ACCTG 502 | Session 2 | Financial statements vs. FinTech: A discussion of Minnis, Sutherland, and Vetter - 2024

Peter Demerjian

Introductions:

Minnis, Sutherland, and Vetter (MSV) document a significant decline in lenders' collection of attested financial statements, including unqualified audits, reviews, and compilations, from 2002 to 2017. They attribute this change to the adoption of new technology by lenders and the entry of new non-bank lenders into the market. In this discussion, I examine several aspects of their findings. First, I offer a framework for assessing the usefulness of financial statement information in debt contracting. Using this framework, I analyze how financial statements may be helpful for small and medium loans studied by the authors, and how this role could be impacted. Second, I explore how financial technology (FinTech) has disrupted traditional lending and possibly altered the role of financial statements. Lastly, I discuss the implications of these changes for the accounting profession.