Download or read book Auditing Non GAAP Measures written by Spencer B. Anderson and published by . This book was released on 2020 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many companies regularly disclose non-GAAP performance measures to communicate firm-specific information that does not fit within the mold of GAAP reporting. However, these non-GAAP measures may have low information content or even be misleading to investors. Thus, some question whether auditors should play a role in the reporting of non-GAAP measures, which currently are not audited. We run an experiment to provide ex ante evidence on the effect of auditing non-GAAP measures. Specifically, we present investor participants with a non-GAAP measure that is either more useful (should be used when making investment judgments) or less useful (should not be used when making investment judgments) and is either audited or is not audited. We find that, when participants view a non-GAAP measure that is more useful, they appropriately use the non-GAAP measure in their investment-related judgments, regardless of whether the measure is audited. However, we find that, while participants appropriately do not use a less useful non-GAAP measure when it is not audited, participants inappropriately do use the less useful non-GAAP measure in their investment-related judgments when it is audited. Mediation results provide evidence consistent with audits increasing investors' reliance on non-GAAP measures when they are less useful. Overall, our results are consistent with audits of non-GAAP measures signaling more than is intended and have implications for regulators regarding the role of auditors in non-GAAP reporting.

Download or read book Reporting Non GAAP Financial Measures written by Nicola Moscariello and published by Cambridge Scholars Publishing. This book was released on 2019-11-25 with total page 420 pages. Available in PDF, EPUB and Kindle. Book excerpt: The use of alternative performance indicators (APMs) (also known as ‘Non-GAAP’ earnings) is a widespread phenomenon, and the increased reliance on APMs has recently triggered a strong debate among regulators, managers and investors on the nature of these ‘tailored’ earnings and on the economic reasons behind them. On one hand, APMs might reflect managers’ attempt to offer useful information to predict companies’ future sustainable cash-flows and earnings (information hypothesis), while, on the other, the non-standardized nature of these metrics impacts on the comparability of the financial results, and reduces the reliability and the faithful representation of financial information (opportunistic hypothesis). By collecting several theoretical and empirical contributions on APMs, this book provides a number of interesting and useful insights on the economics of APMs and their impact on financial markets.

Download or read book Essays on Auditor Quality and Non GAAP Earnings written by Xiaojie Christine Sun and published by . This book was released on 2015 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1 provides empirical evidence that auditors may play a role in the disclosure of non-GAAP earnings. Using non-GAAP earnings disclosures hand-collected from firms' annual press releases, I find that firms are more likely to disclose non-GAAP earnings if their auditors are industry experts. Furthermore, firms with these high quality auditors report low quality non-GAAP exclusions in their reconciliation to GAAP income/loss. I interpret these results as suggesting that managers are more likely to opportunistically disclose non-GAAP earnings when they have high quality auditors. However, I do not find a significant association between auditor quality and the likelihood of non-GAAP earnings meeting or beating financial benchmarks. Taken together, my results suggest a negative relationship between auditor quality and non-GAAP earnings quality, in contrast to the positive effects of auditor quality on GAAP earnings documented in prior literature. These findings contribute to the literature on audit quality and non-GAAP earnings, as well as to the regulatory discussion of whether non-GAAP earnings should be audited. Chapter 2 investigates the characteristics of actual, disclosed non-GAAP exclusions. My results indicate that three categories of exclusions that increase non-GAAP earnings, impairment expenses, loss, mark-down, and mark-offs, and other exclusions that increase non-GAAP earnings, are associated with the next period's operating income, indicating that these exclusions are of low quality or may be opportunistic. However, stock-based compensation, amortization expenses, and restructuring costs excluded from non-GAAP earnings do not predict future operating income and therefore are one-time high-quality exclusions. I find no consistent results on the persistence of exclusions that decrease non-GAAP earnings (i.e. gains). These results contribute to the literature by providing the first empirical evidence on the quality of actual non-GAAP exclusions disclosed by companies. Next, I extend the analyses in Chapter 1, finding that high-quality auditors are negatively related to the quality of non-GAAP increasing exclusions. However, I do not find evidence that firms with high-quality auditors are more likely to use non-GAAP increasing exclusions to meet or beat financial benchmarks, further supporting the results presented in Chapter 1.

Download or read book The RISE and RISE of NON GAAP DISCLOSURE written by Jeff Coulton and published by . This book was released on 2016-11-24 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Does Non GAAP Reporting Result in Less Conservative Auditor Materiality Judgments Evidence from the U K written by Nicholas Hallman and published by . This book was released on 2018 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether non-GAAP reporting results in less conservative auditor materiality judgments, as measured by auditors' determination of quantitative materiality thresholds. Using a sample of audit reports for Premium Listed companies on the London Stock Exchange for the 2013-2014 fiscal year, we find that more than 50 percent of auditors who rely on “profit-before-tax” as their materiality benchmark use non-GAAP profit before tax, which results in a less conservative audit (via a higher materiality threshold) 92 percent of the time. We find that auditors are significantly more likely to rely on a non-GAAP profit-before-tax materiality benchmark when management discloses non-GAAP profit before tax in their annual report. The GAAP items that auditors' exclude from the materiality benchmark are highly persistent, suggesting that the exclusions are not typically one-time items as is often claimed. We also find that auditors are significantly more likely to rely on a non-GAAP materiality benchmark when doing so reduces the extent of required audit procedures performed on complex estimates. Finally, we find that auditor turnover is higher when the auditor's materiality benchmark is smaller than non-GAAP earnings disclosed by management. In sum, our results suggest that managers' non-GAAP reporting could indirectly affect investors by lowering the rigor of the financial statement audit.

Download or read book Financial Reporting Handbook written by Michael R. Young and published by Aspen Publishers Online. This book was released on 2003 with total page 1824 pages. Available in PDF, EPUB and Kindle. Book excerpt: Never before has a single reference provided such quick access to every critical aspect of financial reporting. In addition to covering the new Sarbanes-Oxley legislation, SEC rules and regulations, and corporate governance standards promulgated by the Independence Standards Board and the AICPA at institutions such as New York Stock Exchange, NASDAQ, and the American Stock Exchange, the Financial Reporting Handbook tackles important underlying themes such as the centrality of the audit committee, the individual responsibility of executives, and the integrity of the outside auditor. Best of all, the Financial Reporting Handbook will be updated every quarter with the relevant laws and regulations that are developed and implemented.

Download or read book Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.

Download or read book Audit and Accounting Guide written by AICPA and published by John Wiley & Sons. This book was released on 2020-07-24 with total page 768 pages. Available in PDF, EPUB and Kindle. Book excerpt: From financial reporting to revenue recognition to grants and contracts to auditor report changes, you have a lot going on in the not-for-profit financial arena right now. Whether you're already an expert in NFP audit and accounting standards or just getting started, this is the practical guidance you need. This must-have resource for nonprofits accounting and auditing professionals is an essential reference that will assist you with the unique aspects of accounting and financial statement preparation and auditing for not-for-profit entities. It will help you with the following Understand and implement recent updates and changes, including those related to financial reporting, revenue recognition, and grants and contracts Gain a full understanding of the accounting issues unique to not-for-profit entities Assist in the implementation of auditor report changes.

Download or read book Standards for Internal Control in the Federal Government written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: Policymakers and program managers are continually seeking ways to improve accountability in achieving an entity's mission. A key factor in improving accountability in achieving an entity's mission is to implement an effective internal control system. An effective internal control system helps an entity adapt to shifting environments, evolving demands, changing risks, and new priorities. As programs change and entities strive to improve operational processes and implement new technology, management continually evaluates its internal control system so that it is effective and updated when necessary. Section 3512 (c) and (d) of Title 31 of the United States Code (commonly known as the Federal Managers? Financial Integrity Act (FMFIA)) requires the Comptroller General to issue standards for internal control in the federal government.

Download or read book Fair Value Measurements written by International Accounting Standards Board and published by . This book was released on 2006 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Government Auditing Standards written by Government Accounting Office and published by www.Militarybookshop.CompanyUK. This book was released on 2012 with total page 242 pages. Available in PDF, EPUB and Kindle. Book excerpt: Newly revised in 2011. Contains the auditing standards promulgated by the Comptroller General of the United States. Known as the Yellow Book. Includes the professional standards and guidance, commonly referred to as generally accepted government auditing standards (GAGAS), which provide a framework for conducting high quality government audits and attestation engagements with competence, integrity, objectivity, and independence. These standards are for use by auditors of government entities and entities that receive government awards and audit organizations performing GAGAS audits and attestation engagements.

Download or read book Sarbanes Oxley Institute written by and published by . This book was released on 2005 with total page 672 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Research Handbook on Financial Accounting written by Luz Parrondo and published by Edward Elgar Publishing. This book was released on 2024-01-18 with total page 305 pages. Available in PDF, EPUB and Kindle. Book excerpt: Through careful classification of the opportunities and challenges facing current financial regulatory bodies, the Research Handbook on Financial Accounting inspects the financial implications of our ever-changing modern economic and environmental climate.

Download or read book More Than a Numbers Game written by Thomas A. King and published by John Wiley & Sons. This book was released on 2011-02-17 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt: The world certainly suffers no shortage of accounting texts. The many out there help readers prepare, audit, interpret and explain corporate financial statements. What has been missing is a book offering context and discussion for divisive issues such as taxes, debt, options, and earnings volatility. King addresses the why of accounting instead of the how, providing practitioners and students with a highly readable history of U.S. corporate accounting. More Than a Numbers Game: A Brief History of Accounting was inspired by Arthur Levitt's landmark 1998 speech delivered at New York University. The Securities and Exchange Commission chairman described the too-little challenged custom of earnings management and presaged the breakdown in the US corporate accounting three years later. Somehow, over a one-hundred year period, accounting morphed from a tool used by American railroad managers to communicate with absent British investors into an enabler of corporate fraud. How this happened makes for a good business story. This book is not another description of accounting scandals. Instead it offers a history of ideas. Each chapter covers a controversial topic that emerged over the past century. Historical background and discussion of people involved give relevance to concepts discussed. The author shows how economics, finance, law and business customs contributed to accounting's development. Ideas presented come from a career spent working with accounting information.

Download or read book The End of Accounting and the Path Forward for Investors and Managers written by Baruch Lev and published by John Wiley & Sons. This book was released on 2016-06-14 with total page 268 pages. Available in PDF, EPUB and Kindle. Book excerpt: An innovative new valuation framework with truly useful economic indicators The End of Accounting and the Path Forward for Investors and Managers shows how the ubiquitous financial reports have become useless in capital market decisions and lays out an actionable alternative. Based on a comprehensive, large-sample empirical analysis, this book reports financial documents' continuous deterioration in relevance to investors' decisions. An enlightening discussion details the reasons why accounting is losing relevance in today's market, backed by numerous examples with real-world impact. Beyond simply identifying the problem, this report offers a solution—the Value Creation Report—and demonstrates its utility in key industries. New indicators focus on strategy and execution to identify and evaluate a company's true value-creating resources for a more up-to-date approach to critical investment decision-making. While entire industries have come to rely on financial reports for vital information, these documents are flawed and insufficient when it comes to the way investors and lenders work in the current economic climate. This book demonstrates an alternative, giving you a new framework for more informed decision making. Discover a new, comprehensive system of economic indicators Focus on strategic, value-creating resources in company valuation Learn how traditional financial documents are quickly losing their utility Find a path forward with actionable, up-to-date information Major corporate decisions, such as restructuring and M&A, are predicated on financial indicators of profitability and asset/liabilities values. These documents move mountains, so what happens if they're based on faulty indicators that fail to show the true value of the company? The End of Accounting and the Path Forward for Investors and Managers shows you the reality and offers a new blueprint for more accurate valuation.

Download or read book What Constitutes Good Financial Reporting written by Christian Betz and published by GRIN Verlag. This book was released on 2011-09-06 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2011 in the subject Business economics - Accounting and Taxes, grade: 1, Stockholm School of Economics (Accounting Faculty), language: English, abstract: Diverging views on the attribute of „comparability. for financial reporting under IFRS Six guest lectures at Stockholm School of Economics passed by and one word left a permanent mark on my mind. With a high regularity and consensus the representatives of different interest groups involved in financial reporting mentioned „comparability., sometimes referred to as „consistency. or „continuity., as one particularly important attribute of good financial reporting. Heurlin (2011, p. 8/12), as an IASB member, stressed the need to acknowledge consistency in financial reporting, which he regards as a proxy for good financial reporting. Scheja (2011), in his auditor role, stated that PwC has a major focus in auditing on ensuring comparability of financial reporting, i.e. by preventing the usage of non-GAAP measures for earnings management. According to him, the attribute of relevance is mainly ensured by preparers. Also, Gerentz (2011) mentioned the term comparability twice; first, stating that NCC aims at preventing managerial opportunism in IR, and second, stressing the need for NCC to create peer comparability by educating analysts about their own “more correct IFRS interpretation”. Last, Malmqvist (2011), representing analysts, pointed out the importance that firms enable peer comparability, i.e. by providing comparable income statements without company-specific non-GAAP measures, where irregularities are explained in footnotes, and by using more comparable accounting methods. So, on this point: All united? As opposed to the otherwise often diverging opinions, all interest groups1 strikingly seem to be aligned that comparability constitutes good financial reporting. But do the involved interest groups really share one joint perception about the attribute „comparability. for financial reporting? In particular, is the IASB.s idea of comparability defined in the framework widely accepted in practice? Considering the different interests of involved groups, one might doubt that those groups really share a common understanding, opinion and rationale with regards to 'comparability'. This paper reflects upon the two questions by taking three explicit perspectives: (1) IASB, (2) preparers, and (3) analysts / investors.

Download or read book Giving Voice to Values in Accounting written by Tara Shawver and published by Routledge. This book was released on 2018-10-11 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: There has been much written on the importance of responsibility accounting and integrated reporting to ensure business accountability, but not on how to be a responsible accountant. As the accounting profession is built on the foundation of maintaining public trust, making the right decisions when faced with a challenging dilemma has a major impact on the long-term performance and perception of the firm as well as personal credibility. Accountants make judgement calls on a regular basis: they are privy to highly confidential information regarding their clients and their clients' businesses. Unethical earnings management practices can easily lead to falsifying records, but how does the accounting professional avoid succumbing to these practices when faced with other pressures? Giving Voice to Values in Accounting is the first book to explain the ethical dilemmas faced by accountants in their day-to-day work and to provide clear guidance for accounting students and professionals in navigating through these issues. The Giving Voice to Values (GVV) framework focuses on resolving ethical conflict by encouraging individuals to act on their values. This book provides accounting educators, coaches, trainers and professionals with both the impetus and the tools to easily implement the GVV offering into their own work, their organizations and in the classroom.