The Impact of Accounting Measurement at Fair Value of Financial Derivatives on The Quality of Financial Statements: Case study of Saudi National Bank

Abstract

The study aimed to clarify and apply the accounting measurement of the fair value of financial derivatives and its impact on the quality of financial statements and financial reports, and to shed light on fair value accounting according to International Financial Reporting Standard No. (13), by identifying the concept and importance of fair value, methods of measuring it, and mechanisms for applying fair value based on accounting standards, and stating the impact of financial information provided at fair value on the quality of financial statements. The study problem was represented in, what is the impact of accounting measurement at the fair value of financial derivatives on the assets and liabilities sides on the total equity and the quality of financial statements. The study reached a number of results, namely, that the increase in the positive fair value of financial derivatives on the assets side increases the total equity, which positively affects the quality of financial statements, as well as the decrease in the negative fair value of financial derivatives on the liabilities side increases the total equity, which positively affects the quality of financial statements. The study recommended several key recommendations, including providing investors with more accurate and relevant information using fair value measurements, which helps them make better investment decisions. It also recommended increasing transparency in financial reporting, and guiding investors and users of financial statements to pay attention to the quality of financial statements and announced profits, as this helps them make sound decisions.