Search results for: international financial reporting standards

Authors: Kwadwo Yeboah

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Background and Aims: The adoption of International Accounting Standards (IAS) is considered to be one of the most significant developments in the accounting profession. The adoption of IAS aims to improve financial reporting quality by ensuring that financial information is transparent and comparable across borders. However, there is a lack of research on the impact of IAS on financial reporting quality in emerging economies. This study aims to fill this gap by evaluating the impact of IAS on financial reporting quality in emerging economies. Methods: This study uses a sample of firms from emerging economies that have adopted IAS. The sample includes firms from different sectors and industries. The financial reporting quality of these firms is measured using financial ratios, such as earnings quality, financial leverage, and liquidity. The data is analyzed using a regression model that controls for firm-specific factors, such as size and profitability. Results: The results show that the adoption of IAS has a positive impact on financial reporting quality in emerging economies. Specifically, firms that adopt IAS exhibit higher earnings quality and lower financial leverage compared to firms that do not adopt IAS. Additionally, the adoption of IAS has a positive impact on liquidity, suggesting that firms that adopt IAS have better access to financing. Conclusions: The findings of this study suggest that the adoption of IAS has a positive impact on financial reporting quality in emerging economies. The results indicate that IAS adoption can improve transparency and comparability of financial information, which can enhance the ability of investors to make informed investment decisions. The study contributes to the literature by providing evidence of the impact of IAS adoption in emerging economies. The findings of this study have implications for policymakers and regulators in emerging economies, as they can use this evidence to support the adoption of IAS and improve financial reporting quality in their respective countries.

Keywords: accounting, international, standards, finance

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Authors: Lynn Ruggieri

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The worldwide pandemic has only increased sustainability awareness. The public is demanding that businesses be held accountable for their impact on the environment. While financial data enjoys uniformity in reporting requirements, there are no uniform reporting requirements for non-financial data. Europe is leading the way with some standards being implemented for reporting non-financial sustainability data; however, there is no uniformity globally. And without uniformity, there is not a clear understanding of what information to include and how to disclose it. Sustainability reporting will provide important information to stakeholders and will enable businesses to understand their impact on the environment. Therefore, there is a crucial need for this data. This paper looks at the history of sustainability reporting in the countries of the European Union and throughout the world and makes a case for worldwide reporting requirements for sustainability.

Keywords: financial reporting, non-financial data, sustainability, global financial reporting

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Authors: Riaz Dhai

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The inherent differences between Islamic and conventional finance have given rise to a debate on whether conventional accounting standards provide sufficient disclosure in the annual financial statements of Islamic financial institutions (IFI). This issue has become more pronounced due to the rapid growth of IFIs over the last decade. This paper seeks to collate the literature surrounding this debate as well as summarise the key macro and micro level financial reporting differences between conventional and Islamic accounting. Based on these findings we propose some important areas of future research in this emerging field.

Keywords: Islamic financial institutions, financial reporting, critical analysis, conventional accounting standards

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Authors: Feddaoui Amina

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This paper aimed to help researchers and international companies to the differences and similarities between IFRS (International financial reporting standards) and UK GAAP or UK accounting principles, and to the accounting changes between standard setting of the International Accounting Standards Board and the Accounting Standards Board in United Kingdom. We will use in this study statistical methods to calculate similarities and difference frequencies between the UK standards and IFRS standards, according to the PricewaterhouseCoopers report in 2005. We will use the one simple test to confirm or refuse our hypothesis. In conclusion, we found that the gap between UK GAAP and IFRS is small.

Keywords: accounting, UK GAAP, IFRS, similarities, differences

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Authors: Nadezhda Kvatashidze

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The International Accounting Standards Board updated the conceptual framework for financial reporting. The main reason behind it is to resolve the tasks of the accounting, which are caused by the market development and business-transactions of a new economic content. Also, the investors call for higher transparency of information and responsibility for the results in order to make a more accurate risk assessment and forecast. All these make it necessary to further develop the conceptual framework for financial reporting so that the users get useful information. The market development and certain shortcomings of the conceptual framework revealed in practice require its reconsideration and finding new solutions. Some issues and concepts, such as disclosure and supply of information, its qualitative characteristics, assessment, and measurement uncertainty had to be supplemented and perfected. The criteria of recognition of certain elements (assets and liabilities) of reporting had to be updated, too and all this is set out in the updated edition of the conceptual framework for financial reporting, a comprehensive collection of concepts underlying preparation of the financial statement. The main objective of conceptual framework revision is to improve financial reporting and development of clear concepts package. This will support International Accounting Standards Board (IASB) to set common “Approach & Reflection” for similar transactions on the basis of mutually accepted concepts. As a result, companies will be able to develop coherent accounting policies for those transactions or events that are occurred from particular deals to which no standard is used or when standard allows choice of accounting policy.

Keywords: conceptual framework, measurement basis, measurement uncertainty, neutrality, prudence, stewardship

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Authors: Nadezhda Kvatashidze

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The conceptual framework of International Financial Reporting Standards determines the basic principles of accounting. The said principles have multiple applications, with professional judgments being one of those. Recognition and assessment of the information contained in financial reporting, especially so the somewhat uncertain events and transactions and/or the ones regarding which there is no standard or interpretation are based on professional judgments. Professional judgments aim at the formulation of expert assumptions regarding the specifics of the circumstances and events to be entered into the report based on the conceptual framework terms and principles. Experts have to make a choice in favor of one of the aforesaid and simulate the situations applying multi-variant accounting estimates and judgment. In making the choice, one should consider all the factors, which may help represent the information in the best way possible. Professional judgment determines the relevance and faithful representation of the presented information, which makes it more useful for the existing and potential investors. In order to assess the prospected net cash flows, the information must be predictable and reliable. The publication contains critical analysis of the aforementioned problems. The fact that the International Financial Reporting Standards are developed continuously makes the issue all the more important and that is another point discussed in the study.

Keywords: conceptual framework, faithful representation, professional judgement, relevance

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Authors: Piotr Prewysz-Kwinto, Grazyna Voss

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Accounting policies are a set of solutions compliant with legal regulations that an entity selects and adopts, and which guarantee a proper quality of financial statements. Those solutions may differ depending on whether the entity adopts national or international accounting standards. The aim of this article is to present accounting principles (policies) in Polish and international legal regulations and their adoption in selected Polish companies listed on the Warsaw Stock Exchange. The research method adopted in this work is the analysis and evaluation of legal conditions in Polish companies.

Keywords: accounting policies, international financial reporting standards, financial statement, method of measuring

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Authors: Abdullah Almulhim

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The International Accounting Standards Board (IASB) was established in 2001 to develop International Financial Reporting Standards (IFRS) that bring transparency, accountability, and efficiency to financial markets around the world. In addition, the IFRS provide a unified accounting language, which is especially important in the era of globalization. However, the establishment of a single set of high-quality international accounting standards is a matter of growing importance, as participants in the increasingly integrated world capital market demand comparability and transparency of financial reporting worldwide. Saudi Arabia became the 149th member of the World Trade Organization (WTO) on 11 December 2005, which has increased the need to convert to IFRS. Currently, the Saudi Arabian Monetary Authority (SAMA) requires banks and insurance companies in Saudi Arabia to report under IFRS Standards. However, until the end of 2016, SOCPA standards were applied to all other companies, listed and unlisted. From 2017, listed Saudi companies would be required to report under IFRS Standards as adopted by SOCPA effective 2017. This paper is to investigate the expected benefits gained and highlight the challenges faced by adopting IFRS by the listed companies in the Saudi Stock Exchange. Questionnaires were used as the main method of data collection. They were distributed to listed companies in the Saudi Capital Market. Data obtained through the questionnaires have been imported into SPSS statistical software for analysis. The expected results of this study will show the benefits of adopting IFRS by Saudi Listed Companies. However, this study will investigate the challenges faced by adopting IFRS by the listed companies in the Saudi Arabian Stock Market. Findings will be discussed later upon completion of initial analysis.

Keywords: challenges, IAS, IFRS, opportunities, Saudi, SOCPA

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Authors: Mohammed Lawal Danrimi, Ervina Alfan, Mazni Abdullah

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The purpose of this study is to investigate whether the adoption of International Financial Reporting Standards (IFRS) encourages information-based trading and mitigates investors’ herding practice in emerging EU equity markets. Utilizing a modified non-linear model of cross-sectional absolute deviation (CSAD), we find that the hypothesis that mandatory IFRS adoption improves the information set of investors and reduces irrational investment behavior may in some cases be incorrect, and the reverse may be true. For instance, with regard to herding concerns, the new reporting benchmark has rather aggravated investors’ herding practice. However, we also find that mandatory IFRS adoption does not appear to be the only instigator of the observed herding practice; national institutional factors, particularly regulatory quality, political stability and control of corruption, also significantly contribute to investors’ herd formation around the new reporting regime. The findings would be of interest to academics, regulators and policymakers in performing a cost-benefit analysis of the so-called better reporting regime, as well as financial statement users who make decisions based on firms’ fundamental variables, treating them as significant indicators of future market movement.

Keywords: equity markets, herding, IFRS, CSAD

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Authors: Uyanga Jadamba

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Globalisation of the world economy has necessitated the development and implementation of a comparable and understandable reporting language suitable for use by all reporting entities. The International Accounting Standard Board (IASB) provides an international reporting language that lets all users understand the financial information of their business and potentially allows them to have access to finance at an international level. The study is based on logistic regression analysis to investigate the factors for the adoption of theInternational Financial Reporting Standard for Small and Medium sized Entities (IFRS for SMEs). The study started with a list of 217 countries from World Bank data. Due to the lack of availability of data, the final sample consisted of 136 countries, including 60 countries that have adopted the IFRS for SMEs and 76 countries that have not adopted it yet. As a result, the study included a period from 2010 to 2020 and obtained 1360 observations. The findings confirm that the adoption of the IFRS for SMEs is significantly related to the existence of national reporting standards, law enforcement quality, common law (legal system), and extent of disclosure. It means that the likelihood of adoption of the IFRS for SMEs decreases if the country already has a national reporting standard for SMEs, which suggests that implementation and transitional costs are relatively high in order to change the reporting standards. The result further suggests that the new standard adoption is easier in countries with constructive law enforcement and effective application of laws. The finding also shows that the adoption increases if countries have a common law system which suggests that efficient reportingregulations are more widespread in these countries. Countries with a high extent of disclosing their financial information are more likely to adopt the standard than others. The findings lastly show that the audit qualityand primary education levelhave no significant impact on the adoption.One possible explanation for this could be that accounting professionalsfrom in developing countries lacked complete knowledge of the international reporting standards even though there was a requirement to comply with them. The study contributes to the literature by providing factors that impact the adoption of the IFRS for SMEs. It helps policymakers to better understand and apply the standard to improve the transparency of financial statements. The benefit of adopting the IFRS for SMEs is significant due to the relaxed and tailored reporting requirements for SMEs, reduced burden on professionals to comply with the standard, and provided transparent financial information to gain access to finance.The results of the study are useful toemerging economies where SMEs are dominant in the economy in informing its evaluation of the adoption of the IFRS for SMEs.

Keywords: IFRS for SMEs, international financial reporting standard, adoption, institutional factors

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Authors: Edward Chamisa, Colin C. Smith, Hamutyinei H. Pamburai, Abdul C. Abdulla

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South Africa (SA) adopted International Financial Reporting Standards (IFRS) for listed firms effective 1 January 2005. However, it was not until 2011 that substantial financial reporting enforcement changes were introduced, which were meant to ensure compliance with IFRS. This innovative setting allows us to examine the value relevance of accounting amounts during the (1) pre-IFRS adoption period (2002-2004); (2) post-IFRS adoption, but pre-enforcement changes period (2006-2010); and (3) post-enforcement changes period (2011-2012). The results show that accounting amounts were most value relevant in the post-enforcement changes period (R2, 75.5%) compared to both the pre-IFRS adoption period (adjusted R2 is 24.3%) and the period after IFRS adoption but before enforcement changes (adjusted R2 is 37.5%). Also, during the 2008 financial crisis, the equity book value per share was significantly value relevant (at 1%) but not earnings per share, whereas before the crisis, the opposite was true. We make two important contributions to the literature. First, we identify SA as an innovative setting that allows researchers to examine separately the effects of IFRS adoption and enforcement changes on capital markets and accounting quality. This is a departure from prior studies that are dominated by the European Union setting, where IFRS adoption occurred contemporaneously with enforcement and other regulatory changes. Second, we provide preliminary findings which suggest that while the adoption of IFRS seems to have improved the financial reporting quality of accounting amounts of SA listed firms, its impact appears to be limited unless combined with effective enforcement.

Keywords: international financial reporting standards (ifrs), ifrs adoption, financial reporting enforcement, value relevance, price model, equity book value, earnings per share

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Authors: Saeed Rabea Baatwah, Zalailah Salleh, Norsiah Ahmad

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This study examines whether audit committee chair with financial expertise enhances the audit committee role in financial reporting quality in emerging market. We investigate this influence by employing the direct effect and moderating effect of audit committee chair with financial expertise on financial reporting timeliness. By using Omani data and the panel data method for two proxies for financial reporting timeliness, we find that audit committee chair with financial expertise enhances the timeliness of financial reporting through making the disclosure of annual reports timely. Further, we report evidence showing that both accounting and non-accounting financial expertise on the audit committee have a positive and significant influence on the timeliness of financial reporting. We also document that the association between financial expertise and the timeliness of financial reporting is more pronounced when the chair of the audit committee has financial expertise. This study is among the first to comprehensively prove that audit committee chair with financial expertise contributes to the quality of financial reporting in emerging market.

Keywords: audit committee, chair with financial expertise, timeliness of financial reporting, Oman

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Authors: Angela McCaskill

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Accounting graduates in most United States universities are not being adequately taught International Financial Reporting Standards (IFRS). As such they are not prepared with the knowledge and skills necessary to remain competitive in international businesses. One of the reasons behind the ill preparation is the lack of specific international accounting instruction available in the U.S. This paper explores the importance of IFRS education through the lenses of graduate accounting majors. The paper specifically explores graduate accounting major’s preparedness in IFRS based on their recent completion of a Master in Accountancy degree where IFRS had been integrated. The data for the study was collected via face-to face and telephone/Skype interviews and questionnaires. After the interview the participants also agreed to answer two supplementary questions. The participants were to determine the amounts that should be reported on the balance sheet under (1) IFRS and (2) U.S. GAAP. These questions intended to test their knowledge of both sets of standards. The sample consisted of on-line and brick and mortar university students enrolled in their graduate program during the period from spring semester 2016 to summer semester 2016. This study shows that a separate course should be devoted to teaching IFRS and convergence related issues. There is a direct correlation between the knowledge level of those students taking an IFRS course and the successful completion of the supplementary questions compared to those who only had IFRS instruction mixed into their U.S. GAAP based instruction. Students who took an international accounting course were better prepared for the IFRS conversion than those who did not have a separate course. Academically, universities need to take a deeper look into the needs of their students and do better at incorporating international standards in their curriculum.

Keywords: accounting education, global accounting standards, international accounting, IFRS and U.S. GAAP convergence, IFRS, U.S. GAAP

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Authors: Nadezhda Kvatashidze, Elena Kharabadze

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It is broadly known that lease is a flexible means of funding enterprises. Lease reduces the risk related to access and possession of assets, as well as obtainment of funding. Therefore, it is important to refine lease accounting. The lease accounting regulations under the applicable standard (International Accounting Standards 17) make concealment of liabilities possible. As a result, the information users get inaccurate and incomprehensive information and have to resort to an additional assessment of the off-balance sheet lease liabilities. In order to address the problem, the International Financial Reporting Standards Board decided to change the approach to lease accounting. With the deficiencies of the applicable standard taken into account, the new standard (IFRS 16 ‘Leases’) aims at supplying appropriate and fair lease-related information to the users. Save certain exclusions; the lessee is obliged to recognize all the lease agreements in its financial report. The approach was determined by the fact that under the lease agreement, rights and obligations arise by way of assets and liabilities. Immediately upon conclusion of the lease agreement, the lessee takes an asset into its disposal and assumes the obligation to effect the lease-related payments in order to meet the recognition criteria defined by the Conceptual Framework for Financial Reporting. The payments are to be entered into the financial report. The new lease accounting standard secures supply of quality and comparable information to the financial information users. The International Accounting Standards Board and the US Financial Accounting Standards Board jointly developed IFRS 15: ‘Revenue from Contracts with Customers’. The standard allows the establishment of detailed revenue recognition practical criteria such as identification of the performance obligations in the contract, determination of the transaction price and its components, especially price variable considerations and other important components, as well as passage of control over the asset to the customer. IFRS 15: ‘Revenue from Contracts with Customers’ is very similar to the relevant US standards and includes requirements more specific and consistent than those of the standards in place. The new standard is going to change the recognition terms and techniques in the industries, such as construction, telecommunications (mobile and cable networks), licensing (media, science, franchising), real property, software etc.

Keywords: assessment of the lease assets and liabilities, contractual liability, division of contract, identification of contracts, contract price, lease identification, lease liabilities, off-balance sheet, transaction value

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Authors: Shibly Abdullah

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This paper provides an overview of fundamental philosophical and functional differences in conventional and Islamic accounting. The aim of this research is to undertake a detailed analysis focus on specific illustrations drawn from both these systems and highlight how these differences implicate in recording financial transactions and preparation of financial reports for a range of stakeholders. Accounting as being universally considered as a platform for providing a ‘true and fair’ view of corporate entities can be challenged in the current world view, as the business environment has evolved and transformed significantly. Growth of the non-traditional corporate entity such as Islamic financial institutions, fundamentally questions the applicability of conventional accounting standards in preparation of Shariah-compliant financial reporting. Coupled with this, there are significant concerns about the wider applicability of Islamic accounting standards and framework in order to achieve reporting practices satisfying the information needs generally. Against the backdrop of such a context, this paper raises fundamental question as to how potential convergence could be achieved between these two systems in order to provide users’ a transparent and comparable state of financial information resulting in an alternative framework of financial reporting.

Keywords: accounting, conventional accounting, corporate reporting, Islamic accounting

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Authors: Ichiro Mukai

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The purpose of this study is to investigate whether firms applying International Financial Reporting Standards (IFRS), provide high-quality and comparable earnings information that is useful for decision making of information users relative to firms applying local Generally Accepted Accounting Principles (GAAP). Focus is placed on the earnings quality of listed firms in several developed countries: Australia, Canada, France, Germany, Japan, the United Kingdom (UK), and the United States (US). Except for Japan and the US, the adoption of IFRS is mandatory for listed firms in these countries. In Japan, the application of IFRS is allowed for specific listed firms. In the US, the foreign firms listed on the US securities market are permitted to apply IFRS but the listed domestic firms are prohibited from doing so. In this paper, the differences in earnings quality are compared between firms applying local GAAP and those applying IFRS in each country and industry category, and the reasons of differences in earnings quality are analyzed using various factors. The results show that, although the earnings quality of firms applying IFRS is higher than that of firms applying local GAAP, this varies with country and industry category. Thus, even if a single set of global accounting standards is used for all listed firms worldwide, it is difficult to establish comparability of financial information among global firms. These findings imply that various circumstances surrounding firms, industries, and countries etc. influence business operations and affect the differences in earnings quality.

Keywords: accruals, earnings quality, IFRS, information comparability

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Authors: Benjamin Bae

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This study investigates the relationship between the adoption of International Financial Reporting Standards (IFRS) and the performance of banks in a number of Middle East countries. We examine whether performance levels and audit qualities play any role in adopting the International Financial Reporting Standards (IFRS) in Middle East banks. This study hypothesizes that, in general, banks with high performance and audit quality measures tend to adopt the IFRS than low-performing banks, as the adoption of a new standard takes lots of time and expenses, which could be an additional burden to them. The results show that three hypotheses are strongly supported whereas the cultural factor hypothesis is not. Banks with high ROA and ROE tend to adopt IFRS than low-performing banks. Big banks are also more likely to adopt IFRS than small or medium-sized banks. Contrary to the hypothesis, the Islamic bank status as a cultural factor has some positive impact on the adoption of the banks in the region. Overall, this research adds to our understanding of the bank’s performance. First, evidence on the relationship between the adoption of IFRS and the bank’s performance should be useful to investors. Second, the findings of this study provide financial statement users with useful information about the bank’s performance measures.

Keywords: IFRS, financial performance, audit quality, culture, firm size

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Authors: Mohammad Sarchami, Mohsen Zeinalkhani

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Always, financial reporting system faces some problems to win public ear. The increase in the number of fraud and representation, often combined with the bankruptcy of large companies, has raised concerns about the quality of financial statements. So, investors, legislators, managers, and auditors have focused on significant fraud detection or prevention in financial statements. This article aims to investigate the Sugeno fuzzy classification to consider fraud detection in financial reporting of accepted firms by Tehran stock exchange. The hypothesis is: Sugeno fuzzy classification may detect fraud in financial reporting by financial ratio. Hypothesis was tested using Matlab software. Accuracy average was 81/80 in Sugeno fuzzy classification; so the hypothesis was confirmed.

Keywords: fraud, financial reporting, Sugeno fuzzy classification, firm

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Authors: Matthias Nnadi

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Using samples of 250 large listed firms by market capitalization in China and Hong Kong, we conducted empirical test to determine the impact of regulatory environment on reporting quality following IFRS convergence using three financial reporting measures; earning management, timely loss recognition and value relevance. Our results indicate that accounting data are more value relevant for Hong Kong listed firms than the Chinese A-share firms. The empirical results for timely loss recognition further reveal that there is a larger coefficient estimate on bad news earnings, which suggests that Chines A-share firms are more likely to report losses in a timely manner. The results support the evidence that substantial convergence of IFRS can improve financial reporting quality in a regulated environment such as China. This further supports the expectation that IFRS are relevant to China and has positive effect on its accounting practice and quality.

Keywords: reporting, quality, earning, loss, relevance, financial, China, Hong Kong

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Authors: T. Miková

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This paper analyzes the effect of a single uniform accounting rule on reporting quality by investigating the influence of IFRS on earnings management. This paper examines whether earnings management is reduced after IFRS adoption through the use of “loss avoidance thresholds”, a method that has been verified in earlier studies. This paper concentrates on two European countries: one that represents the continental code law tradition with weak protection of investors (France) and one that represents the Anglo-American common law tradition, which typically implies a strong enforcement system (the United Kingdom). The research investigates a sample of 526 companies (6822 firm-year observations) during the years 2000 – 2013. The results are different for the two jurisdictions. This study demonstrates that a single set of accounting standards contributes to better reporting quality and reduces the pervasiveness of earnings management in France. In contrast, there is no evidence that a reduction in earnings management followed the implementation of IFRS in the United Kingdom. Due to the fact that IFRS benefit France but not the United Kingdom, other political and economic factors, such legal system or capital market strength, must play a significant role in influencing the comparability and transparency cross-border companies’ financial statements. Overall, the result suggests that IFRS moderately contribute to the accounting quality of reported financial statements and bring benefit for stakeholders, though the role played by other economic factors cannot be discounted.

Keywords: accounting standards, earnings management, international financial reporting standards, loss avoidance, reporting quality

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Authors: Khaldoon G. Albitar, Hassan Y. Kikhia, Jin P. Zhang

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Since 2007, all companies listed on both Shanghai Stock Exchange and Shenzhen Stock Exchange are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). This study investigates the impact of adopting IFRS on accounting quality for a sample of listed on Chinese companies during the period 2003-2013 with sample of 10846 observations over a four-year period before and a five-year period after the adoption of IFRS. This study tests whether the level of earnings management is significantly lower after the adoption of IFRS, and reported earnings is more value relevant during the IFRS period by using the Ohlson model and Jones model, as modified by Dechow. The empirical results show that accounting quality improved with lower earnings management and higher value relevant after the adoption of IFRS in China. The current study contributes to the literature on IFRS adoption and earning quality in two ways. First, As most of the existing studies on earnings quality and IFRS have been conducted on data from the U.S and European countries, this study fills a gap in the existing literature by studying the effect of adoption of IFRS on earnings quality in an emerging market. Second, the findings of our study have important implications for policymakers, auditors, multinational firms, and users of financial reports. As the rapid growth of China's economy gains global recognition, the Chinese stock market is capturing the attention of international investor.

Keywords: international financial reporting standards (ifrs), accounting quality, earnings management, value relevance, china

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Authors: Piotr Prewysz-Kwinto, Grazyna Voss

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In June 2013, the European Parliament and the Council adopted a directive on financial reporting (Directive 2013/34/EU). The main objective was to simplify the principles of the preparation of financial statements, including the principles of the presentation and disclosures of financial information by adapting reporting burdens to the type and size of an undertaking. Therefore, the Directive introduced a classification of all undertakings into five groups, i.e. micro, small, medium-sized, large and public-interest entities, and defined in detail the classification criteria. The principles of the preparation of financial statements and the presentation of financial information as well as applicable simplifications were defined for each group. The EU Member States had to implement the provisions of Directive 34 relating to accounting and financial reporting into domestic norms until January 1, 2016. In Poland, the provisions of Directive 34 were implemented into domestic accounting norms specified in the Polish Accounting Act on a gradual basis. On July 11, 2014, the Polish Parliament adopted an amendment to the Act, introducing the Directive's solutions for micro-undertakings and on July 23, 2015, for the remaining undertakings. The aim of this paper is to present Polish solutions relating to financial reporting after the implementation of Directive 34 and the results of the survey conducted among accountants regarding the evaluation of the implemented simplifications for micro and small undertakings.

Keywords: accounting standards, financial reporting, financial statement, simplification

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Authors: Nayoma Ranawaka

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The demand for the high quality internationally comparable financial information has been increased than ever with the expansion of economic activities beyond its national boundaries. Thus, the necessity of converging accounting practices across the world is now continuously discussed with greater emphasis. The global convergence to International Financial Reporting Standards has been one of the main objectives of the International Accounting Standards Setting Board (IASB) since its establishment in 2001. Accordingly, Sri Lanka has adopted IFRSs in 2012. Among the other standards as a newly introduced standard by the IASB, IFRS 13 plays a pivotal role as it deals with the Fair Value Accounting (FVA). Therefore, it is valuable to obtain knowledge about the consequences of implementing IFRS 13 in Sri Lanka and compare results across nations. According to the IFRS Jurisdictional provision of Sri Lanka, Institute of Chartered Accountants of Sri Lanka has taken official steps to adopt IFRS 13 by introducing SLFRS 13 with de jure convergence. Then this study was identified the de facto convergence of the SLFRS 13 in measuring the Fair Value of Financial Instruments in the Sri Lankan context. Accordingly, the objective of this study is to explore the consequences to financial reporting by implementing SLFRS 13 on measuring the financial instruments. In order to achieve the objective of the study expert interview and in-depth interviews with the interviewees from the selected three case studies and their independent auditor were carried out using customized three different interview guides. These three cases were selected from three different industries; Banking, Manufacturing and Finance. NVivo version 10 was used to analyze the data collected through in-depth interviews. Then the content analysis was carried out and conclusions were derived based on the findings. Contribution to the knowledge by this study can be identified in different aspects. Findings of this study facilitate accounting practitioners to get an overall picture of application of fair value standard in measuring the financial instruments and to identify the challenges and barriers to the adoption process. Further, assist auditors in carrying out their audit procedures to check the level of compliance to the fair value standard in measuring the financial instruments. Moreover, this would enable foreign investors in assessing the reliability of the financial statements of their target investments as a result of SLFRS 13 in measuring the FVs of the FIs. The findings of the study could be used to open new avenues of thinking for policy formulators to provide the necessary infrastructure to eliminate disparities exists among different regulatory bodies to facilitate full convergence and thereby growth of the economy. Further, this provides insights to the dynamics of FVA implementation that are also relevant for other developing countries.

Keywords: convergence, fair value, financial instruments, IFRS 13

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Authors: Shruti Hajirnis

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In May 2014, FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), and the International Accounting Standards Board (IASB) issued International Financial Reporting Standards (IFRS) 15, Revenue from Contracts with Customers that will supersede virtually all revenue recognition requirements in IFRS and US GAAP. FASB and the IASB have basically achieved convergence with these standards, with only some minor differences such as collectability threshold, interim disclosure requirements, early application and effective date, impairment loss reversal and nonpublic entity requirements. This paper discusses the impact of five-step model prescribed in new revenue standard on the entities operating in Pharma industry. It also outlines the considerations for these entities while implementing the new standard.

Keywords: revenue recognition, pharma industry, standard, requirements

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Authors: Shuofen Hsu, Ya-Yi Chao, Chao-Wei Li

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This paper investigates the relationship between voluntary audit (hereafter, VA) of semi-annual consolidated financial statements decision and accounting conservatism. In general, there are four kinds of auditors' assurance services, which include audit, review, agreed-upon procedure and compliance engagements base on degree of assurance. The VA work by auditors may not only have the higher audit quality but an important signal of more reliable information than the review work. In Taiwan, The listed companies must prepare the semi-annual consolidated financial statements and with auditors' review before 2012, but some of the listed companies choose the assurance work from review to audit voluntarily. Due to the adoption of International Financial Reporting Standards, the listed companies were required to prepare the second quarterly consolidated financial statements which should be reviewed by auditors since 2013. This rule will change some of the assurance work from audit to review by auditors, and the information asymmetry maybe increased. To control the selection bias, we use two-stage model to test the relationship between VA decision and accounting conservatism. Our empirical results indicate that the VA decision and accounting conservatism have a significant positive relationship in firms with family-controlled. That is, firms with family-controlled are more likely to do VA and to prepare more conservative consolidated financial statements to reduce the information asymmetry, meaning that there is a complementary effect between VA and accounting conservatism for firms with more information asymmetry. But on the contrary, we find that the VA decision and accounting conservatism have a significant negative relationship in firms with professional managers-controlled, meaning that there is a substitution effect between VA and accounting conservatism for firms with less information asymmetry. Finally, the accounting conservatism of consolidated financial statements decrease after the adoption of IFRSs (International Financial Reporting Standards) in Taiwan. It means that the disclosure and transparency of consolidated financial statements had be improved.

Keywords: voluntary audit, accounting conservatism, audit quality, information asymmetry

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Authors: Fatma Ezzahra Kateb, Neila Boulila Taktak, Mohamed Kabir Hassan

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We examine the impact of Islamic accounting and auditing standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) on the income smoothing perspective of Islamic financial institutions located in the Middle East and North Africa region between 2013 and 2018. Based on General Least square regression for panel data, we find a significant and positive relationship between intentional income smoothing and earning persistence and cash flow predictability in all models. However, we discovered that AAOIFI accounting standards (FAS) had a negative and significant effect on intentional income smoothing and earning persistence. As a result, the income smoothing efficiency is lower for IFIs that use FASs than IFIs that use IFRSs. Our findings emphasize the need for specific standards to enhance the relevance of financial reports disclosed by Islamic financial institutions.

Keywords: AAOIFI, financial reporting quality, income smoothing perspective, MENA countries

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Authors: Tahraoui Boualem

Abstract:

The International Labor Organization is one of the specialized agencies of the United Nations, and it is the only organization within the United Nations system that is distinguished by its tripartite legitimacy and which simultaneously includes governments, workers' and employers' organizations of its member states in a joint effort to set standards and policies Work to promote decent work in various parts of the world, and the expression of international labor standards basically means two types of documents, namely international labor agreements and international labor recommendations, and so far its general conference, which is held annually, has set a number of standards, the number of which has reached 184 agreements and 192 recommendations so far. For this reason, it is decided to clarify the International Labor Organization and the formulation of international labor standards within two sections. In the first topic, the researcher discusses the concept of the International Labor Organization, and in the second topic, it highlights the legal basis for the authority of the International Labor Organization in protecting the rights of workers.

Keywords: international labor, international labor standards, rights of workers, nation’s system

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Authors: Muhammad Umar Kibiya

Abstract:

The study aims to examine whether regulatory changes have an impact on the financial reporting quality of Microfinance Banks in Nigeria. The research employed a panel data analysis technique, using data from 2018 to 2022. The sample includes 72 microfinance banks, using regression analyses to examine the relationship between variables. The findings indicate that Board Chairmanship has a positive and significant effect on financial reporting quality. It also reveals that share ownership has a negative and significant impact on financial reporting quality. The results suggest that regulatory changes have a positive and significant influence on financial reporting quality. Thus, findings have important implications for microfinance banks in Nigeria. It suggests that having a strong and competent board chairperson can enhance financial reporting quality, leading to more transparent and reliable information for stakeholders. Furthermore, the study highlights the importance of regulatory changes in improving financial reporting practices in the microfinance banking sector. The study contributes to the extant literature by providing empirical evidence on the relationship between board chairmanship, share ownership, financial reporting quality, and regulatory changes in microfinance banks. It further supports the concept that governance mechanisms and regulatory reforms play a crucial role in ensuring transparency and accountability within the microfinance banking sector. It recommends that microfinance banks should appoint experienced and qualified individuals as board chairpersons to enhance financial reporting quality. Furthermore, policymakers and regulatory authorities should continue to implement and enforce regulations that promote transparent financial reporting practices in microfinance banks.

Keywords: board chairman, share ownership, financial reporting quality, microfinance, regulatory changes

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Authors: Olurankinse Felix, Fatukasi Bayo

Abstract:

Over the years, the medium through which government financial statements are prepared has been on cash basis of accounting. This basis was characterised with some shortcomings ranging from non- disclosure of quality and detail information relating to government financial transactions, ill informed assessment of government resource allocation, weak internal control system that inhibits accountability and transparency and non- standardisation of reporting ethics for the purpose of comparability. The emergence of international public sector accounting standards (IPSAS) is therefore seen as leverage as it aims at improving the quality of general purpose financial reporting by public sector entities thereby increasing transparency and accountability. IPSAS is a new concept that all institutions must fully adopts. The crux of this paper is to find out to what extent is the awareness and adoption of IPSAS to both students and lecturers interms of teaching, learning and inclusion in the curriculum of accounting education. The methodology involved the use of well designed questionnaires to obtain information from some selected institutions and the analysis was done with the use of maximum likelihood ordered probit regression. The result of the analysis shows that despite a high level of sensitisation/awareness of IPSAS, the degree of adoption is still low due to low level of desirability by students and lecturers. The paper recommend the need for the government to enact an enabling law to back up the adoption and more importantly to institute appropriate sanctions to ensure full compliance.

Keywords: assessment, awareness, adoption, IPSAS, cash basis

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Authors: M. S. Turan, Dimple

Abstract:

Due to implementation of IFRS by several developed and developing countries, India has no option other than to converge their accounting standards with IFRS. There are over 10,000 listed companies required to implement IFRS in India. IFRS based financial information presented by a company is different from the same information provided by Indian GAAPs. In this study, we have brought out and analyzed the effect of IFRS reporting on the financial statements of selected companies. The results reveal that convergence with IFRS brought prominent positive variations in the values of quick ratio, debt/equity ratio, proprietary ratio and net profit ratio, while negative variation is brought in the values of current ratio, debt to total assets ratio, operating profit ratio, return on capital employed and return on shareholders’ equity ratios. It also presents significant changes in the values of items of balance sheet, profit and loss account and cash flow statement.

Keywords: IFRS, reporting standards, convergence process, results

Procedia PDF Downloads 299