While the extractive industries (EI) are of major significance economically, the reporting of their activities has been the subject of contentious debate posing dilemmas for regulators and standard setters over many decades. In order to ensure alignment with the International Accounting Standards Board (IASB) research project on EI, we first identify some important economic characteristics of EI and associated accounting challenges together with an overview of how current accounting standards deal with these challenges using International Financial Reporting Standards as the focus. Second, we conduct a review of extant research on EI reporting analyzed around the key areas of: (a) international diversity of accounting practices and the challenges facing information users; (b) standard-setting processes and lobbying behaviour that deals with why the IASB (and other standard setters) have not succeeded in developing rigorous standards for extractive activities; (c) the reporting of oil, gas, and mineral reserves, given that large proportions of the assets of EI firms (the reserves) are off-balance sheet; (d) environmental, social, and governance (ESG) reporting dealing with how EI firms have increased their reporting of ESG information in response to regulatory demands and pressure for voluntary disclosures; and (e) other EI related topics such as earnings management, risk disclosures, and voluntary disclosure behaviour. Finally, we present some conclusions together with suggestions relating to key areas for future research on EI reporting.
The current paper was prepared for the International Accounting Standards Board (IASB) Research Forum 2017 and evaluates the effects of introducing more principles of disclosure as part of the IASB Disclosure Initiative. We perform a literature review of academic research on how entities have complied with disclosure requirements in the past. The review shows high levels of noncompliance and high volatility across entities, including poor disclosers being far below the average. We find no clear pattern of higher compliance for International Financial Reporting Standards (IFRS) with more reliance on disclosure principles as compared to specific requirements (i.e. IFRS 7, IFRS 8), but note the methodological problem of measuring compliance with disclosure principles. Academic research suggests that the degree of compliance depends on entities' incentives for providing or withholding information in combination with local conditions for primary users, auditors and regulators. Based on our review, we argue that increased reliance on entities to act in 'good faith' when complying with disclosure requirements, in capital-market contexts where entities may be in highincentive situations and have low costs of non-compliance, is potentially risky in terms of how well the Standards protect primary users from poor disclosers. More emphasis is needed on ensuring that the disclosure requirements are enforceable and auditable in order to secure a certain minimum level of disclosure.
This paper investigates the usefulness of the external audit to a listed client company. The research questions focus on what the auditors discovered, the subsequent auditor-client interaction, and the ways in which this was useful to the client company. The study proceeds from the management letters produced by the auditors in the period 1999-2001. On the basis of these reports, interviews were conducted with financial managers at different organisational levels. The data collection and analysis of the data follows a grounded theory approach. The results suggest that the usefulness of the audit to the client company was primarily linked to the way the management letters, and the auditor-client interaction related to the management letters, supported the client's management control system. Improved management control was achieved as a result of co-operation between the audit firm and the client company's central accounting and finance department, that put pressure on the subordinate units. The reported benefits for the client company must be weighed against potential threats to auditor independence, and the paper also includes empirical results that indicate risks of auditor dependency on the client's accounting and finance department.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
customersupport@researchsolutions.com
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.