to contributions individuals control), efficiency, need and equality. We conclude that stakeholders typically exhibit a "fairness bias", i.e., they tend, consciously or not, to interpret and apply fairness principles in a self-serving manner, whereas the views of spectators, or impartial third parties, tend to converge significantly more. Further, we argue that fairness considerations are relevant to both descriptive and prescriptive analysis in environmental economics. These fairness concerns are reflected in the behavior of private and public decision-makers and have potentially important policy implications through the overall social objective function.

Re-examination of a true and fair view opinion in the midst of pecuniary crisis for investment decision-making

This paper is set out to examine the use of a true and fair opinion in audit reports with a view to proposing an alternative phrase that would limit the auditors‟ liability on the audit, and create confidence for investment decision-making. The views of accountants and business administrators in academics and practice; and the public within the academic environment represented the sample used as respondents for primary data collection. Data collected were analyzed using statistical tools like simple percentages and Kendalls measure of concordance. Amongst others, it was found that a majority of the respondents are of the opinion that a shift from the popular „a true and fair view‟ opinion would create more credibility on the audit function, and decision making. The researcher advocates an alternative phrase that would reflect the independent auditors‟ actual role in the financial audit along with standardized transparency rating-similar to the credit rating given to bonds, to enhance the integrity of the auditor, and dependability of prospective investor.Keywords: Published report; true and fair; expectation gap; independent auditor; value.