Graduation Research Discussion

بسم الله الرحمن الرحيم

مناقشة بحث التخرج

Graduation Research Discussion

Al-Azhar University - Gaza

Faculty of Economics and Administrative Sciences

Department of Accounting

Research title

The effect of using “IAS” in improving the quality of interim financial reports

" Case study applied into banks sector in southern area in Palestine "

Prepared by :

Alaa Aldeen Jamal El Hattab

Nimr Basher Serhan

Supervised  by :

Dr. Iskander M. Nashwan

May , 2015

قال تعالى :

بسم الله الرحمن الرحيم

(  إنا عرضنا الأَمانة على السموات والأرض والجبال فأبين أن يحملنها وأشفقن منها وحملها الإنسان  إنه كان ظلوما جهولا )  الأحزاب 72

صدق الله العظيم

Acknowledgment

As we have finished our graduating research with the help and care of God Almighty. We have done our Best to make it . A useful and objective research through the information included in it. We never forget to thank heartily our dear Professor Dr. Iskander M. Nashwan . For the great efforts and help that he offered to us which facilitated our  mission and lit the way to us. Thanks heartily also to every one offered a hand to help us whatever small his help was to finish this research and bring it to existence in a way we hope to be a source for estimation and admiration for the honorable supervisor on this research and every one go through it . We hope that god help us in undertaking the trust finely.

God granted for success

Abstract

This research mainly aims to clarify the effect of the use of international accounting
standards (IAS) to improve the quality of interim financial reports, and indicate of the
qualitative characteristics that should be enjoyed by these reports according to IAS 34,
Interim Financial Reporting.

The target population of this study was (60), consists of Accountants and mangers and the study sample size was chosen to be totally (30) represents 50% from the population of study into banks sector in South Palestine , based on the Random sample method.

The study results show:

1.      About the first dimension, the researchers arrived to there is a positive statistically significant relationship between the management decisions and information provided by interim financial reports.

2.      About the second dimension, the researchers arrived to there is a positive statistically significant relationship between the investor’s decisions and information provided by interim financial reports.

3.      About the third dimension, the researchers arrived to there is a negative statistically significant relationship between misstatements, errors and the quality of information provided by interim financial reports.

4.      About the fourth dimension, the researchers arrived to there is a positive statistically significant relationship between the stock prices and the quality of information provided by interim financial reports.

The study also come up with a sect of recommendation and this is the most important of   recommendation:

1.      The Researchers Supported and confirmed the significant role of international accounting standards is effected on the quality of Interim Financial Reporting.

The Researchers Supported and confirmed the significant role of using international accounting standards into management decisions , investor’s decisions and stock prices through the quality of information provided by interim financial reports.

1. Chapter one : General Framework of the Study

1.1 Introduction :

This  study examines The effect of using International Accounting Standard 34 (IAS 34) on improving the quality of interim financial reports by banks sector in southern area in Palestine. the demand for interim financial reporting and disclosures arose from information asymmetry and agency conflicts between managers and outside investors. Providing more financial information should lower the information asymmetry and therefore improve the decision-making process. Management should also be able to behave in a more transparent way by communicating firm’s performance and governance to outside investors and other stakeholders. 

Since 2009 the European Transparency Directive made it mandatory for SEC listed companies to issue interim reports or periodically updates (Dinant, 2009). Before 2009 it was only mandatory to issue a semi-annual report. European listed companies are obliged to provide their interim report in accordance with the International Accounting Standard (IAS) 34, one of the International Financial Reporting Standards (IFRS). In 1998 the International Accounting Standards Board (IASB) issued IAS 34, which was effective since July 1 st, 1999. In this study They investigated the relationship between using International Accounting Standard 34 (IAS 34) and improving the quality of interim financial reports was investigated for Palestine some listed companies.

IAS 34.8 provides the contents of an interim report:

- condensed statement of financial position (balance sheet);

- condensed statement of comprehensive income;

- condensed statement of changes in equity;

- condensed statement of cash flows; - selected explanatory notes.

“IAS 34 ‘Interim Financial Reporting’ prescribes the minimum content of an interim financial report. It outlines the recognition and measurement principles which are to be followed in interim financial statements.”

 “ According to the interim financial reporting process, they demonstrate the annual reporting process decreases managers’ tendency to manage earnings upward. Also, their findings show that managers bring into play downward expectations of management as an option method to make surprise earnings games when their capability to manage earnings upward is restricted. ” (Javad Darjezi1 and Ehsan Khansalar, 2013 , p 121-123)

“ An interim financial report may contain either a complete or condensed set of
financial statements for a period shorter than an enterprise’s full financial year.
IAS 34 defines the minimum content of an interim financial report, including
disclosures. IAS 34 also prescribes the accounting recognition and measurement
principles that should be applied in an interim financial report. ” (P. L. Joshi and Wayne G. Bremser, 2003 , p.107)

1.2 Research problem :

When providing information about interim periods, according to IAS 34, managers have to make estimations about their effective it’s on improving the quality of interim financial reports by banks sector in southern area in Palestine.

IAS requires disclosure of total assets and total liabilities where there has been a material change from the total assets and total liabilities disclosed in the last annual consolidated financial statements, if this information is provided to the chief operating decision maker (CODM) on a regular basis. To fulfil this requirement, the Group has disclosed segment assets and liabilities at the end of the current period and at the end of the most recent annual financial year.

“ IAS 34 for interim reporting does not mandate which entities should publish interim reports, how frequently, or how soon after the end of the interim period.2 However, governments, securities regulators, stock exchanges, and accounting bodies often require entities to publish interim reports. However, it is not empirically researched that those forecasts give an insight in future earnings. ” (René van Gassen, 2010, p.9)

Therefore the main research question of this study is:

Are International Accounting Standard 34 effective in improving the quality of interim financial reports?

To provide a reasonable answer to the main research question, the following four sub questions were elaborated:

                      

1.      What is the nature of the relationship between the management decisions and the information provided by interim financial reports for investors?

2.      What is the nature of the relationship between the investor’s decisions and the information provided by interim financial reports for management?

3.      What is the nature of the relationship the stock prices and information provided by interim financial reports?

4.      What is the nature of the relationship between misstatements and errors with the quality of information provided by interim financial reports?

1.3 Research hypotheses:

The main hypothesis:

There is a statistically significant relationship between using International Accounting Standard 34 (IAS 34) and improving the quality of interim financial reports.

Divided in four sub hypothesis as:

1.      There is a statistically significant relationship between the management decisions and information provided by interim financial reports.

2.      There is a statistically significant relationship between the investor’s decisions and information provided by interim financial reports.

3.      There is a statistically significant relationship between misstatements, errors and the quality of information provided by interim financial reports.

4.      There is a statistically significant relationship between the stock prices and information provided by interim financial reports.