How useful is the statement of cash flows?

Article Abstract:

A 1992 survey of 246 investors reveals that the majority of respondents perceive a company's statement of cash flows to be useful in the assessment of investment decisions. The survey also indicates that these investors regard the statement of cash flows to be a valuable information source that can be referred to along with a company's income statement and balance sheet. A comparison of the results with that of a similar study conducted in 1973 shows that investors' appreciation for the value of cash flow information has increased significantly. Three factors are responsible for this change in investor attitudes, these are growing investor awareness of the importance of cash flow, declining investor confidence in the credibility of income statements, and the changes in the format and structure of the cash flow statement that have made it much easier for investors to understand.

Accounting and auditing, Cash flow

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Corporate governance and the shareholders' revolt

Article Abstract:

The tendency of more and more individual corporate shareholders to assume greater responsibility in the financial management of their investments has resulted in a call for greater accountability of the boards of directors. This self-reliant attitude of shareholders towards the decision-making aspects of their investments is attributed to the increasing importance placed on corporate annual reports as vital sources of information concerning their investments' financial condition. This is reflective of a strong shareholder distrust for stockbrokers and management representation. Shareholders are expecting greater disclosures of financial information from management while management accountants are being called upon to assist in ensuring the accountability of management for its own performance through the auditing process.

Stockholders, Corporate governance, Beliefs, opinions and attitudes, Organizational effectiveness

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Accountants and the S&L crisis

Article Abstract:

The Savings and Loan (S&L) crisis, considered the most expensive financial tragedy in the US, has been blamed on accounting fraud by the federal government and the media. However, the actual causes of the crisis were the deregulation of the S&L industry, the downturn of the real estate and high-yield bond market and the government's FIRREA. The largest error committed by accountants involved in the case was that they used regulatory accounting principles that the did not comply with generally accepted accounting principles. The S&L crisis shows a need for management accountants, internal auditors and public accountants to improve their practices and provide better service. These can be done with increased know-how in business and economy and increasing accountants' participation in fraud detection.

Federal savings institutions, Evaluation, Accountants, Crime, Savings and loan associations, Savings and Loan Associations Bailout Crisis, 1987-

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