Literature Review On Accounting Standards
Literature Review On Accounting Standards
Literature Review On Accounting Standards
research, analysis, and synthesis of existing literature. The process involves delving into numerous
scholarly articles, journals, books, and other academic sources to gather relevant information and
insights. Moreover, it necessitates a comprehensive understanding of the subject matter and the
ability to critically evaluate different perspectives and arguments.
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literature available and identifying the most pertinent and reliable sources. Additionally, synthesizing
the findings from various studies and integrating them cohesively into the review requires
considerable time and effort.
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Others believe that the successful ones are not necessarily the most effective and the debate may go
on for a long time. The researchers further indicated that executives with financial targets are likely
to resort to creative accounting processes that allow them to manipulate the numbers to best serve
their targets and incentives. Enormous goodwill leads to banks and other lenders imposing higher
credit restrictions on such entities ( Carlin and Finch 2011 ). 3.2.3. Depreciation It is essential to
follow a specific depreciation scheme and adhere to accounting policies that are applicable to the
entity. In this case, the value of an asset can be amortised over an extended period, thereby reducing
annual depreciation expense and facilitating an increase in profit ( Susmus and Demirhan 2013 ).
3.2.6. Construction Contracts Construction contracts can be accounted for differently using two
prevalent methods. Some researchers did not reach an agreement on this view; they consider creative
accounting a “deliberate intervention in the external financial reporting process” to benefit specific
stakeholders ( Shah et al. 2011 ). The information that is disclosed does not need to be fraudulent;
however, the facts are twisted in a way that can be considered a violation of the “full disclosure”
requirement defined by the International Financial Reporting Standard (IFRS). However, the
researchers did not recognize that other internal factors, such as ownership structure, ethical
orientation and the qualification of management staff, could also influence the quality of financial
statements. GIFs Highlight your latest work via email or social media with custom GIFs. What is the
answer to the research question that you have posed given. He has done a little empirical study to
find the relationship whether creative accounting is related to the types of companies or industrial
classifications, the reason behind the use of creative accounting, perceived legitimacy, consequences
of the continued use of creative accounting, and measures to be taken to minimize its use.
Additionally, information is relevant when it helps users make economic decisions ( Akpanuko and
Umoren 2018 ). A deliberate error in reporting current inventory can lead to changes in assets; it is
referred to as a result of “polishing”. We collected, and included, data and information in relation to
your request on certifications that will make you more competitive. Ethics frameworks typically
attempt to mention or identify the aspects that concern individuals and society ( Tassadaq and Malik
2015 ). Stable profits are associated with a reduced cost of capital. The principal here being the
shareholders, directs the activities of the agents and thus implies that the agent has to act on behalf
of the principal and based on the principal’s directions. Adobe InDesign Design pixel-perfect content
like flyers, magazines and more with Adobe InDesign. It was concluded that when a company
exceeds its earnings targets, and the managers’ incentives are linked to these targets, it is likely that
the managers defer the reporting of excess profit to offset shortfalls in lean periods in order to attain
persistent bonuses. References Abed, Ibtihal A., Nazimah Hussin, and Mostafa A. Ali. 2020a.
Piloting the Role of Corporate Governance and Creative Accounting in Financial Reporting Quality.
Teams Enable groups of users to work together to streamline your digital publishing. Such practices
originated during the industrial revolution and have continued since then; however, creative
accounting has significantly increased since the 1980s ( Sanusi and Izedonmi 2014 ). In addition,
these contributions were personally examined to remove any duplication, and 332 were selected. It
had been shown that creative accounting comprises manipulating how revenue is recognised and
expenses are accounted for ( Susmus and Demirhan 2013 ). The growing progress in this field
allowed for the timeliness of this study. Pension obligations are future liabilities, and they are easy to
manipulate because businesses need to account for future expenses ( Remenaric et al. 2018 ).
Executes may intentionally diminish provisions by considering uncertain recoveries as favourable
debt recoveries. Through evaluating your literature, you can start to group it by theme. Corporate
governance comprises the organisational processes used to formulate, implement and use internal
controls ( Alzeban 2020 ). In particular, management accounting assists in collecting, processing as
well as communicating information that assists management for control purposes. The Importance
and the Implementation of the Sarbanes-Oxley Act in Albania. Attributes emphasized by this theory
such as experience and education play a vital role in determining the position that one is at. They
found that financial reporting quality deteriorates due to poor internal control and governance
systems ( Bimo et al. 2019 ). It is understood that corporate-governance-specific information
provides value to capital providers.
Depreciation expense can be decreased if the useful life of an asset is considered optimistic.
Kovalova, Erika, and Katarina Frajtova Michalikova. 2020. The Creative Accounting in Determining
the Bankruptcy of Business Corporation. Consequently, the literature offers many different
definitions. Select a research interest from an everyday interest. The authors also are grateful to the
editor and the anonymous reviewers for providing very constructive and useful comments that
enabled us to make additional efforts to improve the clarity and quality of our research. Accounting
standards are the foundation of the accounting system, and these standards define the best practices
in accounting and reporting ( Briloff 1972 ). Simply, ratio means the comparison of one figure to.
The figures which are fed twice a year to the investing public have all been changed in order to
protect the guilty. The Infosys is the I.T sector company has more profitability. Graham, and
Campbell R. Harvey. 2011. Liquidity Management and Corporate Investment during a Financial
Crisis. This study concluded that there was no evidence to conclude that cash and other incentives
were the primary objectives behind creative accounting. These authors determined that the audit
report provides added value for financial reporting by facilitating assurance regarding annual reports;
the users are assured to some degree that faithful representation has been adhered to. They however
have little control over those elected or nominated as the board of directors and this jeopardizes their
chances of controlling those elected as managers. Businesses can use creative accounting to project
themselves more positively; however, this is successful when performed with minimal effect and a
positive application ( Atabay and Dinc 2020 ). The principal here being the shareholders, directs the
activities of the agents and thus implies that the agent has to act on behalf of the principal and based
on the principal’s directions. The two basic components of accounts receivable turnover ratio are net
credit annual sales. Under this standard there was a clear definitions as to what must be shown as a
debt, non-equity shares, and equity shares with clear rules. The CEOs end up manipulating the
financial results to exhibit an effective company whereas the opposite is true (Ofek and Yermack.
2000:1369). Another way that interests can be realigned is through the use of well-designed
corporate governance policies which allow the mitigation of agency problems that have to deal with
creation of rules, checks and balances and processes that will be used to ensure the fiduciary duties
are fulfilled by the directors to the shareholders (Gordon 2005:677). However, placing a cap on how
much one can draw is also important for effective running of the company. Moreover, since
consistency requires that accounting principles are kept the same, the revised figures should be
similar to the previous years’ figures. It is clear from the discussion that executives deliberately
practice creative accounting to characterize their revenue, profits, assets, and other financials to suit
vested interests rather than reflect the business’s precise financial position. It may be used to provide
greater-than-expected asset profitability; average return on investment is one such indicator ( Carlin
and Finch 2011 ). Inventory turnover ratio measures the velocity of conversion of stock into sales.
Usually a. The main objective of the present study is to explore the literature review related to.
Current ratio is the relationship between current asset and current liability. This. If finance costs are
accounted for in production costs, financial outcomes differ because expenses are already accounted
( Lucchese and Di Carlo 2020 ). However, with time, the amount need to steady operations could not
be raised by a single entity and thus required the input of others to make it grow. The most
successful managers need to be recognized by their companies. Al-Ramahi, and Mostafa A. Ali.
2022a. The Moderating Effects of Corporate Social Responsibility on the Relationship between
Creative Accounting Determinants and Financial Reporting Quality. It was indicated that job security
was another potential reason that managers would defer reporting an additional profit ( Kamau et al.
2012 ). This way, managers could use the excess profit during a specified period in another period
with a deficit. 3.1.3. Share Ownership Scheme A share ownership scheme is a commonly used
compensation mechanism, allowing managers, executives, and senior staff to become company
owners.
In contrast, this criterion contributes to extending the applicability of the financial reports. Banks
may indulge in income smoothing to placate individuals who use financial statements for decision-
making ( Hammarback and Karlsson 2020 ). It also simplifies the purchase of long-term funds,
allows management to properly account for the resources entrusted to them, and works as a catalyst
for the expansion and development of the capital market. Corporate-governance-specific information
enhances the likelihood of faithful representation ( Tassadaq and Malik 2015 ). 4.1.3.
Understandability The Australian Accounting Standards Board (AASB) defines understandability as
a fundamental aspect concerning the information presented in financial reports. A high ratio
indicates efficient utilization of working capital and a low. Therefore, investors and other capital
providers find such information useful if present in the annual report. Managers and Remunerations
Given the scorecard, are the effective and hard working managers paid the most remuneration. The
growing progress in this field allowed for the timeliness of this study. The studies’ overall idea is that
executives are lured by the higher earning potential using stock ownership. Control system rests on
adequate and comprehensive analysis of enterprise-wide risks. Articles Get discovered by sharing
your best content as bite-sized articles. It is clear from the discussion that executives deliberately
practice creative accounting to characterize their revenue, profits, assets, and other financials to suit
vested interests rather than reflect the business’s precise financial position. Abed IA, Hussin N, Ali
MA, Haddad H, Shehadeh M, Hasan EF. It identifies the gap between the current (problem) state
and desired (goal) state of a process or product. Financial Resources for Institutions Providing
Dental Care In particular we wish to acknowled. Moreover, information is considered material if its
misrepresentation or omission can affect the decisions of users who rely on the financial reports (
Saleem et al. 2020 ). The definition specified by the AASB Framework is comparable to other
definitions that were suggested in the review period ( Kewo 2017 ). The Infosys is the I.T sector
company has more profitability. The first construct assesses the degree to which annual reports are
indicative of future business scenarios. The primary, but not exclusive, audience should be—as it is
now—academicians, graduate students, and others interested in accounting research.”. Access
Document Review Of literature On Product Disclosure - FCA 4 Literature review: themes specific
to financial services 24 There is a wealth of literature on product disclosure, especially following the
This literature review focuses on studies from the financial services sector. Creative Accounting
Determinants and Financial Reporting Quality: Systematic Literature Review. Annual reports should
be comprehensive, error-free, and neutral so that the information contained within is represented
faithfully. A too high inventory means higher carrying costs and higher risk of stocks becoming. Such
practices can mislead users and investors by using disinformation, which is a significant hindrance to
corporate growth and investment mobilization ( Campello et al. 2011; Jedi and Nayan 2018 ). When
an organisation offers a comparison of the financial results over several years, even without any
change in judgements, estimates, or accounting procedures, financial information comparability is
enhanced. Simply, ratio means the comparison of one figure to. For example, when you write your
paper and hit autoformat, our system will automatically update your article as per the The
Accounting Review citation style. Previous Article in Journal The Impact of Health Impairment on
Optimal Annuitization for Retirees. Nevertheless, a unanimous position was not achieved on the
subject of negative accruals in case the target levels for receiving bonuses were not met. Moreover,
disclosure specific to the comments specified in the balance sheet and income statement might be
useful for providing detailed information concerning earnings ( Cheung et al. 2010 ). Narrative
forms are specifically useful for enhancing understandability.
This will determine how one gets compensated for their skills. Unleashing the Power of AI Tools for
Enhancing Research, International FDP on. A relatively high current ratio is an indication that the
firm is liquid and has the. It is clear from the discussion that executives deliberately practice creative
accounting to characterize their revenue, profits, assets, and other financials to suit vested interests
rather than reflect the business’s precise financial position. Current ratio is the relationship between
current asset and current liability. This. Some researchers did not reach an agreement on this view;
they consider creative accounting a “deliberate intervention in the external financial reporting
process” to benefit specific stakeholders ( Shah et al. 2011 ). The information that is disclosed does
not need to be fraudulent; however, the facts are twisted in a way that can be considered a violation
of the “full disclosure” requirement defined by the International Financial Reporting Standard
(IFRS). Keep on browsing if you are OK with that, or find out how to manage cookies. Several steps
of the review process are depicted in Figure 1. 3. Creative Accounting Widely considered the father
of accounting, Luca Paciolo first introduced the concept creative accounting more than five centuries
ago. In particular, management accounting assists in collecting, processing as well as communicating
information that assists management for control purposes. The Infosys is the I.T sector company has
more profitability. We also want to try the answer whether it is good or it brings company into the
crisis. International Journal of Translational Medicine (IJTM). Though many believe that
performance is imperative, others postulate that traits and effective practices determine who one
becomes and how much they achieve while at the executive position (Yang 2008:654). These
sections typically comprise information with confirmatory value ( Elsiddig Ahmed 2020 ). 4.1.2.
Faithful Representation Faithful representation is the second fundamental qualitative aspect. The
covering of this system's evaluation in this report has been achieved as part of an accounting
assessment, which is part of the AAT level 4 accounting. The predictive value is the most significant
aspect concerning relevance because it affects decision usefulness and allows for the measurement of
predictive value using three constructs. European Journal of Investigation in Health, Psychology and
Education (EJIHPE). Moreover, no clear approach was followed in this research ( Krishnan et al.
2020 ). From the limitations of the above studies, according to a review of the literature on creative
accounting, the issues in measuring creative accounting and assessing its impact need immediate
attention. Consequently, the literature offers many different definitions. Figure 3 displays the
creative accounting techniques. 3.3. Effects of Creative Accounting Creative accounting has been
seriously considered in recent years due to numerous accounting scandals in large corporations (e.g.,
WorldCom and Enron). Creative accounting is a critical challenge that has been the cause of major
financial crises ( Mudel 2015 ). Depreciation and useful life are other ways in which businesses
practice creative accounting. Independent’t’ test was used to find the difference in the disclosure of
Human. The fundamental of faithful representation is to document economic activity without any
manipulation. But some scholars are of the opinion that the increasing changes within the
shareholders’ portfolio in various times become problematic (Jensen and Fuller 2002:45). Authors
have used several attributes to characterise relevance. Generally, the cost of goods sold may not be
known from the published financial. Tangible results are staggered throughout the contract fulfilment
using a percentage-based technique. Financial performance across different industries, whether CSR
programs add value to intangible assets such as brand, and how transparency of CSR reporting
impacts stakeholder decisions and, ultimately, financial performance.. Access Doc Performance
Management - Wikipedia First, a commitment analysis must be done where a job mission statement
is drawn up for each job. There is extensive discussion in the literature concerning the precise
definition of creative accounting and its ethical aspects.
Income smoothing refers to the tweaking of income levels to provide an indicator of typical business
performance so that management objectives can be met ( Saleem 2019 ). Journal of Functional
Morphology and Kinesiology (JFMK). Hence, a firm having a high liquidity ratio may not have a.
Let us write or edit the literature review on your topic. Accounting disclosure in selected Indian
companies. 20 companies were. Conflicts of Interest The authors declare no conflict of interest, as
the authors are the funders of this research. It was asserted that organisations engage in income
smoothing when the company’s financial performance does not meet the expectations ( Trisanti 2016
). Document Retrieval INNOVATION AND BUSINESS PERFORMANCE: A LITERATURE
REVIEW Confused and the link between innovation and business performance remains to be
proven. This has led to adoption of modern information systems as evidenced by the shift towards
management accounting. Users may want to compare financial statements from different periods or
statements from different companies for one or more periods; comparability is the characteristic that
facilitates users to achieve this objective. Pension obligations are future liabilities, and they are easy
to manipulate because businesses need to account for future expenses ( Remenaric et al. 2018 ).
Executes may intentionally diminish provisions by considering uncertain recoveries as favourable
debt recoveries. The manipulation of accounts is the deliberate change and falsification of financial
data to meet the management’s objectives. The volume of sales can be increased by following a
liberal. Accounts receivable turnover ratio or debtors turnover ratio indicates the number of times.
Many companies have become victims of these accusations with many more suffering price losses
and even closures as a result of having their executives drawing more from the bank than the
company would handle. This has been seen as a direct result of the 163% rise in the CEO pay in a
span of 20 years compared to 10% over the same period of time (Zhang et al. 2008: 245).
Shareholders are also getting worried that there are continued discrepancies between executive
compensation and firm competence which brings the question of why the payment plans are skewed
as such. It should be noted that businesses have grown from small entities to large corporations that
are not owned by one but by many shareholders and executive directors who have different roles. As
a result of this, the 1951 convention sought to bring all the remunerations at par within the
companies without watering down the motivation of all the employees. The reputation of one of the
world’s greatest entrepreneurs was questioned. Abed, I.A.; Hussin, N.; Ali, M.A.; Haddad, H.;
Shehadeh, M.; Hasan, E.F. More from ijcite V3 e6-017Educational Media Awareness Among The
Higher Education Teachers-An A. Hello everyone! Today we'll cover the very basics on how to
become a res. Hence, businesses operations in comparable scenarios select similar accounting
techniques ( Kardan et al. 2016 ). Dissimilarities between the figures stated in annual reports that do
not occur due to performance are expected to be removed ( Rashid 2020a ). However, the average
remuneration package offered at the entry level is also competitive with the other professions. This
will ultimately lead to less erosion of shareholder value in particular, and economic resources in
general ( Shehadeh et al. 2022 ). Moreover, this study was limited by corporate enterprises in the
private sector only. But the level of inventory should neither be too high. The agency issue and
related challenges mandate the need for financial disclosure and reporting. Please let us know what
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Page You are on page 1 of 9 Search inside document. Dr. S. Nirmala, Deepthy. K:: A Study Of
Cointegration Between.
Subscribe to receive issue release notifications and newsletters from MDPI journals. Vital aspects of
this relationship include information asymmetry due to evasive action, conflicts of interest,
concealing information, aspects of moral hazard, and adverse selection. From the perspective of a
potential future investor, there is a chance that the project will be scrapped. Human resource
accounting is of recent origin and is striving for. Profession objectives are established to meet the
highest levels of performance and meet the public interest. Kovalova, Erika, and Katarina Frajtova
Michalikova. 2020. The Creative Accounting in Determining the Bankruptcy of Business
Corporation. Elamer, and Eshani Beddewela. 2019. Doing Good with Creative Accounting. Quest
International Multidisciplinary Research Journal, I (II), 155-158. Numerous financial scandals led to
the passing of the Sarbanes Oxley act. We also try to look on the accounting standard parts which
allow creative accounting and how it should be modified by the accounting authorities to reduce the
effect of creative accounting because in present scenario, the accounting standards have some
loopholes which provide alternative methods of accounting e.g. Recognition of revenue, methods
charging for depreciation, recognition of cost etc. Select a research interest from an everyday
interest. Financial reports may be manipulated because contracts and target-based bonuses are
correlated with stronger financial reports ( Alit 2017 ). In concise we perceived that a large body of
theoretical and empirical research has been. In which it is analysed who will be responsible for the
failure of the company. Evaluating The Strength Gain And Structural Properties Of Self-Compacting
Con. The primary, but not exclusive, audience should be—as it is now—academicians, graduate
students, and others interested in accounting research.”. Journal of Low Power Electronics and
Applications (JLPEA). The trade debtors for the purpose of this ratio include the. They however
have little control over those elected or nominated as the board of directors and this jeopardizes their
chances of controlling those elected as managers. Dr. S. Nirmala, Deepthy. K:: A Study Of
Cointegration Between. Ghorbani, Behrooz, Mehrdad Ghanbari, Babak Jamshidi Navid, and Ali
Reza Moradi. 2020. Big Bath and Insolvency. Content Retrieval ABSTRACT Title Of Dissertation:
INTERNAL CONTROL, ENTERPRISE. Income smoothing is performed considering a long-term
perspective because it allows for organisations to project themselves as consistent and stable. This
will also allow academic research to prepare to objectively detect and inform creative accounting
practices. Usefulness and materiality are two critical attributes used to define relevance from the
1960s to the 2000s. Multiple requests from the same IP address are counted as one view. Creative
Accounting Determinants and Financial Reporting Quality: Systematic Literature Review.
Importance of Aligning Interests Corporations, as stated above, were first an individual or personal
entity. Resources Dive into our extensive resources on the topic that interests you.