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South African companies have, in the past, not recognised an asset for unused Secondary Tax on Companies (“STC”) credits. AC 501, Accounting for “Secondary Tax on Companies (STC)”, which is effective for annual periods beginning on or after 1 January 2004, now requires South African companies to recognise a deferred tax asset for unused STC credits, to the extent that it is probable that an entity will declare dividends of its own, against which the unused STC credits can be utilised. In terms of AC 501 and IAS 12 (AC 102), Income Taxes (the local and international accounting standard on income taxes), the recognition of a liability to pay STC has to be postponed until the declaration of a dividend. Some accounting commentators have indicated that they find it anomalous to recognise a deferred tax asset in respect of unused STC credits, while no liability is recognised for the STC that would be payable on the future distribution of retained earnings. The objective of the study is to consider whether it is conceptually anomalous to recognise a deferred tax asset for unused STC credits while no liability is raised for the STC that would become payable on future dividend declarations on profits already recognised in the financial statements. The study concludes that it is conceptually anomalous to recognise a deferred tax asset for unused STC credits when no corresponding liability is raised.

The objective of this study was to identify the impact of a perceived inadequacy of authoritative South African financial reporting guidance for long‐term insurers, on the basic financial statement characteristic of comparability. The authors attempted to identify areas of non‐comparable presentation and disclosure and to suggest relevant guidance. To assess comparability, the financial statements of five insurers were evaluated using a checklist specifically developed for this study. This process identified seven main categories of significant non‐comparable presentation and disclosure practices. Solutions were proposed for these areas, based inter alia on existing international literature and guidance.

This paper uses content analysis to compare International Financial Reporting Standards (IFRS)1 with the Local Accounting Standards (LAS) of South Africa (SA), Mauritius and Tanzania. It begins by identifying the equivalence of the local accounting standards of these three countries with IFRS and follows with a content analysis of the definition of terms, accounting treatment and disclosure requirements in the standards. The contents of these three items in each of these countries’ standards are compared with those in the IFRS. A score card is used to record the level of harmony between the LAS and IFRS of each country and between the LAS of each country. The score is compared by running statistical test of significant difference using Wilcoxon Matched Paired test. The paper reports that, except for Tanzania, the local accounting standards of the two other countries are more or less similar to IFRS. As regards the level of harmony between the local accounting standards and IFRS, the score card reveals that the accounting standards of SA are more in harmony with IFRS, followed by Mauritius. A lead table is produced at the end.

We assess the impact of NZ IAS 32 on the financial reporting of convertible financial instruments by retrospective application of the standard to a sample of New Zealand companies over the period 1988 ‐ 2003. NZ IAS 32 has a broader definition of liabilities than does the corresponding current standard (FRS‐31) and it does not permit convertibles to be reported under headings that are intermediate to debt and equity. The results of the study indicate that in comparison with the reported financial position and performance, the reporting of convertibles in accordance with NZ IAS 32 would result in higher amounts for liabilities and higher interest. Thus, analysts using financial statement information to assess risk of financial distress will need to revise the critical values of commonly used measures of risk and performance when companies report under NZ IAS

Summarizes the effects of globalization on financial markets, and the need for accounting practices to keep up with it. Criticizes the Financial Accounting Standards Board Exposure Draft “Accounting for derivatives and similar financial instruments and for hedging activities” for not including the impact of derivative transactions on the risk exposure of a company. Describes Financial Accounting Standards Board collaboration with foreign standard setters, starting with earnings per share and capital structure disclosure. Argues that published financial statements still show the conflict between equity‐holder based accounting and debt‐holder accounting, which has not yet been resolved, despite the EU’s fourth and seventh Directives. Asserts that US and international accounting standards differ in the interpretation by different companies. Predicts that standards will be forced on accountants by the market.

This study aims to explore the influence of internal audit (IA) reporting lines and the implementation of IA recommendations (IMPLEMENT) on financial reporting quality (FRQ).

Data were obtained from the annual reports of 201 UK listed companies, and also from survey questionnaires completed by the chief audit executives working within those companies. Two measures are used as proxies of FRQ: abnormal accruals and accrual quality.

Findings indicate that when IA reports directly to the audit committee (AC), there is a significant positive influence upon FRQ. Conversely, when IA reports to the chief executive officer (CEO) or chief financial officer (CFO), there is a negative impact on FRQ. It is further shown by the results that lower income-increasing accruals are evident when there is greater IMPLEMENT, thereby showing an accompanying positive influence on FRQ. Moreover, the results indicate that greater adoption of such recommendations is also associated with internal reporting lines, i.e. when IA reports directly to the AC, FRQ results improved.

These findings contribute to the literature in the field of IA reporting, by introducing new insights regarding reporting lines and IMPLEMENT, and the influence of these on FRQ, and by establishing those insights through empirical work undertaken in the UK where little research on this issue has been reported.

This paper explains the concepts of underhedging and overhedging in interest rate swaps and demonstrates how overhedged and underhedged swaps might be accounted for under Statement of Financial Accounting Standards No. 133 (FAS 133) and international Accounting Standard No. 39. To illustrate, we use an interest rate swap with receive‐fixed, pay‐fixed swap leg foreign currency to explain the un derlying differences between overhedging and underhedging on foreign exchange risk. We further clarify that when both legs of an interest rate swap are specified with the same currency as in the situation of FAS 133 ‐ Example 5 beginning in Paragraph 131, accounting for overhedging or underhedging will be no different because there is no foreign exchange overhedging or underhedging risk that impacts swap valuation.

This study explores the role played by audit committees (ACs) in illuminating the effectiveness of internal audit (IA) as a facilitator of the achievement of organisational goals, specifically examining whether the AC mediates the relationship between IA and firm performance (FP).

Data are gathered from survey questionnaires directed to chief internal auditors (CIAs) and from the annual reports of 119 listed companies in Saudi Arabia (SA) and the United Arab Emirates (UAE). Ordinary least squares (OLS) regression and mediation tests are used to assess the study’s hypotheses.

The findings indicate that the independence of the AC and having members with accounting and auditing expertise mediate the effects of IA independence and size on FP. However, no such mediation is found with respect to IA competence and FP. Further, AC meetings do not mediate the effects of IA characteristics on FP. Additional measures of the tested variables determine the robustness of the obtained findings.

While much research examines the relationship between FP and corporate governance (CG) mechanisms, this study considers IA, as a key element of CG, and its impact on FP, which has received more limited attention. Hence, the findings contribute to the literature by providing new understandings regarding IA as a component of CG and its relationship with FP. Furthermore, they bring additional evidence of the influence of IA upon FP, which is mediated by AC independence and expertise.

This paper aims to investigate the impact of the characteristics of two corporate governance mechanisms, namely, board of directors and audit committee (hereafter AC), on the level of compliance with International Financial Reporting Standard [hereafter International Financial Reporting Standards (IFRS)] 7 “Financial instruments: Disclosures” (hereafter FID).

Using a self-constructed checklist of 128 items, this research measures the compliance with IFRS 7 of 63 Canadian financial institutions listed on the Toronto Stock Exchange during a period of three years (2014-2016). Fixed effect panel regressions have been used to capture the individual effect present in authors’ data.

Empirical results show that the mean compliance level with IFRS 7 requirements is about 77 per cent and identify various areas of non-compliance. This level of compliance has a positive linkage with the board size and independence. Similarly, the AC independence and financial accounting expertise are shown to positively affect authors’ dependent variable. Nevertheless, CEO/chairman duality, AC size and meeting frequency are not significantly correlated with the level of compliance with IFRS 7.

This study expands prior compliance literature in the Canadian setting by examining the determinants of compliance with IFRS mandatory disclosures. Also, and to the best of the authors’ knowledge, this paper is among the first studies that have investigated the effect of corporate governance characteristics (hereafter CGC) on compliance with all IFRS 7 requirements in general.