Accounting Mismatch
Teoretisk definition med en tillämpning på svenska bankers redovisning
Accounting for financial instruments can either be based on a transactions approach or an eco-nomic approach. Under a transactions approach instruments are reported at cost whereas under an economic approach instruments are reported at fair value. Hence, under a transactions approach realization becomes a criterion for recognizing fair value fluctuations as revenue whereas under an economic approach it does not. A mixed model is defined as a combination of the transactions approach and the economic approach insofar it records some accounting items at cost and other items at fair value. The mixed model gives rise to an issue commonly referred to as an accounting mismatch. However, current descriptions of accounting mismatch have in our view failed to ex-plicitly take the mixed model and its characteristics into account. The main contribution of this thesis is a definition of accounting mismatch based on the theory of the mixed model. The link between the mixed model and the concept of accounting mismatch is narrowed down to the relations which may exist between financial statement items. The first concept of relations hinges on the firm financing its assets by means of debt and equity. The second concept of rela-tions is based on the fact that items in financial statements may be affected by the same type of risk. The type of risk an item is exposed to depends on the characteristics of the item and the pur-pose of holding the item. This thesis proceeds by defining an accounting mismatch as a situation in which related items are treated according to different accounting approaches and, as a result, the financial statements inadequately discloses the result, financial position and risks of the firm. Furthermore, this thesis provides several examples of accounting mismatch and illuminates the indirect effects which may follow thereof. Finally, the solutions to accounting mismatch that have been proposed so far are presented and the potential flaws inherent in these solutions discussed.