School of Accountancy (ETDs)

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Subject: search.filters.subject.Financial reporting quality

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    Financial reporting quality: an exploratory study of small-and mid-cap entities listed on the JSE
    (2021) Brookes, Leigh
    The fundamental challenges small-and mid-cap firms are facing in producing high-quality financial statements: High-quality financial statements are becoming increasingly difficult to prepare as business and the IASB’s standards evolve and become increasingly complex. This may leave small-and mid-cap firms vulnerable to being ill-equipped to produce high-quality financial statements based on their limited resources and dependencies. Minimal research has focused on the components that contribute to attaining high-quality financial statements at small-and mid-cap firms. The research that has focused on this has been predominately centered around large-cap firms, while little attention has been allocated to that of the small-and mid-cap firms. Small-and mid-cap firms comprise the majority (in number) of the companies listed on the JSE and contribute a significant portion of growth and employment to South Africa. It is important to address this gap in research so that structures can potentially be put into place to support these companies and aid their success. An exploratory qualitative research method was employed due to the limited availability of prior research. Data was obtained through semi-structured, open-ended interviews with senior financial executives at small-and mid-cap JSE listed entities. Further interviews were conducted with auditors, regulators, and academics in relation to their interactions and perceptions of the financial reporting quality at small-and mid-cap firms. It appears that small-and mid-cap firms may be disadvantaged by the limited resources they have access to. If so, this tends to adversely affect their ability to implement effective corporate governance and particularly obtain financial management with high expertise, adversely affecting the quality of their financial statements. Conversely, there are factors that may contribute to decreasing the challenges they face. Small-and mid-cap firms often have finance teams with longer tenures and inherently less complex processes and reporting. This allows staff to understand the business intrinsically, facilitating with the financial reporting process
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    An investigation into the extent IFIs display the characteristics of useful decision making within their financial statements'
    (2021) Cassim, Shabeer
    Locally and abroad, Islamic finance has shown phenomenal growth in recent years. The Global Islamic Finance Report discloses that the global Islamic finance industry stood at US$ 2.293 trillion at the end of December 2016. Islamic finance is not only limited to middle eastern countries but has shown growth in western countries as well, for example the United Kingdom, Luxembourg, Germany and Switzerland. This has led to growth in the number of Islamic Finance Institutions (IFIs). With the growth and reach of Islamic finance, understanding the differences between the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) accounting framework and other commonly used accounting frameworks is crucial. At present there is limited research which explores these differences. This research begins to address this gap in the literature by investigating to what extent IFI’s financial statements reflect the qualitative characteristics of useful information and investigates if there is a significant difference in the application of the qualitative characteristics, as presented in published financial statements, under AAOIFI and International Financial Reporting Standards (IFRS). Shariah (Islamic law) has important cultural differences from most western cultures and countries. Most notable is the prohibition of the concept of ‘interest’. Other prohibitions include trading in pork, intoxicants and games of chance. This may have significant effects on how financial instruments are dealt with compared to IFRS. The Accounting and Auditing Organisation for Islamic Financial Institutions was established to maintain and promote Shariah standards for IFIs. Some IFIs apply accounting standards issued by AAOIFI, however, the current practice is that many IFIs apply IFRS. The purpose of financial reporting is to provide useful financial information which will aid users in decision making. IFIs rely on strong public confidence as stakeholders expect the institute to act in compliance with Shariah principles and, as a result reporting transparently on financial transactions is essential. The purpose of this research is to assess the qualitative characteristics of useful financial information in the financial statements produced by IFIs and to assess if there is a significant difference in the application of the qualitative characteristics between IFIs which use AAOIFI accounting standards and those which use IFRS. This research employed a quantitative approach and used a 21-item index against which the qualitative characteristics of IFI’s financial statements were scored. This research analysed the financial statements of 83 IFIs, 30 of which produced financial statements using accounting standards issued by the AAOIFI and 53 IFIs which use IFRS. The main finding of this study is that financial statements issued by IFI’s adequately display the characteristics of useful financial information. The results further indicate there is no significant difference in the score of IFIs which apply IFRS and IFIs which apply AAOIFI in respect of their application of the qualitative characteristics
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    An assessment of the quality of South African and Indian listed companies’ financial reporting
    (2019) Haarburger, Carla Peta
    Orientation: The accounting profession has been put in the spotlight as a result of the high amount of public failures and corporate collapses. The importance of high-quality financial reporting has been demonstrated not only by the past corporate failures, but also due to the scarce level of capital that is available to be allocated within capital markets. Research aim: The primary objective of this study was to investigate the quality of financial reporting in South Africa and India. Motivation for the study: This study contributed to the existing body of literature on financial statements. The focus of this study was on two of the emerging markets of the BRICS nations, South Africa and India. The members of the BRICS are suspected to be some of the strongest economies of the future; therefore, it is imperative that research is conducted in the context of these developing markets. This research analysed financial statement quality, which extends beyond the pure financial aspect of financial reporting since there is a demand for research that is focused on the qualitative aspects of financial reporting as opposed to solely quantitated financial figures. Research approach and method: This research followed a quantitative approach. The approach employed a 21-index scorecard to score the application of the qualitative characteristics in the financial statements of 50 entities from the JSE and BSE. The entities were selected based on the highest market capitalisation entities for the 2017-year end. The data was analysed using descriptive statistics. Main findings: The main finding of this study was that the application of the qualitative characteristics in South African companies was high. The application of the qualitative characteristics in India is not as high when compared with South Africa in most aspects; however, timeliness was a characteristic where India outperformed South Africa. Applications: This research contributes to the existing body of knowledge on financial statements. This research was also a contribution and an investment into the developing markets, as both South Africa and India are emerging markets. This study also unlocked opportunities for further research that can be conducted in relation to this topic such as the motives behind Indian listed entities not preparing integrated reports as well as a study which analyses the link between financial statement quality and audit quality. Contributions: This study contributes to the academic literature on financial statements. It also contributes towards the research into developing economies and it unlocks opportunities for future research.