scholarly journals An analysis of the financial reporting compliance of South African public agricultural companies

2016 ◽  
Vol 9 (3) ◽  
pp. 833-853 ◽  
Author(s):  
Ingrid Baigrie ◽  
Danie Coetsee
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Voluntary Disclosure ◽  
Fair Value ◽  
Agricultural Activities ◽  
Voluntary Disclosures ◽  
Public Companies ◽  
Financial Position ◽  
Disclosure Requirements ◽  
Research Findings

This article assesses the extent to which South African public companies that are engaged in agricultural activities are complying with the compulsory recognition and measurement and compulsory and voluntary disclosure requirements of IAS 41 Agriculture. Sixteen large South African public companies with material holdings of biological assets in their statements of financial position were selected for analysis. The results of the analysis show that the majority of South African agricultural companies are using fair value to measure their biological assets at initial recognition as well as at the end of each reporting period. Most of these companies are complying with the compulsory disclosure requirements of IAS 41, and are also providing certain of the recommended voluntary disclosures listed in IAS 41. The study concludes that the measurement methods used by companies to value their biological assets and the nature and extent of both compulsory and voluntary disclosures of these assets are sector-specific. This is consistent with previous research findings. This study contributes to the existing literature by providing a baseline on the financial reporting of agricultural entities in South Africa prior to the implementation of IFRS 13.

scholarly journals Accounting estimates in financial statements and their disclosure by some South African construction companies

2013 ◽  
Vol 6 (2) ◽  
pp. 383-400
Author(s):  
Elsje Raubenheimer
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Financial Statements ◽  
Fair Value ◽  
Construction Companies ◽  
Financial Reporting Standards ◽  
Estimation Uncertainty ◽  
Disclosure Requirements ◽  
Frequency Of Use ◽  
Accounting Estimates

Accounting estimates form part of the preparation of financial statements and should not affect faithful representation. The use of accounting estimates does not yield exact amounts, but, rather, amounts based on assumptions. The frequency of use of accounting estimates in financial statements depends on the measurement criteria prescribed by International Financial Reporting Standards (IFRSs). For example, in the absence of prices in an active market, and if measurement is at fair value, the fair value is based on assumptions. Disclosure of the assumptions on which accounting estimates are based enables the users of financial statements to judge if amounts are faithfully represented. The objective of the research on which this article is based was to establish what IFRSs require in terms of the disclosure of assumptions and estimation uncertainty and also if listed companies in the construction and materials sector comply with these disclosure requirements.

Fair value accounting implementation challenges in South Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anuradha Pandya ◽  
Wayne van Zijl ◽  
Warren Maroun
Keyword(s):  
South Africa ◽  
South African ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Perceived Usefulness ◽  
Developing Economy ◽  
Fair Value Accounting ◽  
Extensive Experience ◽  
Content Type

PurposeThe objective of this research is to explore the challenges being encountered when applying and implementing fair value accounting requirements, focusing specifically on the determination of fair value per International Financial Reporting Standards (IFRS) 13: Fair value measurement (IFRS 13) in the South African capital market.Design/methodology/approachData are collected from 20 detailed interviews, primarily with preparers and interpretively analysed to identify how individuals internalise the requirements of IFRS 13 and the challenges associated with its application. The researchers focus specifically on South Africa because of its status as a developing economy and, at the same time, its extensive experience in applying IFRS.FindingsSouth African preparers appear reluctant to change from a conventional cost-based measurement approach to one grounded in fair value. Primary concerns include the perceived usefulness of fair value accounting and its conceptual appropriateness, given its perceived de-emphasis of the traditional stewardship role of financial reporting. Related challenges to the application of IFRS 13 include concerns about the cost of determining fair value; the inherent subjectivity of fair value measures and the practical difficulty of calculating fair values when markets are not efficient or where business environments are complex and dynamic where Level 1 inputs are not widely available for all assets and liabilities. These challenges encourage preparers to choose accounting policies, which minimise the use of fair value or apply the provisions of IFRS 13 legalistically.Research limitations/implicationsData are collected from a group of respondents from a single developing economy. Additional research on the application of IFRS 13 in other developing markets will be required to conclude on the relevance of economic, cultural and social factors for the understanding and implementation of new accounting standards by practitioners.Practical implicationsStandard setters and regulators cannot assume that new accounting standards will be interpreted and applied as intended. Even when compliance with IFRS is mandatory, preparers have considerable discretion when it comes to operationalising accounting prescriptions. Unless the challenges raised by preparers are addressed, misapplication of IFRS is likely to continue.Originality/valueThe research makes an important empirical and practical contribution by providing primary evidence on the operationalisation of IFRS 13 in a novel setting. It complements earlier research which has focused primarily on the conceptual/theoretical dimension and on American and European perspectives.

Impact of Voluntary Disclosure on Valuation of Firms: Evidence from Indian Companies

2020 ◽  
Vol 24 (2) ◽  
pp. 194-203
Author(s):  
B. Charumathi ◽  
Latha Ramesh
Keyword(s):  
Financial Reporting ◽  
Voluntary Disclosure ◽  
Firm Value ◽  
Positive Association ◽  
Financial Information ◽  
Significant Implication ◽  
Voluntary Disclosures ◽  
Additional Information ◽  
Panel Data Regression ◽  
Data Regression

This article investigates the effect of voluntary corporate disclosures on the firm value from the market value perspective. Financial reporting includes disclosures as prescribed by regulators, but few companies go beyond mandatory requirements and provide additional information voluntarily. This study empirically tests the extent of such voluntary disclosures using Corporate Voluntary Disclosure Index containing 81 items of both financial and non-financial information and panel data regression to test the hypotheses. The sample for this study is the non-financial companies in the BSE 100 Index and the period is five financial years from 2010–2011 to 2014–2015. This study finds a positive association between voluntary disclosures and firm value as measured by Tobin’s Q. Especially the market gives a higher valuation for companies disclosing optional information on social and environmental, corporate governance and financial information. This finding has a significant implication for emerging economies like India and it supports various disclosure theories such as agency, stakeholders and positive accounting theories.

Complementarity between Audited Financial Reporting and Voluntary Disclosure: The Case of Former Andersen Clients

2021 ◽  
Author(s):  
Richard Frankel ◽  
Alon Kalay ◽  
Gil Sadka ◽  
Yuan Zou
Keyword(s):  
Financial Reporting ◽  
Voluntary Disclosure ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Voluntary Disclosures ◽  
Cross Sectional ◽  
Prior Literature ◽  
Arthur Andersen

Prior literature presents various perspectives on the role of financial reporting. One view is that mandatory periodic reporting disciplines managers and encourages timely voluntary disclosure. We examine this "confirmation hypothesis" using the shock to financial-reporting quality experienced by Arthur Andersen clients forced to switch auditors. Consistent with the confirmation hypothesis, we find that former Andersen clients increase disclosure after they change auditors. They increase forecasting frequency and enhance forecasting precision and specificity. We present additional cross-sectional evidence that shows Arthur Andersen clients with larger increases in financial-reporting quality increased their disclosure by relatively more, even within the sample of Arthur Andersen clients. We supplement our main findings with a battery of tests to reduce the possibility that alternative shocks and uncertainty drive our results. Our findings support complementarity between financial-reporting quality and voluntary disclosures.

A Rationale for Imperfect Reporting Standards

2021 ◽  
Author(s):  
Henry L. Friedman ◽  
John S. Hughes ◽  
Beatrice Michaeli
Keyword(s):  
Financial Reporting ◽  
Private Information ◽  
Voluntary Disclosure ◽  
Accounting Standards ◽  
Direct Costs ◽  
General Purpose ◽  
Mandatory Reporting ◽  
Comparative Statics ◽  
Voluntary Disclosures ◽  
Financial Reports

The aim of general purpose financial reporting is to provide information that is useful to investors, lenders, and other creditors. With this goal, regulators have tended to mandate increased disclosure. We show that increased mandatory disclosure can weaken a firm’s incentive to acquire and voluntarily disclose private information that is not amenable to inclusion in mandated reports. Specifically, we provide conditions under which a regulator, seeking to maximize the total amount of information provided to investors via both mandatory and voluntary disclosures, would mandate less informative and more conservative financial reports even in the absence of any direct costs of increasing informativeness. This result is robust to allowing the firm to make reports more informative and to imposing a nondisclosure cost or penalty on the firm. The results and comparative statics analysis contribute to our understanding of interactions between mandatory reporting and voluntary disclosure and demonstrate a novel benefit to setting accounting standards that mandate imperfectly informative reports. This paper was accepted by Suraj Srinivasan, accounting.

The role of electronic auditing in verifying the principles and approaches of accounting measurement for financial instruments when adopting international financial reporting standards IFRS

2021 ◽  
Vol 11 (1) ◽  
pp. 229-247
Author(s):  
Abdul Majeed S. Dawood ◽  
Saad Salman Awad AL Maeeni
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
International Financial Reporting Standards ◽  
Financial Assets ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Market Values ◽  
Financial Position ◽  
Income Statement ◽  
Audit Program

The diversity of financial assets owned by Iraqi companies, which are measured and presented in different ways according to the classification of these assets according to international financial reporting standards, and that re-measuring these assets (shares) affects the income statement and the financial position of companies according to the change in the fair value of shares. The auditor uses multiple auditing methods for the purpose of verifying the measurement and presentation of these assets, including the use of electronic means in auditing (computer auditing.(The aim of the research is to clarify what electronic auditing is and to explain and analyse the measurement requirements in accordance with the International Financial Reporting Standard (IFRS - 9), in addition to preparing an electronic audit program that helps the auditor to verify the re measurement and presentation of the companies ’financial assets. Two mixed joint stock companies (Iraqi Company for Manufacturing and Marketing Dates - the National Company for Tourism Investments and Real Estate Projects) are adopted as a field of application by analysing their financial data for the year / 2018 and conducting a simulation of the outcome of the activity and the financial position of the company using an electronic audit program. This is to show the difference between the actual results and the results expected to be shown in light of the measurement principles adopted under international financial reporting standards. The researchers have concluded that the use of electronic means helps the auditor to conduct the audit process for the various financial assets due to their multiplicity and diversity in addition to the diversity of their market values. In addition, this enables the auditor to identify errors and indicate their impact on the income statement and budget and thus reach a final opinion on the financial statements towards the use of electronic means in auditing operations by professional organizations and relevant authorities for the purpose of speed and accuracy in completing auditing operations. Moreover, the necessity to prepare electronic programs for various auditing purposes in line with the activity of the bodies subject for auditing and training auditors in the use of such programs.

Some Recent Advances in the Theory of Financial Reporting and Disclosures

2017 ◽  
Vol 31 (3) ◽  
pp. 39-54 ◽  
Author(s):  
Ronald A. Dye
Keyword(s):  
Financial Reporting ◽  
Information Economics ◽  
Fair Value ◽  
Financial Accounting ◽  
Theoretical Research ◽  
Personal Essay ◽  
Voluntary Disclosures ◽  
Financial Innovations ◽  
Academic Assessments

SYNOPSIS This is a personal essay that contains my views on some of the recent history and evolution of the theory of financial accounting and disclosures. The essay starts by discussing how research on information economics by Hirshleifer and Akerlof combined with Demski's critique of academic assessments of accounting standards shifted theoretical research toward emphasizing the role of voluntary disclosures. Grossman's and Milgrom's “unravelling result” is reviewed, as are recent modeling efforts that provide a foundation for studying firms' incomplete voluntary disclosures. The paper also speaks to some contemporary financial reporting problems, such as fair value accounting, and also to an assessment of some recent financial innovations, such as so-called flash trading.

scholarly journals A critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Act

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Mareli Dippenaar
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Intrinsic Value ◽  
Historical Analysis ◽  
Fair Value ◽  
Research Approach ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Intended Meaning ◽  
African Context

Background: Sections 30(4) and 30(5) of the Companies Act 71 of 2008 (the Act) require, inter alia, disclosure of the remuneration received by each director in a company’s annual financial statements. Section 30(6) defines the term ‘remuneration’, which includes, inter alia, in Section 30(6)(e) the ‘value’ of any option or right granted to a director, as contemplated in Section 42, which deals with options for the allotment or subscription of securities or shares of a company. It is uncertain what the intended meaning of the term ‘value’ is in this context and it is interpreted differently by different companies in practice. Aim: The objective of this study was to understand the meaning of the term ‘value’ in Section 30(6)(e) of the Act (including the date of measurement thereof), as intended by the legislature. Setting: This article examined existing literature in a South African corporate and legislative environment. Method: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed. Results: Possible interpretations of the term ‘value’ include the grant date fair value of the rights, the fair value at reporting date, the fair value on vesting date, the expense calculated in terms of the International Financial Reporting Standard on share-based payments, the gain on exercise of the rights and the intrinsic value on reporting date. It is submitted that the most likely meaning is the grant date fair value. Conclusion: It was found that the meaning of the term ‘value’, for purposes of Section 30(6)(e) of the Act, is unclear and interpreted differently by different companies. It is, therefore, recommended that the wording of Section 30(6)(e) is amended to reflect the meaning intended by the legislature.

scholarly journals Extreme Estimation Uncertainty and Audit Assurance

2013 ◽  
Vol 7 (1) ◽  
pp. P36-P42 ◽  
Author(s):  
Brant E. Christensen ◽  
Steven M. Glover ◽  
David A. Wood
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Fair Value ◽  
Public Companies ◽  
Estimation Uncertainty ◽  
Auditing Standards

SUMMARY The overall uncertainty inherent in financial statements has increased in recent decades, but the related reports and required level of audit assurance have changed very little. In our study, “Extreme Estimation Uncertainty in Fair Value Estimates: Implications for Audit Assurance” (Christensen et al. 2012a), we examine estimates reported by public companies and find that estimates based on management's subjective models and inputs contain estimation uncertainty that is many times greater than typical audit materiality. We do not question the value that audits provide to the marketplace or the ability of auditors to deploy up-to-date auditing techniques. Rather, we suggest that the convergence of relatively recent events is placing an increasingly difficult and perhaps, in some cases, unrealistic burden on auditors. We discuss potential changes to financial reporting and auditing standards that may improve the information provided to users, and also address the concerns raised in our study.

scholarly journals LABOUR MARKET REFORM: GENERAL TRENDS, EXISTING CHALLENGES, DIRECTIONS OF ADVISORY SUPPORT

2021 ◽  
pp. 50-59
Author(s):  
Yuriy Bakun ◽  
Mykhaylo Ksenofontov ◽  
Lyudmyla Dudnik
Keyword(s):  
Financial Reporting ◽  
Balance Sheet ◽  
Financial Statements ◽  
Fair Value ◽  
Fundamental Principle ◽  
The Real ◽  
Historical Cost ◽  
Current Accounting ◽  
Financial Position ◽  
The Difference

Introduction. The article describes the concept of valuation of assets, liabilities and capital, as well as the presentation of the information received in the accounting and financial statements. Methods. Methods of structural and logical analysis, comparison and generalization of requirements of national and international accounting standards and current legislation are used in this article. Results. The economic content of the assessment of objects at the reporting date as an important methodological tool of accounting is in-depth. The principal difference between the fundamental principle of accounting - monetary valuation and evaluation as a procedure performed for the purpose of obtaining the real (fair) value of the property of the enterprise as of the reporting date is set out. The expediency of using historical value in current accounting and fair value is substantiated - when the information about the property of the enterprise in the financial statements is displayed. It has been proved that the assessment as one of the fundamental principles of accounting and assessment as a procedure that is carried out in order to obtain the real (fair) value of the property, liabilities and capital of the enterprise as of the reporting date should be distinguished. The expediency of using historical value in current accounting and fair value has been substantiated - when the information about the property of the enterprise in the financial statements is displayed. The assessment has been designated as the principle of accounting and as a procedure performed to establish the fair (fair) value of the property, liabilities and capital of the enterprise at the reporting date. To do this, the balance sheet proposes to reflect the results of their accounting for historical cost, and in the statement of financial position present information about the financial position, taking into account the fair value of assets, liabilities and equity as of the reporting date. Discussion. The difference between the indicators of these reports is recommended to be presented in the notes, accordingly, it will provide interested parties with reliable information about the financial position and will give reasons to recognize the extent to which the revalued methods of revaluation of assets, liabilities, capital and management effectiveness are used. Keywords: accounting, assessment, financial reporting, accounting principles, fair value, accounting procedure.

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