the impact of the new ohada accounting system on the judgments and decisions of cameroonian bankers

Advances in Accounting, incorporating Advances in International Accounting 25 (2009) 89–105

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Advances in Accounting, incorporating Advances inInternational Accounting

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The impact of the new OHADA accounting system on the judgments and decisions ofCameroonian bankers

Anne Fortin ⁎, Saidatou DickoÉcole des sciences de la gestion, Université du Québec à Montréal, Département des Sciences Comptables, C.P. 8888, Succursale Centre-Ville, Montréal (Québec), Canada H3C 3P8

⁎ Corresponding author.E-mail address: [email protected] (A. Fortin).

1 Sixteen member-states were parties to the treaty forLaw in Africa in 2007. These countries are Benin, BurAfrican Republic, Chad, Comoros, Equatorial Guinea, GIvory Coast, Mali, Niger, Republic of the Congo, Senegal,

0882-6110/$ – see front matter © 2009 Elsevier Ltd. Aldoi:10.1016/j.adiac.2009.02.006

a b s t r a c t
a r t i c l e i n f o
Cameroon and 15 other African States belonging to the Organization for the Harmonization of Business Lawin Africa (OHADA) adopted the Uniform Act Organizing and Harmonizing Undertakings' Accounting Systemson March 23, 2000, which scuttled the OCAM accounting plan in favor of the new OHADA accounting system(SYSCOHADA). Companies were required to adopt SYSCOHADA for company accounts and consolidatedaccounts beginning on January 1, 2001, and January 1, 2002, respectively. The goal of this study is to comparethe impact of the presentation format and informational content of both accounting systems on thejudgments and decisions of bankers, and, more specifically, to find out whether the information contributedby SYSCOHADA has changed the judgments and decisions bankers made under the old OCAM accountingplan. To that effect, a field experiment was conducted with Cameroonian bankers using a within-subjectsdesign. Significant differences were noted in bankers' underlying judgments (operating income, net income,cash flow, leverage, liquidity, and ability to raise capital) as well as in their initial judgments aboutprofitability and financial structure. Conversely, no significant differences were noted with respect to otherjudgments and decisions, i.e. principal judgments about the overall risk rating and overall risk trend, the loandecision, and the interest rate to charge (risk premium). Further, the new statement of sources andapplications of funds (SSAF) influenced their underlying judgments about operating income, leverage,liquidity, and ability to raise capital, as well as their initial judgments about financial structure.

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1. Introduction

The African member-states of the Organization for the Harmoniza-tion of Business Law in Africa (OHADA), adopted the Uniform ActOrganizing and Harmonizing Undertakings' Accounting Systems (X,2000) on March 23, 2000, which required that companies adopt thenew OHADA accounting system for corporate financial statementscovering financial years beginning on or after January 1, 2001, and forconsolidated financial statements issued for the following year andbeyond.1 Cameroon, one of the organization's principal member-states, had been using the accounting system of the Joint African andMalagasy Organization (Organisation Commune Africaine et Malgache,or OCAM), which was developed in 1970 after the French accountingplan of 1957. The shift to the new accounting system would bringabout content changes and a new format for conveying information toexternal users — in this case, the State, bankers, and shareholders.

the Harmonization of Businesskina Faso, Cameroon, Centralabon, Guinea, Guinea Bissau,and Togo.

l rights reserved.

Numerous behavioral studies in financial accounting indicate thatsophisticated users (bankers and financial analysts) and non-profes-sional investors alter their judgments and decisions when presentedwith a change in accounting information format and content (Harper,Mister, & Strawser, 1987; Hirst & Hopkins, 1998; Hopkins, Houston &Peters, 2000; Maines & McDaniel, 2000; Viger, Belzile, & Anandarajan,2008). In view of these findings, it can be reasonably assumed that achange in accounting systems, as has occurred in Cameroon, affectedthe judgments and decisions of accounting information users in thatcountry.

The aim of this study is to assess the impact of the new pre-sentation and information content on the judgments and decisions ofCameroonian bankers, one of the primary user groups in the country.2

More specifically, this study explores whether the informationproduced by the OHADA accounting system (SYSCOHADA) has causedCameroonian bankers to take a different stand in their judgments anddecisions as compared with those they formed on the basis of theOCAM plan.

2 Bankers are the main external financial statement users in Cameroon, given thatmost firms are family owned and the capital market is still undeveloped, having beenin existence only since 1999.

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90 A. Fortin, S. Dicko / Advances in Accounting, incorporating Advances in International Accounting 25 (2009) 89–105

The results of this research will enlighten the Cameroonianfinancial community about the impact of the new accounting systemand be of interest to other OHADA member-states that formerly usedthe OCAM plan. This study augments the behavioral literature on thejudgments and decisions of sophisticated accounting informationusers by focusing on the impact of concurrent changes in bothpresentation format and information content, whereas earlier studiesexamined these aspects only separately. Evidence will be providedthat data on the impact of financial statement changes on judgmentsfrom studies in developed countries are valid for developing countriesas well. The present research also reveals whether any effect onbankers' initial and underlying judgments extends to their subsequentjudgments and decisions. Finally, the description provided ofSYSCOHADA and its differences from the previous OCAM system willgive insights into the development of accounting thought in one ofAfrica's major regions.

2. Literature review

Experimental research conducted within the communicationparadigm in North America shows that user judgments and decisionsare influenced by variations in accounting information content (use ofdifferent accounting methods or additions of information) andpresentation. This effect has been observed in studies on both non-sophisticated users, i.e. students and non-professional investors(Belzile, Fortin, & Viger, 2006; Cooper & Selto, 1991; Elliott, 2006;Frederickson & Miller, 2004; Harper et al., 1987; Hodge, JollineauKennedy, & Maines, 2004; Maines & McDaniel, 2000), and sophisti-cated users, namely financial analysts and bankers (Belkaoui, 1992;Brooks, Scott, & Pearson, 1996; Danos, Holt, & Imhoff, 1989; Elliott,2006; Goldwater & Fogarty, 1995; Harper et al., 1987; Hirst & Hopkins,1998; Hirst, Hopkins, & Wahlen, 2004; Hopkins et al., 2000; Hopkins,1996; Munter & Ratcliffe, 1983; Sami & Schwartz, 1992; Viger et al.,2008).

Behavioral research on changes in the format or information contentof financial statements has rarely been conducted outside of NorthAmerica. One exception is a study conducted in Singapore by Wilkinsand Zimmer (1985), who investigated whether alternative accountingmethods used by associated investment companies affected Singapor-ean lenders' assessment of borrowers' loan repayment ability. Theyconcluded that lenders' judgments were significantly affected, but onlybecause the alternative methods influenced some balance sheetindicators such as debt/equity ratios. In Nigeria, Asechemie (1992)examined whether including a statement of transactions in foreigncurrency (STFC) with financial statements had any effect on bankers'evaluation of a firm's stability, uncertainty, risk, and vulnerability. Afterlooking at a sample of 46 subjects, including a few bankers as well asaccountants and individual investors, he concluded that the STFCmighthave contributed incremental information content beyond the valueadded statement included in Nigerian financial statements. In HongKong, Kwok (2002) investigated whether reporting cash flow using thedirect or indirect format in the cash flow statement affected bankers'credit assessment process. The sample of 20 participants includedfinancial loan officers, academics and auditors, all of whom areconsidered sophisticated users. Using a verbal protocol analysis and awithin-subjects design, the author concluded that despite includingcash flow information in their decision-making process, the subjectsignored any information in the direct reporting format that wasincremental to the data reported in the indirect format.

The preceding review of the impact of introducing format orcontent changes in financial statements points to significant effects onbankers' judgments and decisions, regardless of where the subjectslive. However, the financial statement changes investigated mainlyresulted from manipulating one format or information element. Itremains to be seen whether the manipulation of several format andinformation elements in combination also has an effect.

Studies in Bangladesh, Jordan, Zimbabwe, Iran, and Saudi Arabiaindicate that the balance sheet and the income statement are themostuseful sections for annual report users, including loan officers/creditors (Abu-Nassar & Rutherford, 1996; Al-Razeen & Karbhari,2007; Mirshekary & Saudagaran, 2005; Nicholls & Ahmed, 1995;Odhiambo & Simon, 1999). The statement of source and application offunds is also considered widely important, but to a lesser extent thanother statements. Jordanian bankers in Abu-Nassar and Rutherford(2000) and Iranian bankers in Mirshekary and Saudagaran (2005)rated highly (4 or higher on a scale of 1 to 5, 5 being most important)several elements of the income statement and the balance sheet aswell as the statement of source and application of funds. Ngangan,Saudagaran, & Clarke (2005) showed that users in developingcountries rated financial and non-financial information in financialstatements as more important than their counterparts in developedcountries. Wamba and Tchamanbé-Djiné (2002) attested to theimportance of financial statements for Cameroonian bankers in thecredit lending decision process. Overall, these studies indicate thatbankers in developing countries view financial statements as animportant source of information.

In considering loan requests, bankers must assess the borrower'sability to repay the loan (Kemp & Overstreet, 1990). This processrequires weighing many factors, including firm-specific informationand economic considerations (Beaulieu,1994; Treacy & Carey,1998). Italso involves studying financial and non-financial characteristics, e.g.quality of management or the position of the firmwithin the industry(Beaulieu, 1994; Berry, Faulkner, Hughes, & Jarvis, 1993; Treacy &Carey, 1998; Viger et al., 2008). Collateral and the firm's repaymenthistory in previous loan cases are also considered (Beaulieu, 1994;Berry et al., 1993; Kemp & Overstreet, 1990; Treacy & Carey, 1998).Financial statements are essential to analyzing the firm's capitalstructure, solvency, liquidity, and profitability/cash flow (Beaulieu,1994; Berry et al., 1993; Treacy & Carey, 1998). Some banks use formalcredit risk rating models in which each rating's grade corresponds toparticular criteria (Treacy & Carey, 1998; Viger et al., 2008). InCameroon, banks do not seem to have developed such models, buttheir bankers use financial statements as the basis for their creditlending decision process, along with other criteria (Wamba andTchamanbé-Djiné, 2002). Many of the major banks were establishedby French banks (Wanda, 2007), making it likely that credit grantingprocesses in Cameroonian institutions resemble those of French banksto some extent. In comparing French and Bulgarian bankers, Stela andKarim (2007) found that both parties used similar decision criteria,but weighted and ordered the criteria differently. Their results suggestthat culture plays a role in bankers' decision process, but does notaffect the types of factors considered.

After interviewing 21 bankers from eight Cameroonian banks,Wamba and Tchamanbé-Djiné (2002) concluded that respondentsfocused most prominently on the firm's financial structure andprofitability in their credit decision process by considering debt size,leverage/solvency, autofinancing capacity compared to debts (thuscash flow and liquidity), and return on assets. They also consideredcollateral value and the firm's portion of the project's financing, afactor that becomes less significant if the firm has a positivereimbursement record for previous loans. The importance of theclients' affairs with the bank is also considered in the decisionprocess (Wamba and Tchamanbé-Djiné, 2002; Wanda, 2007).Company size (Wanda, 2007) and credibility gained from successin business affairs (Tchomba, 1997) are influential factors. Given thatestablishing interpersonal relationships (Kombou & Feudjo, 2007;Roudier & Chassagne, 2002) and confidence (Roudier & Chassagne,2002) is important to Cameroonians, the quality of the banker-clientrelationship affects the credit granting decision process. In theiranalysis, the bankers assess the firm's credit risk and the interestrate to charge on the loan. This amount depends on the prime rate attheir bank and the credit risk of the loan, which is assessed by

Fig. 1. Decision model.

91A. Fortin, S. Dicko / Advances in Accounting, incorporating Advances in International Accounting 25 (2009) 89–105

considering the risk attributed to the type of credit and client(Wanda, 2007).3

3. SYSCOHADA versus OCAM

Since financial statement analysis is important in Cameroonianbankers' credit granting decision process, a change in the statements'format and information content would probably impact theirjudgments about profitability and the firm's financial structure (initialjudgments). Profitability is evaluated through underlying judgmentsabout operating income, net income, and cash flow, while financialstructure is assessed through leverage, liquidity, and the company'sability to raise capital.4 If the impact on initial judgments is material, itshould be reflected in bankers' judgments regarding credit risk and itsexpected trend (principal judgments), as well as in the decision aboutgranting the loan and the interest rate to charge. Other factors,including collateral, shareholders' investment in the project, industrytype, market positioning, quality of assets, and management alsoinfluence their principal judgments (Beaulieu, 1994; Berry et al., 1993;

3 All the aspects mentioned in the description of Cameroonian bankers' decisionprocess were confirmed to the authors through interviews with seven bankers (preand post experiment).

4 Viger et al. (2008) asked for three secondary judgments, i.e. overall financialcondition, ability to pay debts and ability to sustain growth. The present studyinvestigates additional judgments in bankers' decision making process, i.e. two initialjudgments and six underlying judgments. The principal judgments of overall risk andtrend rating were also factors in bankers' credit decision process, called primaryjudgments, in Viger et al. (2008).

Treacy & Carey, 1998; Viger et al., 2008; Wamba and Tchamanbé-Djiné, 2002). The decision model shown in Fig. 1 illustrates thesejudgments and decisions. Fig. 1 is not based on a rating systemwith apre-determined correspondence between levels of analysis andspecific grades of risk. Each banker, therefore, can use his owndecision model in weighting the various elements as he sees fit.5

The change from OCAM to SYSCOHADA financial statementsbrought about a number of format and information content changes.The characteristics of SYSCOHADA and the major changes ushered inby the new system are discussed in the following paragraphs, alongwith their expected impact on financial statement analysis.

The overarching goal of SYSCOHADA is to produce accounting andfinancial information that can be widely useful. SYSCOHADA wasdeveloped to ensure that all types of firms have the benefit of anappropriate accounting system to improve communications withusers. Firms are classified into three categories, according to size, andare assigned specific accounting guidelines. Each of the threecategories has a corresponding accounting system – the normalsystem, the simplified system, or the minimal cash-basis system. Thenormal system is used by large companies whose annual turnover isequal to or higher than 100 million CFA francs (X, 2000). A companywhose turnover does not exceed 100,000,000 (one hundred million)CFA francsmay use the “Simplified System” (X, 2000, article 11, par. 3).Any small undertaking that does not use either of the two systemsreferred to in article 11, and whose annual revenue does not exceed

5 The only constraint participants were under was to weight financial statementsitems and other elements equally (50% per category of elements).

8 The experimental case did not include capital leases. Had they been a factor in the


the thresholds set out in paragraph 2 of article 13, i.e., thirty (30)million CFA francs for trading undertakings, twenty (20) million CFAfrancs for handicraft and similar undertakings, and ten (10) millionCFA francs for service undertakings, should adopt the minimal cash-basis system. This article examines only the normal system tohighlight the type of enhanced information content contributed bySYSCOHADA.

Particular emphasis is therefore placed on the need to producereliable financial statements that provide a true and fair view of afirm's position and financial operations and that fulfill the needs ofexternal financial statement users other than the State, formerly themain intended user under the OCAM plan.6 Under SYSCOHADA,companies must produce four summary documents: the balancesheet, the income statement, the statement of sources and applica-tions of funds (SSAF), and notes to the accounts.7 In contrast with theOCAM plan, the financial statements prepared under the new systemmust be presented on a comparative basis with those of the previousyear, which is a major informational change.

The SYSCOHADA balance sheet offers more details on fixed assetswhile highlighting financial assets. This should enhance bankers' abilityto analyze the company's operational capacity (tangible assets) and itsintangible assets (research and development costs, patents and licenses,goodwill, and so on) as compared with the OCAM plan (Appendix A,Panel A1). The SYSCOHADA balance sheet should also improve theirability to analyze the firm's financial structure (debt/equity) bydistinguishing between shareholders' equity (which now includes theperiod's net income) and financial debts (medium and long term),contrary to the OCAM plan, which lists debts under Other permanentcapital along with grants and tax-regulated provisions (Appendix A,Panel B1). In addition, under the new plan, the firm's liquidity is betterassessed because its cash and cash equivalents are also highlighted,along with circulating items (under assets and liabilities).

The SYSCOHADA income statement shows some aggregates thatdid not exist in the OCAM income statement, such as gross margin onmaterials, turnover, gross operating surplus, financial income/loss,and irregular activities (denoted as I.A.) net income/loss that nowincludes income on disposal of fixed assets (Appendix B). Further,operating income related to regular activities is highlighted moreprominently in the SYSCOHADA income statement than in OCAM.Given that SYSCOHADAcompares the informationwith last year's data,trends in the evolution of operating and net income can be assessed.Therefore, the changes made to the income statement should enhancebankers' analysis and assessment of the firm's profitability.

Users have the additional benefit of using the SSAF, provided as anew requirement under SYSCOHADA (Appendix C). The importantitems in this statement are overall internal financing capacity (OIFC),change in operating working capital, cash flow from operatingactivities, acquisitions (internal and external growth), divestitures(sales of assets), and financing through equity and new loans. The

6 An external auditor (“commissaire aux comptes”) shall, pursuant to the provisions ofarticle 70 of the Uniform Act, (X, 2000) certify that the financial statements portrayregularity and sincerity, and thus give a true and fair viewof the assets, financial positionand results for the financial year then ended. In accordance with articles 376 and 702 ofthe Uniform Act (X, 2000) applicable to commercial companies and economic interestgroups, private limited companies whose registered capital exceeds ten million(10,000,000) CFA francs or which fulfill either of the following two conditions: (1)the annual turnover exceeds two hundred and fifty million (250,000,000) CFA francs, or(2) the permanent staff exceeds 50 persons, shall be required to designate at least oneauditor. In the fall of 2005, when the experiment was conducted, one U.S. dollar wasworth approximately 550 CFA francs (www.oanda.com/convert/fxhistory).

7 The simplified system has fewer financial statements, categories and items. Thefirm produces only a balance sheet, an income statement, and notes to the accounts.The minimal cash-basis system is based on changes in cash flow. The results of the yearare determined by inflows and outflows, and only one statement of receipts andexpenditures must be presented at the end of the financial year. Three types ofinformation are presented in the notes: accounting rules and methods, supplementalinformation regarding the balance sheet and the income statement, and otherinformation (Appendix, D).

OIFC is useful for evaluating the firm's available internal financing,which should help bankers judge the firm's ability to finance itsactivities and investments and repay its debts. The change inoperating working capital is an important element for analyzingcash needed for operations. The cash flow from operating activitiesindicates the cash generated solely by regular operations afterconsidering their financing. The financing surplus or deficiency,corresponding to the change in net cash and cash equivalents, reflectsthe impact of the firm's decisions and activities on its cash. Net cashand cash equivalents at year end is also presented, and thisinformation communicates the amount available to the firm for facingimmediate commitments. Thus, SSAF represents a change in informa-tional content and should improve bankers' assessment of cash flowaswell as the firm's investment and financing decisions.

In summary, the SSAF obviously represents a change in theinformational content of financial statements established underSYSCOHADA relative to the OCAM plan. However, as establishedabove, there are differences in financial statement presentation formatand informational content even without the SSAF. These differencesshould have an impact on the credit granting judgments and decisionsof Cameroonian bankers in the process described in Fig. 1. Thefollowing hypotheses are thus put forward (alternative form):

H1. Cameroonian bankers will not arrive at the same judgments withSYSCOHADA financial statements as they did with OCAM statements.

H2. Cameroonian bankers will not arrive at the same decisions withSYSCOHADA financial statements as they did with OCAM statements.

4. Research methodology

Thepurpose of this study is todeterminewhether the judgments anddecisions bankers make after analyzing SYSCOHADA financial state-ments differ from those they made after analyzing OCAM statements.8

The need to compare their judgments and decisions under the twoaccounting systems led us to adopt a within-subjects experimentalplan.9 Two sets of a single company's financial statements establishedunder the two accounting systems were distributed in turn toparticipants for their analysis.10 In comparing within- and between-subjects designs, Schepanski, Tubbs, and Grimlund (1992) emphasizedthe former's advantage of having subjects that bring to bear only onecontext or frame of reference (which could differ from one subject toanother) as they compare two treatments. “In a between-subjectsdesign, the stimulus to be judged is confoundedwith the distribution ofother stimuli that form the context or frame of reference for judgment"(Schepanski et al.,1992, p.132). This confounding “may bemost likely tooccur in judgment tasks when the stimulus domain is one with which

new accounting system's financial statements, they might have been judgedresponsible for any differences in the bankers' judgments and decisions because theywere not reported in the old system. The goal was to determine whether the change inaccounting system had an impact in general.

9 In addressing factors to consider for choosing between a within- and between-subjects design, Schepanski et al. (1992) mention several elements. First, difficulty insubject recruitment would favor a within-subjects design. In our case, it wasimpossible to know beforehand the number of questionnaires that could be distributedor the acceptance rate. Although we benefited from a support letter from the directorof the Institute of Chartered Accountants of Cameroon, its effect in eliciting a positiveresponse to participating in the study from each institution's representative could notbe anticipated. Second, the statistical power of a hypothesis test for a within-subjectsdesign may be greater relative to a between-subjects design because the varianceassociated with subjects is estimated and removed from the error term used in testingthe hypothesis. Finally, in using the same subjects for all conditions, the within-subjects design improves the precision of the estimate of the treatment effect since iteliminates from the treatment means any difference that existed before the treatmentswere administered.10 As the participants were French speaking, the financial statements (andquestionnaires) they received were in French and were translated into English forthe purpose of this paper.

http://www.oanda.com/convert/fxhistory

Table 1Comparison of experimental material aggregates of the income statement betweenSYSCOHADA and the OCAM plan.

SYSCOHADA OCAM

Amount in CFA Francs Amount inCFA Francs

Aggregate Year N Year N−1 Aggregate Year N

Gross margin ongoods for resale

71,190,000 47,820,000 Gross margin ongoods for resale

71,190,000

Gross margin onmaterials

33,307,500 48,102,000

Turnover 309,720,000 175,545,000Value added ⁎ 103,886,388 94,638,000 Value added ⁎⁎ 101,549,250Gross operatingsurplus (GOS)

101,681,388 93,738,000

Operating income 94,426,700 92,875,500 Operating income 88,878,450Financial loss −6,264,334 −4,834,355Net income fromregular activities

88,162,366 88,041,145

Irregular activitiesnet income

1,888,387 945,000 Non-operatingincome

2,508,916

Loss on sale of fixedassets

−1,336,613

Net income beforetaxes

90,050,753

Income tax 36,879,498Net income 54,171,255 54,726,480 Net income 54,171,255

⁎ Including taxes, other charges and revenue, operating grants.⁎⁎ Excluding taxes, other charges and revenue, operating grants.


subjects have had considerable prior experience” (Schepanski et al.,1992, p. 137), as in the present study. Working in different banks, thebankers could have drawn on different frames of reference, not onlybecause of personal differences but also because of the specificprocedures at their respective banks. Thus, the within-subjects planmade it possible to control for individual decision-making differencesunrelated to informational changes. The hypotheses tests were carriedout on differences in the judgments and decisions participants madeafter analyzing financial statements established under the OCAM plan,and then under SYSCOHADA.

Given that SYSCOHADA financial statements include an additionalfinancial statement, the SSAF, it is appropriate to consider thatstatement's impact separately because it analyzes cash flow fromoperations and shows the impact of company investing and financingactivities on its net cash and cash equivalents. Two experimentalgroups were formed for this purpose. The first group received theOCAM financial statements (balance sheet, income statement,supplementary tables), followed by the SYSCOHADA information(balance sheet, income statement, supplementary tables).11 Thesecond group received the same OCAM financial statements as thefirst group, but then received the SYSCOHADA financial statements,including the SSAF, in addition to the other statements. A comparisonof the differences in the judgments and decisions of participants in thetwo groups helped measure the additional impact of the SSAF.

In addition to the financial statements, respondents received aninformation letter describing the objectives and conditions of the study,the experimental case, and the questionnaires.12 The main balances ofthe various financial statements are shown in Tables 1 and 2. Thefinancial statements were developed using the financial data of anundisclosed private Cameroonian company.13

The experimental case study provided general information on thecompany's position, the nature and value of the project to be financed,the collateral, the percentage of the project financed by shareholders(25%), and qualitative information bankerswere to consider (manage-ment, market position, quality of assets, and operations). Thecompany was a major manufacturer and distributor of buildingmaterials in full growth and with a dominant market position. Givenits expected ongoing expansion, the company was seeking a majorloan to finance the acquisition of newmachines costing 30million CFAfrancs, or approximately 46% (30,000,000/65,448,487) of the value ofthe firm's total fixed assets (see Table 2). The amount of the loanrequested, payable over four years, represented 75% of the newmachine's value (22.5 million CFA francs) and approximately 179%(22,500,000/12,582,561) of the total value of the firm's financial debts(see Table 2). The other 25% of the equipment cost was to be financedby an increase in shareholders' equity. Given that the experimentalmanipulations pertained solely to profitability and financial structure,the qualitative decision factors were characterized as adequate andsatisfactory (and assigned a 5 on a scale of 0 to 10). They were alsoattributed a fixed weighting of 50% in the category of judgments onthe firm's overall risk rating and overall risk trend.

11 In both cases, participants received additional information in the form of tables onfixed assets and depreciation, provisions, and capital gains and losses, which aredocuments bankers commonly use in the loan decision-making process, according tothe participants questioned in the pre-test. These statements provide an overall viewof the nature and scope of the company's transactions involving fixed assets.12 The experimental material was pre-tested in Cameroon with a professor, achartered accountant, and three bankers in different banks. It established that thecomponents of the research instrument included the essential information needed forconsideration of a loan request, and that the questionnaires were clear andunderstandable. Therefore, it was not necessary to modify the experimental materialfollowing the pre-test. The bankers who took part in the pre-test were thus kept in thesample.13 Looking at either the OCAM or the SYSCOHADA balance sheet, it is evident that thecompany is severely indebted over the short term. This is typical in Cameroon, wherebanks rarely extend long-term credit. Only short- or medium-term credit is given(Biro, 2004).

Participants were required to answer the first questionnaire afteranalyzing the case and the OCAM financial statements. The ques-tionnaire was in two parts. The first part consisted of six questions onthe bankers' judgments and decisions. The first question askedrespondents to rate, on a scale of 0 to 10 (where 0 represents verypoor and 10 represents excellent), their underlying judgments of thecompany's operating income, net income, cash flow, leverage,liquidity, and ability to raise capital. The second question asked fortheir initial judgments of the company's profitability and financialstructure, using the same scale of 0 to 10. The third question askedrespondents to weight the relative importance of the company'sprofitability and financial structure in their decision-making processby breaking down 50 points between these two factors. Question fourasked for the company's overall risk assessment, using the scale of 0 to10, and its overall risk trend (negative, stable, or positive). Questionfive asked whether respondents would grant the loan based on theinformation provided and the assessment made. Question six askedfor the interest rate applicable to the loan (expressed as a premium tobe added to the institution's prime rate); this information wasrequested regardless of whether or not the loan would be granted.

The second part of the first questionnaire gathered the followingdemographic data:

1. The first question asked for respondents' academic qualifications.2. The second question asked respondents whether they held a

professional title at the bank and to state their title, if applicable.3. The third question asked for respondents' sex, the fourth question,

years of experience in commercial loans,4. The fifth question, their individual lending limit, and the sixth

question, whether they specialized in a particular industry for thepurpose of credit analysis.14

Participants were asked to fill out a second questionnaire afteranalyzing the SYSCOHADA financial statements. The first part of this

14 The levels of education specified in the first question were Brevet d'études primaireset collégiales (secondary studies), Probatoire (1st part of high school), Baccalauréat(2nd part of high school), Brevet Professionnel (high school vocational studies), Licence(undergraduate degree), Maîtrise (graduate degree), or DEA or Doctorat (doctoraldegree).

Table 2Comparison of experimental material aggregates of the balance sheet between SYSCOHADA and the OCAM plan, and aggregates from the SSAF.

SYSCOHADA OCAM

Amount in CFA Francs Amount in CFA Francs

Aggregate Year N Year N−1 Aggregate Year N

AssetsTotal fixed assets 65,448,487 17,767,500 Total fixed assets 65,448,487Circulating assets 726,957,338 286,668,938 Operating assets 235,500,000Cash and cash equivalents 164,896,014 129,312,938 Quick assets 656,353,352Translation adjustment – assets 150,000 19,355

Shareholders' equity and liabilitiesShareholders' equity and related equities 108,387,735 74,226,480 Net position before results for the financial year 51,216,480Financial and related debts 12,582,561 7,639,355 Other permanent capital 15,600,510Total stable equities 120,970,296 81,865,835Circulating liabilities 756,783,594 349,202,896 Current debts 836,463,594Cash and cash equivalents – liabilities 79,680,000 2,700,000 Net income for the financial year to be allocated 54,171,255Translation adjustment – liabilities 17,949 0Total assets/ Shareholders' equity and liabilities 957,451,839 433,768,731 Total assets/shareholders' equity and liabilities 957,451,839

SSAF Applications Sources

Part IOverall internal financing capacity (OIFC) 64,071,140Change in operating working capital 67,416,202Cash flow from operating activities 33,845,186

Part IITotal investment(investments and divestments) 64,032,151 6,480,312Economic applications to finance ⁎ 131,448,353 6,480,312Total applications to finance ⁎⁎ 134,606,231 41,188,812Net financing ⁎⁎⁎ 40,010,000 92,030,495Financing surplus or deficiency (net of ⁎⁎ and ⁎⁎⁎) 41,396,924Change in net cash and cash equivalents 41,396,924

⁎ Total investment + change in operating working capital.⁎⁎ Economic applications to finance + change in I.A. working capital + mandatory financial applications.⁎⁎⁎ Internal financing + financing through equity + financing through new loans.

Table 3Sample: bank and group allocation.

Acronym Bank name Questionnaires G1 G2

Handed Obtained

BICEC Banque internationale du Camerounpour l'Épargne et le Crédit

18 15 8 7

SGBC Société Générale de Banqueau Cameroun

18 15 7 8

SCB-CLC Crédit Lyonnais Cameroun 19 17 7 10CBC Commercial Bank of Cameroon 14 11 6 5AMITY BANK AMITY BANK 2 0 0 0


questionnaire contained the same questions as the first part of thecorresponding questionnaire on the OCAM statements. The second partof the questionnaire pertained to the experimental manipulations toascertain that respondents had properly understood the experimenta-tion and had read and memorized the information in the financialstatements carefully enough to use it in their decision making(information acquisition). In this part of the questionnaire, four or sixquestions were posed, depending on whether the respondent hadreceived the SSAF. The first question asked respondents whether thecompany's goodwill had been presented in the balance sheet. Questionstwo, three and four asked them to indicate the range of the value of thefinancial assets, gross operating surplus, and shareholders' equity.Questions five and six asked respondents to indicate the range inwhich they would classify the firm's overall internal financial capacityand its financing surplus or deficiency, based on the SSAF.

5. Sample

There are ten commercial banks in Cameroon, with about 99branches, including the institutions' respective head offices (Wanda,2007).15 The three major banks, BICEC, SGBC, and SCB-CLC, have at leastone branch in each of Cameroon's ten provinces.16 In order to obtain arepresentative sample of the country's different banks and regions, atleast four bankswere visited in the capitals of eight provinces. To obtain ameeting in a particular branchof a bank, a formal requestwas submitted,

15 See www.izf.net for more information on Cameroonian banks.16 Cameroonian banks have a centralized credit system. All commercial loan requestsare first examined locally and then by head office, which makes the decision. Bankerswho work in the branches do not have final authority, but are still considered full-fledged bankers because they perform the same analyses as head office does and thenmake a recommendation before sending the request on to head office. However, it isimpossible to know whether their recommendations are generally adopted.

accompanied by an introduction letter from the director of the Instituteof Chartered Accountants of Cameroon (Ordre national des expert-comptables et comptables agréés, or ONECCA). The request was examinedwithin three to seven days, and if granted, was valid only for the branchconcerned. Once contact was established with the institution's repre-sentative (either the human resources director or the credit manager),the following step was to verbally explain the study, using the exper-imental material to support the request. If the manager agreed toparticipate in the study, he was given one copy of the experimentalmaterial for each banker working in the loan department. The managerwas responsible for administering and collecting the questionnaires, andreturning them to the researcher within three to ten days. Managers ineach institution were given the same number of experimental material

SCB Standard Chartered Bank 4 2 1 1ECOBANK ECOBANK 4 3 2 1AFB Afriland First Bank 2 1 0 1Total 81 64 31 33

G1: SYSCOHADA financial statements without SSAF.G2: SYSCOHADA financial statements with SSAF.Test of the allocation of participants by bank and experimental group: χ2=2.02,p=0.917.

http://www.izf.net

Table 4Descriptive statistics: comparison between experimental groups.

Variables Group 1 Group 2 Total χ2 ρ

Work place Head office 8 9 17 0.01 0.894Branches 23 24 47Total 31 33 64

Education Master's or DEA 29 28 57 1.24 0.265Other 2 5 7Total 31 33 64

Gender Male 23 22 45 0.43 0.510Female 8 11 19Total 31 33 64

Specialization ina specific industry

Yes 9 10 19 0.03 0.848No 22 22 44No answer 0 1 1Total 31 33 64

Variables Mann–Whitney p

Years of commerciallending experience

0–5 years 22 28 50 −1.29 0.1955–10 years 6 3 9≥15 years 3 2 5Total 31 33 64

Individual commerciallending authority(in CFA francs)⁎

None 11 12 23 −1.15 0.2480–5 M 8 16 245–10 M 2 1 320–25 M 5 2 725 M or more 5 2 7Total 31 33 64

⁎Two ranges were not selected: 10 to 15 million and 15 to 20 million.


packageswithout a SSAF (group 1) andwith a SSAF (group 2) and askedto distribute them in random order. The bankers were to respond on avoluntary basis and were ensured anonymity as well as confidentialitywith regard to their responses. Thenumber of questionnaires distributedper bank and the number of responses obtained and their distributionaccording to experimental group are presented in Table 3. As both typesof groups were evenly distributed among the banks in the sample (χ2 isnot significant), all formal decisionprocesses in place at the banks, if any,

Table 5Experimental manipulation questions.

Question 1:

ABC disclosed the value of its goodwill in its balance sheet for the 2004 financial year.(Correct answer: yes)

Question 2:

Indicate the range in which the value of ABC's total financial assets would fall for the 2004Value: 15,735,987 CFA francs(Correct answer: 15 to 20 M)

Question 3:

Indicate the range in which the value of ABC's gross operating surplus (GOS) would fall for the

Value: 101,681,388 CFA francs(Correct answer: 100 to 110 M)

Question 4:

Indicate the range in which ABC's shareholders' equity would fall for the 2004 financial year.Value: 108,387,735 CFA francs(Correct answer: 100 to 110 M)

Question 5:

Indicate the range in which ABC's overall internal financing capacity (OIFC) would fall for theValue: 64,071,140 CFA francs(Correct answer: 60 to 70 M)

Question 6:

Indicate the range in which ABC's financing surplus or deficiency would fall for the 2004 finValue: 41,396,924 CFA francs(Correct answer: 40 to 50 M)

were similarly represented in the two groups. Sixty-four of the 81questionnaires distributed were completed, for a response rate of 79%.The questionnaires were administered between October and December2005.

6. Results

6.1. Descriptive statistics

Eighty-ninepercentof participants (57/64)had at least amaster's or aDEA, and78%(50/64)hadbetween0and5years of experience (seeTable4). Given their relatively high academic levels and years of experience,they were assumed to be familiar with analyzing and interpretingfinancial statements as part of the commercial loan decision-makingprocess. In addition, their recent educationwould have ensured that theywere acquainted with SYSCOHADA, which had been taught since 2000.They would also be familiar with the OCAM plan, which was officiallyretired in December 1999, but still used unofficially until December 2003(less than twoyears before the experiment), according to themembers ofthe Institute of Chartered Accountants of Cameroon. Also, the fact thatmost of the respondents were not specialized in any specific industry(44/64) meant that they were probably able to analyze any type ofcommercial loan request regardless of the enterprise's sector of activity.Most of the respondentsweremale (45/64), andmanyof them, i.e. about58% (37/64), had not been assigned individual lending limits, or else hadlimits that included the amountof the loan requested in our experimentalcase. Forty-twopercent (27/64)were given lending limits between0 and10 million CFA francs. In Cameroonian banks, loan decisions are usuallymade by teams at the institutions' head offices. Nevertheless, the bankerthat receives the loan application analyses the financial statements of theloan applicant and makes recommendations.

There were no significant differences between experimentalgroups with regard to the distribution of respondents between headoffice and the branches (p=0.894), education (p=0.265), gender(p=0.510), whether participants specialized in a particular industry

Group Total Yes No χ2 p

1 31 27 4 1.34 0.2452 33 25 8Total 64 52 12

Group Total 10–15 M 15–20 M 20–25 M χ2 p

financial year. 1 31 0 26 5 22.84 0.0002 33 16 17 0Total 64 16 43 5

Group Total 100–110 M 120–130 M χ2 p

2004 financial year. 1 31 31 0 9.83 0.0022 33 24 9Total 64 55 9

Group Total 100–110 M

1 31 312 33 33Total 64 64

Group Total 60–70 M 70–80 M

2004 financial year. 2 33 24 9% 100 72.7 27.3

Group Total 20–30 M 40–50 M

ancial year. 2 33 8 25% 100 24.2 75.8


(p=0.848), years of experience (p=0.195), or individual lendingauthority (p=0.248). The fact that the experimental groups were notstatistically different in terms of demographic variables increased theassurance that differences relative to their judgments and decisionswould be attributable to the experimental manipulations assessingthe impact of the OHADA financial statements, with and without aSSAF, on participants' judgments and decisions.

6.2. Understanding the experimental manipulations

The goal of the manipulation checks was to ascertain thatparticipants had fully integrated the experimental manipulations(information components) involving the financial statements of thenew accounting system. Looking at Table 5, we see that mostparticipants in both experimental groups appropriately answered eachof the first four questions (those common to both groups), exceptquestion 2 on the value of the financial assets, for which nearly one-halfof the participants in the second experimental group selected the 10–15 million (16/33) rather than 15–20 million range, and question 3 onthe value of theGOS, forwhichnineparticipants in the secondgroup (9/33) selected the 120–130million rather than the 100–110million range.The difference between the two groups was significant for these twoquestions (p=0.000 and p=0.002, respectively). There was nosignificant difference in the way both experimental groups answeredthe question on goodwill disclosure (p=0.245) and question 4 on netincome value (all respondents gave the correct answer). As for themanipulation questions on overall internal financial capacity andfinancing surplus or deficiency directed to participants in the secondgroup (questions5 and6, respectively), Table 5 shows thatmostbankerswho received the SSAF appear to have acquired the information (i.e.72.7% [24/33] and 75.8% [25/33] for questions 5 and 6 respectively).

A number of factors could explain the wrong answers provided forthe experimental manipulation questions. Given the newness ofSYSCOHADA, some participants may have had difficulty integratingthe accounting system's newconcepts. In fact, themain concepts used inthe questions (goodwill, total financial assets, gross operating surplus,overall internal financial capacity, and financing surplus or deficiency)are not found in the vocabulary of the old OCAM plan, perhaps causingacquisition problems in respondents. In fact, these concepts were noteven used before the implementation of SYSCOHADA, possibly resultingin somebankers not taking them into account simply because of a lack ofunderstanding. An on-site source confirmed this possibility to theresearchers. Most of the wrong answers were provided by participantsin the second experimental group, which had received the SYSCOHADAfinancial statements that included the SSAF. It would appear that theywere more affected by the scope of the changes than participants in thefirst group, and thereforehaddifficultyacquiring the concepts. However,in the specific case of question 2, the wrong answers could also be

Table 6Analysis of differences between underlying judgments based on OCAM financial statement

Group 1

Accountingsystem

Judgmentmeans

Means of differences injudgments (OHADA−OCAM)

Std. Dev.

Operating income OCAM 6.00 0.81 1.49OHADA 6.81

Net income OCAM 6.52 0.54 1.60OHADA 7.06

Cash flow OCAM 5.74 0.61 2.47OHADA 6.35

Leverage OCAM 5.45 1.23 3.02OHADA 6.68

Liquidity OCAM 5.29 1.16 2.14OHADA 6.45

Ability to raise capital OCAM 4.68 1.80 1.99OHADA 6.48

⁎On a Likert scale with 11 points where 0 represents a very poor assessment and 10 repres

attributed to the proximity of the exact number of financial assets(15,735,937 CFA francs) to the value of 15 million that appeared in tworesponse choices (10–15 million and 15–20 million). Respondents mayhave chosen one of the ranges that included the value of 15 million,thinking it was the appropriate answer.

Based on the above analysis and the fact that the proper responsesoutnumbered the wrong answers for each question in the manipula-tions, it can be assumed that participants generally understood theexperimental manipulations.

6.3. Analysis of differences in judgments and decisions by financialstatement type

6.3.1. Group 1: OCAM vs. SYSCOHADA without SSAFUnderlying and initial judgments about profitability. The partici-

pants' study of the OCAM and SYSCOHADA statements led to significantdifferences (see Table 6) in their underlying judgments about operatingincome (p=0.005) and net income (p=0.067), although the latterdifference was only marginally significant. Differences in underlyingjudgments about cash flow were not significant (p=0.178, Table 6),while the difference in their initial judgments about profitability wassignificant (p=0.011, Table 7). Judgment means were all higher whenthe OHADA financial statements were used.

Research Hypothesis 1 is therefore confirmed with regard tounderlying judgments concerning operating income and net income,and initial judgments about profitability, but not with regard tounderlying judgments about cash flow. These results may beexplained by comparing the items in the income statements of thetwo accounting systems (Table 1). The operating income was higherin the OHADA income statement for both the current year and ascompared with the previous year. The same is noted for the valueadded. In fact, this is due to the reclassification of revenue andexpense items from operating income to value added and theexclusion of the financial income/loss from the operating income.Moreover, turnover was now highlighted, having spiraled comparedwith the previous year. The OHADA income statement also lists grossoperating surplus, which, in this case, showed an increase over theprevious year. The results for net income were identical under thetwo accounting systems, but users were able to evaluate changesbecause they were presented comparatively in the SYSCOHADAsystem, which showed the current year's income to be at least as highas the previous year's. The improved assessment of operating and netincome through the use of the OHADA income statement led to morepositive judgments of profitability. Although cash flow is animportant consideration in the decision-making process of bankers,participants in the first experimental group received only twostatements (balance sheet and income statement) to help themassess this information. They were thus left to judge for themselves

s and those based on SYSCOHADA financial statements by experimental group.

Group 2

t p Judgmentmeans

Means of differences injudgments (OHADA–OCAM)

Std. Dev. t p

3.00 0.005 5.85 1.63 1.72 5.43 0.0007.48

1.89 0.067 6.21 1.03 1.10 5.36 0.0007.24

1.38 0.178 4.85 1.12 3.26 1.97 0.0575.97

2.25 0.032 4.24 −0.91 2.69 −1.93 0.0623.33

3.01 0.005 4.58 −0.33 2.38 −0.80 0.4274.24

5.05 0.000 4.15 0.15 1.48 0.58 0.5614.30

ents an excellent assessment.

Table 7Analysis of differences between judgments (initial and principal) and decisions based on OCAM financial statements and those based on SYSCOHADA financial statements byexperimental group.

Group 1 Group 2

Accountingsystem

Judgmentmeans

Mean of differencesin judgments⁎⁎

Std. Dev. t p Judgmentmeans

Mean of differencesin judgments

Std. Dev. t p

Initial judgments⁎Profitability OCAM 6.87 0.55 1.12 2.72 0.011 6.48 0.88 1.31 3.83 0.001

OHADA 7.42 7.36Financial structure OCAM 4.03 1.84 1.61 6.34 0.000 3.88 0.27 1.51 1.04 0.306

OHADA 5.87 4.15Principal judgmentsOverall risk rating ⁎ OCAM 5.42 0.48 2.04 1.31 0.198 5.03 0.33 1.55 1.23 0.227

OHADA 5.90 5.36

Negative Stable Positive Total Z p Negative Stable Positive Total Z p

Overall risk trend ⁎⁎⁎ OCAM 9 7 15 31 −1.02 0.306 4 11 18 33 −0.34 0.735OHADA 14 4 13 31 8 0 25 33

Decisions Yes No Difference Yes No DifferenceGrant decision OCAM 31 0 0 33 0 0

OHADA 31 0 33 0

Judgmentmeans


Std. Dev. t p Judgmentmeans


Std. Dev. t p

Interest rate: riskpremium OCAM 5.79 −0.07 0.36 −1.00 0.325 5.48 −0.15 0.55 −1.59 0.122OHADA 5.72 5.33

Weight profitability OCAM 32.03 −0.16 2.03 −0.44 0.662 33.25 −0.38 3.31 −0.65 0.516OHADA 31.87 32.87

Weightfinancial structure OCAM 17.96 0.16 2.03 0.44 0.662 16.74 0.38 3.31 0.65 0.516OHADA 18.12 17.12

⁎ On a Likert scale with 11 points where 0 represents a very poor assessment and 10 represents an excellent assessment.⁎⁎ Differences in judgments=judgments based on SYSCOHADA financial statements – judgments based on OCAM financial statements.⁎⁎⁎ Statistical test: Wilcoxon signed rank test for related samples.


cash flow from operating activities and overall internal financingcapacity, using the items in the financial statements provided, whichthey did less accurately than if the amount had been providedoutright. This may explain why there were no differences inunderlying judgments about cash flow.

Underlying and initial judgments about financial structure. Therewere significant differences in participants' underlying judgmentsbased on the OCAM statements and SYSCOHADA with regard toleverage (p=0.032), liquidity (p=0.005), and ability to raise capital(p=0.000), and the initial judgment about financial structure(p=0.000) (Tables 6 and 7). The means obtained demonstratemore favorable judgments with SYSCOHADA statements.

Based on these results, Research Hypothesis 1 is confirmed withregard to underlying judgments about leverage, liquidity, and ability toraise capital, and initial judgments about financial structure. Theseresults may be explained by referring, in particular, to items in thebalance sheets of both plans (Table 2). When considering short- andlong-term debt, the bankers noted that the firm was highly indebtedand was widely using financial leverage to generate profits for itsshareholders. Given its high income, however, it could easily cover itsfinancial expenses, as demonstrated in the OHADA income statement(Table 1), which may explain the rather favorable judgmentsconcerning leverage (6.68 using OHADA, Table 6). Financial (long-term) debts appeared low in comparison with shareholders' equity(Table 2). This judgment was more difficult to make with the OCAMbalance sheet given that the firm's net position excluded net incomefor the financial year, and investment grants were included in the debt,therefore increasing that aspect despite being more of an equitynature. Thus, the long-term debt/equity ratio appeared higher in theOCAM balance sheet than in the OHADA document, and the firm'sability to raise capital appeared lower. Since the OHADA balance sheetis comparative, it showed an increase in equity and relatively modestfinancial debts in comparison, giving the company the opportunity to

enter into new medium or long-term debt (Table 2). In terms ofliquidity, cash and cash equivalents – assets and liabilities resulted in anet cash position of approximately 85 million CFA francs and netcirculating assets and liabilities (operating and I.A. working capitalrequirements) of −30 million CFA francs (Table 2). It is more difficultto assess liquidity with the OCAM balance sheet than with its OHADAequivalent because cash and cash equivalents are not highlighted, andworking capital must be determined after considering operatingassets, quick assets, and current debts.

Principal judgments and decisions. Differences in principal judg-ments about the overall risk rating (p=0.198) and the overall risk trend(p=0.306) based on the OCAM plan and on SYSCOHADA were notsignificant (Table 7), norwere thedifferences in the decision to grant theloan, since all participants answered in the affirmative to this question.Similarly, there were no significant differences in the respondents'decisions concerning the interest rate (p=0.325). Thus, ResearchHypothesis 1 is not confirmed with respect to the principal judgmentsof the overall risk trend and overall risk rating. Research Hypothesis 2concerning decisions about granting the loan or the interest rate (riskpremium) is not confirmed either.

The significant differences noted for underlying and initial judg-ments (profitability and financial structure) were thus not impor-tant enough to motivate participants to change their evaluation ofthe overall risk rating and the overall risk trend, their decision togrant the loan, or their determination of the interest rate. Inaddition, Table 7 shows that participants in this experimental groupascribed considerable importance to profitability factors in theirdecision-making process, both in respect of OCAM as well as OHADAdata (not a significant difference), given that profitability (32.03/50and 31.87/50, based on OCAM and OHADA respectively) wasgenerally weighted higher than financial structure (17.96/50 and18.12/50 based on OCAM and OHADA respectively). Since thebankers judged profitability quite favorably under both systems

Table 8Comparison of differences in underlying judgments between experimental groups.

Underlyingjudgments

Group Mean of differences injudgments (OHADA–OCAM)

Std. Dev. t p

Operating income 1 0.81 1.49 −2.05 0.0452 1.63 1.72

Net income 1 0.54 1.60 −1.40 0.1652 1.03 1.10

Cash flow 1 0.61 2.47 −0.69 0.4872 1.12 3.26


(6.87 and 7.42, based on OCAM and OHADA respectively), theiroverall risk rating is on the less risky side of the scale, slightly higherthan the scale mean of 5 (5.42 and 5.90, based on OCAM and OHADArespectively). They consequently granted the loan with a mean riskpremium of 5.79 and 5.72, OCAM and OHADA respectively.17

6.3.2. Group 2: OCAM vs. SYSCOHADA with SSAFUnderlying and initial judgments about profitability. The differences in

underlying judgments based onOCAMand SYSCOHADAwith a SSAFwithrespect tooperating income(p=0.000), net income(p=0.000), andcashflow (p=0.057) were significant, although only marginally in the lattercase (seeTable6). Also significantwas thedifference concerning the initialjudgment about profitability (p=0.001, Table 7). For these judgments, themeans of judgments made on the basis of OHADA financial statementswere higher than those based on OCAM statements. Research Hypothesis1 is therefore confirmedwith respect to underlying judgments concerningoperating income, net income, and cash flow, and with respect to initialjudgments about profitability. The results regardingoperating income, netincome, and profitability can be explained as theywere for group 1, but inaddition, the SSAF generates a more accurate assessment of cash flow,which is obtained directly through the OIFC and cash flow from operatingactivities (see Table 2). As the cash flow is positive, therewas amarginallysignificant difference in judgments concerning cash flow based onSYSCOHADA information.

Underlying and initial judgments about financial structure. Differ-ences in underlying judgments concerning leverage, based on theOCAM plan and SYSCOHADA, were marginally significant (p=0.062,Table 6). By contrast, differences in underlying judgments concerningliquidity (p=0.427) and ability to raise capital (p=0.561), as well asin the initial judgment of financial structure (p=0.306), were notsignificant (see Tables 6 and 7). Hence, as regards judgments aboutfinancial structure, only the underlying judgment about leverageconfirms Research Hypothesis 1, and marginally so. The SSAF seemsto have had a negative impact on the bankers' judgments of thefirm's leverage (the mean decreased from 4.24 with the OCAM planto 3.33 with SYSCOHADA; see Table 6). This is because the SSAF pegsthe increase in long-term debt at 8 million CFA francs and the netdecrease in equity at 20 million CFA francs (dividends and with-drawals of 40 million CFA francs, compared with new inflows of20 million CFA francs) [not listed separately in Table 2]. The favorablenet cash position highlighted in the balance sheet was countered inthe SSAF by a negative variation in net cash and cash equivalents andoperating working capital, resulting in a non-significant effect on thebankers' appraisal of the firm's liquidity after they examined theOHADA statements, as compared with their appraisal based on theOCAM statements. The same result was noted with respect to theirassessment of the firm's ability to raise capital, as cash needs count-eracted the effect of a weak financial debt/equity ratio.

Principal judgments and decisions. The differences in principaljudgments based on the OCAM plan and SYSCOHADA with regard tothe overall risk rating (p=0.227), the overall risk trend (p=0.735),and the decision regarding the interest rate (p=0.122) were notsignificant (see Table 7). Similarly, there was no significant differencein the bankers' decisions to grant the loan based on informationgathered from the OCAM plan or from SYSCOHADA, since all partici-pants answered yes to this question.

Thus, as with the first experimental group, the research hypothesesare not confirmed for the overall risk rating, the overall risk trend, thedecision regarding the interest rate, and the decision to grant the loan.Therefore, the significant differences noted in the underlying and initial(profitability) judgments were not substantial enough to influence

17 The prime rate of the Cameroon central bank was 6% in 2005 (InternationalMonetary Fund, 2005), resulting in a mean interest rate of approximately 12% inrelation to the loan in our case study. This is typical of the rates charged for medium-and long-term commercial loans (Biro, 2004).

participants to change their evaluation of the overall risk rating andoverall risk trend, their decision to grant the loan, or the interest rate,even though they placed greater importance on their assessment ofprofitability factors (33.25/50 and 32.87/50 with OCAM and SYSCO-HADA respectively) than on financial structure (16.74/50 and 17.12/50with OCAM and SYSCOHADA respectively), and profitability factorswere judged more favorably with SYSCOHADA (see Tables 6 and 7).

In the case of both groups 1 and 2, factors related to informationsources other than financial statements might have played prominentlyin their assessment of the overall risk rating and risk trend, theirunanimous positive decision to grant the loan, and the interest ratecharged. The company was well established, had a dominant marketpresence, and growth in sales was anticipated. Collateral was adequateand shareholders were contributing to the project's financing. Takentogether, these factors demonstrated the company's good standing andwere considered in bankers' decision process, as discussed previously(Tchomba, 1997; Wamba and Tchamanbé-Djiné, 2002; Wanda, 2007).Thus, the impact of the more favorable judgments for profitability andfinancial structure under SYSCOHADA was judged against an alreadyfavorable baseline situation provided by other information in the case.

6.3.3. Comparison of differences in judgments and decisions betweenexperimental groups

Acomparisonof the differences in judgments and decisions betweenthe two experimental groups shows that theyweremost divided in theiropinions about the firm's financial structure; more specifically, asindicated in Tables 8 and 9, respondents diverged significantly in theunderlying judgments they made based on the OHADA and the OCAMstatements with regard to leverage (p=0.004), liquidity (p=0.011),and financial structure (p=0.000), and their initial judgment of thefinancial structure (p=0.000). The differences in the judgments madeunder the two systems were less pronounced for group 2, and evennegative for some judgments (liquidity and leverage). As far asprofitability judgments were concerned, the two experimental groupsdiffered significantly only in their underlying judgments concerningoperating income (p=0.045, Table 8). The most positive difference injudgments about operating income was noted in group 2. Thedifferences in principal judgments (overall risk rating and trend) weresimilar between the two groups (p=0.741 and p=0.187, respectively),as were the differences in their decisions concerning the interest ratepremium (p=0.459) [see Table 9].

The two experimental groups did not differ significantly in the judg-ments and decisions they made on the basis of the OCAM statementsalone (except as regards leverage, which group 2 participants evaluatedmore negatively) [tests not presented]. Consequently, any difference inthe way the judgments and decisions diverged in the two groupsfollowing their reading of the OCAM and then the SYSCOHADA financialstatements can generally be attributed to the additional financialstatement received by group 2, i.e. the SSAF. With regard to profitability,

Leverage 1 1.23 3.02 2.98 0.0042 −0.91 2.69

Liquidity 1 1.16 2.14 2.63 0.0112 −0.33 2.38

Ability to raisecapital

1 1.80 1.99 3.78 0.0002 0.15 1.48

18 CEMAC: Communauté Économique et Monétaire de l'Afrique Centrale (Central AfricaMonetary and Economic Union).19 GICAM: Groupement inter-patronal du Cameroun (Employers' association ofCameroon).

Table 9Comparison of differences in judgments (initial and principal) and decisions betweenexperimental groups.

Group Mean of differences injudgments (OHADA–OCAM)

Std.Dev.

t/Z p

Initial judgmentsProfitability 1 0.55 1.12 −1.07 0.285

2 0.88 1.31Financial structure 1 1.84 1.61 4.01 0.000

2 0.27 1.50Principal judgmentsOverall risk rating 1 0.48 2.04 0.33 0.741

2 0.33 1.55Overall risk trend ⁎ 1 −0.23 1.15 −1.32 0.187

2 0.09 1.10DecisionsGrant decision 1 0

2 0Interest rate: riskpremium

1 −0.07 0.36 −0.42 0.4592 −0.15 0.75

⁎ Statistical test: Mann–Whitney U.


the SSAF reiterates the gross operating surplus, thereby highlightingoperating income (before depreciation and provisions). With regard tofinancial structure items, the SSAF highlighted cash needs, includingoperational and asset investment needs, and the fact, in this case, thatinternal financing was insufficient to cover the firm's needs. It alsoindicated growing debt and the net outflow of equity. Thus, thedifferences in underlying and initial judgments concerning financialstructure factors were all significantly less favorable when participantshad the SSAF in addition to the other financial statements (group 2compared to group 1). Therefore, it can be concluded that the SSAFinfluenced some of the bankers' judgments.

7. Conclusions

This study examined how the judgments and decisions of Camer-oonian bankers are affected by changes in the format and informationalcontent of financial statements. Most of the participants acquired theinformation related to thenewconcepts in SYSCOHADAand appeared tohave integrated them into their decision-making process. The change inaccounting system mainly brought about changes in initial judgmentsconcerning profitability (both groups) and financial structure (group 1),as well as underlying judgments (operating income, net income, andleverage, both groups; liquidity and ability to raise capital, group 1; andcash flow, group 2). However, the differences in underlying and initialjudgments did not result in the bankers modifying their principaljudgments concerning theoverall risk ratingand theoverall risk trendortheir decision aboutwhether to grant the loan and the interest rate theywould request (risk premium).

The addition of the SSAF (group 2) did not alter significantly theirunderlying judgments concerning liquidity and ability to raise capital,their initial judgments concerning financial structure, or even theirprincipal judgments or decisions. But a comparison of the changes injudgment brought about by SYSCOHADA in each experimental groupreveals that the SSAF had an effect, given that differences betweengroups were noted in the change in the bankers' underlying judgmentsconcerning operating income, leverage, liquidity, and ability to raisecapital, and in their initial judgments concerning financial structure. Asparticipantsweightedprofitability factors higher thanfinancial structurein their assessment process even though the financial structure factorswere easier to discern with the SSAF, they did not change their overallrisk rating or risk trend assessment, in viewof thefirm's profitability andthe fact that the other elements related to the company were favorable.

It can thus be concluded that although there was no change in thebankers' principal judgments of the overall risk rating and the overallrisk trend after the transition from the OCAM plan to SYSCOHADA,Hypothesis 1 postulating that their judgments would not remain the

same is confirmed for most of the underlying and initial judgments ofboth groups. This result indicates that some of the Cameroonianbankers' judgments were indeed impacted by changes in informa-tional content and in the presentation format of financial statements.These findings are consistent with the results of several earlier studieson the impact of content or format change on the judgments ofbankers (Asechemie, 1992; Belkaoui, 1992; Brooks et al., 1996; Danoset al., 1989; Harper et al., 1987; Kwok, 2002; Sami & Schwartz, 1992;Viger et al., 2008; Wilkins & Zimmer, 1985) and financial statementusers (Asechemie, 1992; Belzile et al., 2006; Cooper & Selto, 1991;Elliott, 2006; Frederickson & Miller, 2004; Goldwater & Fogarty, 1995;Hirst & Hopkins, 1998; Hirst et al., 2004; Hopkins et al., 2000; Kwok,2002; Maines & McDaniel, 2000; Munter & Ratcliffe, 1983).

However, Hypothesis 2 postulating a difference in bankers' decisionsis not confirmed, contrary tomostof the aforementioned studies inwhichparticipants were required tomake decisions. As therewas no significantdifference in the overall risk rating and overall risk trend after thetransition fromtheOCAMplan to SYSCOHADA, it follows that thedecisionto grant credit and the interest rate charged on the loan would not bedifferent either. It seems that the variations in the initial and underlyingjudgments were not material enough to prompt significant variations insubsequent principal judgments. In fact, the decision-making factors thatwere unrelated to financial statements may have been important inexplaining the respondents' principal judgments and subsequentdecisions. Also, given this study's use of a within-subjects design, theinitial principal judgments anddecisionsbankersmadeon thebasis of theinformation provided in the case study might have constituted afoundation on which subsequent information had a significant incre-mental effect, depending on its materiality. This notwithstanding, indemonstrating that the statistically significant difference obtained forsome judgments in the decision process does not necessarily impactsubsequent judgments, and hence the resulting decisions, this studyindeed makes a contribution to the behavioral literature on changes infinancial statements and their impact on bankers' decision makingprocess. However, future research could use in-depth interviews tofurther investigate the reasons behind the presentfindings and assess theimportance and interaction of the various decision factors.

It is possible that migrating to the new accounting system did notinfluence certain aspects of some bankers' decision-making processbecause of the difficulties of integrating the new aspects ofSYSCOHADA, particularly the SSAF. This possibility was underscoredby some Cameroonian chartered accountants:

In CEMAC in general, and in Cameroon in particular, the transitionfrom OCAM to the OHADA accounting plan has created concerns…These concerns generally stem from the fear of novelty and thescope of the adaptation efforts. They could be mitigated by effortsto simplify, raise awareness, and provide training (ComitéONECCA/GICAM, 2002, p. 20) [translation].18

Itwould be important for bankers inparticular to develop an in-depthunderstanding of the SSAF because of its potential influence on certainjudgments and its prominent role in showing not only the firm's growthstrategy (internal or external), but also its financing policy (Kamdem &Wanssy, 2004). Given that some participants in this study did not acquiresome of the elements of the SSAF, the OHADA Permanent Secretariatshould bemade aware of users' trainingneeds. In Cameroon, ONECCAhasbeen very active in easing the transition between accounting systems byorganizing information and awareness conferences, creating theONECCA/GICAM committee, and developing methodology guidelinesand a user manual for the OCAM-SYSCOHADA transition.19


There are a number of limits associated with this study. First, it waspractically impossible to find out whether participants had followedthe recommended steps in performing the experiment, given thatthere was a period of three to seven days between the time theexperimental material was delivered and then collected. Thisuncertainty could threaten the study's internal validity if extraneousevents occurred during the time it took participants to perform theexperiment, resulting in an impact on their judgments and decisions.As respondents were not supervised during the experiment, whilecompleting the second questionnaire they could have reviewed theirresponses to the first questionnaire as a way to ensure consistency.However, this possibility is unlikely to have been widespread sincesignificant differences were noted in many judgments.

In view of the fact that this was a two-phase experiment in whichfinancial statements were presented in the OCAM and then in theSYSCOHADA format, participants may have been exposed to matura-tion over the period of the experiment or have been influenced by thepre-measurement effect. Each respondent was given only oneexperimental case, which included financial statements from thesame firm, for both OCAM and SYSCOHADA questions. The adminis-tration of the first questionnaire after the OCAM financial statementswere distributed may have sparked awareness of the particularinterests of the experiment and conditioned respondents' reactionsto the second set of financial statements (SYSCOHADA financial

Comparison of SYSCOHADA and OCAM balance sheets.

Panel A1Non-current assets

SYSCOHADA classification

Fixed assets ⁎

Deferred costsFormation expensesDeferred chargesRedemption premiums

Intangible assetsResearch and development costsPatents, licenses, softwareGoodwillOther intangible assets

Tangible assetsLandBuildingsFixtures and fittingsEquipmentVehicles

Payments on account for fixed assets

Financial assetsParticipating interestsOther financial assets

Panel A2 – Current assets

SYSCOHADA classification

Circulating assetsCirculating I.A. assetsInventoriesGoodsRaw materials and other consumablesWork in processFinished goods

Trade debtors and related accountsSuppliers, advance payments receivedClientsOther receivables

Appendix A

statements). However, as Schepanski et al. (1992) point out, thehypothesis or the socially desirable response would have to beprovided explicitly to subjects for any demand effects from thesubjects' role to pose a serious problem. In this case, neither thehypotheses nor the responses were explicitly provided. Further, therejection of the null hypothesis of no effect could have resulted fromeither a positive or a negative direction in judgment change (two-sidedtests of hypotheses). From this analysis, the probability of demandeffects in this study's experiment is believed to be low.

The cue salience resulting frommanipulationof the variableswithin-subjects could threaten external validity. However, high cue salience isnot a problem when the primary objective is to generalize causalrelationships, since “cue salience isnot viewedasa causal variableper se.Although saliencemight alter the effect size of a variable that is causallyrelevant, it would not do so for a variable that is causally irrelevant”(Schepanski et al., 1992, p. 138). It was therefore possible to generalizethe causal effects obtained in this experiment, but not the effect size.

Acknowledgment

The authors would like to thank Mr. Dikoumé Mbonjo, Adminis-trative and Education Director of the Ordre National des Experts-Comptables et Comptables Agréés (ONECCA), for his help in facilitatingthis research. The authors are also grateful to Réjean Belzile, Chantal

OCAM classification

Fixed assetsCosts and intangible assetsCapitalized costsIntangible assets

Tangible assetsLandOther fixed assetsOther fixed assets in process

Other fixed assetsPayments on account for fixed assetsLong- and medium-term loans and receivables

(less amount to be paid within one year)Long-term investments

OCAM classification

Operating assetsGoodsMaterials and consumablesCommercial packagingIntermediate goodsFinished productsWork in process (goods and services)Goods forwarding, to be received

Quick assetsAdvance payments madeClientsAfrican and international states and organizationsPartners

Panel A2 – Current assets

Quick assets (continued)Subsidiaries and related companiesOther debtors (individual and miscellaneous)

Cash and cash equivalents – assets Prepayments accrualsLoans receivable within one year

Marketable securities Short-term investment securitiesDeposits in transit Notes and warrants receivableBanks, postal accounts, cash Checks and coupons to cash

Banks and postal accountsCashAdvances and commercial letters of credit

Translation adjustment-assets

Panel B1– Capital and long-term debts

SYSCOHADA classification OCAM classification

Shareholders' equity and related equities Net position (before results for the financial year)Capital Share or personal capitalShareholders, capital Premiums on share issues– Shareholders, uncalled capital Statutory reserves

Available reservesAdditional paid-in capital and reserves Retained earningsShare premiums and merger premiums Revaluation adjustmentRevaluation reserve Unappropriated prior periods income or lossUnavailable reservesAvailable reservesRetained earnings

Unappropriated prior periods income or lossNet income/loss for the financial yearOther equities Other permanent capitalInvestment grants Tax-regulated provisionsTax-regulated provisions and related funds Capital gains to reinvest Equipment grants

Financial and related debts ⁎⁎

Loans Loans – bondsLeasing and other similar obligations – Bond redemption premiumsSundry financial obligations Other long- and medium term loans and debtsFinancial provisions for risks and charges (Less amount to be paid within one year)

Affiliated or partner accounts frozenProvisions for liabilities and charges

Panel B2 – Current liabilities

SYSCOHADA classification OCAM plan classification

Circulating liabilities Current liabilitiesCirculating I.A. and related debtSuppliers SuppliersClients, advance payments received Clients, advance payments receivedTax liabilities African and international states and organizationsSocial liabilities PartnersOther liabilities Subsidiaries and related companiesContingency provisions Other creditors

PrepaymentsCash and cash equivalents – liabilities Accrued amounts payable

Loans payable within one yearNotes and warrants payable

Banks, discount credit Banks, short-term advancesBanks, cash creditBanks, overdraftTranslation adjustment – liabilities Net income/loss for the financial year to be appropriated

⁎ Including irregular activities (I.A.) assets in the amount of …⁎⁎ Including I.A. debts in the amount of …

Appendix A (continued)

Comparison of SYSCOHADA and OCAM income statements.

Income statement (SYSCOHADA) Income statement (OCAM)

Charges Revenue Charges Revenue

ACCOUNT 80: Calculation of gross margin (GM) ACCOUNT 80: Calculation of gross margin (GM)Operating activities Operating activities Cost of goods sold Sales of goodsPurchases of goods Sales of goods (1) Credit balance for account 80: GM Debit balance for account 80: GM(+) Increase or (−) decrease ininventories

Total Total

Gross margin on goods for resale ACCOUNT 81: Calculation of value added ACCOUNT 81: Calculation of value addedSales of manufactured goods (2)

Gross margin: transfer of account 80 debit balanceGross margin: transfer of account80 credit balance

(continued on next page)

Appendix B


(continued)

Income statement (SYSCOHADA) Income statement (OCAM)

Charges Revenue Charges Revenue

Purchases of raw materials andrelated consumables

Sales of work or services (3) Materials and consumables Products sold

(+) Increase or (−) decrease ininventories

Products stocked ⁎ Transportation Products stocked⁎⁎⁎

Own work capitalized Other purchased services Own work capitalizedGross margin on materials Charges to capitalize or transfer

Other purchases (+) Increase or(−) decrease in inventories

Miscellaneous revenue (4) Credit balance for account 81:Value added

Debit balance for account 81:Value added

TransportationExternal servicesTaxesOther charges

[TURNOVER (1+2+3+4)] Total Total

Operating grantsOther revenue

Staff costs Value added

Gross operating surplus (GOS) ACCOUNTS 82 and 082: Calculation ofoperating and non-operating income⁎⁎

ACCOUNT 82 and 082: Calculation ofoperating and non-operating income⁎⁎⁎⁎

Appropriations to depreciationand provisions

Provisions written back

Charges transferred Value added: transfer of account81 debit balance

Value added: transfer of account81 credit balance

Total operating charges Total operating revenue Sundry charges and losses Miscellaneous revenue and gainsStaff costs

Operating income/loss Taxes Grants receivedInterest paid Interest and dividends received

Financial activities Financial activities Appropriations to depreciationand provisions

Depreciation and provisions written back

Financial charges Financial income Credit balance for account 82:Operating income

Debit balance for account 82: Operating loss

Exchange losses Exchange gains Credit balance for account 082:Non-operating income

Debit balance for account 082:Non-operating loss

Appropriations to depreciationand provisions

Provisions written back Total Total

Financial charges transferred ACCOUNT 84: Calculation of incomeon disposal of fixed assets

ACCOUNT 84: Calculation of income ondisposal of fixed assets

Total financial charges Total financial revenueBook value of assets sold Depreciation related to assets sold

Financial income/loss Ancillary selling costs transferred Selling price of assetsTotal regular activity charges Total regular activity revenue Credit balance for account 84:

Capital gainsDebit balance for Account 84: Capital losses

Net income/loss from regularactivities

Total Total

Irregular activities (I.A.) Irregular activities (I.A.) ACCOUNT 85: Calculation of netincome before taxes

ACCOUNT 85: Calculation of netincome before taxes

Book value of fixed assets sold Fixed assets' selling price Operating loss: transfer of account82 debit balance

Operating income: transfer of account82 credit balance

I.A. charges I.A. revenue Non-operating loss: transfer ofaccount 082 debit balance

Non-operating income: transfer ofaccount 082 credit balance

I.A. appropriations I.A. writebacks Capital losses: transfer of account84 debit balance

Capital gains: transfer of account84 credit balance

I.A. charges transferred Commitment to reinvest capital gains Reintegration of reinvested capital gainsTotal I.A. charges Total I.A. revenue Credit balance for account 85:

Net income before taxesDebit balance in account 85:Net loss before taxes

Total TotalI.A. Net income/loss

Employee profit share ACCOUNT 86: Calculation of income tax ACCOUNT 86: Calculation of income taxIncome tax Income tax Tax creditTotal profit share and tax Additional assessment Debit balance in account 86: income taxOverall total for charges Overall total for revenue

Net income/loss for the financial year ACCOUNT 870: Calculation of netincome/loss for the financial yearto be appropriated

ACCOUNT 870: Calculation of net income/lossfor the financial year to be appropriated

Net loss before taxes: transfer of account85 debit balance

Net income before taxes: transfer ofaccount 85 credit balance

Income tax: transfer of account86 debit balanceCredit balance in account 870:Net income for the financialyear to be appropriated

Debit balance in account 870:Net loss for the financial year to beappropriated

Total Total

⁎ Products stocked: changes in inventories of finished goods and work in process.⁎⁎ Except for value added which is debited or credited to account 82 only, amounts for the other elements may be related to operating activities (account 82) or non-operatingactivities (account 082).

Appendix B (continued)


Appendix C

Statement of source and application of funds (SSAF).

Panel A: Part 1: Calculation of financial balances for financial year N

Overall internal financing capacity (OIFC)

GOS –

Financial charges – Operating charges transferred –

Exchange losses – Financial revenue –

I.A. charges – Financial charges transferred –

Employee profit share – Exchange gains –

Income taxes – I.A. revenue –

– I.A. charges transferred –

Total (I) – Total (II) –

OIFC=Gross Operating Surplus (GOS) − other charges + other revenue, excluding income/loss from disposal of fixed assets=Total (II) − Total (I).Internal financing=OIFC – Distributions of dividends during financial year (dividends paid during the financial year, including interim dividends).

Change in operating working capital Application [increase (+)] Source [decrease (−)]

Changes in inventories: N−(N−1)Goods – or –

Raw materials – or –

Work in process – or –

Finished goods – or –

(A) Net change in inventories – or –

Changes in receivables: N−(N−1)Suppliers, advance payments made – or –

Clients – or –

Other receivables – or –

(B) Net change in receivables – or –

Changes in circulating liabilities: N−(N−1)Clients, advance payments received – or –

Suppliers – or –

Tax liabilities – or –

Social liabilities – or –

Other liabilities – or –

Contingency provisions – or –

(C) Net change in circulating liabilities⁎ – or –

Change in operating working capital=(A) + (B) + (C) – or –

Cash flow from operating activities N N−1

Gross operating surplus – –

– Change in operating working capital – –

– Own work capitalized – –

Cash flow from operating activities – –

Panel B: Part 2: Investments, financing and change in net cash and cash equivalents

Items Year N Year N−1

Applications (A) Sources (S) (A −; S +)

I. Investments and divestmentsDeferred costs (increase during financial year)Internal growthAcquisitions/sales of tangible fixed assetsAcquisitions/sales of intangible fixed assets

External growthAcquisitions/sales of financial assets

Total investmentII. Change in operating working capitalA – Economic applications to finance (I+II)III. Applications/sources (change in I.A working capital)IV. Mandatory financial applications (1)

Repayment (according to timetable) of loans and financial debts⁎⁎

B – Total applications to financeV. Internal financingDividends (application)/OIFC (source)VI. Financing through equityIncrease in capital through new share issuesInvestment grantsReductions in capital(including withdrawals by owner)VII. Financing through new loansLoans ⁎⁎⁎

(continued on next page)


Mandatory information to include in notes to the accounts.

Accounting rules and methods 1 Evaluation and presentation rulesSupplemental information on the balance sheet and income statement 2 Table for fixed assets

3 Table for depreciation4 Table for capital gains and losses5 Table for provisions6 Extraordinary circumstances7 In case of revaluation: type and date, amounts, method, tax treatment, revaluation gain included in equity8 Table for capital leased assets9 Table for receivables and debts10 For each debt item, debt guaranteed by collateral11 Table for financial commitments12 Breakdown of goodwill and accounting and depreciation methods13 Comments on potential derogations regarding research and development costs14 Contracts with reservation of ownership clause15 Individual fungible items indicated16 Explanations on the nature, amount and accounting treatment of expenses to be deferred over several years17 Explanation on the method for calculating partial income from multi-year operations18 Information on earnings from joint operations19 Information required for national statistics: revenue, charges and specific information20 Composition of share capital21 Allocation of last five years' results22 Projected allocation of the income for the period23 List of subsidiaries and intercorporate investments24 Advances and credits to partners and directors

Other information 25 Investment grants and tax-regulated provisions26 Translation adjustment27 Assessment of acquired goods based on market price at last month of period28 Personnel and employee payroll at year end29 Expired receivables and debts of the period30 Breakdown of exchange gains and losses31 Analysis of deferred taxes32 Partners' current accounts33 Receivables and debts related to intercorporate investments34 Details of available and unavailable reserves35 Overall compensation for members of governing, administration and monitoring bodies

Appendix D

Panel B: Part 2: Investments, financing and change in net cash and cash equivalents (continued)

Items Year N Year N−1

Applications (A) Sources (S) (A −; S +)

Other financial debts ⁎⁎⁎

C – Net financingD – Financing surplus or deficiency (C–B)VIII. Change in net cash and cash equivalentsNet cash and cash equivalents at year end + o r −Net cash and cash equivalents at the beginning of the year + or −Change in net cash and cash equivalents:(+ if application; − if source)

Check: D=VIII with opposite sign.⁎ Excluding I.A. items.⁎⁎ Excluding anticipated repayments allocated to VII.⁎⁎⁎ Anticipated repayments separately allocated to applications.

Appendix C (continued)


Viger and an anonymous reviewer for their helpful comments onearlier versions of this paper. They acknowledge support from theCorporate Reporting Chair, École des sciences de la gestion, Universitédu Québec à Montréal.

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the impact of the new ohada accounting system on the judgments and decisions of cameroonian bankers

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