ارزش منصفانه در گزارش مالی: مشکلات و بروز اشتباه در عمل: مطالعه موردی تحلیل به کارگیری ارزش منصفانه در شرکت Enron
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|25||2008||20 صفحه PDF||سفارش دهید||4770 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Accounting Forum, Volume 32, Issue 3, September 2008, Pages 240–259
This paper contributes to the debate on the use of mark to market accounting in financial reporting by means of a case study-based examination of the use of mark to market accounting by Enron Corp. in the years immediately preceding its collapse. Set in the context of historical developments in and theoretical discussion upon asset valuation and income measurement, the case study highlights: (i) the ease with which Enron was able to ‘monetize’ physical assets so as to bring them within the remit of mark to market accounting; (ii) the unreliability of valuation estimates provided by independent third parties; and (iii) the asymmetry between management desire to recognise mark to market gains through the income statement in contrast to their desire to avoid recognising mark to market losses. Notwithstanding the particular features of the Enron case, it is argued in the paper that these issues are generic and should be taken into account by standard setters as they move toward encouraging more widespread use of mark to market accounting under IAS 39, SFAS 157 and previous statements, and by other regulators with an interest in the provision of financial information to the capital markets, such as the SEC in the US, the FSA/FRC in the UK, and the ASIC/FRC in Australia.
Issues as to the most appropriate manner in which to record assets and liabilities in the balance sheet, and how to reflect changes in these measures in periodic statements of income, have been integral to financial reporting since the development of balance sheet oriented financial statements in the nineteenth century and the emergence of the income or profit and loss statement in the twentieth. In the nineteenth century and earlier, a variety of balance sheet valuation bases were employed in the UK and elsewhere (Herrmann, Saudagaran, & Thomas, 2006; Richard, 2005 and Yamey, 1977). Over time, however, the historical cost approach in which assets are recorded at cost and, if they have a finite life, written off over that life, became the dominant convention in the UK, the US and many other jurisdictions. In the twentieth century there emerged an academic literature which sought to determine the most appropriate valuation bases for assets, as, for example, in the work of Bonbright (1965), Baxter (1967) and others1; and the most appropriate method to measure reported income or profit (Chambers, 1966; Edwards & Bell, 1961; Paton, 1922). Paralleling this work, but, to an extent, divorced from it, was the continuation of a much longer tradition within the economics literature focusing on issues of valuation and income. This work, which can be traced back in origin to that of Ricardo and other classical economists,2 was, in the main, directed to issues of distribution and accumulation. Some economists, for example Fisher (1906), Lindahl (1933) and Hicks (1946), however, focused, directly or indirectly, on the determination of measures of periodic income within a framework of the calculation of present values of future cash flows associated with assets and liabilities.3 Although these streams of thought were influential in academe, in themselves they had little, if any, effect on the nature and practice of financial reporting. In the UK, however, the high levels of inflation experienced in the 1960s and throughout the 1970s occasioned much debate as to the most appropriate methods of financial reporting within an environment of rapid price change.4 This, in turn, overlapped with more basic issues as to the appropriate methods of accounting for and reporting changes in relative price levels5 (for a comprehensive review of both the issues and the debate see Tweedie & Whittington, 1984). Whilst the accounting developments consequent to the issuance of SSAP 166 faded with the fall in the level of inflation in the UK during the 1980s,7 and the standard fell into disuse before being eventually withdrawn, the need to ensure that current cost accounting was legal under UK company legislation meant that ‘alternative accounting rules’ were introduced into the 1981 UK Companies Act—and have remained in the legislation ever since.8 These provisions allow a variety of bases of valuation for different classes of assets; in essence allowing that all assets (other than goodwill) be valued at one of (or, for some categories of asset, at either of) current cost or market value—even if this is greater than historic cost. Any valuation gains until 2004, however, were not permitted to be credited to the profit and loss statement; rather, they had to be taken direct to equity and shown in a revaluation reserve. Meanwhile, international interest in the more widespread use of market values in financial statements grew, particularly in relation to financial instruments. For many the conceptual framework statements developed by, inter alia, the Financial Accounting Standards Board (FASB) in the US, the Accounting Standards Board (ASB) in the UK, the Australian Accounting Standards Board (AASB) and the International Accounting Standards Committee (IASC) (now reconstituted as the International Accounting Standards Board (IASB)) were seen as presaging, and to an extent accompanying (or even following), the introduction by standard setters of much more widespread use of market values within financial statements. In December 2000, the Joint Working Group of the major standard setting bodies (the JWG)9 produced a draft ‘standard’ which unequivocally recommended the use of market valuation in respect of financial instruments with changes in value being reflected through the income statement.10 Two years prior to this, the IASB had issued its first version of International Accounting Standard 39 Financial Instruments Recognition and Measurement (IAS 39), itself heavily reliant upon US GAAP and, in particular, Statement of Financial Accounting Standards (SFAS) 115 Accounting for Certain Investments in Debt and Equity Securities issued in 1993.11 For the last seven years the international accounting standard setting agenda outside the US has been dominated, technically and politically, by the ramifications of IAS 39, which has been revised three times (in 2000, 2003 and 2004) and subsequently amended four times (in December 2004, and April, June and August 2005). In its 2003 iteration the standard allowed the option of any financial asset so designated to be accounted for on a mark to market basis and UK company legislation was amended in 2004 to allow assets so designated to be accounted for ‘at fair value through the profit and loss account’.12 In the June 2005 amendment to IAS 39, restrictions were placed upon the availability of the mark to market option. Critical to the use of fair values in financial statements is the manner in which these values are arrived at. In the US, SFAS 157 Fair Value Measurements issued in September 200613 adopts the three level hierarchical classification first proposed in 200514 comprising: level 1 valuations, being quoted prices in active markets for identical assets and liabilities; level 2 valuations, a more wide ranging category incorporating quoted prices for similar assets and liabilities in active or inactive markets—these prices being appropriately adjusted as necessary to reflect differences in the assets and liabilities and the activity level of the market; and level 3 valuations, where there are no markets for comparable assets and valuations must be based largely on the estimations and judgements of the valuing entity itself. In November 2006 the IASB published a discussion paper on fair value measurements15 which recommends adoption of a similar hierarchy to underpin fair valuation within individual international standards. In this paper we address issues of valuation and income measurement within the context of a case study-based investigation of the use of mark to market accounting in the financial reporting of Enron Corporation, the collapse of which in late 2001 – and the ramifications thereof – ranks high in the all-time list of accounting causes célèbres. The case study draws on the extensive and voluminous ex post investigation to explore the motivation for, and the manner of, the use of fair value accounting by Enron, and to interpret and reflect on the insights and lessons that may be gained therefrom. There is already a significant corpus of academic and professional literature on Enron and it is, therefore, necessary to justify the contribution of a further study a number of years on from the company's collapse. We suggest that this contribution comes in relation to the importance of the particular issue, mark to market accounting, which we examine; its contextualisation within the wider field of valuation and income theory and consideration of previous empirical work in the field; the highlighting of the ease with which Enron was able to use structured financial entities to ‘monetize’ physical assets for the purposes of fair valuation; the use of a more comprehensive, and, in part, more authoritative, body of evidence than that which was available to earlier researchers and commentators; and more specific consideration than in previous studies of the manner in which valuations were arrived at and supported. In the immediate aftermath of Enron's collapse, much of the initial focus from an accounting perspective was directed at the company's extensive use of special purpose entities (SPEs) to keep large parts of its activities off-balance sheet; at the issues which arose from the use of these SPEs to support Enron's income numbers through the writing of options which, if enforceable, would protect the value of Enron assets; and at the opportunity provided by these SPEs and their dealings with Enron for certain senior Enron employees to enrich themselves personally (Powers, Troubh, & Winokur, 2002; hereinafter “the Powers report”). It took a little time for a wider and more balanced view of the scale of accounting manipulation at Enron to emerge, most notably in the reports of the court-appointed bankruptcy examiners (Batson, 2002, Batson, 2003a, Batson, 2003b, Batson, 2003c and Goldin, 2003). Issues relating to the inappropriate use of fair valuations did not escape scrutiny altogether, however, and were highlighted in the work of Benston and Hartgraves (2002), McLean and Elkind (2003), Baker and Hayes (2004) and, more specifically, in Benston (2006).16 To an extent, therefore, this paper overlaps with some of the earlier work but, given the relevance to the continuing debate as to the use of fair valuations in financial reporting, we consider that there is scope for additional insights to be obtained from further investigation and exploration of these issues in the Enron context. Beyond our attempt to place the relevant issues within a wider scope of background context and theory, we examine, more specifically than in any previous study of which we are aware, the nature and quality of evidential support which Enron obtained to support its valuations. Here we rely on material contained within the Goldin (2003) report, which has received less prominence in the literature than that contained within various Batson, 2002, Batson, 2003a, Batson, 2003b and Batson, 2003c reports, to shed further light on the manner in which Enron arrived at the valuations it used and on the rôle of third parties both in constructing valuations and in giving support and credibility to internally derived valuations. Before moving on to the evidence itself, we consider some of the arguments for and against the use of fair values in financial reporting and also review briefly recent empirical work which has sought to investigate value relevance and associated issues. Here the purpose is not necessarily to offer new theoretical insights or reinterpretations of the empirical studies that have been carried out—but rather to provide a background to, and a framework for, the case study material which follows.
نتیجه گیری انگلیسی
Perhaps a final irony is that, whereas Solomons (1961) predicted that measures of profit and earnings would decline in importance,84 it was because Enron was, according to its final published financial statements, ‘laser focused on earnings per share’85 that necessitated, at least from the perspective of Enron's management, the use of fair valuation and mark to market accounting in a manner which was, arguably, far removed from that which was appropriate. If markets continue to attach such importance to ‘headline” income numbers (or if management believe that they do), and if financial and other institutions are prepared to facilitate management desires to represent their own perceptions or beliefs as to what these numbers should be, then, on the basis of the case study evidence adduced above, individuals and standard setters should be cautious with regard to expectations that the wider introduction of fair value86 and mark to market accounting will in fact significantly improve financial reporting and, ultimately, economic decision making.