Title: Fair Value Measurement in Saudi Arabia and its Expected Impact: A Special Focus on the Insurance Sector
Abstract:There is an ongoing debate in the world regarding valuing the assets at their historical cost or at the fair value measurement. The fair value measurement has been explained under Standard 13 of Inter...There is an ongoing debate in the world regarding valuing the assets at their historical cost or at the fair value measurement. The fair value measurement has been explained under Standard 13 of International Financial Reporting Standards (IFRS), providinga single framework tomeasurefair value and associated disclosures. The adoption of fair value accounting in all the companies for equityas per IAS 16, IAS 38,IAS 40 and IFRS 13 in the Kingdom of Saudi Arabia(KSA)is under consideration by Saudi Organization for Certified Public Accountants (SOCPA), Saudi Arabian Monetary Authority (SAMA)and Capital Market Authority (CMA), but allowed in banking and insurance sectors. The Saudi Arabian companies might achieve several benefits in adopting the IFRS framework and also revaluing the equityand marketable securities. according to fair value measurement. Hence, the current study assesses the expected effectof fair value measurementon the companies’ financial statementsin the insurance sector. Data Envelopment Analysis (DEA) wasused to measure the efficiency of the two methods of accounting, i.e. the historical cost method and fair value method. Even though there are policy issues that might hinder the adoption of fairvalue accounting by the companies, since IFRS is more comprehensive compared to Saudi standards, it is found that the adoption is enhancingthe reporting standards in KSA.Read More
Publication Year: 2020
Publication Date: 2020-05-01
Language: en
Type: article
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