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Article
Publication date: 1 November 1998

Jill M. D’Aquila

The accounting profession’s strong focus on internal control and fraudulent financial reporting has led to new standards relating to internal control and fraudulent…

Abstract

The accounting profession’s strong focus on internal control and fraudulent financial reporting has led to new standards relating to internal control and fraudulent financial reporting. The control environment and specifically, management integrity, is an important component. The purpose of this article is to determine if the control environment forces ‐ the tone at the top, codes of conduct, and short‐term targets ‐ are related to financial reporting decisions. The results are based on a survey mailed to 400 CPAs who prepare financial reports. The findings indicate there is some reason for concern about fraudulent financial reporting. In addition, a tone at the top in an organization that fosters ethical decisions is of overriding importance to reliable financial reporting. Codes of conduct and pressure for short‐term performance, alone, had no significant effect on financial reporting decisions. The findings emphasize the importance of learning about an organization’s tone at the top during an audit.

Details

Managerial Auditing Journal, vol. 13 no. 8
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 March 2008

Lela D. Pumphrey and Gil Crain

In 2004, City of Gardena was unable to meet its obligations on $26 million in debt. The authors examined City of Gardena financial reporting as of June 30, 2004 and 2003…

Abstract

In 2004, City of Gardena was unable to meet its obligations on $26 million in debt. The authors examined City of Gardena financial reporting as of June 30, 2004 and 2003 to determine if the publicly available financial reports adequately disclosed the situation. Information about the long-term debt was properly displayed in the financial statements and disclosed in notes. There was no mention of the situation in the MD&A either year. The auditors’ did not include an explanatory paragraph highlighting the debt, nor did they issue a ‘substantial doubt about the ability to continue to exist as a going concern’ report. This paper examines existing accounting and auditing standards to determine their adequacy to protect the public interest.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 20 no. 3
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 20 August 2021

Vahab Rostami and Leyla Rezaei

This study aims to trace the impact of corporate governance and its mechanisms in preventing companies from turning to fraudulent financial reporting.

Abstract

Purpose

This study aims to trace the impact of corporate governance and its mechanisms in preventing companies from turning to fraudulent financial reporting.

Design/methodology/approach

For this purpose, using the systematic elimination pattern, the information of 187 listed companies on the Tehran Stock Exchange over six years from 2013 to 2019 were collected, and the hypotheses were examined using a linear regression model. To measure fraudulent financial reporting, the adjusted model of Beneish (1999) was used to evaluate corporate governance. Its mechanisms based on nine corporate governance mechanisms, including board independence, board remuneration, CEO financial expertise, expertise in CEO industry, board financial expertise, board industry expertise, board effort, CEO duality and managerial ownership, have been examined. These mechanisms are calculated as a combined index of corporate governance.

Findings

The findings indicate that robust corporate governance significantly reduces companies’ intention toward fraudulent financial reporting. In the same way, a negative and significant relationship was observed between each of the nine corporate governance mechanisms, except for board compensation and fraudulent financial reporting.

Originality/value

This study’s findings provide valuable insight into the importance of strengthening companies to prevent companies’ managers from engaging in fraudulent financial reporting activities. Hence, it is suggested that professional references bodies more seriously follow the rules to dictate to companies for using and empowering their corporate governance.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 22 July 2021

Mitali Panchal Arora, Sumit Lodhia and Gerard Stone

With the increasing adoption of integrated reporting and the subsequent interest of the accounting discipline in its development, this paper aims to examine the enablers…

Abstract

Purpose

With the increasing adoption of integrated reporting and the subsequent interest of the accounting discipline in its development, this paper aims to examine the enablers and barriers to the involvement of accountants in integrated reporting.

Design/methodology/approach

The paper adopts a case study approach by collecting interview data from six organisations that have adopted integrated reporting internationally. In the selected organisations, face-to-face and telephone interviews were conducted with professionals who are involved in the preparation of an integrated report. The interviewees in this study included key integrated report preparers including accountants, corporate reporting managers, sustainability managers and other report preparers. Institutional entrepreneurship provided the theoretical insights for this study.

Findings

The study found that accountants’ expertise in corporate reporting and especially their knowledge of the assurance process was one of the major reasons why they were involved in integrated reporting. Accountants’ in-depth understanding of an organisation in addition to their general analytical and interpersonal skills were also found to be useful in preparing an integrated report. However, the voluntary nature of integrated reporting along with the lack of sufficient guidelines deterred accountants from being involved in integrated reporting. The study also found that accountants themselves did not see value in integrated reporting and found it challenging to convert numerical information to narratives, thus limiting their involvement in integrated reporting.

Research limitations/implications

Whilst prior studies have underlined accountants’ institutionalised practices, this study uncovers the strategies applied by accountants to maintain their institutionalised practices. The specific application of the institutional entrepreneurship concept identifies mechanisms and strategies through which accountants restrict their practices to narrow taken-for-granted roles.

Practical implications

This study uncovers practical implications by highlighting the factors that limit the involvement of accountants within integrated reporting. One of the major implications identified relates to the training of accountants to apply their existing skills and expertise in non-financial reporting to contribute effectively to multi-disciplinary teams that contribute towards integrated reporting in organisations. This study also provides an impetus for the International Integrated Reporting Council to provide more guidance for preparing an integrated report.

Originality/value

This is one of the initial studies that has explored the enablers and barriers to the involvement of accountants in integrated reporting through its focus on organisations that are already practising this form of reporting. The use of institutional entrepreneurship theory adds to the theoretical insights for exploring the involvement of the various actors in integrated reporting.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

Keywords

Content available
Article
Publication date: 2 June 2021

Ewelina Zarzycka and Joanna Krasodomska

The paper aims to examine if corporate characteristics, general contextual factors and the internal context differentiate the quality and quantity of the disclosed non…

Abstract

Purpose

The paper aims to examine if corporate characteristics, general contextual factors and the internal context differentiate the quality and quantity of the disclosed non-financial Key Performance Indicators (KPIs).

Design/methodology/approach

The study is based on content analysis of the disclosures provided by large public interest entities operating in Poland after the introduction of the Directive 2014/95/EU. The quality of the KPIs disclosures is measured with the disclosure index. Regression analysis and selected statistical tests are used to examine the influence of the selected factors on the differences in the index value and corporate disclosure choices as regards the KPIs.

Findings

The study findings indicate that the sample companies provide a variety of non-financial KPIs in a manner that makes their effective comparison difficult. The research confirms that mainly industry, ecologists and the reporting standard determine the significant differences in the quality of the KPIs disclosures and the quantity of presented KPIs.

Research limitations/implications

The paper adds to the understanding of the differences in the quality of KPIs presentation and the choice of disclosed KPIs.

Practical implications

The paper includes suggestions on how to change corporate practice with regard to the non-financial KPIs disclosures.

Originality/value

We shed additional light on the importance of internal contextual factors such as the reporting standard and the reporters' experience in providing non-financial KPIs disclosures.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

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Book part
Publication date: 23 August 2021

Mohammad Nurunnabi

The study critically evaluates the theory of International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for future research…

Abstract

The study critically evaluates the theory of International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for future research. Using the extensive structured review of literature using the Scopus database tool, the study reviewed 79 articles, and in particular the topic-related 57 articles were analysed. Nine journals contribute to 51% of articles (29 of 57 articles). In particular, the three journals published 15 articles: Critical Perspectives on Accounting (7), Accounting, Organizations and Society (4), and Journal of Applied Accounting Research (4). In total, 83% (47 of 57) of the articles were published 2009–2018. A total of 1,168 citations were found from 45 articles since 12 articles were without citations. The highest cited authors were Ball (2006) – 410 citations, Kothari, Ramanna, and Skinner (2010) – 135 citations, and Napier (1989) – 85 citations. In particular, five theories have been used widely: institutional theory (13), accounting theory (6), agency theory (3), positive accounting theory (3), and process theory (2). Future studies’ focus could be on theory implications in IFRS adoption/implementation studies in a country or a group of countries’ experience. Future studies could also focus on various theories rather depending on a single theory (i.e. institutional theory).

Details

International Financial Reporting Standards Implementation: A Global Experience
Type: Book
ISBN: 978-1-80117-440-4

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Book part
Publication date: 5 August 2005

Andrew D. Bailey, Jr. and Audrey A. Gramling

Abstract

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-0-76231-239-9

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Book part
Publication date: 14 November 2016

Robert H. Herz

Abstract

Details

More Accounting Changes
Type: Book
ISBN: 978-1-78635-629-1

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Book part
Publication date: 14 November 2016

Robert H. Herz

Abstract

Details

More Accounting Changes
Type: Book
ISBN: 978-1-78635-629-1

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Book part
Publication date: 14 September 2018

Thinh Hoang

The belief that modern organisations have responsibility for their stakeholders, community and society has existed for many decades (Carroll & Shabana, 2010). In this…

Abstract

The belief that modern organisations have responsibility for their stakeholders, community and society has existed for many decades (Carroll & Shabana, 2010). In this context, there is increasing demand for the non-financial factors (e.g. corporate social responsibility (CSR), natural and human capitals) from stakeholders for making the appropriate business decision (Eccles & Saltzman, 2011). This information of the organisation is therefore required to not only disclose relevant and reliable information, but also monitor corporate executives.

In the other side, corporation reports are criticised as they do not provide the whole business picture of the way organisations organise financial and non-financial elements to creating value yet. It has ignored or reported just a part of the environmental, social and corporate governance (ESG) impact made by an organisation (Flower, 2015). As a consequence, there has been a call for improving firm report on environmental, CSR and corporate governance in particular, and additional factors that can potentially impact on business performance in general.

Recently, various corporation reports related to environmental, social activities and sustainability have been introduced, and integrated reporting (IR) is one of them. IR framework is introduced as a new standard for corporate communication. It is ‘a concise communication about how an organisation’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term’. A number of important outcomes are attributed to IR including satisfying the information needs of stakeholders and driving organisational change towards more sustainable outcomes (Eccles & Krzus, 2010); reducing reputational risk and allowing companies to make better financial and non-financial decisions; and helping to break down operational and reporting silos in organisations and improving systems and processes (Stubbs & Higgins, 2012). Since the IR emphasise the integration of financial and non-financial data into one report, it calls for experience and knowledge from not only the board as management role but also accountant as practice role to deal with this emerging issue.

This chapter considers the problem of the link between how to reporting the ESG information, the management role board and practice role of accountants in organisation to successfully embed ESG information into the overall corporation strategy. We identify the issues with the demand of ESG information from stakeholders and the lack of connecting and integrating the environmental and corporate social sustainability information into organisation report. We explore the development of IR and integrated thinking (InTh) and the opportunities for board in integrating ESG information into practices and eliminating the ESG and reputational risks. Finally, we consider how management accountant via adopting IR and practising InTh can act as the important role in providing and delivering the better ESG information to stakeholders.

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