Readers Of Financial Statements Research Articles

Accounting Standards in India: Operational Issues

Accounting standards were primarily developed to provide more transparency in business operations and to ensure accurate reporting that supports wise decision-making. Together with these things, accounting ideas, techniques, and principles changed. Accountability standards are really more than just a framework; they are fundamentally similar to legislation. In order to resolve disputes between parties with disparate interests, accounting standards are also crucial. An essential mediator in settling conflicting interests is accounting standards. Accounting standards are regarded with legitimacy by many interest groups. They work to guarantee that readers of financial statements are provided with accurate information about the company. Malignancy of this includes the many instances of business scams in which investors were conned out of crores of rupees, levies were fined, and embezzlement was permitted. Because of all of this, changes to the standards were necessary to make them more informative and tone-regulating. Amending related legislation was required by these revisions. A thorough knowledge of whether the account is in line with materiality, transparency, complete exposure, and operational support is required. From a business standpoint, accounting standards are evaluated for their efficacy in promoting transparency via exposure and accuracy in reporting. In order to assist stakeholders' decision-making and provide functional support for the firm, corporate financial statements (profit and loss account and balance sheet) needed to be made visible and efficient. The present research looks at the accounting standard revisions from the perspectives of company registers, cost accountants, and chartered accountants. Professionals, the experimenter examines their viewpoints about the efficacy of accounting standard change. This makes the research relevant.

BANTUAN IMPLEMENTASI SOFTWARE AKUNTANSI BAGI KARYAWAN MGK

The development of Financial Accounting Standards (SAK) is a framework in the procedure for preparing financial reports so that there is uniformity in the presentation of financial reports. SAK also functions to make it easier for auditors and readers of financial statements to understand and compare the financial statements of different entities, and continue their understanding of knowledge about accounting software that has been given training in the previous semester. The problem faced by MGK is that the results of processing its financial reports are less integrated. The results obtained from this activity are that MGK can use accounting software and produce financial reports that are more accurate and reliable according to Financial Accounting Standards (SAK). so that information from financial reports is less reliable and not timely. In this activity, we provide training assistance and assistance with accounting software implementation.

IFRS FOR SMEs: EVOLUTION AND DISCUSSIONS

Research on the harmonization of financial reporting of SMEs worldwide is currently focusing on the global application of IFRS for SMEs as an alternative for the financial reporting of entities whose securities are not listed on a regulated market. Several principles of recognition and valuation of assets have been simplified as a result of revisions made to the entire set of IFRS standards in order to meet the specific demands of small and medium-sized entities (SMEs) in meeting the information needs of readers of financial statements. The proposed goal was reached through the application of the historical research methodology, which involved an examination of the background and development of the IASB s project on the financial reporting of small and medium-sized enterprises, as well as subsequent events following the first and second revisions of the standard. Starting in 2000, when the first discussions about the need for a distinct standard for small and medium-sized entities emerged, to March 2021, when the feedback received following the second Request for Information for revision, the time period studied covered a number of significant events, taking into account that this provides a better understanding of the evolution of the IFRS standard for SMEs. Hence, three time periods were examined: the standard s pre-publication period (2000–2009), its first revision (2009–2015), and its second revision (2019-2021).

Tinjauan Atas Psak 102 (Revisi 2019) Dan Psak 102 (Revisi 2016) Tentang Akuntansi Murabahah

Murabaha transactions through murabaha financing are the leading transactions in Islamic Financial Institutions in Indonesia. The accounting treatment for these transactions is regulated in PSAK 102 Akuntansi Murabahah. First issued in 2007, PSAK 102 Akuntansi Murabahah has been revised three times, namely in 2013, 2016, and 2019. This literature study aims to analyze the differences between PSAK 102 Akuntansi Murabahah Revised 2019 and Revised 2016. Using content analysis techniques, the main sources of writing come from the related Sharia Financial Accounting Standards (SAK), related scientific journals, and IAI Education and Training (PPL) materials. The differences between PSAK 102 Akuntansi Murabahah Revised 2019 and Revised 2016 include: scope, amount, paragraphs, advances, significant financing elements, the definition of Murabaha income, definition of real costs, terms of Murabaha assets, recognition of Murabaha income, recognition of deferred revenue with a significant financing element, as well as a component of disclosure by sellers in the financial statements. Content difference analysis of PSAK 102 Akuntansi Murabahah is necessary to enrich the literature related to Murabaha accounting treatment, to update and improve the understanding of all parties with an interest in Murabaha transaction information, especially financial statement preparers, financial statement readers, and auditors.

Earnings manipulation behavior in the banking industry of Bangladesh: the strategical implication of Beneish M-score model

PurposeThis study aims to determine the number of companies involved in earnings manipulation. Additionally, this study has empirically investigated the common manipulation items among the companies.Design/methodology/approachBangladesh's listed commercial banks are selected as a sample for this study, and financial data from 2009 to 2018 were collected. The likely and nonlikely manipulator Beneish model (1999) divides the sample into two groups. Based on the M-score of the model, the banks are put into two groups. To identify the most influential variables, an independent samplet-test was done with the help of Statistical Package for Social Sciences (SPSS).FindingsThe findings show that banks in Bangladesh have an unstable trend in making manipulated financial reports. Results of thet-test reveal that overstating revenues, increasing intangible assets, lessening cost and accruals are the most appealing items for preparing a fraudulent financial report. The findings of this research work will help the investors take the right decision having the idea of manipulation in the banking sector of Bangladesh.Originality/valueIn the presence of many irregularities in the banking sector Bangladesh, very few studies have been carried out in forensic accounting and fraudulent financial reporting practices. Much research has focused on earnings management techniques. This research specifically focuses on identifying earnings manipulation in financial statements for micro-level variables like accounting accruals, intangible assets, etc. This will help policy-makers and financial statement readers to be proactive while reading financial statements and taking any investment decision.

OVERVIEW OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) AND APPLICATION DIFFERENCES BETWEEN IFRS AND TURKISH TAX PROCEDURE LAW (TPL)

Purpose- The purpose of this study is to explain the differences between IFRS and Turkish Tax Procedure Law (TPL), give information about how financial statements are presented according to TPL and IFRS, and show the presentation of financial statements in practice by specifying the theoretical and application differences in the two frameworks. Methodology- Within the scope of this research, the balance sheet and income statements were explained in detail in terms of TPL and IFRS applications on account basis, correction and classification records were made within the scope of IFRS, and the financial statements were reproduced for a sample firm. Findings- The general validity of the financial statements prepared by each country according to its own rules is lower than the general validity of the financial statements prepared according to IFRS. Financial statements prepared in accordance with IFRS are standardized with a single application integrity. Conclusion- With the implementation of IFRS, it is ensured that all financial statement readers, regardless of country, company or location, gather under a single standard, under a single roof, and interpret the reporting in the same way. Thus, it will increase confidence, transparency and stability in the markets for users of financial statements. Keywords: International Financial Reporting Standards (IFRS), Tax Procedure Law (TPL), financial statements, accounting standards. JEL Codes: M40, M41, M42

The Effect of Ownership Structure, Audit Committee, Company Size, and Audit Quality on the Integrity of Financial Statements on Manufacturing Companies Listed on IDX

A list of financial data (e.g., account balances, transactions, and changes in value) is given over a period of time. This information may be utilized by readers of financial statements to help them make economic choices. So, the businesses that want to be trusted must provide honest financial accounts. The study sought to investigate the relationships between several measures of corporate control, management control, the audit committee, and size, on the accuracy of financial statements for manufacturer companies listed on the IDX. The population utilized in this study consists of 169 businesses, while the sample is made up of just 43 companies. This study used the assistance of SmartPLS software to analyze the information. The study's findings indicate that Institutional Ownership and the Audit Committee are linked to financial statements' integrity. Meanwhile, these three factors (i.e., size of the company, level of managerial ownership, and audit quality) have no impact on the financial statements' integrity.

Impact of Environmental Performance on Financial Performance: Empirical Evidence from Indian Banking Sector

There has been long-standing debate over whether or not firms gain economic competiveness from reducing their impact on the environment. Although ample literature is available on association between environmental performance and financial performance across various sectors, little empirical evidence is available in context of Indian banking sector. This research aims to analyze whether there is any significant relationship between environmental performance and financial performance of banks operating in India for a period 2013-14 to 2017-18. Secondary data has been collected for a sample of 83 banks operating in India. Content analysis was applied to extract information about environmental performance disclosed by sample banks followedby construction of environmental disclosure score index. Hierarchical multiple regression was applied to analyze relationship between environmental performance and financial performance after controlling for effects of size, financial leverage and capital intensity. Results exhibit no significant relationship between environmental performance and financial performance of banks operating in India. Findings of this research are expected to provide insight to users and readers of financial statements to have better understanding about the environmental practices carried out by banks. It would also contribute significantly towards decision making for policy makers in Indian banking sector to establish mandatory environmental legislations for reporting on environmental practices in order to improve non financial disclosure and financial performance in Indian banking sector.

Functional Expense Reporting Practice Among Non-Profit Organisations (NPOs)

The objectives of the study are to understand the practice of Functional Expense Reporting (FER) and to identify the factors influencing the practice of Functional Expense Reporting (FER) by non-profit organisations (NPOs) in Malaysia. The study on NPOs is critical because non-profit financial reporting also has the potential for accounting fraud and scandal as there is a lack of accounting standards. Many NPOs cannot provide the right information about their relative effectiveness in fulfilling their mission. As a result, donors, funders, and charity watchdog organisations have placed undue reliance on financial indicators, many of which according based on reported functional expenses. The presentation regarding the expenses based on a “functional” classification reflects the expenses according to the purpose of the expenses incurred. A functional expense presentation helps readers of financial statements (including donors, foundations, regulators, and financial institutions) in understanding how a NPOs spends its resources. This study is using the qualitative research approach to meet the objectives. The data collections are using in-depth interviews and reviews on organisational documents. Face to face and semi-structured interviews conducted between the preparers/founders/employees of financial reporting of four (4) NPOs, the controllers which consist of three (3) officers from Bahagian Hal Ehwal Undang-Undang (BHEUU), Jabatan Perdana Menteri (JPM) and one (1) auditor. The document reviews include the financial reporting of NPOs that also been analysed to identify whether the functional expenses have presented. From qualitative research, the study had identified three main factors that are influencing the practice of functional expense reporting. The factors are accountability, policy requirement, and trust. Specifically, this paper only focuses on NPOs, which registered under BHEUU. The findings of this study are expected to state the current practices of functional expense reporting by NPOs in Malaysia. The presentation of expenses as both natural and functional is meaningful to users and is encouraged for all organisations in promoting accountability among NPOs. Keywords: Functional Expense Reporting (FER), non-profit organisations (NPOs), accountability, policy requirement, trust

EVALUATION OF IFRS 17 INSURANCE CONTRACTS STANDARDS FOR INSURANCE COMPANIES

Objective- The new IFRS 17 “Insurance Contracts” Standard, which could change the accounting of all enterprises drawing up insurance contracts and the investment contracts with discretionary participation feature radically, will be applied in the annual reporting periods starting on January 1, 2021 or after that date, and replace TFRS 4 Contracts standard that is currently in force. This study examines the IFRS 17 standard from the viewpoint of the insurance companies, and also discusses the revisions made within the scope of TFRS 4 that is in force until the start of the application of the IFRS 17 standard, and the accompanying right of exemption in application of the TFRS 9 Instruments standard. Since there is no sufficient study on this subject in our country, it is targeted to contribute to understanding of the subject by including application examples in this study. Methodology- This study uses case method, qualitative interview (in-depth interview), and review method as the research method. The basic reason for selecting this method is that the method is appropriate for the aim of the study, and an effective method investigating a special situation based on insurance companies systematically in the studies on the “Insurance Contracts” standard. Findings- IFRS 17 will be beneficial for both investors and the insurance companies by requiring recognition of all insurance contracts consistently, and by solving the comparison problems created by the TFRS 4. IFRS 17 requires an up-to-date measurement model in which the estimations are measured again in each reporting period. The measurement is based on the building blocks of the discounted, probability-weighted cash flows, a risk correction, and a contractual service margin representing the unearned profit of the contract. Within the scope of IFRS 17, the enterprises have an accounting policy option to recognize the changes in the discount rate or the other assumptions related to the financial risks in the profit or loss, or in the other comprehensive income. Within the scope of TFRS 4, on the other hand, it will provide all companies drawing up insurance contracts with an option to recognize the fluctuation possible to occur when TFRS 9 is applied before implementation of the new insurance contracts standard in the other comprehensive income statement instead of profit or loss. Conclusion- The IFRS 17 insurance contracts standard will replace TFRS 4, and ensure the creation of the single and consistent measurement model that meets the supplementary disclosure requirements intended for increasing the transparency for all insurance contracts prepared by the companies issuing reports in accordance with the International Financial Reporting Standards. Within this scope, the Insurance liabilities will be recognized by using updated values instead of historical cost, and the readers of financial statements will have been provided with more effective and accurate information.

Identifying Corporate Speculation Reading Public Disclosures Why Firms Speculate

To date, readers of financial statements are not able to identify speculation as risk-increasing activity from public corporate disclosures. We examine a unique regulatory environment, in which the regulating authority recommends additional FX-disclosures in excess of prevailing reporting standards and find that these optional publications enable, henceforth, the identification of speculative activities. Further, we help solve the puzzle of the determinants of speculation and find that frequent speculators are smaller, have more growth opportunities and possess lower internal resources, which indicates unprecedented empirical evidence for the convexity theories of Campbell & Kracaw (1999) and Adam, Dasgupta, & Titman (2007). Our findings substantiate the significance of an extended reporting with optional disclosures that might unlock numerous benefits for both share- and stakeholders.

MORALITAS, PENGENDALIAN INTERNAL DAN GENDER DALAM KECENDERUNGAN TERJADINYA FRAUD

Morality, Internal Control and Gender in Fraud.University is an economic entity which is required to be accountable and transparent in funds management. Accountability can be indicated through financial reporting that is free from fraud. Fraud refers to the intentionally accounting errors to mislead the financial statement readers and usersin order to taking advantages. This research conducted with research design experiments 2x2 factorial by adding a gender perspective in examining the tendency of commit accounting fraud between individuals who have a (high or low) level of moral reasoning and (with or without) elements of internal control organization as factors that could cause accounting fraud. Data was analyze with two-ways ANOVA and Mann Whitney test in testing hypotheses. Research results indicate significant differences in the tendency of the accounting fraud due to the level of morality, internal control and gender. The results of this study are expected to provide recommendations in evaluating internal control policy to prevent fraudulent accounting practices and the importance of ethics and character education in the university environment to reduce the intention of fraud.

Value relevance of biological assets under IFRS

This paper examines the value relevance of fair value accounting for biological assets under IAS 41 Agriculture, using 389 firm-year observations from 2011 to 2013 of listed firms in 27 countries. We adjust the Ohlson (1995) model to operationalize value relevance as the ability of book value to explain market equity value. The results confirm that recognized biological assets are value relevant at fair value, but are more value relevant in firms with higher levels of disclosure. The same results were obtained for bearer biological assets. However, for consumable biological assets, the results suggest that investors do not value recognized biological assets in firms with higher levels of disclosure. These findings should help regulators, accounting standard setters, and readers of financial statements to better understand the market valuation implications of IAS 41.

The effect of Statement of Financial Accounting Standards No. 157 Fair Value Measurements on analysts’ information environment

This study examines the effect of the adoption of Statement of Financial Accounting Standards No. 157 Fair Value Measurements (hereafter FAS 157) on analysts’ information environment. A major controversy surrounding FAS 157 disclosures is whether Level 3 measurements provide useful information to financial statement readers. We provide evidence suggesting that FAS 157 disclosures regarding Level 3 measurements are able to reduce uncertainty in analysts’ information environment. Our results reveal that the provision of such fair value disclosures is associated with reduced uncertainty regarding future earnings and lower forecast errors. We also find that unrealized gains and losses from fair value changes in Level 3 measurements are positively associated with firms’ future performance. Overall, our findings suggest that disclosures related to FAS 157 fair value measurements improve analysts’ information environment. Our findings thus contribute to the debate regarding the extent of fair value accounting in financial reporting.

Information Quality of Interim Financial Statements

AbstractExpressing concern about the Canadian capital market environment, Boritz (2006) suggested that the accounting and auditing profession may be paying limited attention to quarterly reports. This study investigates whether fourth‐quarter adjustments are significantly different from the previous three, thereby limiting the reliability or faithful representation of the firms' results for each quarter. This study includes four years (2003–2006) of quarterly financial information of 353 Canadian public companies. Our results indicate that the volatility of net income in each of the first three quarters is considerably lower than in the final quarter. While lower volatility can improve predictability, the resulting relevance may be limited. The low volatility of reported earnings in the first three quarters suggests that either earnings management is taking place or that management may not be exercising sufficient care at the end of each of the first three quarters on the measurements that generally accepted accounting principles call for and readers of financial statements expect. This could result in quarterly financial statements that do not faithfully represent the underlying resources and obligations of the reporting firms at the end of the quarter, or the firm's performance during the quarter. Our findings support Boritz's proposition for increased audit requirements for interim reports and changes in the approach to the annual audit to integrate it more closely with interim financial reporting.

Non‐Audit Services and Auditor Independence in the 2007 Italian Regulatory Environment

This paper analyzes the first‐time application of mandatory disclosure in annual reports of audit and non‐audit fees in the Italian context. This information can give the readers of financial statements an indication of auditor independence (in appearance). An empirical analysis is conducted on year 2007 annual reports of 239 Italian listed companies. The main research objectives are as follows: (1) to provide a comprehensive description of the relative level of non‐audit fees; and (2) to investigate the relation between non‐audit services (NAS) and the opinion expressed in the audit report.

Does Graph Design Matter To CPAs And Financial Statement Readers?

<p class="MsoNormal" style="text-align: justify; line-height: normal; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">We asked CPAs and financial statement readers if they believe distorted graphs influence judgments and if they think there is a need for standards governing their presentation and attestation in annual reports. We consider these important questions because decades of studies document that distorted graphs commonly appear in annual reports even though there is considerable evidence that such graphs influence readers’ judgments.<span style="mso-spacerun: yes;">  </span>Our results show that professionals are aware of the potential influence of graphical distortion, believe that standards are needed to assist in preparing graphs of financial information to be included in annual reports, and agree that auditors should be required to provide assurance about the accuracy of such graphs. </span></span></p>

Disclosure of non-audit services in annual reports and auditor independence: Evidence from Italy

This article explores recent regulatory reforms in Italy and analyzes the first-time application of mandatory disclosure in annual reports of audit and non-audit fees. This information can convey to readers of financial statements an indication of auditor independence (in appearance). An empirical analysis is conducted on annual reports of 239 Italian listed companies for the year 2007. The main research objectives are as follows: (1) to provide a comprehensive description of the relative level of non-audit fees; and (2) to investigate the relation between non-audit services (NAS) and the opinion expressed in the audit report. The evidence shows that the average ratio of non-audit fees (further assurance services, tax advisory services and other services) to total auditor remuneration is 0.24. In particular, there are 38 companies (15.9 per cent) that paid their auditor more for NAS than for audit services; excluding further assurance services, there are 22 cases (9.2 per cent) with a ratio of non-audit fees that is higher than 0.50. In our sample, we observed 231 unqualified opinions (96.7 per cent) and eight qualified opinions (3.3 per cent): a statistical significant relationship between the NAS ratio and qualified opinions was not found. However, the study's results show that there is a positive association between the emphasis of matter paragraph in the audit report and NAS. This finding cannot be interpreted as an indication of compromised auditor independence, thus opening space for further empirical studies on the use of emphasis of matter paragraphs in auditor reports.

Reflections on Amernic and Craig: A Note

Amernic and Craig (2004) propose the impossibility of anything other than a binary divide between moral absolutism and relativism.Campbell (1992) is drawn on to support this; however, it is revealed here that it cannot be used in this way. While Amernic and Craig leave the arguments as to the inevitability of this binary divide at this juncture, their discussion of the possibilities for accounting education reform offers the prospect of an alternative to relativism that avoids moral absolutism. More fortunately, Campbell's book provides the theoretical arguments necessary to rebut both absolutism and relativism. This rejoinder observes that, in reviewing the history of accounting, Amernic and Craig drew heavily on the work of Raymond Chambers, a critic of current accounting practice. In many works he demonstrated its failure to produce data comparability when complying with current accounting standards to report the values of assets, debts and income. For Chambers, truth in accounting (and ultimately data comparability) is found by the rigorous application of scientific rules. Introducing students to his persuasive arguments would be a very effective way of helping them understand the fragile and disputed nature of truth in accounting. But students should also be introduced to the arguments of those such as Gaffiikin, who believe there are limits to the extent that accounting can be based on objective facts (2000). To allow them simply to accept the orthodoxy of the day not only fails to prepare their minds (Clarke, 1996), it also allows relativism into our classrooms. Students who can grapple with truth in accounting can then start addressing ethical truth. We must take our students beyond professional rules of conduct. A goal outlined in the article should be to teach them to treat the readers of financial statements with, as Campbell puts it, ‘integrity and insight’ (p. 438).

Accounting for In-Process Research and Development Costs

This paper examines accounting for research and development costs and specifically the treatment of those costs acquired in business combinations that are accounted for as in-process research and development (IPR&D). Both the SEC and the FASB expressed concerns over an increase in IPR&D costs immediately charged against earnings in purchase-type business combinations in the past decade. The AICPA formed an Emerging Issues Task Force to address these concerns and compiled a set of best practices with respect to recording and reporting IPR&D costs. With recent changes in accounting for business combinations and the treatment of goodwill created in acquisitions, readers of financial statements should be aware of the potential impact of IPR&D costs on reported earnings in the year of combination as well as in subsequent years. Examples of the reporting of IPR&D costs are drawn from recent business combinations in the biotechnology and pharmaceuticals industries.