State Pension Liabilities and Credit Assessments

2015 ◽  
Vol 29 (4) ◽  
pp. 943-967 ◽  
Author(s):  
Nicholas Hallman ◽  
Inder K. Khurana
Keyword(s):  
Discount Rate ◽  
Credit Rating ◽  
Financial Statement ◽  
Municipal Bonds ◽  
State Governments ◽  
Current Accounting ◽  
Rate Adjustment ◽  
The Difference ◽  
State Pension ◽  
Pension Liabilities

SYNOPSIS We examine the decision relevance of a commonly suggested adjustment to how state governments report governmental pension liabilities by recalculating such pension liabilities using the return on a portfolio of high-quality municipal bonds as the discount rate. Calculated as the difference between the state's expected rate of return and the municipal bond return, we find that the discount rate adjustment associates with lower credit ratings and higher interest costs. We also find that credit rating agencies are more likely to issue conflicting ratings when the calculation of the discount rate adjustment involves greater uncertainty. Overall, while financial statement users agree about the need for and the direction of a pension liability rate adjustment, there is less consensus about the proper magnitude of this adjustment, suggesting that current accounting treatment of pensions in the public sector leads to costly uncertainty among financial statement users.

Auditors' and Investors' Perceptions of the “Expectation Gap”

2001 ◽  
Vol 15 (4) ◽  
pp. 345-358 ◽  
Author(s):  
John E. McEnroe ◽  
Stanley C. Martens
Keyword(s):  
Empirical Studies ◽  
Primary User ◽  
Financial Statement ◽  
User Group ◽  
Accounting Profession ◽  
The Public ◽  
Government Accounting ◽  
Expectation Gap ◽  
The Difference

The auditing “expectation gap” refers to the difference between (1) what the public and other financial statement users perceive auditors' responsibilities to be and (2) what auditors believe their responsibilities entail. The notion of this divergence receives much attention in the accounting literature (i.e., Commission on Auditors' Responsibilities 1978; Guy and Sullivan 1988; AICPA 1993; U.S. Government Accounting Office 1996). Although prior empirical studies encompass certain expectations associated with a range of audit services, these papers often involve the opinions of bankers as the primary user group employed in the research (Nair and Rittenberg 1987; Lowe and Pany 1995). In contrast, this study extends the prior research by directly comparing audit partners' and investors' perceptions of auditors' responsibilities involving various dimensions of the attest function. We conducted the study to determine if an expectation gap currently exists and we find that it does; investors have higher expectations for various facets and/or assurances of the audit than do auditors. Our findings serve as evidence that the accounting profession should engage in appropriate measures to reduce this expectation gap.

Rating Agency Adjustments to GAAP Financial Statements and Their Effect on Ratings and Credit Spreads

2014 ◽  
Vol 90 (2) ◽  
pp. 641-674 ◽  
Author(s):  
Pepa Kraft
Keyword(s):  
Default Risk ◽  
Credit Rating ◽  
Credit Ratings ◽  
Balance Sheet ◽  
Financial Statements ◽  
Financial Statement ◽  
Credit Spread ◽  
Credit Spreads ◽  
Term Structures ◽  
Interest Expense

ABSTRACT I examine a dataset of both quantitative (hard) adjustments to firms' reported U.S. GAAP financial statement numbers and qualitative (soft) adjustments to firms' credit ratings that Moody's develops and uses in its credit rating process. I first document differences between firms' reported and Moody's adjusted numbers that are both large and frequent across firms. For example, primarily because of upward adjustments to interest expense and debt attributable to firms' off-balance sheet debt, on average, adjusted coverage (cash flow-to-debt) ratios are 27 percent (8 percent) lower and adjusted leverage ratios are 70 percent higher than the corresponding U.S. GAAP ratios. I then find that Moody's hard and soft rating adjustments are associated with significantly higher credit spreads and flatter credit spread term structures. Overall, the results indicate that Moody's quantitative adjustments to financial statement numbers and qualitative adjustments to credit ratings enable it to better capture default risk, consistent with it effectively processing both hard and soft information.

Analisis Ekualisasi SPT Masa PPN Dengan SPT PPh Badan Terhadap Kewajiban Perpajakan PT. Adiyana Teknik Mandiri

2018 ◽  
Vol 6 (3) ◽  
pp. 117-122
Author(s):  
Irham Firdauza Pratama ◽  
Hadi Sutomo
Keyword(s):  
Income Tax ◽  
Value Added ◽  
Preventive Measure ◽  
Income Taxes ◽  
Financial Statement ◽  
Corporate Income Tax ◽  
Applicable Law ◽  
Tax Returns ◽  
Tax Audit ◽  
The Difference

Many cases are related to corrections caused by the occurrence of VAT and Income Tax equalization. The difference in reporting the circulation of business on the VAT SPT with the Corporate Income Tax Return is the object of the tax authorities' examination. Basically, equalization is not to find the same number of circulation businesses but to find the cause of the difference between the VAT Period of Income Tax and the Corporate Income Tax Return. These differences are often due to differences in provisions between Income Taxes and Value Added Taxes, such as tax objects, exchange rates, and so on. The purpose of this study was to find out how to report the circulation of business between the VAT Period of VAT and Corporate Income Tax Returns of PT. AdiyanaTeknikMandiri. To find out the process and analysis of equalization between VAT Period of VAT and Corporate Income Tax Returns at PT. AdiyanaTeknikMandiri. To find out the equalization benefits of the VAT Period SPT with Corporate Income Tax Returns for companies. This study uses a comparative descriptive method with qualitative and quantitative data, namely by analyzing and processing financial statement data and existing fiscal reports, then comparing the circulation of business to the results of calculations according to the VAT Period of VAT and Corporate Income Tax Returns, then processed further to provide an explanation of the difference in business circulation generated. The results of this study indicate that PT. AdiyanaTeknikMandiri that the company in reporting the circulation of its business has not been reported as it should, it is known after equalizing it is known that there is a number of business circulation that has not been reported in the VAT Period SPT report so that it causes a difference in the amount of business circulation between the VAT Period of Income Tax and the Corporate Income Tax Return. Equalization process is carried out by comparing the VAT Period report with the Corporate Income Tax Return, collecting data on business circulation in the ledger, comparing the data obtained, then analyzing the factors that cause the different reporting of business circulation. Equalization benefits for the company, which can be a preventive measure to face a tax audit by the tax authorities, so that the company can explain in accordance with the conditions that occur, equalization can also be a benchmark of compliance and increase the accuracy of taxpayers in reporting the amount of tax obligations in accordance with the applicable law .   Keywords: tax equalization, business circulation, corporate income tax return

Urban poverty in India: Issues and perspectives in development

Social Change ◽  
2000 ◽  
Vol 30 (1-2) ◽  
pp. 8-32 ◽  
Author(s):  
Amitabh Kundu
Keyword(s):  
Credit Rating ◽  
Urban Poverty ◽  
Rural Poverty ◽  
State Level ◽  
The State ◽  
Constitutional Amendment ◽  
State Governments ◽  
Rural And Urban ◽  
Urban Settlements ◽  
The Government

The present paper examines the trends in rural and urban poverty, analyses the interstate variations and explains these in terms of socio-economic factors. It shows that rural poverty declines smoothly with economic development, which unfortunately is not the case with urban poverty. The availability of water supply, toilets and electricity, that are not explicitly incorporated in the official definition of poverty, has also been analysed at the state level as also across size class of urban settlements. It is argued that the small and medium towns have a weak and unstable economic base. As a consequence, most of these are not in a position to generate funds to provide civic services to all sections of population. These towns, particularly those located in less developed states, should, therefore, be the major concern of government policy. Further, overviewing the changing system of governance, it argues that the seventy-fourth Constitutional Amendment, has not succeeded in genuine empowerment of civic bodies. The power now seems to have shifted from the state governments to the financial institutions, international donors and credit rating agencies. Finally, the capacity of the government to generate employment directly through anti-poverty programmes would remain limited. The paper, therefore, recommends that the anti-poverty programmes should primarily be focussed on provision of basic amenities.

4. Financial reports of listed companies

2014 ◽  
Author(s):  
Christopher Nobes
Keyword(s):  
Annual Report ◽  
Balance Sheet ◽  
Listed Companies ◽  
Financial Statement ◽  
Financial Assets ◽  
Financial Reports ◽  
Income Statement ◽  
Tangible Assets ◽  
The Difference ◽  
Accounting Ratios

‘Financial reports of listed companies’ considers the components of an annual report and the types of financial statement that companies generally provide: balance sheet, income statement, statement of changes in equity, and cash flow statement. It addresses the following questions: what are assets and how are they measured? What is the difference between depreciation and impairment? Why are various expected expenses and losses not accounted for as liabilities? How can an investor decide which company to lend to or buy shares in? How could managers use accounting to mislead investors? Tangible assets, intangible assets, and financial assets are defined along with liabilities and accounting ratios.

The Financial Crisis, Fiscal Federalism, and the Creditworthiness of US State Governments

2018 ◽  
Vol 9 (1) ◽  
pp. 1-30 ◽  
Author(s):  
Markie McBrayer ◽  
Patrick E. Shea ◽  
Justin H. Kirkland
Keyword(s):  
Financial Crisis ◽  
Federal Government ◽  
Fiscal Federalism ◽  
Credit Rating ◽  
State Governments ◽  
Negative Effects ◽  
Rating Agencies ◽  
The Great Recession ◽  
Gross State Product ◽  
Credit Scores

AbstractThis study examines why credit rating agencies offered optimistic assessments of some US states during the 2008–2009 financial crisis. Focusing on the creditworthiness of state governments, we argue that because states are procyclic spenders, growth in a state’s economy is actually harmful to that state’s ability to maintain its fiscal promises. As the federal government spends more heavily in a state, however, the procyclic tendencies of that state matter less to credit raters, and the negative effects of growth in a state’s economy diminish. We test our theory in two ways. We first model the Great Recession as an intervention, finding that states receiving less money from the federal government are more likely to experience increases in their credit scores following the crisis. We then test whether this pattern holds outside of the financial crisis for the years 1990–2006. We observe that increases in gross state product are negatively correlated with credit ratings when there are little to no changes in federal dollars flowing into a state.

scholarly journals U.S. municipal yields and unfunded state pension liabilities

2019 ◽  
Vol 53 ◽  
pp. 15-32
Author(s):  
Zina Lekniūtė ◽  
Roel Beetsma ◽  
Eduard Ponds
Keyword(s):  
State Pension ◽  
Pension Liabilities

scholarly journals Variation in forest landowners’ management preferences reduces timber supply from Finnish forests

2020 ◽  
Vol 77 (2) ◽  
Author(s):  
Tero Heinonen ◽  
Timo Pukkala ◽  
Antti Asikainen
Keyword(s):  
Forest Management ◽  
Discount Rate ◽  
Net Present Value ◽  
Timber Supply ◽  
Forest Owners ◽  
Forest Landowners ◽  
Rotation Forest ◽  
Round Wood ◽  
The Difference ◽  
Management Preferences

Abstract Key message Forest owners who maximize profitability with a low discount rate or whose management goals are related to conservation and recreation, rarely sell timber. These owners make it difficult to achieve the high harvesting targets of the growing bioeconomy sector of Finland. To increase timber supply, these landowners should be informed about alternative silvicultural methods. Context The round wood harvests from Finnish forests are increasing and approaching to the level of maximum sustainable cut. Cutting budget calculations assume that forests are harvested in an optimal way for national timber supply. The calculations ignore the variability of landowners’ forest management preferences. Aims This study analyzed the effect of variation in the management objectives and silvicultural preferences of forest landowners on the forecasted timber supply from Finnish forests. Methods Forest owners were divided into savers (net present value maximized with a 1% discount rate), average owners (3% discount rate), and investors (5% discount rate). The owners of each group were further divided into three groups: those who allow only continuous cover management (12%), owners who use only rotation forest management (10%), and indifferent landowners who may use both silvicultural systems (78%). Scenarios were composed of management prescriptions that were optimized separately for the different groups of forest landowners. Results Compared to the even-flow timber drain scenario for rotation forest management (calculated without acknowledging the varying preferences of landowners), the scenario where the owners’ preferences varied decreased harvested volume by 15–19% during a 100-year calculation period. The main reason for the difference was the saver type of landowners who rarely sell timber. Conclusion It was concluded that variation of the preferences of forest landowners may make it challenging to meet the increasing harvesting targets of the growing bioeconomy of Finland.

The Use Of Accounting Information Before And After The Award Of The MFOAs Certificate Of Conformance

2011 ◽  
Vol 9 (4) ◽  
pp. 120
Author(s):  
Arthur Allen ◽  
George D. Sanders ◽  
Jang Y. Cho
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Statement ◽  
Municipal Finance ◽  
Bond Ratings ◽  
Accounting Data ◽  
Before And After ◽  
The Difference ◽  
Effective Signal ◽  
Finance Officers

This study examines whether the Municipal Finance Officers Associations Certificate of Conformance (CC) provides an effective signal to financial statement users of cities financial reporting quality. Bond ratings were modeled prior to and subsequent to the award of the CC. The model using accounting data subsequent to the ward of the CC had a higher rate of classificatory accuracy (55.6%) than the model using accounting data prior to the award of the CC (50.6%). However, the difference in classificatory accuracy between the two models was not statistically significant.

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