Conceptual shifts in accounting: Transplanting the notion of boundary from financial to non-financial reporting

By | 2018-05-28T18:38:39+00:00 May 28th, 2018|

Girella Laura, Abela Mario, Ferrari Elisa Rita / Financial Reporting / 1-2018


In 1998 Miller, in his paper titled “The margins of accounting” observed that “By looking at the margins of accounting, we can understand how this influential body of expertise is formed and transformed” (Miller, 1998: 618). Drawing on this analogy, the boundaries of reporting and the ways these are defined and re-defined, as a consequence of the relationships organisations form with other entities from time to time, and their substantive nature provide insights about the business and its business model. Accordingly, an examination of reporting boundaries helps to better understand and appreciate the objective of an organisation, the logic that underlies its business model and how that is ‘reflected’ and communicated through the reporting entity’s financial statements – which may or may not align with the boundaries of the ‘organisation’. Despite the relevance of reporting boundaries as a critical aspect of the accounting discipline, it remains a relatively unexplored area in the literature. Accordingly, the aim of this work is to offer an initial overview on how the boundaries of reporting have (not) changed in response to the broadening scope of reporting to address both financial and ‘non-financial’ information (e.g. sustainability, governance and intangibles) and attempts to promote greater integration between both sets of information (IIRC, 2013). In particular, the analysis draws on the interpretative schemes of Zambon (1996) and Zambon and Zan (2000) and is combined with the concept of ‘transplantation’. The manner in which reporting boundaries are defined for both financial and non-financial reporting is investigated and compared. This comparison enables similarities and differences between the definition of the ‘reporting boundary’ to be problematised and explored for both financial and non-financial reporting.

Reporting boundaries, Financial reporting, Non-financial reporting, Transplantation


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Oral financial reporting: A rhetorical analysis of earnings calls

By | 2017-12-29T17:42:24+00:00 December 27th, 2017|

Crawford Carmiciottoli Belinda/ Financial ReportingRiviste / Fascicolo: 4-2012


Earnings calls are a key form of voluntary financial reporting through which companies seek to proactively engage investors. Although now quite routine, little is known about their rhetorical dimension. Inspired by Aristotlean classical rhetoric, this paper offers an exploratory analysis of the language of a small sample of earnings calls to identify expressions of logos (reason), ethos (credibility) and pathos (emotion). Text analysis software was used to generate descriptive data for follow-up qualitative analysis to interpret strategic usage. Results indicate a strong presence of persuasive language that is skillfully juxtaposed by company executives with financial information to emphasize success and instill confidence. The findings can be applied towards developing state-of-the-art courses for students of financial communication and towards enhancing the effectiveness of financial reporting.

Keywords: Financial reporting, classical rhetoric, earnings calls, corpus linguistics


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The Severity of Internal Controls over Financial Reporting Deficiencies: Differences among Types and Industries

By | 2017-12-27T14:17:36+00:00 December 27th, 2017|

Mazza Tatiana, Azzali Stefano/ Financial ReportingRiviste / Fascicolo: 1-2014


This study analyzes the severity of Internal Control over Financial Reporting deficiencies (Deficiencies, Significant Deficiencies and Material Weaknesses) in a sample of Italian listed companies, in the period 2007- 2012. Using proprietary data the severity of the deficiencies is tested for account-specific, entity level and information technology controls and for industries (manufacturing and services vs finance industries). The results on ICD severity is compared with one of the most frequent ICD (Acc_Period End/Accounting Policies): for account-specific, ICD in revenues, purchase, fixed assets and intangible, loans and insurance are more severe while ICD in Inventory are less severe. Differences in ICD severity have been found in the characteristic account: ICD in loan and insurance for finance industry and ICD in revenue, purchase for manufacturing and service industry are more severe. Finally, we found that ICD in entity level and information technology controls are less severe than account specific ICD in all industries. However, the results on entity level and information technology deficiencies could also mean that the importance of these types of control are under-evaluated by the manufacturing and service companies.

Keywords: Internal control, financial reporting, significant deficiencies, material weaknesses.


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Impairment estimates for available-for-sale equity instruments under IFRS: evidence from italian Banks

By | 2017-12-27T14:07:55+00:00 December 27th, 2017|

Sannino Giuseppe, Ginesti Gianluca, Drago Carlo/Financial ReportingRiviste / Fascicolo: 2-2014


Literature indicates that accounting choices under a given set of standards is an important topic due to the different economic implications. Daske et al. (2013) suggest that firms have substantial discretion in applying IFRS. Despite the implications on how the firms apply IFRS have motivated many studies, to our knowledge, little is known about the impairment estimates for the Available-for- Sale (AfS) equity instruments. Using a sample of Italian banks over the period 2010-2011, we investigate the determinants of the accounting decisions for impairment estimates. We find that the reporting quality and profitability are explanatory factors of the banks’ decisions to modify the thresholds of the impairment indicators used to assess AfS equity instruments. Our study also suggests that banks use a substantial discretion in implementing the IAS 39 for the AfS equity instruments.

Keywords: Financial instruments, IAS/IFRS, accounting choices, impairment, financial reporting.


 

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Dialogue with standard setters. Business Combinations under Common Control: Concerns, Criticisms and Strides

By | 2017-12-22T14:57:27+00:00 December 22nd, 2017|

Onesti Tiziano, Romano Mauro, Taliento Marco/ Financial ReportingRiviste / Fascicolo: 1-2015


Although excluded from the scope of IFRS 3, business combinations under common control (BCUCCs) are widespread transactions that take place all over the world in different forms, often as a reorganization or restructuring among related parties. These transactions occur when entities are ultimately – not transiently – controlled by the same party/ies before and after the combination (which is neither a capital market nor an arm’s length transaction and devoid of economic substance: indeed, no change of control is entailed). The scarce and fragmentary literature, not to mention the lack of clear consensus on the topic, contributes to the prevailing concerns on how to account for BCUCCs. In this complex context, the purpose of this work is to assess the possible and various accounting methods and identify the most suitable, accredited and consistent techniques. […]

Keywords: Common control, consolidation, financial reporting, acquisition accounting, fresh start, predecessor basis, pooling of interests, IAS/IFRS


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Acquisition-type or merger-type accounting? Further insights on transactions involving businesses governed by the same party(-ies)

By | 2017-12-22T14:47:04+00:00 December 22nd, 2017|

Onesti Tiziano, Romano Mauro, Taliento Marco/ Financial ReportingRiviste / Fascicolo: 2-2015


This paper – aiming at encouraging a fruitful debate – intends to highlight the discontinuous evolution of the accounting solutions explored by notable bodies (Efrag-Oic, Iasb, Fasb, Kasb, etc.) with reference to transactions involving businesses under common control. The work finally recompose them in two basic categories (discussing their pros/cons as well), here analyzed: acquisition-type accounting, which emphasizes fair value (emergence of exchange or current amounts) vs. merger-type accounting, linked to historical costs (continuity values approach). The first cluster includes the pure-acquisition and the fresh-start method, whereas the second the predecessor basis and the pooling of interests techniques. The concrete identification of the proper methodology, in this regard, essentially requires the profound understanding of the underlying economics, architecture and key elements of a specific transaction shedding light on the most relevant and reliable information useful to stakeholders.

Keywords: Common control, consolidation, financial reporting, acquisition accounting, fresh start, predecessor basis, pooling of interests, IAS/IFRS


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