nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒07‒29
five papers chosen by

  1. Differentiation of performance materiality in audit based on business needs By Audrius Masiulevičius; Vaclovas Lakis
  2. Accounting profession by the view of School of Business Administration students By Ivana Koštuříková; Markéta Šeligová; Beáta Blechová
  3. The methodology of the statement of comprehensive income and its impact on profitability: the case of Latvia By Inga Būmane
  4. Integrated reporting in France: a failure of reducing the information asymmetries about sustainability By Elisabeth Albertini
  5. Information support of the circular economy: the objects of accounting at recycling technological cycle stages of industrial waste By Svetlana Vegera; Alena Malei; Ina Sapeha; Volha Sushko

  1. By: Audrius Masiulevičius (Vilnius University [Vilnius]); Vaclovas Lakis (Vilnius University [Vilnius])
    Abstract: Companies are exposed to various risks. Failure to identify and eliminate them may aggravate the development of companies, some of which may be forced to cease operation. Audit can help in revealing the majority of risks. The auditor has an unlimited access to the information, operational strategy, and in some cases even to commercial secrets, of the auditee. Auditor collects a large amount of different information about the company, but it is used only as much as necessary for formulating a conclusion about financial statements. Upon a closer cooperation of the auditor with the persons in charge of the governance of the audited entity, the client needs can be identified and, once the audit plan is slightly revised, the areas that are within the interest of the client can be analysed in more detail. This article aims to investigate the determination of performance materiality in audit to separate classes of transactions based on the principal areas of importance identified by the business undergoing audit. Based on the data collected during the study, a modified model for determining performance materiality in audit was created which can help to identify better the current and potential risks of the distinguished areas. The application of this model enables carrying out an audit in the areas which are of the highest importance to the users of the audit results more effectively and providing them with more detailed information in the management letter. This would help to identify the substantial risks of the auditee in more detail and on time.
    Keywords: materiality,audit,risks,tolerable error,management letter
    Date: 2018–09–30
  2. By: Ivana Koštuříková (Department of Finance and Accounting, School of Business Administration, Silesian University); Markéta Šeligová (Department of Finance and Accounting, School of Business Administration, Silesian University); Beáta Blechová (Department of Finance and Accounting, School of Business Administration, Silesian University)
    Abstract: With the growing importance of accounting information for the accounting entity's management in connection with its financial decision-making, the role of a quality professional accountant is growing. The aim of the article is to evaluate the view of the students of the economic university at the accounting profession in the Czech Republic. It was determined by a questionnaire survey how students of both full-time and combined forms of study at the School of Business Administration perceive the accounting profession in the Czech Republic. Based on the acquired nominal data, the dependence of the perceptions of the accountant profession to form, degree and field of study was examined using the Pearson chi-quadrate test in the contingency table. In addition, the intensity of this dependence was examined using the Pearson coefficient of contingency. It was found that the perception of entrepreneurial risk associated with the selection of a professional accountant does not depend on the form of university studies. On the other hand, it has been shown that the form of university studies influences the perception whether the level of qualifications of professional accountants is reflected in their salary assessment and whether the impact of the economic decline of past years has increased the importance of professional accountants for entrepreneurs. The results also showed that the perception of the accounting profession in the Czech Republic is independent on the degree of university studies.
    Keywords: accountant profession, university studies, questionnaire survey, Pearson´s chi-quadrate test, Pearson contingency coefficient, qualifications of professional accountants, entrepreneurial risk
    JEL: M41 M59
    Date: 2019–07–18
  3. By: Inga Būmane (LU - University of Latvia)
    Abstract: The financial statements of a company are used by external users as the main source of information in order to take financially informed decisions. The author of the article has summarized the study on one of the financial statements-a statement of comprehensive income (CI statement) that enables creditors and investors to assess the process of the formation of company's profit and profitability. Purpose: on the basis of the study of the specificity of the preparation of the statement of comprehensive income to analyze and evaluate the influence of CI statement items on the profitability of Latvian companies. In order to achieve the purpose, the author has structured the research in two parts. In the first part of the article the author describes the theoretical framework of the core, type and content of CI statement and describes the components of other comprehensive income. In the second part of the article the author has analyzed the methodology for the preparation of CI statement at Latvian companies and impact of other comprehensive income on profitability. The subject of research was a sample of 26 financial statements of Latvian companies. The author applied quantitative and qualitative research methods generally accepted in economics: classification, comparative analysis and synthesis, statistical methods. The essence of research findings is that the core of items of CI statement and the division into the reclassified and not reclassified items of other comprehensive income (OCI) are important for the company`s financial result-evaluation of profit. Research showed that most of Latvian companies under research were influenced by reclassified items; besides, positively influenced-profitability ratios of ROE and ROA. The author believes that, when evaluating the profitability of assets and the equity of the company, the financial analysts shall take into account the reclassified items of OCI, and the calculations shall be performed using the modifications of ROE and ROA formulas.
    Keywords: assets,comprehensive income,equity,financial statements,profitability
    Date: 2018–09–30
  4. By: Elisabeth Albertini (IAE Paris - Sorbonne Business School)
    Abstract: Purpose: This paper aims to determine how integrated reporting (IR) can effectively report on multiple capitals that, when taken together, should create value in a sustainable way, with the objective of reducing information asymmetry. Design/methodology/approach: To answer this research question, a qualitative content analysis was conducted of the IR disclosed by the French companies in the period 2013-16. Findings: The study reveals that information asymmetry is not reduced since companies mention only some capitals as inputs to their value creation process while almost entirely excluding natural capital. Moreover, companies disclose only positive information, mainly about their financial capital, without mentioning any destruction of capital, especially natural capital. Finally, the lack of compulsory reporting prevents any comparison between companies or over time. Research limitations/implications: Given its exploratory nature, this research presents several limitations. First, only a few companies have disclosed an IR in France, preventing the generalization of the findings to a larger number of companies. Second, the IR studied covered a period of only four years, preventing the generalization of the findings over a longer period of time. Practical implications: This paper provides insights about the information disclosed through IR in French companies and has implications for adopters and regulators.
    Date: 2018
  5. By: Svetlana Vegera (Polatsk State University); Alena Malei (Polatsk State University); Ina Sapeha (Polatsk State University); Volha Sushko (Polatsk State University)
    Abstract: Circular economy is one of the imperatives of sustainable development of production and society as a whole, which poses corresponding challenges to existing accounting system. In modern conditions of transition from industrial to post-industrial economy, the problem of maintaining a favorable environment and rational use of natural resources requires an adequate transformation of accounting methodology, oriented to the reproduction and sustainable use of natural resources, and not maximum revenue from their exploitation. At present, there is no complete system of accounting for production waste, which would allow solving tasks, which are set by the circular economy, which determines the relevance of the research topic. The purpose of this research is the determination of technological cycle stages of industrial waste and the identification of accounting objects arising at these stages for further recommendations development of industrial waste assessment and accounting for the curcular economy purposes. Among the methods used in the study, the authors identify synthesis, analysis, comparison, logical generalization, inference by analogy, classification, grouping etc. In this article, technological cycle stages of industrial waste will be considered (Stage 1 "Appearance", Stage 2 "Collection and Accumulation", Stage 3 "Waste Preparation for Use", Stage 4 "Storage", Stage 5 "Use", Stage 5 "Burial (destruction)" and identified the objects of their accounting: waste of ferrous and non-ferrous metals, construction waste, waste arising from reservoirs cleaned), as well as costs due to the specifics of technological cycle stage.
    Date: 2018–09–30

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