Aloke Ghosh

(Wall Street Journal) – Intel Corp. will use a new presentation of its operating segments when it reports first-quarter results on April 14, reflecting the formation of its client computing group.

Intel Chief Executive Brian Krzanich told employees in November that the semiconductor company would combine operations that handle chips for personal computers with those targeting smartphones and tablets.

Intel also said it would discuss its goal to improve mobile profitability by $800 million this year. Read the full story.

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Shareholder Participation Improves Financial Reporting Quality

Fewer restrictions on shareholder participation correlate with a relatively low incidence of accounting restatements, according to a new study. The study, entitled “External Corporate Governance and Misreporting,” analyzed external provisions that limit direct shareholder participation in the governance process. The paper was recently accepted for publication in the journal Contemporary Accounting Research, and was written by Lihong Liang of Syracuse University’s Martin J. Whitman School of Management, William Barber of Georgetown University, Sok-Hyon Kang of George Washington University, and Zinan Zhu of the National University of Singapore. Read the full story.

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Unusual Year Might Impact Oil and Gas Financial Reporting

Over the years, the world has become familiar with oil price fluctuations and the impact they have on oil and gas financial reporting. The supply of oil is affected by numerous factors including wars, growing economies, regulations, new discoveries, etc.  In 2014, we saw crude oil prices cut in half in just a few months.  Starting in August, prices began falling and, by year-end, they were at their lowest point in over five years.

2014 is now behind us and many entities are preparing their financial statements. As oil and gas exploration companies go through this process, it’s important to keep in mind that the unusual fourth quarter we experienced could result in major financial reporting issues. Read the full story.

Vanguard tops mutual fund survey with $291bn in new business

Vanguard was the world’s most popular investment group last year as it attracted more new business than any other asset manager in the $29tn global mutual fund industry. Read the full story.

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GASB Finalizes Fair Value Measurement Guidance for State and Local Governments

The Governmental Accounting Standards Board has released finalized guidance on accounting and financial reporting issues related to fair value measurements, primarily applying to investments made by state and local governments.

GASB Statement No. 72, Fair Value Measurement and Application, defines fair value and describes how fair value should be measured, what assets and liabilities should be measured at fair value, and what information about fair value should be disclosed in the notes to the financial statements.
Read the full story.

Tech Going Big In IG Bond Markets

So far this year, issuance from tech firms has been setting a range of new records in the corporate debt arena. According to data provider Dealogic, tech sector debt issuance has reached a new high of USD26.3bn in 2015, marking a more than two-fold increase from the USD10.6bn in issuance recorded by the same stage in 2014. Within this rally, debt capital market (dcm) investors are displaying a hunger for paper being sold by more sizable and well-rated firms. As a result, the average deal size of tech bonds worldwide has reached its highest level yet, at USD2.2bn per deal. Read the full story.

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This article was published on the Financial Executives International (FEI) website on 2/11/2015.

Financial reporting from family-owned firms is cheaper, more accurate and of an overall better quality than other types of companies, according to a new study.

“Our findings provide compelling evidence in favor of the explanation that auditors charge less from family firms because of superior reporting quality, which lowers audit risk and, therefore, the need for greater audit investments,”  concludes a study conducted by Professor Al (Aloke) Ghosh, Professor of Accountancy at the Zicklin School of Business at Baruch College in New York.

The paper was recently accepted for publication in the Journal of Accounting and Economics.

The study focuses on pricing of audit engagements as a proxy for disclosure quality, arguing that because financial reporting quality affects audit risk, that robust financial disclosure will be reflected in how auditors price engagements. Read the full story.

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IAASB Proposes Changes for Auditor Reporting on Special Purpose Financial Statements

The International Auditing and Assurance Standards Board has issued proposals aimed at improving auditor reporting on special purpose financial statements.

The exposure draft proposes changes to two of the newly revised International Standards on Auditing: ISA 800, “Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks,” and ISA 805, “Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement.” Read the full story.

The Headwinds Facing Active Mutual-Fund Managers: Three Forces That Drag Down Performance

It’s widely accepted these days that most actively managed mutual funds routinely deliver below-average results and underperform their benchmarks.

But C. Thomas Howard, director of research at Denver-based AthenaInvest, begs to differ: “Ninety percent of funds are superior stock pickers,” he says, and 80% are good enough to cover the fees they charge investors.

Mr. Howard cites a wide range of research, some of it his own, showing that 80% or more of equity-fund managers beat their benchmark until fees and costs come into play.

But if 90% of managers are good stock pickers, expense ratios alone don’t explain why so many funds are mediocre. Read the full story.

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Tailored Accounting at IPOs Raises Flags

Wall Street Journal recently reported that forty companies went public in 2014 reporting losses under traditional accounting rules but showing profits under non-GAAP (pro-forma) measures. According to consulting firm Audit Analytics, about 18% of all U.S. initial public offerings for the year 2014 reported a profit under a non-GAAP measure when the company reported a loss under US GAAP which is the highest level since at least 2009.

Critics are wary of this reporting method, stating that companies’ increased use of Customized Earnings Measures could confuse investors. Read the full story.

IAASB Finalizes Standards for Improving Audit Reports

The International Auditing and Assurance Standards Board has released newly revised standards for overhauling auditor reports, with the goal of enhancing the auditor’s report for investors and other financial statement users, Accounting Today recently reported. Read the full story.

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The Most Important Financial Reporting Stories of 2014

There were many financial reporting stories of 2014. Check out these top 10 most important stories of 2014, including:

• The U.S. Securities and Exchange Commission’s forthcoming Concept Release on Audit Committee disclosures
• The joint converged Revenue Recognition standard from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB)
• SEC enforcement and rule making initiatives of the Public Company Accounting Oversight Board (PCAOB).

These items and more are highlighted among our pick of our ‘top ten’ posts of 2014. Read the full article.

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