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Book part
Publication date: 16 September 2022

Lovinska Liudmyla and Kucheriava Maria

Introduction: In the context of globalisation processes, the necessity to create appropriate information support for management decisions at various levels becomes…

Abstract

Introduction: In the context of globalisation processes, the necessity to create appropriate information support for management decisions at various levels becomes increasingly important: at the international, national and enterprise levels. The source of such data is financial reporting. The last leads to increase attention from key users (investors, lenders, other users) to the reliability and quality of financial reporting data. The study of scientific literature and best foreign practices made it possible to identify problems of the theoretical, organisational and methodological background of preparing high-quality financial statements and their assessment, particularly the lack of a unified interpretation of the financial reporting quality concept. The necessity to identify a theoretical basis for assessing financial reporting quality has led to the relevance of this study.

Aim: Scientific substantiation and improvement of theoretical provisions of methodology development for financial reporting quality assessment.

Methods used within the study are the following: Analysis, synthesis, operational approach, bibliographic analysis, generalisation.

Findings: The application of an operational approach to the formulation of the definition of financial reporting quality has made it possible to create the basis for its assessment. This approach involves descriptions of the principles of clarity and uniformity. The authors define the concept of ‘financial reporting quality’, formulating the theoretical principles for financial reporting assessment as the process of establishing compliance of financial statements with a specific list of qualitative characteristics.

Details

The New Digital Era: Other Emerging Risks and Opportunities
Type: Book
ISBN: 978-1-80382-983-8

Keywords

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…

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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

Keywords

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…

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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

Article
Publication date: 10 January 2023

Dmitriy Chulkov and Xiaoqiong Wang

This study aims to examine the relationship between corporate social responsibility (CSR) and measures of financial reporting quality.

Abstract

Purpose

This study aims to examine the relationship between corporate social responsibility (CSR) and measures of financial reporting quality.

Design/methodology/approach

The authors explore the link between CSR and several indicators of firms’ financial reporting quality. Estimation with firm and year fixed effects is based on a sample of US publicly traded firms covering the period from 1991 to 2018.

Findings

Empirical results demonstrate that firms with higher CSR scores are associated with higher accuracy of financial forecasts, fewer earnings surprises and greater coverage by financial analysts. This positive relationship is more profound for firms that face low agency concerns, firms that have a higher level of customer awareness, firms that have more long-term institutional ownership or firms that do not face financial constraints.

Originality/value

The study contributes to the ongoing debate on the value of CSR. The results support the stakeholder value maximization view of CSR and identify the impact of several factors on its relationship with the quality of financial reporting.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Book part
Publication date: 15 November 2021

C. Richard Baker and Martin E. Persson

At a congress of the European Accounting Association, held more than 20 years ago, the President of the Belgian Institute of Registered Auditors, Paul Behets (1998)…

Abstract

At a congress of the European Accounting Association, held more than 20 years ago, the President of the Belgian Institute of Registered Auditors, Paul Behets (1998), delivered a plenary speech with the title: Are Financial Statements an Obsolete Product? Behets’ answer was “no,” that financial statements are an essential component of the financial reporting system that is necessary for the proper functioning of capital markets. In this chapter, we reach a similar conclusion, but for somewhat different reasons. A central argument of this chapter is that an effective system of corporate governance requires an effective financial reporting system, and that an effective financial reporting system requires a well-ordered system of financial accounting. Behet’s speech provides evidence that financial reporting, and the role of traditional audited financial statements within financial reporting, have undergone a period of change. The future of financial reporting is difficult to predict with any degree of certainty, but it is likely to be a future marked by change. One possible path for change was suggested by Elliot (1994), who indicated that the accepted model of financial reporting might be replaced by electronic information systems providing financial and other forms of information about companies, not necessarily in the form of audited financial statements, which would be widely available via the Internet. Under this scenario, a decision-maker could decide on the types of information that were important to them, and then arrange the information in the ways they see fit. Financial reports in their present form (i.e., audited financial statements) might become obsolete as users decide individually on the types of information that are important to them. If this scenario came to pass, the question arises whether there would be a continuing need for financial reports as presently constituted. It is the argument of this chapter that, even if it is technologically feasible for financial reports to be changed from their present form, there would still be a need for financial reports as an important component of corporate governance.

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Historical Developments in the Accountancy Profession, Financial Reporting, and Accounting Theory
Type: Book
ISBN: 978-1-80117-805-1

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

Keywords

Abstract

Details

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

Abstract

Details

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

Book part
Publication date: 14 November 2016

Robert H. Herz

Abstract

Details

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

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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