Rreferstotheimpactofregulatoryopacityanduncertainty/
arbitrariness
PriceWaterhousebasedthecountryscoresforeachfactoron
a survey of CFOs, equity analysts, bankers, and Price
Waterhouseemployeesin 35 countriesinthethirdandfourth
quartersof2000.Thesurveyresponseswereconvertedintoa
numerical score and weighted to arrive at each country’s
opacitymeasure.Table16.2summarizestheresultsforthe 35
countries in 2000.
Based on this measure, Singapore has the least opacity
whereas China and Russia havethe most opacity in their
financialstatements.Note thatthis measureis acomposite
measurethatincludes,inadditiontoaccountingtransparency,
other factors such as corruption and legal practices. The
surveyquestionsthatdirectlyrelatetoaccountingopacitydo
provide an interesting perspective on what the survey
participantsviewasthekeyaccountingissuesandproblems
ineach country.Among themost commonproblemsnoted
were:
- Failureto discloserelatedpartytransactions,where
there are potential conflicts of interests between
officers of the company and its stockholders
(numerous emerging markets). - Reliability of exhibits. Exhibits backing up the
financial statements either are missing or do not
include important information (China, Russia). - Inflationaccounting.Inmanycases,attemptsto do
inflation accounting resulted in more complicated
financialstatementsand notmoreinformative ones
(Chile, Colombia).