A számviteli érdekhordozói elméletek evolúciója és a szabályozás – klasszikus tézisek és új irányok a pénzügyi beszámolásban (Evolution of the financial accounting stakeholder theories and the regulation – classic theses and new ways in the financial report)

A modernkori számvitel egyik alapvető kérdése, hogy a pénzügyi beszámolás címzettjét – az érdekhordozókat – miként lehet azonosítani. Ez a törekvés már a klasszikus, azóta meghaladottá vált elméletekben is központi szerepet töltött be és modern, posztmodern elméletekben kulcsfontosságúvá vált. A tapasztalatok alapján az azonosított érdekhordozók köre módosult, bővült. Ennek a fejlődésnek a vizsgálata során a számvitel számos olyan ismérvét sikerült azonosítani, amely segítségével a vonatkozó szabályok tökéletesíthetők. Emellett az evolúció vizsgálata segítségével közvetlenül is megfigyelhetővé vált az, hogy a számvitelt extern módon szabályozó hatalom szükségessége milyen feltételek teljesítése mellett igazolható. A vizsgálat során azonosíthatóvá váltak olyan helyzetek, amikor a számviteli szabályozó és „kívülről irányított” pénzügyi beszámolás szuboptimális helyzethez vezet. A cikk az érdekhordozói elméletek fejlődését a klasszikus felfogásoktól indulva mutatja be. Feltárja, hogy a modern – jelenleg elfogadott – koalíciós vállalatfelfogás miben hozott újat, elsősorban miként hívta életre az extern szabályozót. _____ One of the key problems of the modern financial accounting is how to define the stakeholders. This problem was already a key issue in the already outdated classical stakeholder theories. Research and experience noted that the group of stakeholders has widened and has been modified. Through this evolution researchers identified many characteristics of financial reporting through which the regulation could have been improved. This advance pointed out which are the situations when the existence of an extern accounting regulator may be justified, since under given circumstances this existence led to suboptimal scenario. This paper deals with the stakeholder theories, starting with the classical ones. The article points out how did the currently accepted theory changed the assertions of the previous one and how was the external regulator created as an inevitable consequence. The paper also highlights the main issues raised by the post-modern theories; those, which try to fit the current questions into the current stakeholder models. The article also produces a Hungarian evidence for the previously mentioned suboptimal scenario, where the not tax-driven regulation proves to be suboptimal.

The emergence of integrated private reporting

Purpose - This paper aims to provide evidence to suggest that private social and environmental reporting (i.e. one-on-one meetings between institutional investors and investees on social and environmental issues) is beginning to merge with private financial reporting and that, as a result, integrated private reporting is emerging. Design/methodology/approach - In this paper, 19 FTSE100 companies and 20 UK institutional investors were interviewed to discover trends in private integrated reporting and to gauge whether private reporting is genuinely becoming integrated. The emergence of integrated private reporting through the lens of institutional logics was interpreted. The emergence of integrated private reporting as a merging of two hitherto separate and possibly rival institutional logics was framed. Findings - It was found that specialist socially responsible investment managers are starting to attend private financial reporting meetings, while mainstream fund managers are starting to attend private meetings on environmental, social and governance (ESG) issues. Further, senior company directors are becoming increasingly conversant with ESG issues. Research limitations/implications - The findings were interpreted as two possible scenarios: there is a genuine hybridisation occurring in the UK institutional investment such that integrated private reporting is emerging or the financial logic is absorbing and effectively neutralising the responsible investment logic. Practical implications - These findings provide evidence of emergent integrated private reporting which are useful to both the corporate and institutional investment communities as they plan their engagement meetings. Originality/value - No study has hitherto examined private social and environmental reporting through interview research from the perspective of emergent integrated private reporting. This is the first paper to discuss integrated reporting in the private reporting context.

The quality of financial information in the extractive industries: a value relevance analysis

The extractive industry is characterized by high levels of risk and uncertainty. These attributes create challenges when applying traditional accounting concepts (such as the revenue recognition and matching concepts) to the preparation of financial statements in the industry. The International Accounting Standards Board (2010) states that the objective of general purpose financial statements is to provide useful financial information to assist the capital allocation decisions of existing and potential providers of capital. The usefulness of information is defined as being relevant and faithfully represented so as to best aid in the investment decisions of capital providers. Value relevance research utilizes adaptations of the Ohlson (1995) to assess the attribute of value relevance which is one part of the attributes resulting in useful information. This study firstly examines the value relevance of the financial information disclosed in the financial reports of extractive firms. The findings reveal that the value relevance of information disclosed in the financial reports depends on the circumstances of the firm including sector, size and profitability. Traditional accounting concepts such as the matching concept can be ineffective when applied to small firms who are primarily engaged in nonproduction activities that involve significant levels of uncertainty such as exploration activities or the development of sites. Standard setting bodies such as the International Accounting Standards Board and the Financial Accounting Standards Board have addressed the financial reporting challenges in the extractive industry by allowing a significant amount of accounting flexibility in industryspecific accounting standards, particularly in relation to the accounting treatment of exploration and evaluation expenditure. Therefore, secondly this study examines whether the choice of exploration accounting policy has an effect on the value relevance of information disclosed in the financial reports. The findings show that, in general, the Successful Efforts method produces value relevant information in the financial reports of profitable extractive firms. However, specifically in the oil & gas sector, the Full Cost method produces value relevant asset disclosures if the firm is lossmaking. This indicates that investors in production and non-production orientated firms have different information needs and these needs cannot be simultaneously fulfilled by a single accounting policy. In the mining sector, a preference by large profitable mining companies towards a more conservative policy than either the Full Cost or Successful Efforts methods does not result in more value relevant information being disclosed in the financial reports. This finding supports the fact that the qualitative characteristic of prudence is a form of bias which has a downward effect on asset values. The third aspect of this study is an examination of the effect of corporate governance on the value relevance of disclosures made in the financial reports of extractive firms. The findings show that the key factor influencing the value relevance of financial information is the ability of the directors to select accounting policies which reflect the economic substance of the particular circumstances facing the firms in an effective way. Corporate governance is found to have an effect on value relevance, particularly in the oil & gas sector. However, there is no significant difference between the exploration accounting policy choices made by directors of firms with good systems of corporate governance and those with weak systems of corporate governance.

Transparency in European football : A study of financial disclosure transparency from a supporter perspective

Background and Problem: Despite the exploding increase in revenue by more than 500 percent (1996-2014) among European football clubs, the operating profit in the “big five” leagues are, paradoxically, inexistent or very low. Hence, there is a need for more transparent financial reporting in European football. To preserve the game’s well-being and establish a sustainable future, UEFA introduced Financial Fair Play (FFP) back in 2010 as a part of their club licensing requirements. The transparency that FFP is intended to improve is however only disclosed to UEFA and its member associations, which is only one of many stakeholders. In times of financial turmoil in European football clubs, where fair play and sustainability is frequently discussed since the implementation of FFP, one could ask; is it really fair play that not all European football clubs are obligated to be transparent towards all their stakeholders and supporters? Purpose: The purpose of this thesis is to, from a supporter perspective, look at how transparent European football clubs’ financial disclosure is. Methodology: The research has elements of both a deductive and an inductive approach and uses a disclosure checklist with a cross-sectional design, in order to measure disclosure transparency.  Empirical Results and Conclusion: Even though the empirical findings proved that financial reporting transparency are present within European football, the conclusion is that the financial reporting is generally not transparent within the industry.

Effects of IFRS adoption on the financial statements of Nigerian listed entities: the case of oil and gas companies

On 28 July 2010, the Nigerian Federal Executive Council approved January 1, 2012 as the effective date for the convergence of Nigerian Statement of Accounting Standards (SAS) or Nigerian GAAP (NG-GAAP) with International Financial Reporting Standards (IFRS). By this pronouncement, all publicly listed companies and significant public interest entities in Nigeria were statutorily required to issue IFRS based financial statements for the year ended December, 2012. This study investigates the impact of the adoption of IFRS on the financial statements of Nigerian listed Oil and Gas entities using six years of data which covers three years before and three years after IFRS adoption in Nigeria and other African countries. First, the study evaluates the impact of IFRS adoption on the Exploration and Evaluation (E&E) expenditures of listed Oil and Gas companies. Second, it examines the impact of IFRS adoption on the provision for decommissioning of Oil and Gas installations and environmental rehabilitation expenditures. Third, the study analyses the impact of the adoption of IFRS on the average daily Crude Oil production cost per Barrel. Fourth, it examines the extent to which the adoption and implementation of IFRS affects the Key Performance Indicators (KPIs) of listed Oil and Gas companies. The study further explores the impact of IFRS adoption on the contractual relationships between Nigerian Government and Oil and Gas companies in terms of Joint Ventures (JVs) and Production Sharing Contracts (PSCs) as it relates to taxes, royalties, bonuses and Profit Oil Split. A Paired Samples t-test, Wilcoxon Signed Rank test and Gray’s (Gray, 1980) Index of Conservatism analyses were conducted simultaneously where the accounting numbers, financial ratios and industry specific performance measures of GAAP and IFRS were computed and analysed and the significance of the differences of the mean, median and Conservatism Index values were compared before and after IFRS adoption. Questionnaires were then administered to the key stakeholders in the adoption and implementation of IFRS and the responses collated and analysed. The results of the analyses reveal that most of the accounting numbers, financial ratios and industry specific performance measures examined changed significantly as a result of the transition from GAAP to IFRS. The E&E expenditures and the mean cost of Crude Oil production per barrel of Oil and Gas companies increased significantly. The GAAP values of inventories, GPM, ROA, Equity and TA were also significantly different from the IFRS values. However, the differences in the provision for decommissioning expenditures were not statistically significant. Gray’s (Gray, 1980) Conservatism Index shows that Oil and Gas companies were more conservative under GAAP when compared to the IFRS regime. The Questionnaire analyses reveal that IFRS based financial statements are of higher quality, easier to prepare and present to management and easier to compare among competitors across the Oil and Gas sector but slightly more difficult to audit compared to GAAP based financial statements. To my knowledge, this is the first empirical research to investigate the impact of IFRS adoption on the financial statements of listed Oil and Gas companies. The study will therefore make an enormous contribution to academic literature and body of knowledge and void the existing knowledge gap regarding the impact and implications of IFRS adoption on the financial statements of Oil and Gas companies.

Role of financial and other information in trade credit decisions in SMEs: An international study

Trade credit is an important source of finance for SMEs and this study investigates the use of the financial statements and other information in making trade credit decisions in smaller entities in Finland, the UK, USA and South Africa. The study adds to the literature by examining the information needs of unincorporated entities as a basis for making comparisons with small, unlisted companies. In-depth, semi-structured interviews in each country were used to collect data from the owner-managers of SMEs and from credit rating agencies and credit insurers. The findings provide insights into similarities and differences between countries and between developed and developing economies. The evidence suggests that there are three main influences on the trade credit decision: formal and report-based information, soft information relating to social capital and contingency factors. The latter dictate the extent to which hard/formal information versus soft/informal information is used.

Discount rates in disarray : evidence on flawed goodwill impairment testing

Carlin and Finch, this issue, compare goodwill impairment discount rates used by a sample of large Australian firms with ‘independently’ generated discount rates. Their objective is to empirically determine whether managers opportunistically select goodwill discount rates subsequent to the 2005 introduction of International Financial Reporting Standards (IFRS) in Australia. This is a worthwhile objective given that IFRS introduced an impairment regime, and within this regime, discount rate selection plays a key role in goodwill valuation decisions. It is also timely to consider the goodwill valuation issue. Following the recent downturn in the economy, there is a high probability that many firms will be forced to write down impaired goodwill arising from boom period acquisitions. Hence, evidence of bias in rate selection is likely to be of major concern to investors, policymakers and corporate regulators. Carlin and Finch claim their findings provide evidence of such bias. In this commentary I review the validity of their claims.

How nonprofit boards monitor, judge and influence organisational performance

The law and popular opinion expect boards of directors will actively monitor their organisations. Further, public opinion is that boards should have a positive impact on organisational performance. However, the processes of board monitoring and judgment are poorly understood, and board influence on organisational performance needs to be better understood. This thesis responds to the repeated calls to open the ‘black box’ linking board practices and organisational performance by investigating the processual behaviours of boards. The work of four boards1 of micro and small-sized nonprofit organisations were studied for periods of at least one year, using a processual research approach, drawing on observations of board meetings, interviews with directors, and the documents of the boards. The research shows that director turnover, the difficulty recruiting and engaging directors, and the administration of reporting, had strong impacts upon board monitoring, judging and/or influence. In addition, board monitoring of organisational performance was adversely affected by directors’ limited awareness of their legal responsibilities and directors’ limited financial literacy. Directors on average found all sources of information about their organisation’s work useful. Board judgments about the financial aspects of organisational performance were regulated by the routines of financial reporting. However, there were no comparable routines facilitating judgments about non-financial performance, and such judgments tended to be limited to specific aspects of performance and were ad hoc, largely in response to new information or the repackaging of existing information in a new form. The thesis argues that Weick’s theory of sensemaking offers insight into the way boards went about the task of understanding organisational performance. Board influence on organisational performance was demonstrated in the areas of: compliance; instrumental influence through service and through discussion and decision-making; and by symbolic, legitimating and protective means. The degree of instrumental influence achieved by boards depended on director competency, access to networks of influence, and understandings of board roles, and by the agency demonstrated by directors. The thesis concludes that there is a crowding out effect whereby CEO competence and capability limits board influence. The thesis also suggests that there is a second ‘agency problem’, a problem of director volition. The research potentially has profound implications for the work of nonprofit boards. Rather than purporting to establish a general theory of board governance, the thesis embraces calls to build situation-specific mini-theories about board behaviour.

The influence of family ownership on the quality of accounting information

This article explores the quality of accounting information in listed family firms. The authors exploit the features of the Italian equitymarket characterizd by high ownership concentration across all tpes of firms to disentangle the effects of family ownership from other major block holders on the quality of accounting information. The findings document that family firms convey financial information of higher quality compared to the nonfamily peers. Furthermore the authors provide evidence that the determinants of accounting quality differ across family and nonfamily firms.

Editorial : advancing innovation in accounting research

We live in uncertain times. The sub-prime crisis that commenced in the U.S. in 2007, the global economic crisis that followed, and the recent sovereign debt crisis in various European countries have led to ongoing instability in global financial markets that continues to receive daily media attention. These uncertain times create enormous opportunities for researchers across many disciplines to research capital markets and business practices. From an accounting perspective, accounting regulators have been active in developing new standards to address risk management issues arising from the crises and have continued to develop and refine financial reporting standards. With the adoption of, or transition to international financial reporting standards (IFRS) in many countries, the globalisation of financial reporting standards is close to becoming a reality. However, doubts still remain about whether the IFRS will lead to any real long-term improvement in financial reporting and transparency (see Sunder, 2011)...

Taxation of multinational banks : using formulary apportionment to reflect economic reality (Part 1)

Formulary apportionment does not attempt to undertake a transactional division of a highly integrated multinational entity. Rather, it allocates income to the jurisdictions based on an economically justifiable formula. Opposition to formulary apportionment is generally based on the argument that it is not a theoretically superior (or optimal) model because of the implementation difficulties. The conclusion that the unitary taxation model may be theoretically superior to the current arm's-length model that applies to multinational banks, despite significant implementation, compliance, and enforcement issues, is based on the unitary taxation model providing greater alignment with the unique features of these banks. The formulary apportionment model looks to the economic substance of the multinational entity and, in this sense, adopts a substance-over- form approach. Formulary apportionment further recognizes the impossibility of using arm's-length pricing for economically interdependent multinational entities. A final advantage to formulary apportionment, which is also a consequence of this model achieving greater inter-nation equity, is the elimination of double taxation.

Collaborative organisational structures : implications for the accounting profession

The IT systems drive the financial reporting processes in modern business environments. The result is an integrative system of initialing, authorizing, recording, and processing of financial transactions. This IT-related change inextricably links to the overall financial reporting process, requiring a deeper level of understanding and commitment. Firm’s IT governance initiatives provide this commitment by enforcing controls to IT components to ensure compliance to overall financial reporting requirements. The IT governance institute (ITGI) and other authorities have developed a number of frameworks and guidelines (e.g., COBIT) to help management in managing IT-intensive processes.

Introduction

Australia is presently witnessing concerted federal government policy initiatives to reform many aspects of the Australian Third Sector with an initial emphasis on charity organisations. Policy initiatives include the establishment of a new federal regulator, the Australian Charities and Not-for-profits Commission (ACNC), a national online financial reporting register, a statutory definition of charity, a tightening of taxation regulation and exemption including an unrelated business income tax and national fundraising regulation. This ambitious policy programme has had a gestation over 15 years of government inquiries lamenting lax, inconsistent and complex state-based regulation, and seeking a coherent and modern regulatory environment for nonprofit organisations, which are increasingly being used by the state to deliver outsourced community services..

Why stagnant? behind the scenes in Indonesia’s reformed state asset management policies

This study seeks to answer the question of “why is policy innovation in Indonesia, in particular reformed state asset management laws and regulations, stagnant?” through an empirical and qualitative approach, identifying and exploring potential impeding influences to the full and equal implementation of said laws and regulations. The policies and regulations governing the practice of state asset management has emerged as an urgent question among many countries worldwide (Conway, 2006; Dow, Gillies, Nichols, & Polen, 2006; Kaganova, McKellar, & Peterson, 2006; McKellar, 2006b) for there is heightened awareness of the complex and crucial role that state assets play in public service provision. Indonesia is an example of such country, introducing a ‘big-bang’ reform in state asset management laws, policies, regulations, and technical guidelines. Two main reasons propelled said policy innovation: a) world-wide common challenges in state asset management practices - such as incomplete information system, accountability, and governance adherence/conceptualisation (Kaganova, McKellar and Peterson 2006); and b) unfavourable state assets audit results in all regional governments across Indonesia. The latter reasoning is emphasised, as the Indonesian government admits to past neglect in ensuring efficiency and best practice in its state asset management practices. Prior to reform there was euphoria of building and developing state assets and public infrastructure to support government programs of the day. Although this euphoria resulted in high growth within Indonesia, there seems to be little attention paid to how state assets bought/built is managed. Up until 2003-2004 state asset management is considered to be minimal; inventory of assets is done manually, there is incomplete public sector accounting standards, and incomplete financial reporting standards (Hadiyanto 2009). During that time transparency, accountability, and maintenance state assets was not the main focus, be it by the government or the society itself (Hadiyanto 2009). Indonesia exemplified its enthusiasm in reforming state asset management policies and practices through the establishment of the Directorate General of State Assets in 2006. The Directorate General of State Assets have stressed the new direction that it is taking state asset management laws and policies through the introduction of Republic of Indonesia Law Number 38 Year 2008, which is an amended regulation overruling Republic of Indonesia Law Number 6 Year 2006 on Central/Regional Government State Asset Management (Hadiyanto, 2009c). Law number 38/2008 aims to further exemplify good governance principles and puts forward a ‘the highest and best use of assets’ principle in state asset management (Hadiyanto, 2009a). The methodology of this study is that of qualitative case study approach, with a triangulated data collection method of document analysis (all relevant state asset management laws, regulations, policies, technical guidelines, and external audit reports), semi-structured interviews, and on-site observation. Empirical data of this study involved a sample of four Indonesian regional governments and 70 interviews, performed during January-July 2010. The analytical approach of this study is that of thematic analysis, in an effort to identify common influences and/or challenges to policy innovation within Indonesia. Based on the empirical data of this study specific impeding influences to state asset management reform is explored, answering the question why innovative policy implementation is stagnant. An in-depth analysis of each influencing factors to state asset management reform, and the attached interviewee’s opinions for each factor, suggests the potential of an ‘excuse rhetoric’; whereby the influencing factors identified are a smoke-screen, or are myths that public policy makers and implementers believe in; as a means to explain innovative policy stagnancy. This study offers insights to Indonesian policy makers interested in ensuring the conceptualisation and full implementation of innovative policies, particularly, although not limited to, within the context of state asset management practices.

Standardisation of plant and machinery valuation practices in Malaysia

Plant and machinery valuation is important to every company.s annual financial reporting. It is reported under the non-current assets section, and the valuers are generally employed to provide the up to date valuation of the non-current assets valuation such as property, plant and equipment that can make up to 80% of the total assets of a company. The valuation of plant and machinery is also important for other purposes such as securing loan facilities, sales, takeover, insurance and auction. The application of 2005 International Financial Reporting Standard (IFRS) has a subsequent impact on the financial sector, as a whole. The accountants have to choose between the Historical Cost approach and Market Value approach in determining the value of the client.s assets. In Malaysia, the implementation of IFRS has a domino effect on the financial system, especially for plant and machinery valuation for financial reporting. The comparison data for plant and machinery valuation is limited unlike land and building valuation. The question of Malaysian valuer.s ability to comply with the IFRS standard keeps rising every day, not just to the accountants, but also other related parties such as financial institutions, government agencies and the clients. This is happening because of different interpretations of premise of value for plant and machinery, as well as methods been used and differences in standards of reporting among the valuers conducting plant and machinery valuation. The root of the problem lies in the lack of practical guidelines governing plant and machinery valuation practices and different schools of thought among the valuers. Some follow the United Kingdom.s RICS guidelines, whilst some valuers are more comfortable with the United State.s USPAP rules, especially on the premise of value. This research is to investigate the international best practices of plant and machinery valuation and to establish the common valuation concept, awareness and application of valuation methodology and valuation process for plant and machinery valuation in Malaysia. This research uses a combination of the qualitative and quantitative research approach. In the qualitative approach, the content analyses were conducted from the international practices and current Malaysian implementation of plant and machinery valuation. A survey (quantitative approach) via questionnaire was implemented among the registered and probationary valuers in Malaysia to investigate their understanding and opinion relating to plant and machinery valuation based on the current practices. The significance of this research is the identification of international plant and machinery practices and the understanding of current practices of plant and machinery valuation in Malaysia. It is found that issues embedding plant and machinery valuation practices are limited numbers of resources available either from scholars or practitioner. This is supported by the general finding from the research survey that indicates that there are immediate needs for practical notes or guidelines to be developed and implemented to support the Malaysian valuers practising plant and machinery valuation. This move will lead to a better understanding of plant and machinery valuation, reducing discrepancies in valuation of plant and machinery and increased accuracy among practising valuers.