| An
Exploration of the Financial Reporting Expectations Gap
-- Andrew Higson*
This
paper seeks to explore the possibility of a financial reporting
expectations gap comprising an audit expectations gap as
well as a financial statements’ expectations gap. Whilst
there has been much discussion of the audit expectations
gap, the financial statements’ expectations gap has received
much less attention. The paper contends that there is no
point in trying to just tackle the audit expectations gap
if there is a greater expectations gap relating to the financial
statements themselves. It is suggested that possible components
of the financial statements’ expectations gap include the
emphasis on decision usefulness, the prediction of future
cash flows, the imprecision of the word stewardship, and
connotations that the balance sheet represents wealth. The
inability to communicate the limitations of financial reporting
and the preoccupation of the accounting standard-setters
with satisfying user needs may be central to the financial
statements’ expectations gap.
© Andrew Higson. This paper is a chapter out of the author’s
book Corporate Financial Reporting: Theory and Practice
(April 2003). Reprinted with permission.
The
International Implications of US Research on Going Concern
Opinions
-- Asokan Anandarajan*, Leonard Goodman** ,
This
paper analyzes and reports on studies that examine the extent
to which the US Auditing Standards Board has accomplished
its goal of reducing the expectations gap in reporting on
uncertainties. Relevant research on this issue is examined
in order to provide policy-makers in other countries with
information about reporting on uncertainties that is relevant
to their own standard-setting and evaluation processes.
Gaps and deficiencies in the extant research literature
are identified. In light of these factors, suggestions are
made as to international accounting research that might
help academicians and standard-setters to analyze the impact
of changes in international and specific country auditing
standards that followed the adoption in the US of Statement
of Auditing Standards (SAS) No. 59 dealing with whether
or not an entity could continue to operate as a going concern.
© Asokan Anandarajan, Leonard Goodman, Gary Kleiman, Dan
Palmon. An earlier version of the paper was published in
www.pbfea2002htm.edu.sg and Paper presented in the Pacific
Basin Financial Economics and Accounting Conference. Reprinted
with permission.
GAAP
versus Street Earnings: Making Earnings Look Higher and
Smoother
-- Stephen J Ciccone*
Street
earnings are compared to GAAP earnings for over 29,000 annual
observations and 100,000 quarterly observations from 1990
to 2000. Analysis is performed after separating firms by
profitability and earnings volatility. Although there is
little difference between the two types of earnings for
firms with GAAP profits, firms with GAAP losses report significantly
higher Street earnings. Firms with annual GAAP losses are
also about 20 times more likely to report annual Street
profits than firms with annual GAAP profits are likely to
report annual Street losses. Additionally, firms with volatile
GAAP earnings tend to report higher, smoother Street earnings.
The results suggest that some managers attempt to make financial
performance look healthier.
© Accounting Enquiries. Spring/Summer 2002 issue, Volume
II. Reprinted with permission.
Valuation
of Human Capital: Rationale and Approaches
-- C S Mishra* and Niranjan Swain*
Knowledge-based
structure is the key to the success of any organization
in this modern world. This article analyzes rationale and
verifies the validity of various approaches in estimating
intangible assets such as human capital. Besides, various
modern valuation models for valuing human resources are
described in detail in addition to their applicability in
real life scenarios.
© IUP. All Rights Reserved
Partial
versus Global Coordination of Capital Income Tax Policies*
Rationale and Approaches
-- Bo Sandemann Rasmussen†
Coordination
of tax policies among policy makers is an often considered
remedy against inefficiently low taxes on mobile tax bases
induced by tax competition. Tax coordination may, however,
not be particularly successful if some countries do not
take part in the coordination. The outcome of such “partial
coordination” in capital income taxation is derived within
a linear-quadratic tax competition model with imperfect
capital mobility, and the results suggest that the critical
mass of countries needed for partial coordination to matter
significantly is likely to be a very large percentage of
the economies of the world, with the main benefits accruing
to countries not participating. This may call for implementation
of a global capital income tax treaty administered along
the lines of the WTO trade agreements.
@Bo Sandemann Rasmussen, Department of Economics, University
of Aarhus Working Paper No. 2001-3. (www.econ.au.dk/afn).
Reprinted with permission. |
