Accounting

Earnings Distribution Discontinuity from a Continuous Model of Earnings Management

by Andrew Yim

I formulate a tractable model of earnings management with benchmark beating and auditor-client interaction. Prior... more I formulate a tractable model of earnings management with benchmark beating and auditor-client interaction. Prior models have omitted one or both of these aspects. Under mild conditions, the optimal misreporting strategy is unique. A general characterization of the strategy is provided, with two (effectively four) closed-form solutions derived for certain combinations of the extended audit cost distribution and misreporting cost functions. Some of the solutions are expressed in terms of the Lambert W function, which has wide applications in many scientific fields. The shape of the function can lead to a “discontinuity” in earnings related distributions. Simulation results indicate that the model can accommodate the discontinuity phenomenon, as well as the volcano shape of the distributions of earnings change and earnings surprise, documented in the literature. The insights from the simulations can be summarized in two hypotheses, namely, the mixture conjecture and the continuous “discontinuity” conjecture. Maximum likelihood and nonlinear least squares methods can be used to estimate the model parameters. Several applications of the model are suggested, including the construction of an earnings manipulation measure distinct from but complementary to abnormal accruals.

Private Equity Returns and Disclosure Around the World

by Douglas Cumming

Cumming, D.J., and U. Walz, 2010. “Private Equity Returns and Disclosure around the World” Journal of International Business Studies 41(4), 727-754.
- Reprinted as Cumming, D.J., and U. Walz, 2010. “Private Equity Returns and Disclosure around the World” Journal of Business Valuation, Vol 2., pp.1-33 (lead article)
- Winner of the Canadian Institute of Chartered Business Valuators (CICBV) Best Paper Prize ($5,000)
- PWC Global Competency Centre Research Excellence Award (€3,000)

To obtain more funds from the institutional investors, private equity fund managers may report inflated valuations of... more To obtain more funds from the institutional investors, private equity fund managers may report inflated valuations of private investee companies that are not yet sold. However, such overvaluations may result in a reputational cost when those investments are realized. Using evidence from 39 countries, we show that there are significant systematic biases in managers' reporting of fund performance. We find that these biases depend on the accounting and legal environment in a country, and on proxies for the degree of information asymmetry between institutional investors and private equity fund managers.

DCG, le Diplôme de Comptabilité et de Gestion

by Francois pignon

Faites carrière en comptabilité en préparant le DCG à distance avec Comptalia

Vous avez au minimum le bac,... more Faites carrière en comptabilité en préparant le DCG à distance avec Comptalia

Vous avez au minimum le bac, ou un autre diplôme consenti en dispense, et vous aspirez à réaliser une carrière dans les métiers de la comptabilité, du contrôle de gestion, de la gestion de trésorerie ou encore de la finance. Une inscription au diplôme de comptabilité et de gestion sera une excellente solution d'y arriver.
Comptalia est la première école en ligne des professionnels et futurs professionnels de la filière comptabilité-gestion vous conseille de suivre une formation en diplôme de comptabilité et de gestion en e-learning à votre allure et d'être chaperonné durant votre enseignement.
L'atout du DCG et les ouvertures professionnels
Le DCG : http://www.comptalia.com/diplomes-comptables/dcg/diplomes-comptabilite-gestion.asp est un diplôme d'état comptable de second cycle à finalité professionnelle. Le programme du DCG est axé vers la acquisition des connaissances examinées dans 13 domaines de discipline majeurs. Ils dirigent sur les aspects comptables, juridiques et fiscaux ainsi que sur la maîtrise des systèmes d'information, le management et l'anglais des affaires.
Les débouchés professionnels pour les titulaires du DCG sont divers et le marché de l'emploi affiche une brillante dynamique. Ils peuvent oeuvrer sur des tâches de comptabilité classiques en cabinet comme en entreprise et également en tant que conseil ou auditeur en cabinet indépendant.
Obtenir son DCG est l'assurance d'obtenir un emploi en cabinet ou en entreprise à des postes intéressants
Formez-vous au DCG avec Comptalia- le premier centre de formation comptable en ligne.
Avec plus de 6 000 élèves, Comptalia est la première institution en e-learning des professionnels et futurs professionnels de la filière comptabilité-gestion. Grace à dextérité en e-learning, développé depuis 1999, nous facilitons à tout public désirant développer des expériences en comptabilité-gestion de se former au diplôme de comptabilité et de gestion, sérieusement, efficacement, de manière conviviale à son propre rythme et depuis partout.
Et pour mieux vous orienter dans votre projet professionnel Comptalia a préparé une solution pédagogique unique axée sur l'interactivité et la relation professeur-apprenant, qui vous permet d'être accompagné tout au long de votre projet de formation au diplôme de comptabilité et de gestion.

Le DCG en Contrat de Professionnalisation à distance
Il est également possible de préparer le DCG en formation en alternance
Les bénéfices sont certains :
Cela permet à l'apprenant d'être rémunéré durant la formation, don't le coût sera pris en charge par l'employeur.
- Pour l'entreprise, la souplesse et l'adaptabilité du rythme d'alternance du collaborateur comptable qui se forme au diplôme de comptabilité et de gestion est un avantage inédit.
Pour plus de renseignements sur le DCG, venez nous rendre visite sur le site de http://www.comptalia.com/

FASB No. 8 and reported results of multinational operations: Hazard for managers and investors

by Raj Aggarwal

Credit and Concept (Úver a pojem)

by Andrej Gogora

GOGORA, A. 2012. Úver a pojem. In: Filozofia, kultúra a spoločnosť v 21. storočí. Nitra, 2012. ISBN 978-80-8094-967-9, s. 69 - 73.

BRUNO LATOUR'S METAPHOR OF ACCOUNTING (Účtovnícka metafora Bruna Latoura)

by Andrej Gogora

GOGORA, A. 2011. Účtovnícka metafora Bruna Latoura. In: Filozofia v kontexte súčasného myslenia. Trnava, 2011. ISBN 978-80-8105-327-6, s. 67 – 73.

Under Siege: Deprofessionalization within Accounting

by Johan Magnusson

New Media and External Accounting Information - A Critical Review

by Gregory Saxton

Gregory D. Saxton. In press, Australian Accounting Review

The proliferation of new media has initiated substantial changes in both the production and consumption of accounting... more The proliferation of new media has initiated substantial changes in both the production and consumption of accounting information. The implications for accounting research and practice are thus considerable. Consequently, this paper represents a critical review of the relevant literature on new media and accounting information.

A review of disclosure in the annual financial reports of life insurance companies in South Africa

by Darron West

Put an end to investment fears and anxiety: investment insights

by Darron West

Governmental Accounting Standards Board Statement 34: Perceptions of Texas Finance Officers

by Texas State PA Applied Research Projects

Shirota, Keiji, "Governmental Accounting Standards Board Statement 34: Perceptions of Texas Finance Officers" (2003). Applied Research Projects, Texas State University-San Marcos. Paper 47.
http://ecommons.txstate.edu/arp/47

The recent corporate scandals have made us aware that even Fortune 500 companies with seemingly stellar performances... more The recent corporate scandals have made us aware that even Fortune 500 companies with seemingly stellar performances may not be financially as well off as their financial statements suggest. The corporations involved in the recent flow of scandals have previously been considered as top-notch companies. Despite their good reputation, some of them have declared bankruptcy, and one lost its auditing license in Texas. These events pose a question as to how reliable financial statements are.

Financial statements are not only used in the private sector, but also used in the public sector to allow decision makers to communicate with their stakeholders. Stakeholders in the corporate setting may include stockholders, bondholders, and employees. In the public setting, stakeholders may include citizens, bondholders, and decision makers themselves. Even though stakeholders demand accurate information regarding the well-being of their respective organizations, the recent corporate scandals infer that information may not be accurate or adequate.

There are two organizations that are tasked to establish and improve financial reporting standards in US: one for the private sector and the other for the public sector. Their efforts to improve the reporting standard, known as Generally Accepted Accounting Principle (GAAP), have met considerable resistance in the past.[1] One of which is the focus of this research.

Statement 34 issued by the Governmental Accounting Standards Board (GASB) has caused uproar among public finance officials all over the nation.[2] Statement 34 introduced one important concept to the public sector, which is operational accountability. But, in order to do so, the GASB increased the reporting requirement of state and local governments. This apparently led to a series of debate over the efficacy of Statement 34.

Thus, the purpose of this research project is to describe the attitudes and perceptions of public finance officials in Texas about Statement 34. The researcher explores the attitudes and perceptions by surveying one-hundred public finance officials in Texas about Statement 34 by the Governmental Accounting Standards Board.

The results indicated that public finance officials in Texas agreed that Statement 34 compliant financial statements provided adequate information for fiscal and operational accountability. However, they are not as comprehensible as originally intended. In addition, public finance officials in Texas agreed that the costs of implementation outweigh its benefits.

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[1] GAAP: Generally Accepted Accounting Principle established by the GASB and the Financial Accounting Standards Board.
[2] GASB is a private sector agency founded by the Financial Accounting Foundation to establish accounting and reporting standards in the public sector. The standards set by the GASB become the Generally Accepted Accounting Principle in the public sector, otherwise known as GAAP (Wilson and Kattelus 4).

Research and exposure

by Keith Dixon

Magazine article published in Chartered Accountants Journal 2010

Quality and importance of reported earnings in Chilean capital markets data

by Felix Lopez-Iturriaga

Co-authored with M. Jara. Published in El Trimestre Económico, vol. 78, nº 311, pág. 643-674

Because information conveyed by corporate financial statements is highly influential and, thus, plays a central role... more Because information conveyed by corporate financial statements is highly influential and, thus, plays a central role in capital markets, we analyze the usefulness of reported earnings to measure firm performance as well as the ability of earnings to anticipate future cash flows. Specifically, we examine the relation between specific firm factors and quality of earnings for a sample of 180 listed Chilean firms between 1998 and 2003. We find that earnings are more relevant than cash flows to measure a firm’s performance, which suggests that earnings have additional informational content. The quality of earnings is positively related to the size of the firm and negative related to the operating cycle.

Bloomberg interview with Khnifer over Goldman Sachs’ “Tawrruq” Sukuk

by Mohammed Khnifer -(MSc,MBA,CSAA,CIFP) محمد الخنيفر

Financial Times interview ( http://bit.ly/rFMtXC ) Orignal research note on GS Sukuk ( http://bit.ly/ulykYj ) -Goldman Sachs Sukuk Row May Dent Industry Lure

Advisers including Riyadh-based Mohammed Khnifer of Edcomm Group Banker’s Academy in New York has also said it’s... more Advisers including Riyadh-based Mohammed Khnifer of Edcomm Group Banker’s Academy in New York has also said it’s unclear on how Goldman will use the funds it raises.
Edcomm’s Khnifer, a sukuk structurer and strategist, drew parallels between Goldman Sachs’ Islamic bond structure and the reverse Tawarruq contract. He also says Goldman’s program doesn’t ensure the commodity murabaha certificates are only traded at par.
--------------
Bloomberg: ADIB Scholars See Goldman Sukuk Non-Islamic, Al-Eqtisadiah Says ( http://bloom.bg/xzBCeM )

=-=-=-=-=-= Subjective Op-ed from the industry =-=-=-=-=-=

1)GS "sacks of gold" Rocket Scientists Vs. one Saudi Sharia expert (http://bit.ly/tvYSZW )
2)Young Turks’ Reform movement Vs. Old Guards (http://bit.ly/tsTiQS )

3)Reforming the industry: Sheikh Edam M. Ishaq, said the Goldman case might lead to institutional reforms in the industry and closer scrutiny of sukuk issues in general. http://reut.rs/y8ZgEj
4- "This whole issue has really done the market a big favour," said one senior Islamic finance banker following the panel discussion. "It’s got all the questions out in the open very early in the process rather than at the point of issuance, which could have been a disaster." (Source: EuroWeek). http://bit.ly/ACiWlg

5-The research note I once wrote on the financially engineered "flawed" sukuk by Goldman Sachs was chosen by Zawya as a "Major event that shaped the Sukuk Industry in 2011 & expected to leave an impact which will direct the course of 2012" ( http://lnkd.in/hb2WkV )

6- Reuters Breakingviews:Goldman's First Islamic Foray too Clever by Half ( http://bit.ly/yv7R3i )
7-IFN:”The impending issuance has grabbed headlines; not just as it will mark the western banking giant's first foray into the Islamic debt market, but due to questions raised on the Shariah compliance of the facility's structure, including in much-publicized comments by Mr. Khnifer”.
8- Sachs & the triple entendre ! http://read.bi/z2lLJ4
9- مصرفيون إسلاميون تحت فوهة البركان http://tiny.cc/kxxsbw
=-=-=-=-=-= Update =-=-=-=-=-=

The Irish Stock Exchange is reportedly unable to stabilize the tradability at par. Disturbing because the message the industry was receiving from those behind GS deal is the assurance that any tradability would be at par. That means the “third flaw” can not be fixed at all. Further, there will be no control over the OTC transactions which means the sukuk could be traded at market value. Such tradability would make it non-Shariah. (EuroWeek story: http://goo.gl/3E5Hl )

Disclosure of 3 Flaws in Goldman Sachs' $2 Billion Islamic Bonds

by Mohammed Khnifer -(MSc,MBA,CSAA,CIFP) محمد الخنيفر

This is the Original column that was published on the 1st of Dec. which Ignited the "Great Debate" of the industry. To read Khnifer's Recent Interview with the Financial Times ( http://bit.ly/rFMtXC )- Bloomberg interview ( http://bit.ly/tz0eVR )

Goldman Sachs claims that its $2 billion Sukuk programme follows a Murabaha structure, Mohammed Khnifer claims... more Goldman Sachs claims that its $2 billion Sukuk programme follows a Murabaha structure, Mohammed Khnifer claims otherwise – that it is nothing more than a
Reverse Tawarruq. What follows is an in-depth review of GS sukuk Offering Circular.
=-=-=-==-=-=-=More interviews with=-=-=-==-=-=-=
1) EuroWeek (http://bit.ly/s8cyaT ) & ( http://bit.ly/w0AVPQ)
2) The Islamic Globe (http://bit.ly/tqiPPs) ( http://bit.ly/tFLUpU)
3) Asharq Awsat مقابلة صحيفة الشرق الأوسط (http://bit.ly/rqrq1n )

EuroWeek: ADIB adds to Goldman sukuk heat with Shariah ruling
Provider: IFIS-February 15, 2012

Abu Dhabi Islamic Bank's Shariah board has rejected Goldman Sachs's proposed $2bn sukuk programme as unacceptable for Islamic investment, according to a leaked email seen by EuroWeek and one senior official at the Abu Dhabi bank.

Science Policy: Choice Among Incommensurables and Problems of Justification.

by Robert Shaw

Robert Shaw (1983) Science Policy: Choice Among Incommensurables and Problems of Justification. New Zealand Science Review, 40(2), 26-32.

This paper describes the problems inherent in decision-making when government agencies must determine priorities for... more This paper describes the problems inherent in decision-making when government agencies must determine priorities for research funding. It draws upon the author's experience as a manager of New Zealand's largest social science research programme which is that of the New Zealand Ministry of Education. The work considers the relationship between accounting and the philosophies of science and technology and public policy.

La finalità della redazione del bilancio di esercizio nella logica dei principi contabili internazionali e la sua struttura

by Claudio Sottoriva

Retailing in an Environment of Terrorism and Responsibility to Employees

by Carolyn Predmore

New Trends in Auditor Liability

by Cláudio Flores

European Business Organization Law Review / Volume 12 / Issue 03, pp 415 - 436

EC Recommendation 2008/473/EC of 5 June 2008 concerning the limitation of the civil liability of statutory... more

EC Recommendation 2008/473/EC of 5 June 2008 concerning the limitation of the civil liability of statutory auditors and audit firms presented three methods for limiting auditor liability: (1) the establishment of maximum financial amounts of compensation (liability caps); (2) adoption of proportionate liability; and (3) limitation of liability by agreement between the auditor and his client. The Recommendation was based on several arguments according to which the limitation of liability would be necessary to guarantee the sustainability of the audit profession given the enormous threats posed by civil litigation against auditors, especially against the member firms of the biggest international networks.

The paper starts with an analysis of the arguments presented by the European Commission for issuing the Recommendation. Each of the proposals made is also discussed separately. This preliminary approach serves as a platform for the treatment of issues not considered during the groundwork for the Recommendation, such as the risks of ‘veil piercing’, that threaten the shielding structure of international audit networks and the impact of the recent financial crisis. As regards the latter, the paper carries out an assessment between the increasing risks of the crisis-related lawsuits for the audit profession and the need to strengthen investor confidence in auditors' work. Moreover, it includes a discussion of recent developments in EU audit policy as a result of the crisis and particularly of the findings (e.g., Valukas Report) that arose from some of the major bankruptcies occurring in the US and in Europe.
The results of the analysis of the first arguments used by the EC together with the impact of the crisis lead to a conclusion regarding the need for an updated interpretation of the 2008 Recommendation.


Keywords:

auditors' limitation of liability; auditor negligence; auditor litigation; financial crisis; piercing the veil; undercapitalisation; ‘Big Four’; Valukas Report (Lehman Brothers bankruptcy report); joint and several liability; proportionate liability

Who guards the guards when guards are let down?

by Dhiman Chowdhury