Opinion

This study analyzes a sample of financial restatements from 2011 and 2012 as a way to assess a proposed “five percent rule of materiality” for financial reporting decisions. Such a rule claims the average investor is only influenced by income restatements greater than five percent. Market reactions are observed through stock price, volume, and bid-ask spread following the restatement in the Form 10-K/A. The study finds only some firms restating net income by more than five percent experience statistically significant reactions in two of these metrics.

The interpretation and application of an accounting standard could be a complex task especially in those cases where a slightly different interpretation could lead to materially different financial results. The most difficult part of an accountant’s work life is to accurately apply the accounting standards without compromising on the fair presentation of financial data and that’s a skill which needs ...

The existential threat to Pakistan starts with the letter ‘T’. It’s ‘Taxes’. More precisely, it’s the lack of a fair and equitable taxation system, and the unwillingness and inability of successive governments to fix it.

United States public companies are navigating new reporting and monitoring demands arising from new regulation and societal trends. The Sarbanes-Oxley Act (SOX) and the apparent conversion of US Generally Accepted Accounting Principles (GAAP) to the International Financial Reporting Standards (IFRS) have created reporting issues for US companies.

Even though the Federal Board of Revenue (FBR) appears determined to widen the tax net and is undertaking some unconventional measures as well to rein in the evaders, not much change can be expected from resource mobilisation effort in the year 2012.

The Securities and Exchange Commission of Pakistan (SECP) has decided to streamline investments made by listed companies in associated firms, much of which is made without proper disclosures to the shareholders.

The 1973 Constitution provides for eliminating all forms of exploitation on the basis of, ‘from each according to his ability, to each according to his work.’ Deviating from this fundamental principle, our successive governments have failed to develop a fair taxation system.

The Securities and Exchange Commission of Pakistan (SECP) is on a relaxation spree, amending rules and regulations governing the markets. Almost on a weekly basis, it issues a statement that certain legal requirements have been ‘streamlined’, ‘revised’ or ‘relaxed’, in the ‘interest of the market.’

With a futuristic approach, Islamic banks are now trying to find Shariah-compliant mode for overnight borrowings from the State Bank discount window. The Islamic banking committee of Pakistan Banks Association is fine-tuning a proposal for this purpose to present it to the State Bank.

Financial regulators seem to be in search of their role far beyond the bee-line of notifications and circulars, as there is scarce little that appears to have been done to reform and govern. The banking and corporate regulators have shuffled their feet and shifted their gaze towards the Standing Committee of the Senate on Finance, when called upon to answer difficult questions.