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The purpose of this paper is to examine the association between conformity with generally accepted accounting principles (GAAP) indicated by Governmental Accounting Standards Board (GASB) 34 presentation and pension underfunding in Illinois.

The authors used a fixed effects regression and employed a sample of Illinois municipalities (n=2,565 municipal-year observations) over the period 2009–2014.

The findings show that GAAP is inversely associated with pension underfunding, but only among the subsample of municipalities that are within the healthy pension funding range, i.e., above 80 percent funded. These municipalities may be in a better position to increase pension funding in response to the disciplining effect of broad GAAP conformity.

The paper focuses solely on one state and one multi-employer plan. Future studies should consider assessing the applicability of the results to other states and plan settings.

The results inform the standard-setting process, particularly as the implementation of the new GASB standards is evaluated and as GASB 34 is reexamined.

Despite concerns associated with state and local pension underfunding, academic studies examining its determinants are few. The sample setting is representative of municipal pension plans in the USA (with a comparable average pension funding ratio of 74.2 percent) and provides variability in GAAP conformity (the state encourages, but does not require, financial statement presentation consistent with GASB 34), as well as homogeneity in actuarial assumptions across observations (all sample municipalities participate in a large multi-employer municipal pension plan). The sample period immediately precedes the implementation of GASB Statements Nos 67 and 68, which increase the scope of pension reporting, providing the opportunity to consider the effects of broad GAAP conformity and a baseline for subsequent consideration of the effects of the new standards.

Auditing may be viewed as an arrangement for reducing inefficiencies arising from the fundamental market conflict between a seller who wants as high a price as possible and a buyer who wants to pay as low a price as possible. In more general terms, sellers prefer policies that boost the stock price in the short run whereas buyers would prefer the price to peak when they are ready to sell some time in the future. By framing audited financial reports within this context, the purpose of this paper is to provide some insights regarding both audit institutions and audit regulation.

This paper relies on conceptual arguments and a simple analytical model.

The basic findings are that a unique definition of audit quality is not compatible with the economics of a market where there are conflicts across traders as well a possibility that some traders hold superior information to others. Even an identification of quality with accuracy fails in this setting of conflict. The inference is that audit quality should be approached from a multi-dimensional perspective rather than a unique measure.

While the paper points out difficulties in constructing measures of audit quality extant in the literature, it does not provide any clear empirical suggestions for better measures.

The paper brings back into focus issues from information economics that form the bedrock for the study of audited financial statements in equity markets. While the paper is partially a survey and synthesis of some of the latest empirical findings, it describes them within the context of a rational economic market where traders may possess private information. Within such a market, the paper outlines both the conflicts and the benefits inherent to the current institutional arrangements where auditors are paid by incumbent shareholders and overseen by regulators.

The use of technical terms to communicate accounting information can lead to misunderstandings when the meaning of such terms is not fully appreciated by the recipient of the information. The discipline of translation studies suggests that full equivalence in translation between languages is rare. This suggests that the risk of misunderstanding is exacerbated when technical terms are translated into another language. This paper examines the implications of mistranslations of technical terms in the context of theories from linguistics, which suggest that language influences the way we think. It uses three examples of accounting terminology to illustrate these problems. It concludes that the choice of an inappropriate label in the translation of accounting terminology is detrimental to international accounting communication and creates problems for users and preparers of translated financial statements as well as for researchers in, and students of, international accounting and for those involved in harmonisation and standardisation of accounting.

Since the implementation of the Sarbanes‐Oxley Act of 2002, the SEC has adopted new rules for certifications and proposed many other new rules. The proposals cover financial experts, codes of ethics, internal controls, improper influence of audits, off‐balance‐sheet transactions, non‐GAAP financial information, and trades during pension blackout periods. Among the specific requirements of the new rules are that: (1) an issuer’s principal executive officer and principal financial officer certify the contents of the issuer’s quarterly and annual reports; (2) financial experts on audit committees be disclosed; (3) codes of ethics be disclosed; (4) internal control reports be included in annual reports; (5) officers and directors be prohibited from fraudulently influencing the auditor of financial statements; (6) a separately captioned subsection of the MD&A explain an issuer’s off‐balance‐sheet arrangements; (7) Non‐GAAP financial measures be clearly explained; and (8) officers and directors be prohibited from buying or selling equity securities acquired in connection with employment when other employees are “blocked out” from trading in their individual pension accounts.

The purpose of this paper is to examine the academic literature on the quality of International Financial Reporting Standards (IFRS), formerly International Accounting Standards (IAS), which are poised to be the universal accounting language to be adopted by all companies regardless of their place of domicile.

The methodology used in this study is archival. The authors evaluate the academic empirical literature on the quality of IFRS.

With the world's capital markets becoming more and more inextricably linked, we believe IFRS represents a single set of high‐quality, globally accepted accounting standards that has the potential to significantly improve financial reporting comparability among companies on a worldwide basis.

It will be difficult to find any time in recent history when financial reporting has been catapulted to such enormous prominence. Some would argue that better reporting would have played a vital role in preventing the complete collapse of the world's financial system. This paper provides valuable input to the US Securities and Exchange Commission, which has recently completed a roadmap, creating the potential for all US public companies to be required to file their financial statements in accordance with IFRS by 2014.

The purpose of this paper is to compare foreign listings on regulated and unregulated exchanges, and civil and common‐law companies to test the effects of cross‐listing (CL) on the firm's number of analysts and the accuracy of their forecast.

The study is a comparative one. The empirical test employs both univariate and multivariate analyses and a sample of 584 cross‐listed firms along with the number of analysts and analysts' forecast errors (FE).

After controlling for the firm's size, risk, earnings surprise, and industry, the results show that analysts become more active around CL on the London Stock Exchange (LSE) and PORTAL compared to CL on AMEX, NASDAQ, NYSE and over the counter (OTC). On the contrary, no statistically significant decrease in the magnitude of analysts' FEs was reported, suggesting no increase in the quantity of analysts' information. The results hold for both civil and common‐law countries.

The study is limited to the use of cross‐listed firms only. Future research should include non‐cross‐listed firms. As for the implications, the evidence indicates that the choice between CL on regulated or unregulated exchanges in the USA has no impact, either on the decision of an analyst to follow the firm or on the quantity of information available about that firm. In addition, the evidence suggests that analysts are more inclined to follow firms that cross‐list on the LSE than on the US regulated exchanges. Moreover, PORTAL, as an unregulated market, provides surprising evidence on the significant role of the US large institutional investors in attracting the highest number of analysts per firm compared to other regulated exchanges.

The paper compares CL on regulated and unregulated exchanges in the USA and UK for both civil and common‐law firms. It contributes to the existing literature on CL and information disclosure and has implications for academics, market regulators, professionals, and multinational firms.

This chapter explores the link between virtue and representational faithfulness in making judgments in a principles-based environment. The motivation for the chapter is the impending adoption of International Financial Reporting Standards (IFRS) in the United States and its principles-based approach to accounting. Even in a rules-based system, there are principles that provide a foundation for making decisions about the selection and implementation of accounting standards, financial statement presentation, estimates, and the sufficiency of evidence. A model is presented that reflects these judgments informed by virtue considerations that support substance over form decisions and a true and fair view. Implications for accounting education are discussed including the readiness of faculty to incorporate IFRS into the curriculum.