Off-balance sheet accounting data plays an important role in the management of the enterprise and should be disclosed in the reporting, because the transactions recorded on off-balance sheet accounts ...may in the future cause changes in the balance sheet assets, liabilities, income, expenses and financial results of the enterprise. The purpose of the article is to summarize the theoretical and methodical bases of the disclosure of off-balance sheet accounting data in the financial statements of the enterprise and to develop recommendations for their improvement to form the quality information support of the management system of business entities. The critical analysis of the theory and practice of disclosure the off-balance sheet items in the financial statements has made it possible to determine problematic aspects and outline directions for their improvement in accordance with the information needs of external and internal users. The improvement of the financial statements of the enterprise, namely Notes to the annual financial statements, was proposed by introducing the section “Information about off-balance sheet items”. In this section the data about the availability and movement of off-balance sheet items will be disclose in the context of classification groups: values that not owned, but temporarily owned, operated, or stored; conditional rights and obligations of the enterprise; objects of operational control. Authors recommend disclose the value of intangible, long-term biological and other non-current assets that are leased out under operating leases in the notes to the annual financial statements. In addition, the depreciation should be disclosed in the context of depreciation of property, plant and equipment, non-current assets, non-current assets. It will ensure the clarity and accessibility of the reporting information and will help to increase the confidence of potential investors and partners to enterprise.
I examine a dataset of both quantitative (hard) adjustments to firms' reported U.S. GAAP financial statement numbers and qualitative (soft) adjustments to firms' credit ratings that Moody's develops ...and uses in its credit rating process. I first document differences between firms' reported and Moody's adjusted numbers that are both large and frequent across firms. For example, primarily because of upward adjustments to interest expense and debt attributable to firms' off-balance sheet debt, on average, adjusted coverage (cash flow-to-debt) ratios are 27 percent (8 percent) lower and adjusted leverage ratios are 70 percent higher than the corresponding U.S. GAAP ratios. I then find that Moody's hard and soft rating adjustments are associated with significantly higher credit spreads and flatter credit spread term structures. Overall, the results indicate that Moody's quantitative adjustments to financial statement numbers and qualitative adjustments to credit ratings enable it to better capture default risk, consistent with it effectively processing both hard and soft information.
The Bank of Japan has purchased long-term Japanese government bonds under the Quantitative and Qualitative Monetary Easing (QQE). To study monetary policy after the Bank of Japan exits the QQE, we ...develop a model in which the fiscal authority commits: (ⅰ) not to making fiscal adjustments needed to stabilize government debt and (ⅱ) not to providing financial supports for the central bank that incurs losses on its balance sheet due to a decline in the price of long-term bonds. Within this framework, this study investigates how the interaction between these commitments reduces the ability of monetary policy to control inflation after liftoff from the zero lower bound. We consider a situation in which the central bank that holds long-term bonds raises the nominal interest rates and show two key results: (ⅰ) when the Taylor principle is violated, under certain conditions, inflation right after liftoff cannot overshoot the central bank’s target; (ⅱ) when the central bank follows the Taylor principle, under certain conditions, it cannot prevent the economy from converging to the deflationary steady state.
•We study inflation after a central bank exits quantitative easing.•The fiscal authority is assumed to commit to a certain sequence of primary surpluses.•In addition, it is assumed not to cover losses on the central bank’s balance sheet.•There is an upper bound of inflation that the central bank can achieve.•When the upper bound is relevant, inflation cannot hit the central bank’s target.
Abstract
We study the effects of central bank balance sheet policies—namely, quantitative easing and foreign exchange interventions—in a model where people form expectations through an iterative ...level-k thinking process. We emphasize two main theoretical results. First, under a broad set of conditions, central bank interventions are effective under level-k thinking, while they are neutral in the rational expectations equilibrium. Second, when preferences exhibit constant relative risk aversion, asset purchases increase aggregate output if they target assets with pro-cyclical returns but reduce it if asset returns are counter-cyclical. Finally, we empirically show that forecast errors about future asset prices are predictable by balance sheet interventions, a property that differentiates our channel from popular alternatives, such as portfolio-balance and signaling channels.
Critics have alleged that securitization accounting prior to 2010 was among the causes of the recent financial crisis. In response to this criticism, the Financial Accounting Standards Board (FASB) ...implemented two new accounting standards, SFAS 166 and SFAS 167, to improve the financial reporting for securitizations. Bank regulators have stated their belief that SFAS 166/167 will result in a consolidated balance sheet (and risk‐based capital ratios based thereupon) that better reflects a bank's exposure to risk related to securitized assets. We document that, by ceding retained power or influence through the servicing/special servicing functions to third parties, SFAS 166/167 resulted in real effects to the extent that banks (particularly those that were weakly capitalized) achieved their accounting objectives in the post‐SFAS 166/167 period through legitimate transaction structuring in line with the intent of the new rules. Further, we use capital market participants’ assessments of risk retention by sponsoring banks as a benchmark, and provide evidence consistent with bank regulators’ beliefs. In particular, following SFAS 166/167, equity investors of sponsoring banks do not consider (consider) as risk relevant securitized assets that receive off‐balance sheet (on‐balance sheet) treatment. Securitized assets that are consolidated under SFAS 166/167 exhibit the same risk relevance as assets that are not securitized, despite contractual provisions that would seem to imply substantial risk transfer.
Atmospheric resources provide important support for human economic and social systems through their unique ecosystem service functions. Implementing the off-office auditing of atmospheric resources ...for leading cadres holds great strategic significance for fundamentally solve air pollution problems. Exploring the compilation of an atmospheric resource balance sheet is a necessary pre-step in the implementation of outgoing audits. In this paper, atmospheric resources are innovatively divided into atmospheric capacity resources and atmospheric quality resources from the perspective of the ecosystem service functions of atmospheric resources. The value of atmospheric resource assets is calculated by combining the environmental capacity value method and the environmental loss evaluation method. This study evaluates atmospheric ecological achievements based on the atmospheric resources balance sheet and related accounts as the data carrier and opens up the key “blocking point” of the off-office auditing of atmospheric resources. This paper takes Anhui Province as an example and applies the accounting results of the prepared atmospheric resource balance sheet to evaluate the atmospheric resource ecological achievements of leading cadres from 2016 to 2020. The results clearly reflect the ecological achievements and shortcomings of local leading cadres during their tenure.
Land resources are the material basis for human survival and development. Rapid economic development in the past has resulted in the over-utilization of land, and the undervaluation of land in market ...transactions has further exacerbated the loss of land benefits. This calls for monitoring the quantity and quality of land and reversing the undervaluation of land to reduce the waste of land resources. Based on this, a scientific natural capital accounting system of land resources should be established to understand the quantity and value of land resources in time. In order to provide a comprehensive evaluation of land utilization, this paper introduces the idea of compiling the land resources balance sheet. First, the physical quantity of land is calculated through the ecological footprint method improved by net primary productivity. Second, the value quantity of land is calculated through the equivalent factor method which is improved by the biologically productive land area obtained above, and then using ArcGIS to further demonstrate spatial and temporal changes in land resources. Taking the relevant data of Chongqing from 2000 to 2020 as an example, the land status is comprehensively evaluated from multiple perspectives, including quantity, value and spatial distribution. The results show that: (1) Under the dual impact of changes in the physical quantity and the unit price of land, the value quantity of land assets and equity in Chongqing realized 5.9 times and 5.1 times growth respectively during the study period. (2) Grassland was the most productive land type in Chongqing. Over a long time period, Chongqing prioritized the development of animal husbandry, placing too much emphasis on the production function of grassland and neglecting ecological protection, which was caused by an imbalance in the pasture area. In 2020, grassland utilization exceeded 40.9 % of the carrying capacity. (3) The value quantity of land in Chongqing existed in a spatial distribution pattern that was high in the southeast and northeast and low in the center and west, and there was a great imbalance in its growth rate among regions. The research results are helpful to the rational utilization and standardized transaction of land resources in Chongqing, and provide references for the inclusion of land resources in the management of state-owned assets.
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•The accounting system of land resource balance sheet is constructed.•The “land assets”, “land equity” and “land liabilities” are reasonably expressed through the ecological footprint.•Land quality is considered in the calculation of land ecosystem service value.
This article discusses the issues caused by traditional water resource development and utilization, as well as policy issues in China that have led to a water crisis. The article proposes a ...theoretical approach along with a quantitative accounting of water resources, in order to solve these problems. To improve the value accounting method for water resources, the study focuses on a unified accounting perspective of water quantity and quality, allowing for an evaluation of water use efficiency and quality. The study uses prefecture-level cities in Hubei Province as a case study and finds that the water use efficiency of these cities has constantly improved, while water quality has shown an annual improvement. Water resource assets, liabilities, and net assets have increased, but with fluctuations. The study shows differences in water resource assets, liabilities, and net assets in the eastern, central, and western regions of Hubei Province. The unified accounting perspective of water quantity and quality provides a new idea and method for the preparation of water resource balance sheets and will effectively improve the management level and efficiency of water resources.
SYNOPSIS
Accounting for corporate leasing activities has been examined and debated for more than 30 years. Currently both the Financial Accounting Standards Board (FASB) and International Accounting ...Standards Board (IASB) are developing standards to modify financial reporting for operating leases, which are currently reported off-balance sheet. In light of these proposals, we examine existing literature to better anticipate possible effects of any changes. Namely, we review existing studies to understand why firms engage in operating leases and how information about these arrangements impacts users. First, we review studies directly examining leases. As that review reports, some studies show that companies engage in off-balance sheet leasing at least in part to manage financial statement presentation. Other studies, however, suggest that firms utilize operating leases to manage costs and preserve capital. In general, the research reports that lenders, credit rating agencies, and other capital market participants sufficiently understand off-balance sheet leases and consider them in their decision making. Second, we provide commentary on one of the current proposals' more debated areas and a current point of FASB and IASB divergence: classification of expenses associated with operating leases. While the IASB proposes disaggregating interest and amortization elements, the FASB proposes reporting a single, combined lease expense. However, very little research explicitly addresses expenses associated with operating leases. Existing studies do, however, suggest that information disaggregation, particularly with regard to operating and financing activities, is important. Our review may be useful to regulators as the reporting standards for operating leases are debated.
Economic-financial analysis is the means by which a company can identify its own strengths and weaknesses, in relationship to the means at its disposal, as well as the opportunities and threats that ...it is facing. The economic-financial analysis represents a managerial tool meant to proceed to the examination of an economic entity, in order to identify and solve the problems that arise. The process of managing and administering the company, regardless of the field of activity and the proposed purpose is complex. The appreciation of the differences in performance and financial position depends on the nature of the company as well as on the system of instruments used in wealth management. The basis of our research and results for this company was the economic-financial analysis through which we identified its strengths and weaknesses in relation to the means at its disposal, but also the opportunities and threats to it. The objectives of the research are the analysis of certain indicators in order to identify and solve the problems that this company faces in an aggressive competitive environment, to anticipate the movements of the competition and to self-evaluate the resources it has. These objectives were achieved and explained through the diagnostic analysis within the article.
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