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INTERNATIONAL ACCOUNTING STANDARDS BOARD’S PERSPECTIVE ON PERFORMANCE REPORTING: WHAT HAS CHANGED FROM 1989 TO 2018?

Year 2019, Volume: 12 Issue: 2, 475 - 496, 01.07.2019
https://doi.org/10.29067/muvu.485653

Abstract

Defining income and expenses as derivatives of assets
and liabilities in all published conceptual frameworks shows that the
International Accounting Standards Board has continued to adopt the balance
sheet approach from 1989 to present. On the other hand, the inclusion of the
concept of comprehensive income in the conceptual framework published in 2018
reveals that the importance given to performance reporting has increased.
However, Board has not yet determined a principle approach to which items will
be reported in other comprehensive income. Therefore, the Board is criticized
for failing to provide a specific framework for performance reporting. This
study examines the assigned role to performance reporting by International
Accounting Standards Board from past to present based on the criticisms emerged
in the literature. In addition, findings of the studies in literature on the
usefulness of the comprehensive income presentation are discussed.

References

  • Andersson, P., & Hellman, N. (2007). Does pro forma reporting bias analyst forecasts?. European Accounting Review, 16(2), 277-298.
  • Barker, R. (2010). On the definitions of income, expenses and profit in IFRS. Accounting in Europe, 7(2), 147-158.
  • Barker, R., & Teixeira, A. (2018). Gaps in the IFRS conceptual framework. Accounting in Europe, 15(2), 153-166.
  • Biddle, G. C., & Choi, J. H. (2006). Is comprehensive income useful?. Journal of Contemporary Accounting & Economics, 2(1), 1-32.
  • Bloomfield, R., & Libby, R. (1996). Market reactions to differentially available information in the laboratory. Journal of Accounting Research, 183-207.
  • Brouwer, A., Faramarzi, A., & Hoogendoorn, M. (2014). Does the new conceptual framework provide adequate concepts for reporting relevant information about performance?. Accounting in Europe, 11(2), 235-257.
  • Chambers, D., Linsmeier, T. J., Shakespeare, C., & Sougiannis, T. (2007). An evaluation of SFAS No. 130 comprehensive income disclosures. Review of Accounting Studies, 12(4), 557-593.
  • Chambers, R. J. (1974). Accounting, Evaluation and Economic Behavior. Houston, Scholars Book, 1974.
  • Cheng, A.C.S., Cheung, J. K., & Gopalakrishnan, V. (1993). On the usefulness of operating income, net income and comprehensive income in explaining security returns. Accounting and Business Research, 23(91), 195-203.
  • Choi, J., & Zang, Y. (2006). Implications of Comprehensive Income Disclosure for Future Earning and Analysts' Forecasts. Seoul Journal of Business, 12(2), 77–109.
  • Cooper, S. (2007). Performance measurement for equity analysis and valuation. Accounting in Europe, 4(1), 1-49.
  • Devalle, A. (2012). Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges. International Journal of Accounting, Auditing and Performance Evaluation, 8, 43-68.
  • Dhaliwal, D., Subramanyam, K. R., & Trezevant, R. (1999). Is comprehensive income superior to net income as a measure of firm performance? Journal of Accounting and Economics, 26(1-3), 43-67.
  • Dichev, I. D. (2008). On the balance sheet-based model of financial reporting. Accounting Horizons, 22(4), 453-470.
  • Edwards, E. O. & Bell, P. W. (1973). The Theory and Measurement of Business Income. Berkeley, University of California Press.
  • EFRAG, (2013) Getting a Better Framework – The Asset/Liability Approach, European Financial Reporting Advisory Group (Brussels: EFRAG).
  • Elliott, W. B. (2006). Are investors influenced by pro forma emphasis and reconciliations in earnings announcements?. The Accounting Review, 81(1), 113-133.
  • Ernstberger, J. (2008). The value relevance of comprehensive income under IFRS and US GAAP: Empirical evidence from Germany. International Journal of Accounting, Auditing and Performance Evaluation, 5(1), 1-29.
  • FASB, (2002) Summary of User Interviews – Reporting Financial Performance by Business Enterprises, Norwalk, CT:FASB.
  • Fisher, I. (1906). The Nature of Capital and Income. New York, Macmillan.
  • Fisher, I. (1930). The Theory of Interest. New York, Macmillan.
  • Francis, J., & Schipper, K. (1999). Have financial statements lost their relevance?. Journal of Accounting Research, 37(2), 319-352.
  • Frederickson, J. R., & Miller, J. S. (2004). The effects of pro forma earnings disclosures on analysts' and nonprofessional investors' equity valuation judgments. The Accounting Review, 79(3), 667-686.
  • Givoly, D., & Hayn, C. (2000). The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative?. Journal of Accounting and Economics, 29(3), 287-320.
  • Gokten, S., & Gokten, P. O. (2017). Recent Financial Crisis and the Structured Finance: Accounting Perspective for Future. In Risk Management, Strategic Thinking and Leadership in the Financial Services Industry (pp. 277-285). Springer, Cham.
  • Goncharov, I., & Hodgson, A. (2011). Measuring and reporting income in Europe. Journal of International Accounting Research, 10(1), 27-59.
  • Gökten, S. (2016). Yapılandırılmış Finans. Nobel Bilimsel Eserler, Ankara.
  • Gökten, S., & Karabudak,, Ç. Ö. (2017). Uluslararası vergi planlaması: Türkiye’nin merkez olarak kullanıldığı bir vaka çalışması. Muhasebe Bilim Dünyası Dergisi, 19(2):547-566.
  • Gökten, S., Başer, F. & Yalçın, İ.S. (2017). F-skor göstergelerinin hisse senedi değeri üzerindeki etkisinin defter değerinin aracılık rolü çerçevesinde incelenmesi. İşletme Araştırmaları Dergisi, 9(4), 837-857.
  • Hail, L. (2013). Financial reporting and firm valuation: relevance lost or relevance regained?. Accounting and Business Research, 43(4), 329-358.
  • Hicks, J. (1946). Value and Capital: An Inquiry into Some Fundamental Principles of Economic Theory, Oxford: Clarendon Press.
  • Hirst, D. E., & Hopkins, P. E. (1998). Comprehensive income reporting and analysts' valuation judgments. Journal of Accounting Research, 36, 47-75.
  • Jones, D. A., & Smith, K. J. (2011). Comparing the value relevance, predictive value, and persistence of other comprehensive income and special items. The Accounting Review, 86(6), 2047-2073.
  • Kanagaretnam, K., Mathieu, R., & Shehata, M. (2009). Usefulness of comprehensive income reporting in Canada. Journal of Accounting and Public Policy, 28(4), 349-365.
  • KÇ1989. (1989). Framework for the Preparation and Presentation of Financial Statements.
  • KÇ2010. (2010). Finansal Raporlamaya İlişkin Kavramsal Çerçeve.
  • KÇ2018. (2018). Finansal Raporlamaya İlişkin Kavramsal Çerçeve (2018 Sürümü).
  • Knight, F. H. (1921). Risk, Uncertainty, Profit. Boston, Houghton Mifflin.
  • Kusano, M. (2012). Does the balance sheet approach improve the usefulness of accounting information?. The Japanese Accounting Review, 2(2012), 139-152.
  • Lin, S. W., Ramond, O. J., & Casta, J. (2007). Value relevance of comprehensive income and its components: Evidence from major European capital markets. Working Paper. Universite of Paris Dauphine, Paris.
  • MacNeal, K. (1979). Truth in Accounting. Houston, Scholars Books.
  • Maines, L. A., & McDaniel, L. S. (2000). Effects of comprehensive-income characteristics on nonprofessional investors' judgments: The role of financial-statement presentation format. The Accounting Review, 75(2), 179-207.
  • Mechelli, A., & Cimini, R. (2014). Is comprehensive income value relevant and does location matter? A European study. Accounting in Europe, 11(1), 59-87.
  • Moriarity, S. (1979). Communicating financial information through multidimensional graphics. Journal of Accounting Research, 205-224.
  • Nobes, C. (2012). On the Definitions of Income and Revenue in IFRS. Accounting in Europe, 9(1), 85-94.
  • O'Hanlon, J. F., & Pope, P. F. (1999). The value-relevance of UK dirty surplus accounting flows. The British Accounting Review, 31(4), 459-482.
  • Rees, L. L., & Shane, P. B. (2012). Academic research and standard-setting: The case of other comprehensive income. Accounting Horizons, 26(4), 789-815.
  • Stock, D., & Watson, C. J. (1984). Human judgment accuracy, multidimensional graphics, and humans versus models. Journal of Accounting Research, 192-206.
  • Sultanoğlu, B. & Özerhan, Y. (2018). Muhasebe teorisi ve yeni kavramsal çerçeveye göre varlık, borç ve özkaynak kavramlarının tanımı ve sunumu: Ülkelerarası karşılaştırma. 15.Uluslararası Muhasebe Konferansı. 13-15 Eylül 2018.
  • TM, (2013). Discussion Paper: A Review of the Conceptual Framework for Financial Reporting, International Accounting Standards Board (IASB) July (London: IASB).
  • TM2013. (2013). A Review of the Conceptual Framework for Financial Reporting.
  • Walton, P. (2018). Discussion of Barker and Teixeira ([2018]. Gaps in the IFRS Conceptual Framework. Accounting in Europe, 15) and Van Mourik and Katsuo ([2018]. Profit or loss in the IASB Conceptual Framework. Accounting in Europe, 15). Accounting in Europe, 1-7.
  • Wang, Y., Buijink, W., & Eken, R. (2006). The value relevance of dirty surplus accounting flows in The Netherlands. The International Journal of Accounting, 41(4), 387-405.
  • Zülch, H., & Pronobis, P. (2010). The Predictive Power of Comprehensive Income and Its Individual Components under IFRS [Working Paper N. 95]. HHL-Leipzig Graduate School of Management.

ULUSLARARASI MUHASEBE STANDARTLARI KURULU’NUN PERFORMANS RAPORLAMASINA BAKIŞ AÇISI: 1989’DAN 2018’E NE DEĞİŞTİ?

Year 2019, Volume: 12 Issue: 2, 475 - 496, 01.07.2019
https://doi.org/10.29067/muvu.485653

Abstract

Gelirlerin
ve giderlerin yayınlanan tüm kavramsal çerçevelerde varlıkların ve
yükümlülüklerin türevi olarak tanımlanması, Uluslararası Muhasebe Standartları
Kurulu'nun 1989'dan günümüze kadar bilanço yaklaşımını benimsemeye devam
ettiğini göstermektedir. Diğer taraftan, 2018’de yayınlanan kavramsal çerçeve
içeriğinde kapsamlı gelir kavramının yer alması, performans raporlamasına
verilen önemin arttığını ortaya koymaktadır. Ancak, Kurul halen hangi
kalemlerin diğer kapsamlı gelirler içerisinde raporlanacağına ilişkin ilkesel
bir yaklaşım belirlememiştir. Bu nedenle Kurul, performans raporlamasına
ilişkin özgün bir çerçeve ortaya koyamadığı için eleştirilmektedir. Bu çalışma,
geçmişten günümüze literatürde ortaya çıkan eleştirilere dayalı olarak,
Uluslararası Muhasebe Standartları Kurulu tarafından performans raporlamasına
biçilen rolü irdelemektedir. Ayrıca, kapsamlı gelir sunumunun faydalı olup
olmadığına ilişkin literatürde yapılan çalışmaların bulguları ele alınmaktadır. 

References

  • Andersson, P., & Hellman, N. (2007). Does pro forma reporting bias analyst forecasts?. European Accounting Review, 16(2), 277-298.
  • Barker, R. (2010). On the definitions of income, expenses and profit in IFRS. Accounting in Europe, 7(2), 147-158.
  • Barker, R., & Teixeira, A. (2018). Gaps in the IFRS conceptual framework. Accounting in Europe, 15(2), 153-166.
  • Biddle, G. C., & Choi, J. H. (2006). Is comprehensive income useful?. Journal of Contemporary Accounting & Economics, 2(1), 1-32.
  • Bloomfield, R., & Libby, R. (1996). Market reactions to differentially available information in the laboratory. Journal of Accounting Research, 183-207.
  • Brouwer, A., Faramarzi, A., & Hoogendoorn, M. (2014). Does the new conceptual framework provide adequate concepts for reporting relevant information about performance?. Accounting in Europe, 11(2), 235-257.
  • Chambers, D., Linsmeier, T. J., Shakespeare, C., & Sougiannis, T. (2007). An evaluation of SFAS No. 130 comprehensive income disclosures. Review of Accounting Studies, 12(4), 557-593.
  • Chambers, R. J. (1974). Accounting, Evaluation and Economic Behavior. Houston, Scholars Book, 1974.
  • Cheng, A.C.S., Cheung, J. K., & Gopalakrishnan, V. (1993). On the usefulness of operating income, net income and comprehensive income in explaining security returns. Accounting and Business Research, 23(91), 195-203.
  • Choi, J., & Zang, Y. (2006). Implications of Comprehensive Income Disclosure for Future Earning and Analysts' Forecasts. Seoul Journal of Business, 12(2), 77–109.
  • Cooper, S. (2007). Performance measurement for equity analysis and valuation. Accounting in Europe, 4(1), 1-49.
  • Devalle, A. (2012). Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges. International Journal of Accounting, Auditing and Performance Evaluation, 8, 43-68.
  • Dhaliwal, D., Subramanyam, K. R., & Trezevant, R. (1999). Is comprehensive income superior to net income as a measure of firm performance? Journal of Accounting and Economics, 26(1-3), 43-67.
  • Dichev, I. D. (2008). On the balance sheet-based model of financial reporting. Accounting Horizons, 22(4), 453-470.
  • Edwards, E. O. & Bell, P. W. (1973). The Theory and Measurement of Business Income. Berkeley, University of California Press.
  • EFRAG, (2013) Getting a Better Framework – The Asset/Liability Approach, European Financial Reporting Advisory Group (Brussels: EFRAG).
  • Elliott, W. B. (2006). Are investors influenced by pro forma emphasis and reconciliations in earnings announcements?. The Accounting Review, 81(1), 113-133.
  • Ernstberger, J. (2008). The value relevance of comprehensive income under IFRS and US GAAP: Empirical evidence from Germany. International Journal of Accounting, Auditing and Performance Evaluation, 5(1), 1-29.
  • FASB, (2002) Summary of User Interviews – Reporting Financial Performance by Business Enterprises, Norwalk, CT:FASB.
  • Fisher, I. (1906). The Nature of Capital and Income. New York, Macmillan.
  • Fisher, I. (1930). The Theory of Interest. New York, Macmillan.
  • Francis, J., & Schipper, K. (1999). Have financial statements lost their relevance?. Journal of Accounting Research, 37(2), 319-352.
  • Frederickson, J. R., & Miller, J. S. (2004). The effects of pro forma earnings disclosures on analysts' and nonprofessional investors' equity valuation judgments. The Accounting Review, 79(3), 667-686.
  • Givoly, D., & Hayn, C. (2000). The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative?. Journal of Accounting and Economics, 29(3), 287-320.
  • Gokten, S., & Gokten, P. O. (2017). Recent Financial Crisis and the Structured Finance: Accounting Perspective for Future. In Risk Management, Strategic Thinking and Leadership in the Financial Services Industry (pp. 277-285). Springer, Cham.
  • Goncharov, I., & Hodgson, A. (2011). Measuring and reporting income in Europe. Journal of International Accounting Research, 10(1), 27-59.
  • Gökten, S. (2016). Yapılandırılmış Finans. Nobel Bilimsel Eserler, Ankara.
  • Gökten, S., & Karabudak,, Ç. Ö. (2017). Uluslararası vergi planlaması: Türkiye’nin merkez olarak kullanıldığı bir vaka çalışması. Muhasebe Bilim Dünyası Dergisi, 19(2):547-566.
  • Gökten, S., Başer, F. & Yalçın, İ.S. (2017). F-skor göstergelerinin hisse senedi değeri üzerindeki etkisinin defter değerinin aracılık rolü çerçevesinde incelenmesi. İşletme Araştırmaları Dergisi, 9(4), 837-857.
  • Hail, L. (2013). Financial reporting and firm valuation: relevance lost or relevance regained?. Accounting and Business Research, 43(4), 329-358.
  • Hicks, J. (1946). Value and Capital: An Inquiry into Some Fundamental Principles of Economic Theory, Oxford: Clarendon Press.
  • Hirst, D. E., & Hopkins, P. E. (1998). Comprehensive income reporting and analysts' valuation judgments. Journal of Accounting Research, 36, 47-75.
  • Jones, D. A., & Smith, K. J. (2011). Comparing the value relevance, predictive value, and persistence of other comprehensive income and special items. The Accounting Review, 86(6), 2047-2073.
  • Kanagaretnam, K., Mathieu, R., & Shehata, M. (2009). Usefulness of comprehensive income reporting in Canada. Journal of Accounting and Public Policy, 28(4), 349-365.
  • KÇ1989. (1989). Framework for the Preparation and Presentation of Financial Statements.
  • KÇ2010. (2010). Finansal Raporlamaya İlişkin Kavramsal Çerçeve.
  • KÇ2018. (2018). Finansal Raporlamaya İlişkin Kavramsal Çerçeve (2018 Sürümü).
  • Knight, F. H. (1921). Risk, Uncertainty, Profit. Boston, Houghton Mifflin.
  • Kusano, M. (2012). Does the balance sheet approach improve the usefulness of accounting information?. The Japanese Accounting Review, 2(2012), 139-152.
  • Lin, S. W., Ramond, O. J., & Casta, J. (2007). Value relevance of comprehensive income and its components: Evidence from major European capital markets. Working Paper. Universite of Paris Dauphine, Paris.
  • MacNeal, K. (1979). Truth in Accounting. Houston, Scholars Books.
  • Maines, L. A., & McDaniel, L. S. (2000). Effects of comprehensive-income characteristics on nonprofessional investors' judgments: The role of financial-statement presentation format. The Accounting Review, 75(2), 179-207.
  • Mechelli, A., & Cimini, R. (2014). Is comprehensive income value relevant and does location matter? A European study. Accounting in Europe, 11(1), 59-87.
  • Moriarity, S. (1979). Communicating financial information through multidimensional graphics. Journal of Accounting Research, 205-224.
  • Nobes, C. (2012). On the Definitions of Income and Revenue in IFRS. Accounting in Europe, 9(1), 85-94.
  • O'Hanlon, J. F., & Pope, P. F. (1999). The value-relevance of UK dirty surplus accounting flows. The British Accounting Review, 31(4), 459-482.
  • Rees, L. L., & Shane, P. B. (2012). Academic research and standard-setting: The case of other comprehensive income. Accounting Horizons, 26(4), 789-815.
  • Stock, D., & Watson, C. J. (1984). Human judgment accuracy, multidimensional graphics, and humans versus models. Journal of Accounting Research, 192-206.
  • Sultanoğlu, B. & Özerhan, Y. (2018). Muhasebe teorisi ve yeni kavramsal çerçeveye göre varlık, borç ve özkaynak kavramlarının tanımı ve sunumu: Ülkelerarası karşılaştırma. 15.Uluslararası Muhasebe Konferansı. 13-15 Eylül 2018.
  • TM, (2013). Discussion Paper: A Review of the Conceptual Framework for Financial Reporting, International Accounting Standards Board (IASB) July (London: IASB).
  • TM2013. (2013). A Review of the Conceptual Framework for Financial Reporting.
  • Walton, P. (2018). Discussion of Barker and Teixeira ([2018]. Gaps in the IFRS Conceptual Framework. Accounting in Europe, 15) and Van Mourik and Katsuo ([2018]. Profit or loss in the IASB Conceptual Framework. Accounting in Europe, 15). Accounting in Europe, 1-7.
  • Wang, Y., Buijink, W., & Eken, R. (2006). The value relevance of dirty surplus accounting flows in The Netherlands. The International Journal of Accounting, 41(4), 387-405.
  • Zülch, H., & Pronobis, P. (2010). The Predictive Power of Comprehensive Income and Its Individual Components under IFRS [Working Paper N. 95]. HHL-Leipzig Graduate School of Management.
There are 54 citations in total.

Details

Primary Language Turkish
Subjects Business Administration
Journal Section Issue
Authors

Pınar Okan Gökten 0000-0003-2037-0087

Publication Date July 1, 2019
Submission Date November 20, 2018
Acceptance Date February 1, 2019
Published in Issue Year 2019 Volume: 12 Issue: 2

Cite

APA Okan Gökten, P. (2019). ULUSLARARASI MUHASEBE STANDARTLARI KURULU’NUN PERFORMANS RAPORLAMASINA BAKIŞ AÇISI: 1989’DAN 2018’E NE DEĞİŞTİ?. Journal of Accounting and Taxation Studies, 12(2), 475-496. https://doi.org/10.29067/muvu.485653

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