The Method for Measuring and Disclosure of Non-Financial Performance - Essay Example

If the ratio of intergovernmental revenue to total revenues is low, it indicates that the government is not effectively utilizing available external sources of finance.

Generally, the higher the proportion of operations financed by intergovernmental revenues, the greater the risk borne by the government. Local government can keep low the risks connected with intergovernmental revenues by ensuring sound budgeting traditions. Establishing local sources of finance can reduce the relative impact of any fall in federal revenues. The ratio will determine whether the government is able to meet its obligations and supply the services that the public demand.

DISCUSSION 2: "Non-financial Information"

Nonfinancial information that may be used to evaluate the performance of a college or university includes college or university governance, students satisfaction level, the level of satisfaction of employees, workers turnover, policies, and objectives of the college or university. The information that provides the most insight into financial performance is the turnover of employees because it points to dissatisfaction among workers, which may also indicate poor management, consequently leading to poor financial performance.

The identified nonfinancial information can be said to be playing a crucial role in enhancing conventional financial reporting. They enhance the capability of the users of financial statements to appraise and forecast financial performance. Nonfinancial information is a crucial predictor of financial performance. However, nonfinancial information about organizations is not usually available like financial information (Mohammadi, Yusof & Arumugam, 2011).

DISCUSSION 3: "Taxes"

I prefer the IFRS tax approach to GAAP. Under IFRS, deferred tax allowance (DTA) is recorded at the net if only it is anticipated to be realized while GAAP demands valuation if part or entire DTA will not be realized and the valuation is recorded at gross with the corresponding allowance. Under IFR, the substantially enacted tax rate is applicable whereas under GAAP tax rate used for estimating deferred taxes is the prevailing tax rate when the timing difference is anticipated to reverse. Also, as opposed to GAAP, IFRS demands that expected tax expense and actual tax expense for private companies should be reconciled given the nature and amounts.

The differences between IFRS and GAAP can be resolved during convergence by establishing high-quality, universal accounting standards over time. The difference can also be resolved through the development and implementation of new common principles that boost the quality of financial information issued to investors. Controversial standards should be substituted with jointly formulated standards.

DISCUSSION 4: "Bethlehem Steel Corporation’s Deferred Taxes"

Bethlehem’s management claimed that the write-off was necessary because of complex accounting rules. The company’s explanation for its write-off seemed unreasonable. This is because most companies in the US still use the U.S. GAAP, which is not as complicated as the IFRS. The management knew the effect this would have on the company.

Analysts essentially ignored the write-off of its $ 1 billion deferred tax assets because they had forecast a possible increase in the value of the company’s stock price. Their prediction of the likelihood of improved performance of the company could be the reason behind their position to ignore the write-off.

No. This is because the company’s stock price had a chance of performing better in the market and the announcement of any such massive write-off, which consequently led to the company’s bankruptcy application, had a significant negative impact on investors. The company could have utilized potential operating outcomes and tax arrangement opportunities.