Worldwide Financial Reporting: The Development and Future of Accounting Standards

University Press Scholarship Online You are looking at 1-10 of 17 items for: keywords : fair value Worldwide Financial Reporting: The Development an...
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University Press Scholarship Online

You are looking at 1-10 of 17 items for: keywords : fair value

Worldwide Financial Reporting: The Development and Future of Accounting Standards George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer Published in print: 2006 Published Online: Publisher: Oxford University Press February 2006 DOI: 10.1093/0195305833.001.0001 ISBN: 9780195305838 eISBN: 9780199783342 Item type: book

This book provides readers with reasonably concise descriptions of the state of global markets, the benefits and limitations of financial accounting and accounting/auditing standards, and the development, status, and current policy issues of corporate financial reporting in major countries and the European Union. The globalization of financial markets has contributed to a growing consensus that national financial reporting standards should give way to a single, harmonized set of global reporting standards. This book takes a more practical approach and reaches a different conclusion: that global standards are unlikely to be achieved, and in any event, are not likely to remain unified in the face of continued changes in markets and financial practices. National accounting standards are likely to continue to be relevant for the foreseeable future, and for that reason, the book discusses the national systems and their origins in some detail. The authors also consider a range of other substantive reporting issues, notably the debate over the issue of “fair value” measurement of assets and liabilities, which the authors reject in favor of a system that marks to market only those assets with deep traded markets, coupled with additional disclosures, where relevant.

Aspects of the Future in Accounting: The Use of Market Prices and “Fair Values” in Financial Reports Michael Bromwich

in The Economics and Politics of Accounting: International Perspectives on Trends, Policy, and Practice Published in print: 2004 Published Online: Publisher: Oxford University Press January 2005 DOI: 10.1093/0199260621.003.0002 ISBN: 9780199260621 eISBN: 9780191601668 Page 1 of 6

Item type: chapter

Some arguments are examined for incorporating into accounting reports further estimates or predictions of the future, and items that embed future cash flows. After an introduction (Section 1), Section 2 outlines some of the common concerns of standard-setters with decisionorientated accounting (the essence of which is that accounting items should be measured using their economic values, which are founded on the cash flows they are expected to generate), and considers some of the general arguments for incorporating future-orientated accounting items into accounting reports. Looks at the strong movement toward ‘fairvalue’ accounting in which asset and liability carrying values are based on the market prices that would result from arm’s length transactions between well-informed participants. In Section 3, as an example of this market value approach, some problems with suggestions for accounting for financial instruments (assets) are considered. Section 4 looks more briefly at the use of fair values with non-financial assets, and the final section gives a brief conclusion.

 Summing Up and Charting a Future for Standard Setters

George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer in Worldwide Financial Reporting: The Development and Future of Accounting Standards Published in print: 2006 Published Online: Publisher: Oxford University Press February 2006 DOI: 10.1093/0195305833.003.0011 ISBN: 9780195305838 eISBN: 9780199783342 Item type: chapter

This chapter reiterates the major themes of the book and then further discusses a number of current key issues in financial reporting: that “fair values” based on estimates are unlikely to be seen as trustworthy and may be difficult, if not impossible, to verify; that financial reports can never provide all the information necessary for entity valuation; and that national differences in accounting requirements mean that any global set of accounting standards is likely to fragment in use. It suggests that a better approach is to entertain a small set of competitive international accounting standard regimes.

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 Why and How Audited Financial Accounting Statements Are Useful

George J. Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer in Worldwide Financial Reporting: The Development and Future of Accounting Standards Published in print: 2006 Published Online: Publisher: Oxford University Press February 2006 DOI: 10.1093/0195305833.003.0002 ISBN: 9780195305838 eISBN: 9780199783342 Item type: chapter

Investors, creditors, government officials, and others require information to evaluate companies’ economic position, performance, and prospects. This chapter examines the usefulness of financial accounting statements and their limitations in providing this information, particularly measures of economic values. The essential features of the traditional markettransaction, cost-based accounting system, and the benefits and costs of fair-value accounting and of audits and attestations by independent public accountants (IPAs) are described and evaluated.

 The First Principle of Justice Thomas Pogge

in John Rawls: His Life and Theory of Justice Published in print: 2007 Published Online: May Publisher: Oxford University Press 2007 DOI: 10.1093/ ISBN: 9780195136364 eISBN: 9780199867691 acprof:oso/9780195136364.003.0005 Item type: chapter

This chapter examines the first principle of justice, which is concerned with how well a political order secures the basic rights and liberties of its members. This involves a careful analysis of the structure of a basic right and what it means for a society to realize it. The fair value of the basic political liberties, which Rawls includes among the requirements of the first principle, is discussed. There is also an extensive critical discussion of what Rawls identifies as permissible and impermissible reductions of basic liberties.

Compensation Borzu Sabahi

in Compensation and Restitution in Investor-State Arbitration: Principles and Practice Published in print: 2011 Published Online: September 2011 Page 3 of 6

Publisher: Oxford University Press

ISBN: 9780199601189 eISBN: 9780191729201 DOI: 10.1093/ Item type: chapter acprof:oso/9780199601189.003.0005

This chapter examines compensation in investment treaty arbitration. It shows the development of principles of compensation for expropriation in customary international law, and how investment treaties have treated compensation for expropriation and for other breaches. It outlines the treatment of both unlawful and lawful expropriation prior to the milestone ADC v Hungary decision, and how that award has impacted thought and practice on compensation for expropriation since then. The chapter also outlines how the amount of compensation has been determined in investment arbitrations, focusing on the concept of Fair Market Value. It discusses the determination of the date of the injury and the proper date of valuation, central to setting the amount of compensation, as well as the treatment of post-act events. It outlines a number of valuation methods used to set the amount of compensation, both for valuing investments and for contractual and business interruption damages.

Why Fair Value Is the Rule: The Changing Nature of Standard Setters Karthik Ramanna

in Political Standards: Corporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy Published in print: 2015 Published Online: May Publisher: University of Chicago Press 2016 DOI: 10.7208/ ISBN: 9780226210742 eISBN: 9780226210889 chicago/9780226210889.003.0005 Item type: chapter

With auditors and industrial companies focused on their own interests in accounting rulemaking, can we rely on the FASB regulators themselves to represent the public interest? Chapter 5 explores this question. It provides evidence that FASB regulators appear to represent the interests of the industries from which they hail. In particular, regulators from the asset-management industry appear to be behind the rise in fair-value accounting rules, perhaps because such rules enhance compensation levels in the industry. The evidence points to the potential “financialization” of the FASB as the asset-management industry has grown larger. In their potential capture of the FASB, these financeindustry interests have had allies – notably, academics who appear to have been selectively drawn for their support of fair-value accounting. This narrative presents a more complex picture of capture – one that involves the cooption of ideas and ideologies in the service of economic interests. This process is described as “ideological capture.”

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The Shrinking Big N: Rule-Making Incentives of the Tightening Oligopoly in Auditing Karthik Ramanna

in Political Standards: Corporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy Published in print: 2015 Published Online: May Publisher: University of Chicago Press 2016 DOI: 10.7208/ ISBN: 9780226210742 eISBN: 9780226210889 chicago/9780226210889.003.0004 Item type: chapter

This chapter provides evidence on the role of auditors in accounting rulemaking – particularly the Big Four audit firms that dominate the industry. These large audit firms are among the few players that could provide broad stewardship of public interests in accounting rulemaking. But the evidence suggests that they are instead focused on their own interests. In their lobbying on accounting rules, the auditors have sought to protect their wealth and income from political and legal scrutiny. Prevailing standards of litigation and regulatory enforcement are key explanatory variables for the nature of auditor lobbying in accounting rulemaking. One likely consequence is the increasing incidence of accounting rules that are “check-the-box” or compliance-based – a phenomenon identified by the Securities & Exchange Commission as a major source for concern in U.S. capital markets.

The IASB Survives the Financial Crisis Kees Camfferman and Stephen A. Zeff

in Aiming for Global Accounting Standards: The International Accounting Standards Board, 2001–2011 Published in print: 2015 Published Online: June Publisher: Oxford University Press 2015 DOI: 10.1093/ ISBN: 9780199646319 eISBN: 9780191800719 acprof:oso/9780199646319.003.0013 Item type: chapter

During the initial stages of the financial crisis, the IASB came under pressure to revise its guidance on fair value measurement for financial instruments traded in inactive markets. As the crisis intensified, the role of accounting standards in exacerbating financial instability became a matter of debate at the highest political level. In October 2008, the IASB was forced to amend IAS 39 without due process in order to avoid the loss of its franchise to set accounting standards for the EU. The IASB and the FASB sought to coordinate their attempts to develop a new financial instruments standard, but drifted apart as each faced its own political pressures. When the IASB produced a revised standard, IFRS 9, the Page 5 of 6

European Commission declined to propose its endorsement for use in the EU.

Financial Instruments: The Confrontation with Europe Kees Camfferman and Stephen A. Zeff

in Aiming for Global Accounting Standards: The International Accounting Standards Board, 2001–2011 Published in print: 2015 Published Online: June Publisher: Oxford University Press 2015 DOI: 10.1093/ ISBN: 9780199646319 eISBN: 9780191800719 acprof:oso/9780199646319.003.0006 Item type: chapter

Accounting for financial instruments became a test-case for the adoption of IFRSs by the European Union. The standard IAS 39 had always been controversial. There was a widely held view that the IASB was not sufficiently receptive to the views of the European banking industry while making a number of short-term improvements to IAS 39 prior to its endorsement for use in the EU. The IASB, on its part, insisted that it had followed due process and properly exercised its independent expert judgment. The issue ascended to the political level. IAS 39 was endorsed in 2004, but with two so-called carve-outs. Relations between the IASB and its European constituents were severely strained, even before the actual transition to IFRSs in 2005.

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