Jan'22

Welcome to The IUP Journal of Accounting Research and Audit Practices

Focus

Several stakeholders, such as financial institutions, auditors, policymakers and markets, need transparent and comparable financial reporting to make effective decisions. Transparency and consistency of information will lead to improved accountability, internal discipline and governance. However, accuracy and transparency of financial reporting are compromised under conditions of crises and uncertainty. The nature of risks and disasters may differ, but if reporting standards are flexible and transparent, the adverse impact of such crisis can be moderated. Taking this aspect, Ikram ul Haq and Tahseen Anwer Arshi, authors of the first paper, "The Impact of Covid-19 on IAS 1 Presentation of Financial Statements", propose a revised financial statement structure to address the limitations of financial reporting, particularly in the context of Covid-19. The authors opine that transparency and consistency will improve the standards for financial reporting, while helping mitigate the negative impact of the risks involved and reduce the probability of anxiety and infectivity.

Financial efficiency is the most important feature for the sustenance of any firm. However, financial matrices are an outcome of operational efficiency. Since the proposal of 'factors of production' theory, economic literature has provided various methods to figure out the optimum combination of factors of production to be employed in any firm. Factor productivity theories are vastly employed to measure the operational efficiency of a firm. N S Sudesh and Saradhi Kumar Gonela, the authors of the second paper, "Measurement of Financial and Operational Efficiency: A Literature Review", have conducted a detailed and systematic review of various established methods of measuring the financial and operational efficiency of a firm.

The terms 'corporate failure' and 'financial distress' indicate the difficulty faced by firms in meeting their financial obligations; however, financial distress is a costly process preceding corporate failure. After experiencing financial distress, if a firm fails to recover, then it goes bankrupt. During the pandemic, many firms faced situations of financial distress. Considering the Indian textile sector in particular, Pooja Singh and Anindita Chakraborty, in the third paper, "Estimating Financial Distress in Textile Sector: Implication of Z-Score", examine the financial situation of textile firms using Altman's Z-score to predict the financial distress in the firms. The authors have also evaluated the significance of Z-score and its components in explaining the market value of the firms.

Anurika Vaish, Nishit Kumar Srivastava, Priyanshu Priyam Srivastava and Sarthak Sengupta, the authors of the fourth paper, "Deep Learning and Asset Allocation: A Bibliometric Analysis Using AHP Approach", feel that investing requires deep learning-based asset allocation. The authors have examined relevant studies on deep learning and asset allocation using bibliometric analysis and found the association between age and investment decisions, and based on their findings, they have proposed a ranking framework regarding preferred avenues for investment purposes.

Sireesha Mamidenna, the author of the last paper, "Special Purpose Acquisition Companies: An Overview of Their Structure and Legal Status in India", identifies the need for promoting Special Purpose Acquisition Companies (SPAC) in India and describes their current structure and legal status in the Indian context. The author opines that the current regulatory and legal frameworks in India are unsuitable for the promotion and suggests some key aspects to be brought in by the regulators, while prescribing the procedure for SPAC in India.

- P Bhanu Sireesha
Consulting Editor

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Article   Price (₹) Buy
The Impact of Covid-19 on IAS 1 Presentation of Financial Statements
50
Measurement of Financial and Operational Efficiency: A Literature Review
50
Estimating Financial Distress in Textile Sector: Implication of Z-Score
50
Deep Learning and Asset Allocation: A Bibliometric Analysis Using AHP Approach
50
Special Purpose Acquisition Companies: An Overview of Their Structure and Legal Status in Indi
50
       
Contents : (Jan'22)

The Impact of Covid-19 on IAS 1 Presentation of Financial Statements
Ikram ul Haq and Tahseen Anwer Arshi

Accuracy and transparency of financial reporting are compromised under conditions of crises and uncertainty. The disruption caused by Covid-19 presents a challenge to firms, regulators, auditors and investors to make meaningful conclusions about financial data. In the absence of clear guidelines, firms and regulators cannot present financial information with consistency and reliability. The study proposes a revised financial statement structure to address the limitations of financial reporting, particularly in the context of Covid-19. The conceptual paper utilizes secondary data and the researchers' expertise to propose a revised financial statement structure. The study finds a need to maintain the standards of financial reporting as per the International Accounting Standards Board (IASB) guidelines, with some changes to the immediate impact of Covid-19. The revised financial statement structure can promote transparency, consistency and reliability in reporting financial information, while keeping these standards. This study is one of the first papers to propose a revised financial statement structure to deal with the current Covid-19 crisis. The suggested modifications can be apportioned to Covid-19 issues, will be beneficial for users in decision making, and can be used to amend current reporting standards.


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Article Price : Rs.50

Measurement of Financial and Operational Efficiency: A Literature Review
N S Sudesh and Saradhi Kumar Gonela

Efficiency is at the heart of management literature - operational, financial, market and other efficiencies form the core of every seminal research in the field. It has been noted that financial efficiency is the most important for the sustenance of any firm. However, financial matrixes are an outcome of operational efficiency, which needs to be studied. Since the proposal of 'factors of production' theory, economic literature has provided various methods to figure out the optimum combination of factors to be employed in any firm. Factor productivity theories are vastly employed to measure the operational efficiency of a firm. In this context, the paper aims at reviewing various established methods of measuring the financial and operational efficiency of a firm.


© 2022 IUP. All Rights Reserved.

Article Price : Rs.50

Estimating Financial Distress in Textile Sector: Implication of Z-Score
Pooja Singh and Anindita Chakraborty

The Indian textile industry has experienced a downswing in exports, an upsurge in production costs, and low efficiency because of demonetization and Goods and Service Tax (GST) headwinds. The Covid-19 pandemic has further aggravated the situation. Though the government has taken various steps to support the sector, evaluating the financial position of a textile firm is still important as it depicts the true picture of the firm's financial status, i.e., distressed or not distressed. The sample consists of textile firms listed on the National Stock Exchange (NSE) during 2010-2020. This study predicts the financial situation of textile firms using the Altman Z-score and also the relationship between the Altman Z-score and the market value of firms in India's textile sector using panel regression model. The findings suggest that many of the firms are distressed and the Z-score significantly impacts their market value. Further, only retained earnings to the total assets is significantly associated with the market value of firms.


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Article Price : Rs.50

Deep Learning and Asset Allocation: A Bibliometric Analysis Using AHP Approach
Anurika Vaish, Nishit Kumar Srivastava, Priyanshu Priyam Srivastava and Sarthak Sengupta

The study explores investing, along with a review of deep learning-based asset allocation. The objective is to analyze the relevant studies done across the world on deep learning and asset allocation. It is found that there is an association between age and investment decisions. A ranking framework regarding preferred avenues for investment purposes is also proposed. The statistical tools and techniques used are based on qualitative and quantitative analyses. The study paves the way for further research and development by decentralizing Artificial Intelligence (AI)-based portfolio management.


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Article Price : Rs.50

Special Purpose Acquisition Companies: An Overview of Their Structure and Legal Status in India
Sireesha Mamidenna

Special Purpose Acquisition Companies (SPAC) are created so that investors can invest based on their confidence in the ability and professional expertise of the sponsors to pick the right target companies to acquire and take public. Proceeds from a SPAC Initial Public Offering (IPO) are generally held in a trust within an escrow account till a suitable target is acquired by the SPAC. This enables shareholders to vote on any proposed acquisition by the sponsor prior to the business combination transaction. Studies show that most of the SPAC currently listed in the US and European exchanges are domicile neutral. So far, the Indian legislature has not come up with any comprehensive regulatory requirement for the SPAC. The booming corporate growth in India as witnessed by more than 72 IPOs in 2021 so far portends a positive outlook for SPAC in India and calls for the regulatory framework to be in place along with necessary provisions made in applicable laws.


© 2022 IUP. All Rights Reserved.

Article Price : Rs.50