..."Financial Reporting Disclosures" Please respond to the following: Discuss the impact of the Sarbanes-Oxley Act (SOX) on financial reporting and disclosure and assess whether or not you believe it helps provide accurate information to users of financial statements. The impact of the SOX act on financial reporting and disclosure is that it is the management’s responsibility on how effective is company’s internal controls. Management cannot pretend that they do not know the imperfections of the company’s financial statements because they must sign annual reports that their company submits to the Security Exchange Commission. This ensures that the financial data is accurate. It made management responsible for financial statements. Inaccurate financial statements can lead to stiff penalties levied on management and others. Section 404 of the SOX act outlines management responsibilities on the annual report. Suggest an alternative to regulation for providing accurate financial information to stakeholders. Large corporations are covered by the SOX act. For small companies, it is difficult to follow the SOX act. If congress can add an amendment for small businesses, it would help small businesses comply with the standards of the SOX act. Schroeder, R., Clark, M., & Cathey, J. (2011). Financial accounting theory and analysis: Text and cases.(10th ed.). Hoboken, NJ: John Wiley & Sons. U.S. Securities and Exchange Commission. (2008). Final Rule: Management’s Report...
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...Heading: Full disclosure financial reporting Full disclosure financial reporting Mary Miller ACC/421 Intermediate Financial Accounting 1 University of Phoenix Cathy Reed October 8, 2012 Full disclosure principle in accounting The full disclosure principle in accounting is the action of revealing or reporting every detail of economic transactions, which can affect the financial position of the business and other people who use the financial statements, such as investor, creditors, etc. (What is the full disclosure principle? web -site). Why has disclosure increased substantially in the last ten years? During the last ten years, the full disclosure increase substantially because the FASB has issued several substantial disclosure provisions, such as Complexity of the Business Environment, Necessity for Timely Information, Accounting as a Control and Monitoring Device with the purpose to protect investors and the public security. Need for full disclosure in financial reporting Full disclosure in financial reporting is necessary because this report reflects the financial activities of the business, if this report is not accurate, and if information omitted or altered affects the decisions of the person using or reading the reports. The government created the SEC and FASB; these two organizations set guidelines to ensure that companies and business disclose the information required by the law. A full disclosure of a financial...
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...MEMORANDUM To: The Chief Executive Officer –ABC Inc. From: Vincent Mokwenye, Financial Controller. Subject: Pension Plan Disclosure and Reporting Requirement CC: This brief memo will address the topic of Pension Plans. Specifically, it shall discuss the two basic types of pension plans and the other postretirement plan. Then it shall examine the purpose of pension plan reporting requirements, their effect on the financial statements, and the significance of each type of pension plan. It will also examine the positive and negative implications of each of the pension plans. Defined Benefit Pension Plan - A defined benefit plan is a retirement plan set up to pay a fixed annual amount to eligible employees during their retirement. It is called defined benefit because the quarterly or annual contribution is based upon an actuarial determination of what the participants' retirement benefits should be, not on profits. The formulas look at how much money must be contributed in order for there to be enough money to pay a FIXED amount of benefit(s) to recipients in the future. These projections use a reasonable expected rate of return (401kpsp.com, 2012). Defined Contribution Plan- A defined contribution plan is a retirement plan that requires that an individual "account" be set up for each participant in the plan. It is called "defined contribution" because a participant can only contribute a fixed maximum amount to the plan each year. The contributions are not based...
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...Causal reasoning in financial reporting and voluntary disclosure This paper examines causal reasoning, applying the theories to financial reporting. Causal reasoning involves diagnosis (determining the cause of an effect) and prediction (vice versa). These are important and commonplace amongst analysts, investors and management regarding company earnings and share prices. However, there is very little recent research employing causal reasoning theories to this field. Attribution theory describes how causes are attributed to past events. This may be dispositional (attributed to a person) or situational. In a single instance of an outcome, correspondent inference theory suggests diagnosis is based on choice, expectations and intent. Expected, freely chosen behaviour is considered to be dispositional, whereas unexpected, forced behaviour is attributed to situation. Attributing intent is simplest when considering behaviour with only one positive effect. When an outcome occurs numerous times, covariation theory describes possible cause attribution. This involves looking at cases where the suspected cause is present/absent and matching them to instances where the outcome is present/absent, utilising information on consensus (how others behave), distinctiveness (how the individual behaves in different circumstances) and consistency (how the individual has behaved in similar circumstances). Consistency should be high to make a good attribution judgement. When consensus and distinctiveness...
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...relevance do they have to the MI situation? How did the Governor use them, if at all? (No more than 400 words). | Edwina Howard-Agu2-27-2014 | Taft Hartley and Landrum-Griffin Acts as legal precedent was relevant to the decision made by Governor Rick Snyder and his legislative body that supported his platform to make Right to Work a reality in Michigan in December 2012. The Legislature passed the bills and Governor Snyder signed them, he was within his legal authority to make such a decision based on the Taft Hartley and Landrum-Griffin Acts. The Labor-Management Reporting and Disclosure Act (LMRDA) also known as the Landrum-Griffin Act deals with the relationship between a union and its members. The LMRDA grants certain rights to union members and protects their interests by promoting democratic procedures within labor organizations. The Act establishes a Bill of Rights for union members; reporting requirements for labor organizations, union officers and employees, employers, labor-relations consultants, and surety companies; standards for the regular election of union officers; and safeguards for protecting labor organization funds and assets (www.nlrb.gov/who-we-are/our-history/1959-landrum-griffin-act). In the United States today there are 24 states that have passed Right to Work legislation. A Right to Work Law secures the right of employees to decide for themselves whether or not to join or support a union financially. Employees who work in the railway or airline...
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...Labor Relations and Legislation Labor relations are defined as the relationships between the employer and the employee, specifically the unionized employee. It is a set of activities and procedures used to clarify, manage, reduce, and resolve conflicts between an employer and union members (Fossum, 2005). Federal and state laws and regulations govern the conduct of employers and unions in the administration of employee representation and collective bargaining. Prior to the 1930s few laws were in place to protect workers who were unionized or seeking to join or create a unionized work force. Instead, employers had the liberty to spy on, question, punish, black list and fire union members or workers seeking to unionize. However, with the enactment of the Wagner Act, also known as the National Labor Relations Act (NLRA), in 1933 the tide of opposition began to turn in favor of the unionization of workers. United States labor law consists primarily of the Norris-LaGuardia, Wagner, Taft-Hartley, Landrum-Griffin Acts, and Public Law 93-360. These laws enable collective bargaining, regulate labor and management activities, and limit intervention by the federal courts in lawful union activities. Norris-LaGuardia Act In 1932, the Norris-LaGuardia Act was passed. This act had several provisions. It established the law that workers should be free to unionize without employer interference. It removed the federal courts jurisdiction to issue injunctions in nonviolent labor disputes...
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...Uncertain Supply Chain Management 2 (2014) 61–72 Contents lists available at GrowingScience Uncertain Supply Chain Management homepage: www.GrowingScience.com/uscm Sustainable accounting reporting practices of Indian cement industry: An exploratory study Shagufta Khana , Vineet Chouhanb*, Bibhas Chandrac and Shubham Goswamib a Research Scholar, School of Management, Sir Padampat Singhania University, Udaipur-India Assistant Professor, School of Management, Sir Padampat Singhania University, Bhatewar, Udaipur-India, 313601 c Associate Professor, School of Management, Sir Padampat Singhania University, Bhatewar, Udaipur-India, 313601 b CHRONICLE Article history: Received September 10, 2013 Received in revised format 10 December 2013 Accepted February 25 2014 Available online February 27 2014 Keywords: Cement Industry Sustainability Financial Information Environment Accounting Reporting Sustainable Reporting Practices ABSTRACT Cement is the single most important and profitable product in the building material sector. With the economic boom, in India, Indian cement industry is a market of opportunities waiting to be tapped. However, at the same time cement industry is also experiencing a surge in demand. Production of Cement will always release carbon dioxide and change in the climate of the earth that is why despite its profitability, the cement industry faces many challenges regarding environmental concerns and sustainability issues. In order to minimize the impact of all...
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...Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence Researchers: Musa Mangena Richard Pike Jing Li Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence by Musa Mangena Richard Pike Jing Li University of Bradford Published by The Institute of Chartered Accountants of Scotland CA House, 21 Haymarket Yards Edinburgh EH12 5BH First Published 2010 The Institute of Chartered Accountants of Scotland © 2010 ISBN 978-1 904574-14-9 EAN 9781904574149 This book is published for the Research Committee of The Institute of Chartered Accountants of Scotland. The views expressed in this report are those of the authors and do not necessarily represent the views of the Council of the Institute or the Research Committee. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or publisher. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without prior permission of the publisher. Printed and bound in Great Britain by T. J. International Ltd. C 1. ontents Foreword ...................................................................................... i Acknowledgements ......................................................
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...Disclosures About CSR Practices: A Literature Review Kavitha W * and Anita P ** Corporate Social Responsibility (CSR) is now prominent and evident more than ever due to the emphasis laid on businesses regarding environmental, social and ethical issues. The level of CSR activities of the firms is made known to public only through the disclosures. This paper reviews the literature on CSR disclosures and the effect of these disclosures. There are various factors which determine the extent of disclosures like the size of the firm, industry, high visibility, etc. Introduction Corporate Social Responsibility (CSR) is now prominent and evident more than ever due to the emphasis laid on businesses regarding environmental, social and ethical issues. This is because over the recent years, there have been social, political and economic pressures on corporate management to pay attention on social and environmental consequences of corporate activities. These pressures motivated the corporate management to actively participate in a wide range of social welfare activities. CSR now-a-days covers almost all issues like the use of child labor; inequality of employment; environmental impact; involvement in local community; products’ safety; company cultures; brand image and reputation. Apart from this, companies are now disclosing these activities in their annual reports, and one of the parameters to judge the performance of a company is CSR reporting. Corporate Social...
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... 2 2. Motivating factors for companies to publish sustainability reports 2 3. Key features of effective sustainability reports 3 3.1 General standard disclosures 3 3.2 Specific standard disclosures 3 3.3 Sector specific disclosures 4 4. The evaluation of Westpac’s sustainability report 4 4.1 General standard disclosures 4 4.2 Specific standard disclosures 5 4.3 Sector specific disclosures 5 5. Conclusion 5 6. Reference 6 Executive Summary This article is going to explain the reason for companies to present their sustainability behaviors and highlight the key feature of an effective sustainability report. Sustainability reports refer to disclose companies’ social and environmental performance. It is essential for the financial service industry to convey their sustainability profile and integrate this to their financial report. This article also makes an evaluation about Westpac’s sustainability report. Westpac’s sustainable reporting has used the table and bar chart to illustrate their sustainability performance accurate and transparent. Therefore, this report has a good quality. 1. Introduction Since the environmental...
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...How to measure the quality of voluntary disclosure in annual reports The goal of voluntary disclosure is to give more information than required of reporting standards. This to create more disclosure (Scott, 2009, p.109). Although voluntary disclosure provides more information than required, the earnings quality can be questionable. Earnings quality can be defined as the extent to which reported earnings faithfully represent Hicksian income (Schipper and Vincent, 2000). The Hicksian income corresponds to the amount that can be pay out as dividend without damaging the firm (Hicks, 1939, p.176) and the definition of faithfulness means “correspondence or agreement between a measure or description and the phenomenon that it purports to present” (FASB Concepts Statement, No. 2, para. 63). The quality of the financial reporting are interesting for investment decision making. Low-quality earnings provide an incomplete allocation of resources. Also contracting of decisions based on low-quality will induce unintended wealth transfers (Schipper and Vincent, 2000). Schipper and Vincent (2000) consider four earnings quality constructs: - Time-series properties of earnings - Relations among income, accruals, and cash - Selected qualitative characteristics in the FASB’s conceptual framework - Implementation decisions Time-series properties of earnings Time-series properties of earnings include persistence, predictive...
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...Table of content Part 1……………………………………...…………………….…………2-5 Advantages of harmonization…………………….…….2-3 Disadvantages of harmonization……….…………...…3-5 Part 2…………………………………………………...………...…………6-8 Importance………………...…………….………….….6-7 Challenges in reducing disclosures……………………7-8 Reference……………………………………...……………………………9-10 Coursework Part 1: Harmonization of international accounting standards Every organization has their own accounting systems and standards. If every organization is preparing its financial reports in their own way, it is difficult for the users of accounting to use the financial reports. (Kirk, & Miller, 1986) Harmonization of international accounting standards as the trend for globalization in business becomes increasingly important for economic success, many issues arise through international business practices for corporations, governments, and investors. There are many potential advantages and disadvantages/challenges associated with harmonization of accounting standards. (John, 2013) Advantages 1) Reduced Reporting Costs Multinationals operating in countries with different accounting standards would incur high costs of preparing financial reports in accordance with each country’s accounting principles, then repeating the whole process for consolidation purposes. Harmonized accounting standards benefits multinational corporations because they can prepare one report rather than one...
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...Issue: 1a) Are the disclosures in the Swiss annual report really unnecessary? 1b) what social, economic, and institutional factors in Switzerland Might be causing the inclusion of these disclosures? 1c) Describe on of the differences in financial reporting between a Swiss company and the reporting in another country? Facts: Rob Carpenter senior manager at a prestigious accounting firm, recently transferred to the international division of acquisition and mergers. Mr. Carpenter was recently asked to make a recommendation regarding Nestle. Mr. Carpenter unfamiliar with the accounting in Switzerland has realized substantial differences between Swiss and U.S. accounting standards. Surprisingly, there are many “unnecessary” details in Nestle’s annual report including things such as social, environmental and employee disclosures. Furthermore, he notices differences in the financial statements. Mr. Carpenter is in charge of resolving the reports. Analysis: Multiple aspects of accounting and financial reporting affect the international community in different forms particularly in respect to needs of their prospective capital markets. The United States and Canada are equity-oriented markets, in these countries any individual is allowed to invest in the companies. The reports are typically a “public relations document that will present a positive image of the company” (Saudagaran, 2009). This may be a frowned upon practice by some parties but nonetheless its aim is to create...
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...Research Proposal The Quality of financial Reporting after the passage of Sarbanes-Oxley Act Dr. Hassan Ahmed Assistant Professor at Cameron University Abstract The complexity of business environment necessitates a set of required disclosures in a timely fashion. The full disclosure principle under U.S. GAAP is based on a vague definition that cannot be clearly implemented. The cost of disclosures can be significantly large and can have a negative impact on companies’ future earnings (small businesses). The purpose of this article is to examine the disclosure establishment of pre and post Enron, the effect of those disclosures on both corporations and on potential investors and to examine whether financial reporting quality improved with the passage of SOX. A total of 360 audited annual financial statements of the 500 fortune companies were selected. The paper will specifically concentrate disclosures on financial statements, Notes, supplementary (required or voluntary), and other expanded disclosures required by the SEC. The findings will shed light on our understanding about the intended and unintended consequence of SOX. 1.0 Introduction/Literature Review The purpose of SOX Act is to increase corporate transparency and accountability (Friedman, The Business Forum). Though SOX did not address the full disclosure required by the FASB, it simply expanded disclosures by establishing responsibilities. The company’s Chief Executive Officer (CEO) and Chief Financial...
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...Going Concern issues in financial reporting: a guide for companies and directors Published in 2009 by: Australian Institute of Company Directors (AICD) Level 2 255 George Street Sydney NSW 2000 Telephone: (+61 2) 8248 6600 Facsimile: (+61 2) 8248 6633 www.companydirectors.com.au publications@companydirectors.com.au Auditing and Assurance Standards Board (AUASB) Level 7 600 Bourke Street Melbourne VIC 3000 Telephone: (+61 3) 8080 7400 Facsimile: (+61 3) 8080 7450 enquiries@auasb.gov.au www.auasb.gov.au © Australian Institute of Company Directors (AICD) © Auditing and Assurance Standards Board (AUASB) © Financial Reporting Council (UK) 2009. Portions of this publication have been adapted and reproduced from an Auditing Practices Board Bulletin: Going Concern Issues During the Current Economic Conditions (December 2008) with the kind permission of the Financial Reporting Council (UK). All rights reserved. For further information please visit www.frc.org.uk or telephone +44 (0)20 7492 2300. © Portions of this publication have been adapted and reproduced from a KPMG Flash Report: How Concerned Should Directors be with Going Concern? (February 2009) with the kind permission of KPMG. All rights reserved. Typeset by Endnote design Printed by Ligare Pty Ltd National Library of Australia Cataloguing-in-Publication entry Going Concern issues in financial reporting: a guide for companies and directors/AICD, AUASB ISBN 9781876604158 (pbk.). 9781876604172...
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