Keshk, Walied; Lu, Hung‐Yuan Richard; Mande, Vivek (2020). How have US banks adopted the Financial Accounting Standards Board's Level 3 fair value disclosure rules? Accounting & Finance 60, April Supplement S1, 693-727.
Summarize in your own words (about 100 words).
There is a widespread noncompliance with the basic disclosure requirements. The main reason for the noncompliance is that the banks are smaller in size and are associated with lower audit quality, they have lower institutional ownership and less effective internal controls. In terms of compliance with FV disclosure requirements, Keshk, Lu, and Mande (2018) note that these banks are less likely to provide the Level 3 disclosures required by ASU 2011-04; 22 this could be a sign that there is weaker monitoring through corporate governance which leads to managerial discretion being used to ignore a disclosure requirement altogether. The regulators, auditors and audit committees in the United States, and other countries need to assess the likelihood of noncompliance with fair value disclosure rules and they have to improve the quality of fair value disclosures provided to investors.
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