Maesurement_of_Fixed_Assete_in_Yemen

Measurement and Evaluation of Fixed Assets of Companies in Yemen and its relationship to International Accounting Standards 1. Introduction and problem of the study Yemeni economy suffers - like other economies of the developing countries - the problem of inflation, and this affects the accuracy of the accounting valuation of fixed assets as a result of the decline in the price of the local currency. Some of the limitations faced by the accounting profession in Yemen is the lack of empirical evidence in front of academics and the accounting professionals on the accounting policies applied in the Yemeni companies in the measurement and evaluation of fixed assets, and create a link between accounting thought and reality for practice accounting profession in order to develop and adapt to international circumstances surrounding it. 2. Importance of Study The Importance of this research refers to the following: 1. Economic development witnessed by Yemen and the spread of shareholding companies in Yemen. This development is not accompanied by the development in the profession of accounting and auditing at the same level. 2. Raising the phenomenon of inflation as a matter of impact on the financial reports which are the important sources of information needed by many internal and external parties. 3. Providing information in accordance with the international accounting criteria in order to be an effective tool to rationalize decisions at both domestic and international levels under expansion in fields of investments and spread of multinational company. 4. Possibility of making use of the search results to identify problems of application in shareholding companies in Yemen. 5. Possibility of making use of the international accounting criteria, while providing the conditions and appropriate possibilities to develop it locally, and extract what commensurate with the local environment. 3. Study Objectives Study aims to achieve the following objectives: 1. Identify the accounting policies applied in Yemeni shareholding corporate to measure and evaluate the fixed assets, in order to determine weaknesses or deficiencies and difficulties that face those companies, that leads up to develop a suitable proposal of assessment which consistent with the economic developments and international professional developments. 2. Examine international accounting criteria in order to identify the potential application in Yemeni shareholding companies. 3. Examine some of approaches that reflect the effects of prices changes on the evaluation of fixed assets and calculate depreciation. 4. Previous Studies A number of studies touched on the accounting evaluation for fixed assets, some of them in Yemen and some of them in nearby Arab environments, and it can be useful to enrich this study. One of these studies: a. Al-Adli and Al-Azamah Study (1986): A theoretical study conducted in the State of Kuwait, titled "Accounting of fixed assets" and sought to present and discuss the major accounting problems about accounting of fixed assets and the principles of accounting that used to treatment it. The study presented the cost of acquiring fixed assets and the problems of measurement, also discussed the accounting treatments of the expenditure incurred by the company after the purchase of fixed assets and the foundations of divided it into capital and revenue expenditure, and discussed some departures from the historical cost principle. b. Abdulrahim, Houidi, and Mustafa study (1997): A theoretical and field study entitled "Evaluation of fixed assets accounting in Kuwaiti shareholding companies and the appropriateness of adopting international accounting criteria" and concluded that the actual accounting practices for Kuwaiti companies under study are not consistent with international accounting standards on the measurement and valuation of assets pollutants, which affect the integrity and accuracy of measurement and evaluation of fixed assets in these companies. The study showed that the application of international accounting criteria in measure and evaluate the fixed assets has led to increase efficiency of accounting work, in terms of measurement procedures and make comparisons and raise the efficiency of financial analysis. c. Al-Rubidy Study (1998): A study entitled "modified fixed assets depreciation" the study found a number of recommendations. The study recommended that when inflation rates are high depreciation is calculated in two stages, in the first phase is calculated based on historical cost. The second phase depreciation was calculated based on replacement value or by using the exchange rate. And addresses the difference between the two values as allocation of replacement value with invest this amount in guaranteed investment. The study also recommended the need of attention to international accounting criteria in order to improve the disclosure of financial information published. d. Study Fayed (1992): A theoretical study entitled "The auditing Criteria appropriate for the professional practice in Yemen in light of the report issued by the Committee of International Auditing Criteria." This study sought to identify the reality of the profession in Yemen and how they can benefit from the International Auditing Criteria in develop a general framework for profession criteria fit Yemeni society. The study revealed great difficulties facing the accounting and auditing profession in Yemen and hinder its development. e. Al-Sayh (1998): A study entitled "International Accounting Criteria: examine the possibility and appropriateness of the application in the Republic of Yemen." The study aimed to examine the reality of the profession in Yemen and propose appropriate remedies in the form of a set of standards that governing the professional aspects of professional practice in Yemen, the study also proposed auditing criteria appropriate to the circumstances of Yemen. f. Arthur Anderson (1996): A study prepared by Arthur Anderson & Co., entitled "examine and evaluation of accounting and auditing profession in Yemen". This study dealt with the reality of accounting and auditing profession in terms of laws and legislation and in terms of education and qualification in accounting, and provided a set of recommendations to raise the level of the profession in Yemen. g. Hayder study (2002): A study entitled "The auditing criteria in a number of Arab countries - a comparative study" The study presents some of the criteria used in a number of Arab countries to show the similarities and differences in the application of these criteria among these countries, and to demonstrate the possibility of initiating the conciliation process between the application of auditing criteria between the countries under study as a first step towards the process of consensus among members of the profession of accounting and auditing in all Arab countries. h. Bamashmoos study (2003): A study entitled "International Standards on Auditing and their possible application in the Republic of Yemen" The study focuses on the use of international accounting standards in Yemen, including depreciation accounting for property, plant and equipment through the study of the criteria (4, 16) and information reflecting the effects of changing prices through the criteria (15, 29). 5. Study Hypotheses The study based on the following assumptions: a. There are no significant differences between the accounting policies applied by the Yemeni shareholding companies in measure and evaluate fixed assets and the requirements of international accounting criteria. b. There are no substantial differences between the Yemeni shareholding companies to each other in applied the accounting policies relating to measure and assess fixed assets. c. The application of international accounting criteria is not appropriate for measuring and evaluating fixed assets in Yemeni shareholding companies 6. Limitations of the study No study is an ultimate effort. It always leaves room for improvement and it is the limitation of one study, which serves as the bases for further research ventures. Even though, sincere efforts are taken to ensure that an exact picture can be arrived at, still there may be some limitations related to the study. These are listed as below: • This study is limited to fixed assets in Yemeni shareholding companies. • The study is limited to time, cost and effort of the investigator. In a few span of period it is not possible to collect all the information. • Companies are being hesitant to provide right or valid data which is very much important for our study and it forced us to rely on secondary data. • There may be some vital information which the organization may feel reluctant to share. They may give some wrong information. 7. Source of Data and Methodology • Sources of Data: o The study is based on both the primary and secondary sources of data. Primary data is collected through a structured questionnaire specially designed for the purpose and discussions held with the finance executives of selected Yemeni shareholding companies. o Secondary data is collected from the published annual reports, policy documents, and websites of the Yemeni shareholding companies. • Methodology: Methodology plays a significant role in any study including social science research. It provides the essential tools/techniques to carry out the study in a scientific manner. The concept of truth, usefulness, acceptability could be ascertained through paper quantification, verification of facts through different method of study. The reliability and validity of the study /project depend upon the methods/procedures used. The data collected from both the primary and secondary sources is classified, tabulated and analyzed. The statistical tools such as percentages, ratios, correlation coefficient are used wherever applicable in the analysis. Executives views are collected through a questionnaire and the results of the primary data are corroborated with the results obtained from the secondary data analysis. Appropriate conclusions are drawn from the analysis. At the end suitable suggestions are offered for the efficient performance of measurement and evaluation of fixed assets in Yemen. Keeping this in view, the following methods has been employed to carry out the present study. • Primary Data: Primary data will be collected using the following methods. It is the direct or first-hand data. 1. Questionnaires 2. Personal interviews with a number of auditors and financial managers of these companies • Secondary Data: It will be collected from already available source like- 1. Magazines, journals, newspapers. 2. Different books 3. Reference to the existing work done in this area. 4. Reference to the various reports, material, published by the company 5. Internet 6. Laws and legislation