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Copyright of GeSec: Revista de Gestao e Secretariado is the property of Sindicato das Secretarias e Secretarios do Estado de Sao Paulo (SINSESP) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The objective of the article is twofold. Firstly, it evaluates the importance and significance of true and fair view (TFV)/fair presentation (FP) in European jurisdictions using IFRS standards. Secondly, it examines the potential role of TFV/FP for sustainability accounting and for aligning with the moral code of Islamic accounting. We assess whether we are at an important juncture in time where a common understanding of TFV/FP and the TFO could pave the way for increased understanding and harmonisation across all three frameworks. Conventional accounting is examined in the context of TFV/FP. A survey shows significant acceptance of TFV in European jurisdictions using IFRS, but gaps exist, and reclarification of the concepts could be timely. Experts' opinions on TFV in 'conventional accounting' can illuminate sustainability accounting, which could benefit from the application of these concepts. The introduction of sustainability accounting in IFRS is an opportunity to develop a unified understanding of the TFV/FP concepts across all three frameworks and conclude in stronger and connected base frameworks. This is the first time that sustainability accounting development is considered as an opportunity to strengthen and unify the frameworks of conventional, Islamic and sustainability accounting through the common acceptance of principles-based concepts TFV/FP. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We use a novel database to study the timeliness of hedge fund monthly performance disclosures. Managers engage in strategic timing: poor monthly returns are reported with delay, sometimes clustered with stronger subsequent performance, suggestive of “performance smoothing.” We posit that propensity to delay could reveal operational risk and/or poor managerial quality. Consistent with this, a portfolio strategy that buys (sells) funds with historically timely (untimely) reporting delivers 3% annual-style-adjusted returns. Investor flows are lower following reporting delays, although there are potential benefits to managers from delaying reporting when performance is sufficiently poor. We conclude that timely disclosure is an important consideration for hedge fund managers and investors. [ABSTRACT FROM PUBLISHER]

Copyright of Accounting Perspectives is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article aims to present the possibilities of making simplifications to accounting, particularly in the recognition of fixed assets and other carrying value items, according to the principle of relevance and fair presentation. In order to achieve this aim, the authors used deductive and inductive research methods, such as a literature review, analyses of the content of financial statements, and statistical verifications of the findings. Simplifications may be made to accounting provided that this does not distort a given entity’s true financial picture, and thereby does not mislead the users of the financial statement; making it irrelevant. Establishing the levels at which some type of information should be deemed relevant is difficult but crucial in reporting and financial audit. The authors of the article propose a model to enable establishing the levels of relevance (with regard to both the financial statement as a whole and its components) in each economic entity, regardless of its size and industry in which it operates. This model was created based on the reporting data of Polish companies, constituting a correction of similar models applied in Western Europe. It facilitates the definition of an objectified level of partial relevance basically for all reporting items. The authors used this model to research 148 companies by analysing their financial reports of 2007–2014, thereby reviewing the data of 1,184 financial statements, and other 337 smaller entities by analysing their financial reports of 2010–2017, thereby reviewing the data of 2,696 financial statements. In total, the authors analysed data from 3,880 financial statements. As a result, they drew conclusions as to the possibility of making simplifications in the recognition of fixed assets by entities. This research made it possible to establish the levels of relevance for the entities listed on WIG30, mWIG40, and sWIG80 as well as for the stock exchange companies not listed on any of the indices named, par ticularly the partial relevance considered for depreciation (amortisation). The analysis of the research results, including the application of the Chi square test, has led to the question whether from the financial accounting point of view making one‑off depreciations in the amounts of approx. PLN 10,000 (which the entities may want to practice in relation to the amendment to tax regulations) does not distort a given entity’s financial picture in the view of its financial statement. The research hypothesis of the study assumes that not all entities maintaining accounting books may apply tax regulations in the field of recognition of low‑value fixed assets. The analysis of the data contained in 3,880 financial statements of both larger and smaller entities has shown that the following research hypothesis should be adopted: not all entities maintaining accounting records may apply tax regulations for the recognition of low‑value fixed assets.

Copyright of Economy & Market Communication Review / Casopis za Ekonomiju i Trzisne Komunikacije is the property of Pan-European University Apeiron and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper examines interpretation of accounting standards that provide implementation guidance via affirmative or counter examples. Based on prior psychology research, we predict that practitioners engage in “example-based reasoning” such that they are more likely to conclude that their case qualifies for the same treatment as the example. We test our predictions in two experiments in which participants judge the appropriateness of income-statement recognition. Experiment 1 uses Masters of Business Administration (MBA) students and varies example type (affirmative, counter) and case (revenue recognition, expense recognition) in a 2 × 2 design. Experiment 1 supports our predictions. Experiment 2 uses more experienced practitioners, and varies example type (affirmative, counter, both) in a 1 × 3 design. Experiment 2 supports the use of example-based reasoning, and indicates that practitioners in the “both” condition respond as if they had only received an affirmative example. These results have implications for understanding how guidance that accompanies accounting standards can result in aggressive or conservative application of standards. [ABSTRACT FROM AUTHOR]

Disclosures about research and development (R&D) activities could potentially help market participants understand the future prospects of R&D-intensive firms, but at the same time could be costly to make if the disclosure is related to proprietary information. I examine R&D-related disclosures made by R&D-intensive firms in their annual reports, as well as those made throughout the year to financial analysts. I find that the level of R&D-related voluntary disclosure is higher when proprietary costs are lower and when the book-to-market ratio is lower, perhaps because the basic financial statements are less informative about market value. In addition, after controlling for the level of general disclosure and forward-looking disclosure, I find a negative relation between disclosures about development-stage R&D and both analysts' one-year-ahead sales forecast error and dispersion. This is consistent with disclosures about development-stage R&D reducing analyst uncertainty about one-year-ahead sales. I find mixed evidence about earnings forecasts. A higher level of disclosure about both R&D projects in progress and development-stage R&D is associated with less error in analysts' one-year-ahead earnings forecasts. However, I find no evidence of a relation between R&D-related disclosure and dispersion in one-year-ahead earnings forecasts. [ABSTRACT FROM AUTHOR]

We study how corporate boards and audit committees are associated with voluntary financial disclosure practices, proxied here by management earnings forecasts. We find that in firms with more effective board and audit committee structures, managers are more likely to make or update an earnings forecast, and their forecast is less likely to be precise, it is more accurate, and it elicits a more favorable market response. Together, our empirical evidence is broadly consistent with the notion that effective corporate governance is associated with higher financial disclosure quality. [ABSTRACT FROM AUTHOR]

In October 2000, the Securities and Exchange Commission (SEC) passed Regulation Fair Disclosure (FD) in an effort to reduce selective disclosure of material information by firms to analysts and other investment professionals. We find that the information asymmetry reflected in trading costs at earnings announcements has declined after Regulation FD, with the decrease more pronounced for smaller and less liquid stocks. Return volatility around mandatory announcements is also lower but overall information flow is unchanged when mandatory and voluntary announcements are combined. Thus, the SEC appears to have diminished the advantage of informed investors, without increasing volatility. [ABSTRACT FROM AUTHOR]

With the adoption of Regulation Fair Disclosure (Reg FD), market behavior around earnings releases displays no significant change in return volatility (after controlling for decimalization of stock trading) but significant increases in trading volume due to difference in opinion. Analyst forecast dispersion increases, and increases in other measures of disagreement and difference of opinion suggest greater difficulty in forming forecasts beyond the current quarter. Corporations increase the quantity of voluntary disclosures, but only for current quarter earnings. Thus, Reg FD seems to increase the quantity of information available to the public while imposing greater demands on investment professionals. [ABSTRACT FROM AUTHOR]

This study reports the results of an experiment showing that auditor assessments of litigation risk and planned audit investments are higher when potential errors overstate financial performance than when those errors understate performance. This result is much stronger in the presence of high levels of litigation risk in the client's industry. These results suggest that in industries where litigation risk is high audited financial statements may contain more unintentional material understatement errors than overstatement errors. Thus, litigation risk--through its effect on auditors--may encourage financial statements that understate firm performance. [ABSTRACT FROM AUTHOR]

The article looks at the precision level of financial reports as decided on by management. Financial institutions do not report the precision of their audited estimates of future events at the discretion of management. The article discusses a model where a precision level is decided by management at the start of a reporting period once the public has information on the institution's market value. This public signal gives management the information needed to manipulate the conditional mean of the financial report.

This paper comments on the reporting of uncertainties in financial statements and the study, "The Impact of Uncertainty Reporting on the Loan Decision," by Robert Libby. Loan officers rely on information in the audit and supplemental reports to make decisions during the credit review process. However, auditors report uncertainties on a relative scale, which can be no disclosure, only a footnote disclosure, qualification of the audit report, or a disclaimer of opinion. The issue is which type of disclosure is most valuable in communicating information to users of financial statements. Accrual of a loss contingency, the Financial Accounting Standards Board Statement No. 5, and litigation uncertainties are mentioned.

The article discusses aspects of information disclosure strategy. Experts say a strategy of voluntary information disclosure has considerable potential for changing stakeholders' perceptions of the company and in turn its market value. Voluntary disclosures have been shown to enhance a firm's growth, improve the terms of trade with suppliers and customers, and reduce the likelihood of regulatory intervention in a firm's affairs. The impact of voluntary disclosure strategies largely depends on the reputation or credibility of management.

This paper provides a positive theory of voluntary disclosure by firms. Previous theoretical work on disclosure of new information by firms has demonstrated that releasing public information will often make all shareholders worse off, due to an adverse risk-sharing effect. This paper uses a general equilibrium model with endogenous information collection to demonstrate that there exists a policy of disclosure of information which makes all shareholders better off than a policy of no disclosure. The welfare improvement occurs because of explicit information cost savings and improved risk sharing. This provides a positive theory of precommitment to disclosure, because it will be unanimously voted (or by stockholders and will also represent the policy that will maximize value ex ante. In addition, it provides a "missing link" in financial signalling models. Apart from the effects on information production analyzed in this paper, most existing financial signalling models are inconsistent with a firm taking actions which facilitate future signalling because release of the signal makes all investors worse off. [ABSTRACT FROM AUTHOR]

The article focuses on the conceptual framework project of the U.S. Financial Accounting Standards Board, the most expensive, time-consuming, lengthy and profound program of the Board. It is estimated that nearly 40 percent of the Board's resources were devoted to the project in both 1979 and 1980. The author believes that the project will have a greater impact on the development of accounting standards than any event in the profession. In the conceptual framework, the Board aims to establish the objectives of financial reporting, the definitions of elements that should be reported on financial statements, the attributes of those elements that should be measured, the methods of measuring the attributes, the qualitative characteristics the measurements must have, and the location of that information in financial reports.

The article focuses on alternative compilation reports on financial statements included in certain preprinted forms offered by the U.S. government for business enterprises. The forms depart from generally accepted accounting practices as it introduces several new disclosure requirements. The forms also offer clear identification for items in financial statements. It enables companies to transcribe the content of their financial statements in a clearer and more concise format. Companies are encouraged to obtain the preprinted forms and use them in their financial reporting.

In an effort to determine whether users of financial statements attach economic significance to the lease accounting disclosures currently required by the FASB, investment managers were asked to make an in vestment choke from a set of firms which differed only in their accounting treatment of leases. The results of this study indicate that investment managers do distinguish among the alternative treatments of leases and thus tend to support the efforts of the Financial Accounting Standards Board in the area of lease accounting. [ABSTRACT FROM AUTHOR]

The article reports on the plans of the American Institute of Certified Public Accountants to modify auditor reporting requirements in March 1982. The modification would eliminate the "subject to" qualification, in which the auditor would be required to qualify his opinion on financial statements. There is concern that the removal of the "subject to" opinion would be based on an accumulation of professional judgments about perceived benefits rather than on any quantification of empirical data.

The article focuses on SFAS No. 4, entitled "Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises," codifying the generally accepted accounting principle for subsequent discovery of information and its effect on an accountant's compilation or review report. Subsequent events that may affect the interpretation of the statements require adjustment to and disclosure in the financial statements. The two types of subsequent events include events and transactions that provide additional information relating to conditions that existed as of the date of the balance sheet and affect the estimates inherent in the presentation of financial statements, and events and transactions that provide information relating to conditions that did not exist at the date of the balance sheet being reported on but arose subsequent to the date.

The article focuses on the awareness concept in accounting, which states that if the accountant becomes aware that information supplied by a client or coming to his attention is incorrect, incomplete or unsatisfactory, the accountant should obtain additional or revised information or perform whatever additional procedures are considered necessary under the circumstances to satisfy himself as to the reasonableness of the data. If the client refuses to provide the information or if the accountant is unable to satisfy himself in terms of the date, he must withdraw from the engagement. The course of action available to accountants under the awareness concept are, revision of financial statements, modification of the accountant's report and withdrawal from the engagement.

The article discusses the financial information system as a stochastic process, and presents information on a model that could serve as the basis for an objective, quantitative evaluation of the reliability of the internal control system. Internal controls are included in financial models so when inputs are given, the outputs are reliable, depending on the quality of performance of the individual elements. The article examines several aspects of the financial information system that lead to the development of a reliable system of internal control. These aspects include the integration of internal control measures into the financial information system, the quality of performance of the operating elements, and the quality of the accounting document changes as they are processed.

The article discusses the function and usage of financial ratios. Particular focus is paid to the prediction of failure as a purpose of financial ratios. Failure is when a firm is unable to pay its financial obligations when they mature and has occurred when: a firm is bankrupt, bonds default, and a bank account is overdrawn. A financial ratio consists of a quotient with two numbers which consist of financial statement items. Empirical research consists of studying financial ratios and their function as predictors of failure by focusing on the underlying predictive ability of the accounting data contained on financial statements.

SYNOPSIS: Palmrose and Kinney (2018; hereafter PK) claim that technical compliance with GAAP is sufficient to justify an unqualified audit opinion. We disagree. PK's view ignores "fair presentation," a concept equivalent to "faithful representation." Their "technical compliance" view portrays GAAP as a set of black and white rules and auditing as a box-checking exercise, contradicting guidance from the SEC, FASB, IASB, PCAOB, and the courts. We show that the compliance mindset advocated by PK is responsible for many audit failures, including Enron, WorldCom, and Lehman Brothers. PK's view has long been used by auditing firms and their expert witnesses in (unsuccessful) attempts to avoid legal liability. Unfortunately, it is also a view that has greatly damaged the credibility of the auditing profession. [ABSTRACT FROM AUTHOR]

Copyright of Accounting Analysis Journal (AAJ) is the property of Jurusan Akuntansi, Fakultas Ekonomi, Universitas Negeri Semarang and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

EU Regulation requires that any international accounting standards (International Financial Reporting Standards, IFRS) and interpretations (IFRIC) pronounced by the International Accounting Standards Board (IASB) meet three sets of criteria before they become binding for EU-based companies: a ‘true and fair view’ criterion, a list of qualitative criteria, and a ‘European public good’ criterion. During the endorsement process, EU institutions evaluate each standard or interpretation’s compliance with these three criteria. Nevertheless, despite plenty of past endorsement decisions, there is still disagreement about a unanimous interpretation of the criteria in the literature. In this study, we interpret all three criteria against the background of European accounting law and academic accounting research. Then, the paper illustrates for the case of the new IFRS 9 standard on accounting for financial instruments how these criteria can be applied in the endorsement practice. We conclude that the standard cannot reasonably be rejected on grounds of the IAS Regulation. We also explain that the vagueness of the endorsement criteria and the inherent discretion in the eventual endorsement decision help maintain the EU’s political influence on the IASB’s standard-settingex ante. [ABSTRACT FROM AUTHOR]

Fairs play an important role in bringing together producers and consumers. However, participating businesses and fair visitors are separate groups that fair organizers need to keep satisfied for long-term business success and sustainability of the event. For comparing both side motivations, two separate surveys were performed during a local products fair held in Antalya, Turkey. Forty-five company representatives and 244 visitors took part in the studies and the results showed that “innovation and promotion” motivations of the businesses coincide with “learning and trying” motivations of the visitors. [ABSTRACT FROM PUBLISHER]

The concept of reliability of financial statements used in legal acts on financial accounting is considered. Analyzed the existing definitions of the category "faithful representation" of accounting information used in the work of contemporary researchers. The definition of "faithful representation" of financial reporting in the current economic conditions is given. [ABSTRACT FROM AUTHOR]