International Financial Reporting Research Articles

International Public Sector Accounting Standards (IPSAS) Implementation and Financial Reporting: Issues and Challenges in South-East Nigeria

The main objective of the study was to identify the challenges of IPSAS implementation in the Nigerian Public Sector. This was as a result of low level of accountability and improper application of accounting standards by government institutions. A structured questionnaire was used to elicit information from the various respondents. The population of the study consists of accountants, auditors and cash officers in government ministries, departments and agencies in Abia, Anambra, Enugu, Ebonyi and Imo States. The population was estimated at 8901for the five States. The sample size of 387 was drawn using the stratified sampling technique. The Analysis of Variance (ANOVA) was used for the hypothesis test. The results showed that the challenges that impinge the full implementation of IPSAS in Nigeria include: governments’ unwillingness in terms of political-will towards full IPSAS implementation; statutory adjustment, inadequate funding and institutional commitment among others. It was therefore recommended that there should be adequate funding for the IPSAS implementation projects as most of the Public Sector Entities attributed inability to implement IPSAS Accrual to paucity of funds. Government should also show more political will as well as commitment and support for the accrual basis IPSAS implementation at the Local Government level.

Cognitive Load Theory: Why It’s Important for International Business Teaching and Financial Reporting

ABSTRACTCognitive load theory (CLT) has rarely been applied in the area of financial accounting. This research demonstrates that by using CLT, financial accounting and reporting can benefit in the areas of teaching and decision making. The CLT indicates that by reducing the load of complex concepts in the working memory, a more efficient result is obtained from the expected output. A real example on International Accounting Standard (IAS) 40 on Investment Properties (IP) is used to analyze the assimilation of the true and fair view concept. This standard permits the use of either the fair value or cost value model. Additionally, the study examines whether financial presentation formats are relevant for understanding financial information. The main results show that adequate financial presentation formats reduce extraneous load, and where presentation formats cannot be changed, results can be improved by decreasing cognitive load through dedicating more time to teaching the more complex option. This research aims to aid international business education by recommending these findings to standard setters and improving education material.

Textual Analysis and International Financial Reporting: Large Sample Evidence

We examine annual report text for over 15,000 non-US companies from 42 countries over the period 1998-2011, focusing on the length of disclosure, presence of boilerplate, comparability with US and non-US firms and complexity. We find that textual attributes are predictably associated with regulation and incentives for more transparent disclosure, and are correlated with economic outcomes such as liquidity, institutional ownership and analyst following. Using mandatory IFRS adoption as an exogenous shock, annual report disclosure improved in the sense that quantity of disclosure increased, boilerplate was reduced and comparability increased relative to both US and non-US firms. Firms with the greatest improvements in financial reporting experienced the greatest improvements in economic outcomes around IFRS adoption.

The Main Process In the International Financial Reporting at the Begining of 21st Century

The process of adopting the IFRS and replace the national GAAP is maybe the most important process in the world economy financial reporting system and the first decade of the 21 century. This process is not primarily an exercise or attempt of reshuffling the chart of account, nor only technical accounting and financial reporting matter is it. Changing accounting principles means changing the language of the business. A new global financial reporting model, as a new harmonizes and standardizes reporting language has to be the result of that process. Such a change has a pervasive impact. In fact, each hotel, each insurance or any other company, is likely to spend a significant amount of time addressing concerns around tax, valuation, treasury, legal, people, technology, and communications, following this process. Our objective in this paper is to discuss this actual process in the international financial reporting. Also, we will investigate the impact of this process on word hotel industry. The situation in Macedonian hotel industry will be study too. The aim of this paper is to stress the main activities in this process of creating an understandable accounting information system for the modern world industry economy, as well as for the modern hotel industry. The following research methods will be used for researching: the method of quality analysis, the description method, and the causal method.

The split equity reform and corporate financial transparency in China

PurposeThe purpose of this paper is to report the impact of the Chinese capital market split equity (SE) reform in 2005 on the corporate financial transparency of Chinese listed companies.Design/methodology/approachUsing an International Financial Reporting Standards‐based checklist, the paper investigates whether the post‐reform 2005 annual reports of reformed companies improved transparency compared to pre‐reform 2004 reports. The transparency of the reformed companies was also compared to a control group of companies unreformed on December 31, 2005.FindingsResults indicate that the SE reform increased corporate disclosures. Reformed companies had higher mandatory and voluntary disclosures in their post‐reform 2005 annual reports compared to their pre‐reform 2004 annual reports. In addition, the improvement in mandatory and voluntary disclosures for reformed companies is greater than that of the unreformed control group.Research limitations/implicationsThe SE reform provides a unique natural experimental setting in which to examine the impact of the SE reform, with its associated change in ownership structure and corporate governance, on corporate disclosure.Practical implicationsThe results of this paper suggest that the SE reform has had a positive effect on corporate financial transparency in China, thereby indicating the positive response to regulation in this emerging market. Further, the results suggest that as the proportion of government ownership falls, management has increased incentive to voluntarily supply additional information to the market.Originality/valueThe SE reform is unique to China and this paper is the first to report on financial reporting disclosure implications of this reform.

Coincident and forecast relevance of accounting numbers

Purpose – Value relevance studies, in particular international comparative studies, use market values sampled at different dates relative to the fiscal year-end. This paper aims to contribute a theoretical and empirical analysis of the relationship between value relevance and the month of market value sampling. Design/methodology/approach – The paper examines two components of value relevance, coincident relevance and forecast relevance, which the paper develops on the basis of the Ohlson model. The paper measures value relevance by estimating separate panel-data regressions for each of the 12 months around fiscal year-end. The sample consists of companies listed in two continental European countries, France and Germany, over the 1989-2008 period. Findings – In both country panels, the paper finds that overall value relevance is higher when market value is sampled before or close to fiscal year-end, but incremental value relevance varies between domestic and International Financial Reporting (IFRS) accounting standards. Regression results reveal significant variations in coefficients over the following months of market value in French panel and its IFRS sub-sample only. Research limitations/implications – The scope of the study is limited to the average value relevance parameters of companies listed on stock exchanges in France and Germany. Future research may be devoted to other countries and study additional determinants of value relevance. Practical implications – The study shows that the selection of the month of market value sampling can have significant impact on value relevance regression results. Therefore, sensitivity analysis needs to be included in research studies which rely on the value relevance approach. Originality/value – The paper contributes the first systematic analysis of the variation in value relevance parameters in response to the selection of the month in which market value is sampled.

Mengukur Tingkat Kesesuaian antara Standar Akuntansi Keuangan dengan International Financial Reporting Standards per 1 Januari 2008

International accounting topic was rare to adress between accounting practices, especially International Accounting Standard. It occured due to the restrictive source and difficulty in finding the source. However, recently the standard has been an addressed issue since Indonesia Chartered of Accountant (IAI) plans to comply the Indonesia Accounting Standard (SAK) with the International Financialreporting(IFRS)on1stJanuary2012.The purpose of the research is to measure the compliance of the (SAK) per 1st January 2008 with the IFRS per 1st January 2008 and attain the association between those two standards. Hence, the difference between the two standards and the neccessary steps to be taken for complying can be obtained. The methodology will be used in the paper are Jaccard’s Coefficients, Spearman’s Correlation Coefficient,Euclidean Distances.The sample for the paper will be 43 accounting issues adressed on both standards that have been chosen and investigated. The paper concludes that there are significant equalities (75%) between SAK per 1st January 2008 and IFRS 1st January 2008. (using Jaccard’s Coefficients). Due to several problems that have been found in the research, the author wish that the further researchers could widen the research’s samples, so the result will be more accurate and comprehensive.

La materialidad en auditoría como barrera hacia la comparabilidad de la información financiera: una revisión de la investigación empírica previa

INICIATIVAS COMO LAS NORMAS INTERNACIONALES DE CONTABILIDAD E INFORMACIÓN FINANCIERA (NIC/NIIF), ASÍ COMO LAS NORMAS INTERNACIONALES DE AUDITORÍA (NIA) SUPONEN UN GRAN IMPULSO HACIA LA ARMONIZACIÓN DE LA INFORMACIÓN CORPORATIVA. NO OBSTANTE, EN SU PROCESO DE IMPLANTACIÓN ENCONTRAMOS CIERTAS IMPRECISIONES QUE VIENEN EXISTIENDO DESDE HACE DÉCADAS; UNA DE ELLAS ES LA APLICACIÓN DEL CONCEPTO DE MATERIALIDAD EN CONTABILIDAD Y AUDITORÍA. EL OBJETIVO DE ESTE TRABAJO ES DEMOSTRAR, A TRAVÉS DE UNA REVISIÓN DE LA BIBLIOGRAFÍA PREVIA ESPECIALIZADA, QUE LA AUSENCIA DE PAUTAS OBLIGATORIAS PARA DETERMINAR LA MATERIALIDAD EN LOS TRABAJOS DE AUDITORÍA ORIGINA UNA CONTINUA FALTA DE CONSENSO ENTRE LOS INDIVIDUOS, LO CUAL DESFAVORECE EL PROCESO DE ESTABLECIMIENTO DE SISTEMAS QUE PERMITAN LA COMPARABILIDAD PLENA DE LA INFORMACIÓN FINANCIERA PUBLICADA POR LAS EMPRESAS.

Evidence‐based financial reporting regulation

In this introductory paper at the Abacus Forum on International Financial Reporting, I contend that it is difficult to argue that financial reporting and disclosure regulation around the world is evidence‐based. Anecdotes and references to more systematic research and surveys of research are used to demonstrate this. ‘Evidence‐based’ is a term that I borrow from medicine. There the term stands for basing medical patient care and health policy choices on the ‘current best [scientific] evidence’. I contend that financial reporting and disclosure regulation (and perhaps practice as well) are currently not evidence‐based in the specific sense of not being based on the current best scientific evidence available about accounting and auditing. Next I discuss possible causes of this state of affairs and look at future possibilities for financial reporting and disclosure regulation to become (more) evidence‐based. The discussion ends by providing a link with the papers that follow in this issue.

International financial report

International financial report