IFRS Compliance in the Year of the Pig: Hong Kong Impairment Testing

2014 ◽  
Author(s):  
Tyrone M. Carlin ◽  
Nigel Finch ◽  
Dung Manh Tran
Keyword(s):  
Hong Kong ◽  
High Rate ◽  
Financial Reports ◽  
Large Sample ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Economic Profit ◽  
Early Adoption

Several studies have assumed that the implementation of IFRS can enhance the quality of financial reports, in turn improving their reliability and usefulness (Wyatt, 2005; Barth et al., 2008). However, such studies generally suggest that the introduction of IFRS guarantees consistency and compliance in practice. Given that goodwill impairment testing under IFRS presents a technically challenging task (Hoogendoorn, 2006; Wines et al., 2007) that can materially impact the determination of economic profit, this study focuses on assessing the compliance quality of a large sample of Hong Kong listed firms that are mature IFRS adopters. By examining the detailed disclosures made by 264 large listed firms in 2007, three years after Hong Kong’s implementation of IFRS, an alarmingly high rate of non compliance with HKAS 36 still exists among these goodwill-intensive firms, casting doubts over the hypothesis that lax compliance is a characteristic associated solely with early adoption.

scholarly journals Are Audits of Financial Statements Born Unequal?

2017 ◽  
Vol 2 (3) ◽  
pp. 16
Author(s):  
Manh Dung Tran ◽  
Van Anh Doan ◽  
Thi Thuy Bui ◽  
Manh Cuong Nguyen
Keyword(s):  
Hong Kong ◽  
Audit Quality ◽  
Financial Statements ◽  
Financial Reports ◽  
Audit Firm ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Audit Firms ◽  
Arthur Andersen

Audit is getting more and more importance in assuring the reliability of financial information including financial statements for all parties. Commonly, quality of an audit is viewed as probability that financial reports are free from material irregularities. In the previous literature, there is a positive relationship between size of audit firm and audit quality that has long been understood. This has resulted in many publications to gather evidence of differential audit quality relating to audit firm size. In consequence, the conclusion has been focused that bigger audit firms produce higher audit quality than smaller ones. However, the collapse of many big international audit firms, typically Arthur Andersen has reduced the statement that large audit firms have higher audit quality than small ones. Therefore, this study looks into audit quality basing on the extent of compliance with disclosure requirements pertaining to goodwill impairment of large listed firms in Hong Kong context in the second year transition to IFRS. We found that audit firm identity appears to be a substantial variation, in which compliance levels changed significantly among auditors in the context of Hong Kong.

scholarly journals AUDIT COMMITTEE INDEPENDENCE AND A CONTRACTING PERSPECTIVE ON GOODWILL IMPAIRMENT: SINGAPOREAN EVIDENCE

2017 ◽  
Vol 18 (0) ◽  
pp. 128-135 ◽  
Author(s):  
Jamaliah Abdul Majid
Keyword(s):  
Policy Implication ◽  
Audit Committee ◽  
Financial Statements ◽  
Debt Covenants ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Factors Influencing ◽  
Reporting Incentives ◽  
Logistic Regressions

This study examines factors influencing and constraining the decision to recognize zero goodwill impairment in a sample of 52 Singaporean listed firms from 2010–2012. Using binary logistic regressions, the results reveal that firms that are approaching violation of their debt covenants have a higher likelihood of exercising the recognition choice, while a higher proportion of audit committee independence constrains this choice. The policy implication of this study is that to improve the quality of the financial statements, the relevant authorities need to monitor firms’ reporting incentives closely. This study contributes to the literature on IFRS by providing evidence that supports the applicability of the debt hypothesis in explaining the decision of Singaporean listed firms to recognize zero goodwill impairment.

Disclosure Quality of Goodwill Impairment Testing: A Disclosure Index

2012 ◽  
pp. 5-30 ◽  
Author(s):  
Khairil Faizal Khairi ◽  
Nur Hidayah Laili ◽  
Dung Manh Tran
Keyword(s):  
Annual Reports ◽  
Mandatory Disclosure ◽  
Disclosure Quality ◽  
Quality Of Information ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Weighted Index ◽  
Disclosure Requirements ◽  
Compliance Level

This study sets out to offer proof of several important questions relating to the quality of information disclosed on goodwill impairment process under the new requirements of FRS 36. This study investigates the compliance level and disclosure quality of FRS 36 by top 20 of Singaporean listed firms in SGX at 2007 based on their market capitalization. In order to achieve the objective of this study, the weight- ed index is chosen because this index is able to differentiate the quality and impor- tance of each mandatory disclosure under FRS 36. The weighted index was developed by constructing a disclosure scoring sheet, obtaining annual reports of 20 sampled Singapore firms for particular year, complet- ing scoring sheet for each firms by assigned weighted for the disclosure items and calculating disclosure weighted index. The weighted index was analyzed to examine the firm’s compliance with the FRS 36 disclosure requirements. The results of this study revealed that 18 out of 20 (90%) firms in Singapore failed to comply with the most basic elements of the FRS 36 pertaining to goodwill impairment testing espe- cially in allocating goodwill into the CGUs and key assumptions used in determin- ing the recoverable amount of CGU assets.

The influence of family and government-controlled firms on goodwill impairment

2015 ◽  
Vol 5 (4) ◽  
pp. 479-506 ◽  
Author(s):  
Noraini binti Omar ◽  
Norman Mohd-Saleh ◽  
Mohd Fairuz Md Salleh ◽  
Kamran Ahmed
Keyword(s):  
Ownership Structure ◽  
Chief Executive ◽  
Policy Choice ◽  
First Year ◽  
Financial Reports ◽  
Content Type ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Ceo Tenure ◽  
Accounting Policy

Purpose – The purpose of this paper is to examine the effect of ownership structure on the goodwill impairment policy of Malaysian listed firms. In particular, the authors test whether the direction and magnitude of goodwill impairment are related to whether firms are government or family controlled firms. Given the highly concentrated ownership of firms in Malaysia, the authors suggest that the “entrenchment effect” will take precedence over the “alignment effect”, which will be reflected in the accounting policy on goodwill valuation and impairment. Design/methodology/approach – This study utilizes logistic and Tobit regressions to test the prediction, controlling for a range of factors that might affect the goodwill impairment decision. The data were manually collected through 579 firm-year observations from the financial reports of companies listed on the Bursa Malaysia web site for the period 2003-2009. Findings – The authors find that family controlled firms are more likely to record goodwill impairment than non-family controlled firms. The results are, however, not significant in government-controlled firms. Similar evidence in prior studies finds that Malaysian firms are more likely to recognize and record higher goodwill impairment loss in their first year of adoption than in the subsequent years. Interestingly, in contrast to prior studies, longer chief executive officer (CEO) tenure is found to be positively associated with the likelihood to recognize and record higher impairment of goodwill. Originality/value – This paper is one of few studies that examine the role of ownership structure on goodwill accounting policy choice where ownership structure is highly concentrated and government owned firms play a significant role in the economy. The paper also examines goodwill policy choice before, during the transition and subsequent to the adoption of the goodwill standard in Malaysia, which has not been addressed before.

scholarly journals Adoption of International Financial Reporting Standards (IFRS) in Ghana and the Quality of Financial Statement Disclosures

2014 ◽  
Vol 3 (2) ◽  
pp. 269 ◽  
Author(s):  
Ben Kwame Agyei-Mensah
Keyword(s):  
Regression Analysis ◽  
Financial Reporting ◽  
Firm Size ◽  
Financial Statements ◽  
Financial Information ◽  
Reporting Standards ◽  
Financial Reports ◽  
Listed Firms ◽  
Financial Reporting Standards

According to the IASB's IFRS framework, qualitative characteristics are the attributes that make the information provided in financial statements useful to others. This study was conducted to investigate the quality of financial reports before and after adopting IFRSs in Ghana, and also the influence of firm-specific characteristics which include firm size, profitability, debt equity ratio, liquidity and audit firm size on the quality of financial information disclosed by firms listed on the Ghana Stock Exchange.The research was conducted through detailed analysis of the pre-official adoption period, (2006) and post adoption period, (2008) financial statements of the listed firms.  Descriptive analysis was performed to provide the background statistics of the variables examined.  This was followed by regression analysis which forms the main data analysis.  The results of the quality of financial information disclosure mean of 76.80% (pre adoption) and 87.09% (post adoption) for the two years indicate that the quality of financial reports has improved significantly after adopting IFRSs. The study thus confirms that the implementation of IFRSs generally reinforce accounting disclosure quality.  It also indicates listed firms' overwhelming compliance with the IASB's IFRS Framework.The results of the multiple regression analysis show that company size, represented by net assets and Auditor type were found to be associated at a statistically significant level with the quality of financial information disclosed.  With the improvement in the quality of the financial reports after adopting IFRS users are assured of useful information for financial decision-making.Keywords: Quality of financial reports' disclosure, Firm-specific characteristics, International Financial Reporting Standards, Mandatory disclosure, Ghana. JEL Classifications: M40, M41, M48

scholarly journals QUALITATIVE CHARACTERISTICS AS A RELIABLE TOOL FOR ASSESSING THE QUALITY OF ACCOUNTING INFORMATION: AN OVERVIEW STUDY

2021 ◽  
Vol 9 (5) ◽  
pp. 187-199
Author(s):  
Aiman Hamood Mohammed Ali Alasbahi ◽  
Ishwara P
Keyword(s):  
Decision Making ◽  
Accounting Information ◽  
Professional Organizations ◽  
Financial Reports ◽  
Historical Approach ◽  
Reliable Tool ◽  
Quality Of Accounting Information ◽  
Qualitative Characteristics

The accounting information contained in the financial reports is considered to be of a quality if it possesses a set of characteristics. Professional organizations have been concerned with the issuance of standards and the determination of characteristics related to the quality of accounting information. This paper aims to clarify the dependability on the qualitative characteristics of accounting information as an indicator of the quality of accounting information. The historical approach is used for the purpose of this study. The paper revealed that the qualitative characteristics of accounting information are a dependable indicator of the quality of accounting information and useful for decision-making

Impact of Adopting IFRS in Ghana

2016 ◽  
pp. 191-230
Author(s):  
Ben K. Agyei-Mensah
Keyword(s):  
Internal Control ◽  
Financial Information ◽  
Annual Reports ◽  
Disclosure Quality ◽  
Accounting Disclosure ◽  
Financial Reports ◽  
Listed Firms ◽  
Control Information ◽  
Forward Looking

This chapter reports on the impact of the adoption of IFRS in Ghana. It first traced the history of accounting standards in Ghana and the reason for the adoption of IFRS in 2007. One of the key issues that IFRS talk about is the disclosure of financial and non financial information in corporate financial reports. Hence this chapter provides evidence on the extent of disclosures, the quality of the disclosures and the determinants of the disclosures. The disclosure of financial ratios, forward-looking information and internal control information in corporate annual reports were extensively studied and findings reported in this chapter. The results of the quality of financial information disclosure mean of 76.80% (pre adoption) and 87.09% (post adoption) for the two years indicate that the quality of financial reports has improved significantly after adopting IFRSs. The findings thus confirms that the implementation of IFRSs generally reinforce accounting disclosure quality. However, the low levels of other disclosures (accounting ratio disclosure quality 6.64%, level of disclosure 60%; forward looking information 35%; internal control information 42%) by listed firms in Ghana do not support signaling theory which suggests that firms with good performance will wish to signal their quality to investors, hence are more likely to disclose their performance by disclosing more voluntary information. It is therefore important for the SEC and The Ghana Stock Exchange to do more by enforcing adherence to the corporate code of corporate governance.

scholarly journals Goodwill and accounting discretion

2015 ◽  
Vol 2 (10) ◽  
pp. 9
Author(s):  
Marco Bisogno
Keyword(s):  
Earnings Management ◽  
Management Practices ◽  
Discretionary Accruals ◽  
Financial Economic ◽  
Social Implication ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
And Performance ◽  
Practical Implications

<p>Purpose: The aim of the paper is to investigate earnings management practices related to goodwill accounting, focusing on its first recognition as well as its write-offs, due to the impairment test.</p><p>Design/methodology/approach: The study refers to a sample of Italian listed firms and the analysis covers three years, with a total of 591 firm-year observations. The modified Jones’ regression model has been used in estimating discretionary accruals, as a proxy of earnings management practices.</p><p>Findings: A positive relationship between discretionary accruals and yearly changes in goodwill has been proved. Findings also show an incidence of leverage and performance.</p><p>Research limitations/implications: The study focuses on a single context (Italy) and it is essentially based on financial-economic variables.</p><p>Practical implications: Findings of the study could be relevant for standard-setters in future revisions of goodwill accounting.</p><p>Social implication: The study could support investors in evaluating the incidence of first recognition as well as goodwill impairment on the quality of earnings.</p>

scholarly journals A longitudinal study of audit quality differences among independent auditors

2019 ◽  
Vol 21 (2) ◽  
pp. 234-246 ◽  
Author(s):  
Manh Dung Tran ◽  
Khairil Faizal Khairi ◽  
Nur Hidayah Laili
Keyword(s):  
Financial Reporting ◽  
Audit Quality ◽  
Financial Statements ◽  
Cross Sectional ◽  
Content Type ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Big 4 ◽  
High Level

Purpose The purpose of this paper is to investigate the differences of audit quality of financial statements among auditors, including Big 4 and non-Big 4 auditors. Design/methodology/approach By employing cross-sectional analysis of compliance (a proxy of audit quality) of goodwill impairment testing of listed firms in the context of Hong Kong, the variation of audit quality of financial statements of auditees has been shown. Findings Audit quality of Big 4 auditors is viewed to be higher than that of non-Big 4 audit firms and the homogeneity of audit quality among Big 4 auditors is not long accepted, but variation. Practical implications Even though unqualified opinions have been given on the auditors’ reports, the quality of financial statements audit is a skeptical issue because of the high level of non-compliance of goodwill impairment testing under International Financial Reporting Standards. Originality/value This study does emphasize the higher audit quality of financial statements of Big 4 auditors than that of non-Big 4 auditors and stresses the variation of audit quality among Big 4 auditors.

scholarly journals O PROCESSO DE EUTROFIZAÇÃO ARTIFICIAL NO LAGO PARANOÁ, BRASÍLIA, DF

1994 ◽  
Author(s):  
Gustavo Macedo de Mello Baptista ◽  
Mário Diniz de Araújo Neto
Keyword(s):  
Water Quality ◽  
Sewage Treatment ◽  
Federal District ◽  
High Rate ◽  
Field Methods ◽  
Influx Rate ◽  
Sewage Treatment Plants

This paper represent an academic exercise dealing with some index parameters of water quality usinganalytical field methods. In first instance it aims to demonstrate the praticalness of the methods as well asits level of precision. It was possible to estimate the influence of parameters like NO3, pH, OD (dissolvedoxygen), etc. for the determination of water quality of the Paranoá Lake wich serves as recipient of sewagefrom Brasilia and satellite towns of the Federal District/Brazil, with an estimated influx rate of 140 litersper second. Treatment of this quantity of sewage (during the time of our study) is very simple: just passingby a fence system. Conditions of eutrophication of this water body have become worse due to the inflowof clandestine sewage from houses along the the lake-side, wich contributes much to the increase ofnutrients, especially phosphorus and nitrogen.The obtained results were promising and served to stimulate further studies in the course "Practice ofField Studies", even not serving for a definite characterization of the waters. It is important to emphasizethat neither results nor the analysis of the data are focused in this paper.The high rate of eutrophication at the sampling stations can be observed using NO3 e PO4 as parameters.In that sense the following measures are recommended in order to maintain chemical and physicalcharacteristics of the habitat:1 - dredging of organic mud from the bottom of the lake, since it contains 80% of the phosphates ofthe slop, besides other nutrients;2 - expansion or construction of new sewage treatment plants in order to prevent the inflow ofsewage in natura in the lake and to satisfy the demand of the population;3 - control of clandestine sewage of the houses at Lake South and North by the official environmentalprotection agencies punishing house owners with application of heavy fines;4 - development of environmental education programs for scholars of all levels in order to arouse theconscience for preserving of water resources.

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