March 2014 (Global Review of Accounting and Finance)

March 2014 (Global Review of Accounting and Finance)

Total Articles - 8

Pages 1 – 12

Author: David R. Borker

The eleven Global Growth Generator (3G) countries are the latest candidates for strong economic growth through 2050. (Buiter and Rahbari 2011)  This paper considers six countries that have 3G Runner-up status:  Brazil, Iran, Mexico, North Korea, Thailand and Turkey.  It combines two separate methods into a cultural approach to economic and accounting value analysis. (Borker 2013b) (Borker 2013a) The purpose is to provide comparative cultural and accounting perspectives reflecting economic growth potential in the six Runner-up countries. Each country is examined for Hofstede’s six cultural value dimensions. An accounting profile is constructed based on Gray accounting values and compared to an independent IFRS favourable profile. This profile and other factors suggest the long-term success of IFRS implementation.  Cultural accounting value profiling is shown to complement economic factors in evaluating a country’s growth potential. An important finding of the study was that current antiWestern political extremism need not correlate with a less favourable cultural profile for IFRS. The two countries with the most extreme political regimes and lowest official recognition of IFRS were identified as ranking highest culturally for IFRS potential.

Pages 13 – 26

Author: Samantha E Gomez and Nirupa Padia

Performance auditing in the public sector originated in the late 1970s and would appear to be prevalent in developed countries. As performance auditing has previously been known as operational auditing, management auditing and value-for-money auditing, it seems to be in a constant state of change and advancement. This study is an exploratory study devised to compare and contrast the extent of compliance to guidelines established by INTOSAI in relation to the format of public performance audit reports. In this study, public performance audit reports in South Africa, a developing country, and in Australia, a developed country, are examined. Reports published in  both South Africa and Australia were reviewed using a quantitative approach to inspect possible variation in report format from the INTOSAI guidelines The results of this study revealed that Australian performance audit reports seem to be more compliant with INTOSAI guidelines with regard to format than South African performance audit reports.

Pages 27 – 51

Author: Simone Kelly and Ray McNamara

This paper uses case studies and interview data to explore the relationship between control and new venture success/survival. A model of the new venture control process is distilled and explored in six new venture cases. The control processes were traced through an examination of the everyday language of venture principals to determine a grounded lower order model. Integrating these models into contingency theory locates strategic risk reduction choices as the crucial link between contingent variables and organizational control packages. In this sense the process of organizing is seen as a tiered process of risk reduction: successful firms analyze and control risks. The control package is the organization.

Pages 52 – 75

Author: Mansour Ibrahim Saaydah and Waheed Rathan Khatatneh

The objectives of this study are to: explore the stage and/or level of adoption of some recent cost management tools among Jordanian manufacturing companies in the year 2010; to identify the major difficulties or obstacles facing the adoption attempts of such tools; and to examine the perceived effect of adoption level on company’s operating efficiency, relations with customers, relations with employees, accounting performance and market performance. Because Jordanian manufacturing companies do not reveal, in their annual reports, adequate information about their awareness and level of adoption of such tools, the authors had to design a  questionnaire to collect the relevant data from key financial personnel in those corporations. The findings of the study, based on forty two responses from thirty companies,  confirm the presence of a reasonable level of awareness and adoption, fully or partially, of each of the following four tools in order of intensity: JIT manufacturing; Balanced Scorecard, JIT inventory; Activity-Based Costing; and to a less extent  Target Costing and Kaizen Costing tools. The findings also indicate that when considering adoption, the tool that faces the greatest difficulty is Target Costing followed by Activity-Based Costing. As to the nature of difficulties facing firm’s adoption of those tools, it was found that the high cost of implementation is the most prevailing difficulty  followed by the lack of specialists in application and lack of employees' participation. Furthermore, the respondents believe there will be a positive effect of applying the tools on corporate operating efficiency, relations with customers and employees and on accounting and market performance. In conclusion it seems possible to apply most of the tools in the overall interest of the company if top management commit itself to eliminating or alleviating the difficulties facing adoption.

Pages 76 – 92

Author: Maggie Pan Williams and Dennis William Taylor

The practice of using related-party transactions (RPTs) to prop  up a firm’s earnings or liquidity by its controlling shareholders creates governance and market-distortion issues. This study has two objectives: (i) to develop an improved measure of propping based on Jensen and Ruback’s (1983) theory of ‘market for ownership control’; (ii) to determine the extent to which controlling shareholders are able to capture directors and top executives in order to facilitate the carrying out of propping transactions. Models are developed and empirically tested for all listed companies in China in 2010, using data from the CSMAR database. Results reveal significant factors that create a market for ownership control  and, hence, propping conditions, as well as significant board governance characteristics that facilitate propping. This paper provides a new approach to modelling the regulatory and market conditions and governance characteristics that could be applied by regulators and minority shareholders in predicting the phenomenon of propping.

Pages 93 – 106

Author: Sultan Alktani and Adel Ghareeb

The Saudi Institute of Internal Auditors aims at developing the position of (the status and effectiveness) internal auditing in Saudi Arabia. One goal of the Institute is to provide the international internal auditing criteria, ethics and other relevant guidelines pertaining to internal auditing, as issued by the International Institute for Internal Auditing. This paper investigates whether the professional and legislative efforts in this regard have been well founded and successful. The professional and legislative efforts are, by nature, theoretical, and thus stop short of achieving the desired results which can only be achieved by putting the innovation efforts into practice. This study aims at elucidating the degree of implementation of these innovations by examining the perceptions of the directors of internal auditing departments in the Saudi public sector. The findings suggest that there is a lack of independence of the internal audit functions at public sector units, as well as a dearth of professionalism which may have a negative effect on the quality of the internal auditing function. This may hinder external auditors’ job when reviewing financial reporting. The results also point to some of the challenges relating to auditing that the Saudi public sector may face in future.

Pages 107 – 131

Author: Chih-Hsien Liao, Jenten Liu and Yi-Pong Chia

This study examines whether a firm’s business strategy and life cycle will influence managers’ myopic behaviour in R&D investment. Using a sample of listed Taiwanese firms who have high incentives to meet earnings benchmarks from 1996 to 2010, we find that firms adopting the prospector strategy are more likely to cut R&D expenditures. In addition, we find that firms in the growth stage exhibit lower likelihood of cutting R&D expenditures to meet earnings targets. These results suggest that prospector firms are concerned more about the cost of investor undervaluation due to R&D expensing than about the future benefits that could be derived from current R&D spending. Further analysis indicates that such myopic behaviour tends to exist in firms with poor governance.

Pages 132 – 152

Author: Duc Hong Thi Phan, Bruno Mascitelli and Meropy Barut

The perception of Vietnamese accountants regarding the advantages, disadvantages, potential costs and challenges of IFRS adoption in Vietnam will play a major role in its adaptation. Recently, the Ministry of Finance of Vietnam (MoF) announced its intention to revise the existing Vietnamese accounting standards (VAS) to align with the current IFRS. The MoF has not yet determined whether to adopt fully IFRS, converge or keep VAS as they are. This study examines the perceptions, concerns fears and expectations of the Vietnamese accounting community and, in turn, assists the Vietnamese accounting standard setters in making favourable accounting decisions affecting accounting practices. An aggregate of 3,000 questionnaires was sent to 3,000 Certified Public Accountants, Chief Financial Officers/Chief Accountants and accounting academics in Vietnam internally in 2012. The study reveals that the Vietnamese accounting professionals are optimistic about potential benefits from IFRS adoption, indicate expected costs and challenges in implementing IFRS and suggest strong support for a gradual switch from VAS to IFRS, though the level of support varies amongst the three different groups of accountants.

Total Articles- 8

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