Impact of International Financial Reporting Standards （IFRS） Adoption on Key Financial Ratios＂ The Case of the Czech Republic

This contribution analyzes the impact of new International Financial Reporting Standards （IFRS） reporting rules on financial ratios prepared in the Czech companies. Using a sample of 16 Czech firms, we attempt to measure the scope and size of the differences in the selected set of financial ratios as calculated with data reported according to the traditional Czech accounting standards （CAS） and under the IFRS provisions. Our study discovers that there are important differences resulting from the two reporting formats. Our research comes to a conclusion that translation of Czech statements to IFRS may cause changes in the values of financial indicators without relationship to the real change in the firms＇ value, performance, and stability. Even though the findings were not statistically significant, the indicative results of our measurements disclosed an important fact that the transition to IFRS could cause deterioration of key indicators and thereby could impact on the overall rating of companies. One needs to be cautious with generalization due to the small sample size.

The Relevance of International Financial Reporting Standards for Small and Medium-Sized Entities （IFRS for SMEs） in Swaziland

The purpose of this study is to explore the relevance of adopting International Financial Reporting Standards （IFRS） for small and medium-sized entities （SMEs） in Swaziland. The study further seeks to determine if IFRS for SMEs can be the solution to better reporting by local SMEs. There has been a growing need for different reporting standards for small firms and big firms over the years due to the unique challenges and attributes they face especially in the area of financial reporting. This research is based on a statistical analysis of questionnaires completed by accountants from SMEs in Swaziland as well as other stakeholders who have a direct or an indirect interest in the financial statements of SMEs. These stakeholders included audit firms and the financial institutions. The sampling rate of 10% was applied across each industry to come up with a sample of 60 SMEs. Furthermore, a 100% sampling rate on the other stakeholders was applied. These were nine financial institutions and eight audit finns. The findings from the study revealed that SMEs in Swaziland are having challenges with the current reporting framework but to some extent, the framework is suitable. Most SMEs are not aware of IFRS for SMEs, therefore the accounting profession in Swaziland （SIA） has a huge role to play in training auditors and accountants in the country. Overall, IFRS for SMEs is applicable in Swaziland.

Claim reserving for insurance contracts in line with the International Financial Reporting Standards 17:a new paid‑incurred chain approach to risk adjustments

This study considers the risk management of insurance policies in line with the implementation of the new International Financial Reporting Standards 17.It applies the paid-incurred chain method to model the future unpaid losses by combining the information channels of both the incurred claims and paid losses.We propose the recovery of the empirical distribution of the outstanding claims liabilities associated with a group of contracts via moment-based density approximation.We determine the risk measures and adjustments that are compliant with the new standard using the Monte–Carlo simulation method and approximated distributions.The historical data on the aggregate Ontario automobile insurance claims over a 15-year period are analyzed to examine the appropriateness and accuracy of our approach.

The Relationship Between Financial Reporting Standards （FRS） 139 and Audit Pricing： The Case of Malaysia

This study provides some insights for auditors to gauge the complexity of the financial statements verification process to comply with the ambiguous standard, namely, Financial Reporting Standards （FRS） 139 in Malaysia. Hence, the purpose of this study is to examine the relationship between the adoption of FRS 139 and the audit fees charged to clients. The final sample consists of 1,050 finn-year observations covering the period from 2006 to 2008 from the non-financial companies listed on the Bursa Malaysia. In this study, the static panel data analysis is used to provide richer interpretation and a powerful understanding of the effect of standard adoption on audit pricing. The regression results from the random effects Generalized Least Squares （GLS） suggest that FRS 139 adoption has not significantly increased audit fees. The small number of observations for FRS 139 voluntary adoption is suspected to be the main limitation factor contributing to the insignificant result of the hypothesis. It is suggested that the limitation of small observations of FRS 139 voluntary adopters might be encountered during the period of mandatory adoption. Therefore, future research might investigate the impact of mandatory FRS 139 adoption.

Roadmap to Future Mandatory Application of International Financial Reporting Standards （IFRS） in Japan From the Perspectives of Financial Statement Preparers

This paper seeks to contribute to the discussion on the future mandatory application of Intemational Financial Reporting Standards （IFRS） using data from a questionnaire-based survey administered to financial statement preparers, that is, management in Japan. The important findings of this paper are as follows. The majority of Japanese companies consider that the domestic markets are more important than overseas markets; the most important differences between IFRS and Japanese standards are goodwill, comprehensive income, and the recognition of revenue; it is expected that IFRS would be applied only in consolidated financial statements or in both consolidated and parent companies＇ separate financial statements; and the lack of legislation making it mandatory is the main reason why IFRS has not been adopted by Japanese companies. Overall, this paper found that Japanese management is prudent and passive regarding IFRS adoption, leaving room for further discussions on the future mandatory application of IFRS in Japan.

International Accounting Standards Board （IASB） and Financial Accounting Standards Board （FASB） Convergence Project： Where Are They Now？

The convergence project between the International Accounting Standards Board （IASB） and the Financial Accounting Standards Board （FASB） in the United States （US） was signed on September 18, 2002 in Norwalk, Connecticut in the US. The first is responsible for issuing International Financial Reporting Standards （IFRS） nowadays, which were created 40 years ago. More than one century ago, local regulations are used in the US. The boards differ in years of experience. With the signing of the agreement, both institutions are working to reduce the divergence of accounting. Although they have made a significant progress, it is appropriate to examine whether the difference in approaches to accounting will affect the achieved agreements. It is relevant to investigate whether the years leading the standards adopted in different countries will impact the final result. The date of completion of the project has been postponed and still has not indicated the date of termination. This research is an analysis of the importance of the convergence of accounting standards at a global level. The study presents statistics on the status of the adoption of international standards by country. The study shows a summary of the expressions made by the directors of both boards about the future of the project.

Financial Statements of Banks as a Source of Information About Implementation of IFRS 15： The Evidence from Poland

Banks in the economies of individual countries play the role of entities of public trust and are perceived as ＂too big to fail＂. In fact, they are exposed to risks associated with business operations. In practice, there are even instances of banks going bankrupt. Therefore, the reliability of the financial statements of a bank as a source of information about its financial condition is of particular importance. The main objective of creating IAS/IFRS and their implementation within the European Union is the strive to standardize accounting rules utilized by companies and other organizations. IFRS, as any other regulations, are subject to change over years. One of the recent changes is the introduction of IFRS 15 ＂Revenue from Contracts with Customers＂. In all entities using IAS/IFRS, communication of planned changes should involve disclosure ahead of time, regarding the analysis of their impact on the financial statements. The purpose of this paper has been to analyze whether the financial statements of banks contain any records on the impact of IFRS 15. These analyses are within the mainstream of studying how complete and prospective is the information contained in the financial statements for external users. The subjects for research are the consolidated financial statements of five major banks in Poland. As a result of research, it was found that in all studied cases, work on the implementation of IFRS 15 was observed. However, looking at every bank separately, a differentiated approach to presenting information on the standard is observed, which may be a hindrance for users of banks＇ financial statements.

Analysis of Hidden Value and Value Relevance of Financial Statements Pre- and Post-IFRS Adoption

This study analyses the hidden value and value relevance of financial statements pre- and post-IFRS （International Financial Reporting Standards） adoption. Prior studies on IFRS adoption provide conflicting evidence on value relevance. Market-to-book ratio and IFRS adoption value relevance using price is examined for Australian listed firms. Results show that IFRS adoption is value relevant over a longer period of time. Results are opposite for profit-making firms compared to loss-making fu＇ms which may explain the conflicting results. In the presence of goodwill, IFRS is not value relevant when post-global financial crisis （GFC） period is included. Market-to-book ratio has increased in the post-IFRS period lowering the usefulness of financial statements. Moreover, results show mic changes affecting valuation of firms may explain for differences in the results for market-to-book ratio and value relevance in different jurisdictions and time periods

Financial Statement Comparability： Empirical Evidence From Brazil

The convergence of accounting standards started in the 1970s, with international norms issued by the International Accounting Standards Board （IASB） and with the efforts of various countries to adopt the International Financial Reporting Standards （IFRS）, already mandatory in Brazil since 2010. Thus, comparable accounting information is clearly important, and this study plans to confirm the level of comparability of net income and equity of companies in the financial sector （in Brazil, ＂Finance and Others＂）, listed in the stock exchange, futures, and commodities （BM＆F Bovespal）, issued according to Brazilian Generally Accepted Accounting Principles （BR GAAP） and the IFRS. This study is descriptive, using a quantitative approach. Data were collected from secondary sources, more specifically, from the explanatory notes in the financial statements of the companies listed in the financial sector of the BM＆F Bovespa in the fiscal year of 2010. The results showed a reasonable level of comparability, with 68% of the companies presenting materially comparable information for net income and 72% of them for equity. However, decisions made based on data issued following the two different standards may have suffered the influence of asymmetric information; in other words, the comparability of information did not seem to satisfy those companies during the studied period of time. The main limitations of this study were data collection and selection for the development of the research because of： （1） inconsistence in net income and equity reconciliation criteria in the companies investigated; and （2） lack of uniformity in designating the adjustments that affect net income and equity in the conversion of the BR GAAP standard into the IFRS.

The Impact of International Accounting Standards Board （IASB）＇s Guidelines for Preparing Management Commentary （MC）： Evidence From Italian Listed Firms

This paper investigates the Italian firms＇ disclosure in response to the new guidance on the management commentary （MC） contained in the International Financial Reporting Standard （IFRS） practice statement issued by International Accounting Standards Board （IASB） in 2010. The study is organized as follows. After reviewing the relevant literature on financial disclosure and MC, this paper examines the content of the Italian management＇s report-----known as ＂Relazione sulla Gestione＂ and that of the recent IASB＇s IFRS practice statement. Hence, it applies a self-constructed disclosure index and a multiple correspondence analysis （MCA） on MC of a sample of 66 Italian non-financial listed firms. The results show that the level of disclosures provided by the Italian listed firms does not seem to be affected by the IASB＇s guidelines. However, the survey highlights large differences in the level and type of disclosure provided in MC among the sectors and firms. This paper aims to contribute to the financial reporting debate by understanding the IASB＇s guidelines and their impacts on the voluntary disclosure practices of Italian listed firms.

Importance of Synergistic Value in the Context of Business Combination： A Case Study From Turkey

Considering International Financial Reporting Standards （henceforth IFRS）, although fair value is suggested in the conceptual framework and related standards, concept of measurement is used instead of concept of valuation. Determining the fair value of the acquiree specific into business combination, is needed to identify the fair value of the valuation made beyond the measurement of either monetary items or non-monetary items in the financial statements. Essential reason of the difference between acquired entity＇s fair values as a basis of financial reporting standards and valuation standards, the fair value according to IFRS is equivalent to the market value according to International Valuation Standards （henceforth IVS）. The fair value in accordance with IVS, the combination of the market value, and the synergistic value of the asset are subject to valuation in terms of special purchaser. When business is concerned, considering parameters such as the position in the industry, brand awareness, intellectual capital, geography, cannot be expected to be equal to the fair value of business which simply consists of market value among market participants. The ultimate aim of the study is to illustrate how to determine synergistic value in the terms oflVS which shows the difference between the market value and fair value. Based on the findings of the study, if acquired assets and liabilities are recognized in accordance with IFRS, goodwill comes out during the acquisition. Though, when fair value is determined based on IVS, goodwill is not found, even profitable business combination is realized. This is the result of considered fair value based on IVS Framework, that is the combination of market value of an asset in question and total synergistic value.

Investigating Voluntary Risk Disclosure： The Case of Jordanian Banks

The aim of the study is to investigate whether banks in Jordan are compliant with the International Financial Reporting Standards （IFRS） 7 requirement for mandatory disclosure and to find out the extent to which the banks provide voluntary risk disclosures. To achieve the objectives of the study, we collected data from all 15 banks listed on the Amman Stock Exchange for the year ending December 2013. The findings of the study suggest that there is strong compliance with respect to mandatory risk disclosure, as required by IFRS. However, the results generally signal a need for further improvement in the voluntary risk disclosure area, since most of the banks do not provide adequate information that can be of use to stakeholders. We also suggest future avenues of research into the topic to determine progress.

The Impact of Switching Standard on Accounting Quality

In a developing country, modernization and change of the accounting regime are possible if the standards are in compliance with global ones. The change of accounting standards adopted by Turkey started to be implemented, and this created a number of qualitative and quantitative results. This study examines the impact of change of accounting standards on accounting quality. In order to determine how switching standard reflects accounting quality, first of all, the earnings management, timely loss recognition, and value relevance variables pertaining to accounting quality were listed and the findings were stated after subjecting the obtained data to statistical analyses. Accordingly, by the transition to International Financial Reporting Standards （IFRS）, the earnings management practices were observed to decrease as compared with the pre-IFRS period and the timely loss recognition and value-relevance values were observed to increase, which constitute the dimensions of accounting quality. It was also concluded that by the switch from domestic accounting standards to International Accounting Standards （IAS）, the quality of accounting in the country was improved and the market became more active than it was before.

IAS-IFRS Adoption Impact on Accounting Information： The Case of France

The International Accounting Standards Board （IASB） has established international standards （International Accounting Standards （lASs） and International Financial Reporting Standards （IFRSs）） to ensure more comparability and transparency and also higher-quality financial statements. The creation of such standards by the IASB aims at achieving harmonization of accounting practices among countries. The objective of this research is to show that in accordance with the expectations of international organizations, the adoption of IAS-IFRS increases the information content of financial statements and also to identify the key accounting variables that have been affected by this adoption. This article used a sample of year observations of 150 French firms which have adopted IAS-IFRS since 2005 as data to study the association relationship between accounting variables and stock returns before and after the adoption of IASs. The findings of this paper show that the application of IAS-IFRS as accounting standards increases the information content of accounting numbers. Dividends, long-term debts, equity, and revenue variables are most correlated with stock returns. Their information content has reached 80% after the adoption, while it was 30% before.

The Impact of IFRS Convergence on the Effectiveness of Accounting Information for Share Valuation： Evidence from the Mainland of China

This study examines whether the reconciliation amounts between IFRS and PRC GAAP provide additional incremental value-relevant information. More specifically, it investigates whether firms applying IFRS experience an increase in the quality of accounting information in the post-IFRS convergence period. Results show that IFRS convergence increases the values of balance-sheet items and enlarges variation across firms. Moreover, there is no difference in the explanatory power of value relevance of accounting information under IFRS and PRC GAAP for share prices and returns of A-shares. The incremental value relevance analysis suggests that the IFRS adjustments to earnings are value relevant, whereas the adjustments to book values are not. The IFRS adjustments to change in inventory are value relevant for predicting future operating cash flows. Finally, accounting quality improved in post-convergence period. These results are robust after controlling for the unique characteristics of Chinese firms.