AUDITORS’ RECOGNITION AND DISCLOSURE MATERIALITY THRESHOLDS: THEIR MAGNITUDE AND THE EFFECTS OF INDUSTRY

Materiality thresholds are the dividing line between material and immaterial information. Recognition materiality thresholds are the dividing line between what is recorded and what is not recorded in the accounts. Disclosure materiality thresholds are the dividing line between what is separately disclosed in the financial statements and what is not separately disclosed. Auditors materiality thresholds are important because they have a significant influence on what information is recorded in the accounts and disclosed in financial statements and hence available for decision making by external parties. However, there are no research findings about recognition thresholds, and those in relation to disclosure thresholds show a lack of consensus. Hence the motivation for this research. The objective of the research is to study auditors’ recognition and disclosure thresholds within the context of industry, which is divided into the industry of the firm and the industry specialization (experience) of the auditor. The results of the study show that: (1) Recognition thresholds are significantly lower than disclosure thresholds. (2) The mean thresholds are 5·7% (recognition) and 8·7% (disclosure). These are in the 5% to 10% guideline provided by Australian accounting standards. (3) The thresholds appear to vary with industry market risk. (4) Auditors appear to use the thresholds from the industry in which they specialize, in an industry in which they do not specialize. The paper discusses the implications of these findings.     

DO STRATEGY AND MANAGEMENT MATTER IN MUNICIPAL ORGANISATIONS?

In Sweden, a large share of public services are organised, produced and delivered by municipalities, large and small, rich and poor. Contextual conditions (size and location) and economic conditions (efficiency and wealth) differ considerably among these service‐providing organisations. The question raised in this paper is whether a municipality's economic situation is a direct consequence of the contextual situation or the organisation's strategy and management – that is: Do strategy and management matter? Our analysis rests on a resource‐based view of organisation strategy. Both quantitative and qualitative observations have been made. First, cost savings data from 50 municipalities were examined for patterns and relationships between contextual and economic conditions. Second, about 100 representatives – municipal executive board members and leading officials – from 20 municipalities with different characteristics were interviewed. In this paper we outline an analytical framework and propose that sound and sustainable provision of municipal service depends on whether organisational decision‐making is in harmony with work methods and objectives. The results indicate that strategy and management do matter. Among the municipalities included in our study, we identify four prevalent basic strategies. Strategy tends to coincide with the economic situation rather than the contextual situation. A low‐performing municipality tends to have a predominantly outward orientation in its decision‐making, whereas a higher‐performing municipality makes decisions with both inward and outward orientation.     

QFII AND QDII——中国股票市场对外开放的缓冲

QFII和QD II是中国资本市场尚未完全开发时期发展证券市场的两个过渡性制度,前者是引进来,后者是走出去。这两种制度并不能从根本上解决我国股市的问题,只是一个缓冲。它们对中国股票市场的影响是多方面的,在一定程度上加速股票市场的改革。     

CRITICAL COMMENTARYCHANGED RULES THEORY AND THE EVOLUTION OF ACCOUNTANCY — A COMMENT

In a recent article Birkin @9pet al. @2p(1997) proposed that Changed Rules Theory should provide the appropriate inner logic to drive accounting, in lieu of Social Darwinism. In this comment I take issue with the dichotomy between Darwinism and Changed Rules Theory. I show that both of Changed Rules Theory and Darwinism, when correctly presented, lead to the perspectives the authors recommend.     

WHAT DO AUDITORS DO? OBVIOUSLY THEY DO NOT SCRUTINISE THE ACCOUNTING AND REPORTING

Auditors and auditing firms are important actors in the process of institutionalising accounting standards. However, the formal and institutional requirements to de facto ensure professionalism and independence in the Swedish municipal sector have been strongly questioned. The aim of this paper is to investigate and explain how deviations from accounting standards are treated and reported by auditors. The results indicate deficiency in both competence and independence among the auditors. The institutional arrangements in Sweden do not seem to ensure that auditors facilitate and support the implementation of accounting standards.     

WHY DO UK ACCOUNTING AND FINANCE ACADEMICS NOT PUBLISH IN TOP US JOURNALS?

In peer reviews of the quality of academic accounting and finance journals, US journals are consistently perceived to be the most prestigious. UK accounting and finance academics share these perceptions, and yet very few of them ever publish in top US journals. A survey of UK accounting and finance academics was undertaken in an attempt to ascertain why this is so. The respondents perceive that the preference of top US journals for a US focus to published articles, reinforced by a strong element of gatekeeping and the need to be able to network with the US academic community, provide major barriers to entry. As a result, there is a strong belief that efforts to publish in top US journals will be unsuccessful and, therefore, publishing in the UK is seen to be easier.     

REMEMBERING THE PAST: ETHICS AND THE CANADIAN CHARTERED ACCOUNTING PROFESSION, 1911–1925

The current study is an act of remembering the ethical past of the Canadian CA profession during the formative period of 1911@8a1925. Current-day, ethical discourses are positioned vis-a-vis this ethical past, usually presuming an “honourable” or even “heroic” ethical past as a method of both grounding and rationalizing current-day accounting practices. By examining this earlier period, we hope to provide a curative to the nostalgia about the CA's mythic ethical past. More specifically we argue that, during this formative period, ethics was narrowly defined with minimal ethical deliberation about the role of accountants in relation to important societal issues of the day such as World War I and bank failures. Furthermore, like current-day ethical discourses, ethical deliberation tended to be circular and self-justificatory. Terms such as honour, rectitude and objectivity had the ideological effect of obscuring the alignment of the CA profession with manufacturing capital during this period.     

AUDITOR CONCENTRATION AND MARKET SHARES IN THE US: 1988–1999 A DESCRIPTIVE NOTE

This paper examines from a historical perspective the effects of the Big Eight and Big Six accounting firm mergers on concentration measures and market share percentages of major accounting firms in the US large company audit market. Concentration ratios and Herfindahl indices reflect an increasingly concentrated audit market, though individual firms differ in their success at capturing market shares in the three exchanges examined, as well as in their ability to capture newly listed companies or companies switching auditors over the 1988 to 1999 period.     

THE ASSOCIATION BETWEEN ANALYSTS’ FORECAST REVISIONS AND EARNINGS COMPONENTS: THE EVIDENCE OF FRS 3

This study examines whether the earnings components as required by FRS 3 help UK analysts to predict firms’ earnings changes by investigating the statistical association between analysts’ forecast revisions and firms’ unexpected earnings components. I find that analysts’ forecast revisions made in different time horizons are consistently associated with unexpected earnings components as required by FRS 3. UK analysts are able to incorporate current-year unexpected earnings components into their current and future earnings forecasts even before firms officially release this information. However, empirical results also show that current-year unexpected earnings components are not fully incorporated into analysts’ forecasts of future earnings. Analysts appear to wait for more information releases regarding firms’ future earnings and delay their revisions of future earnings forecasts. This is consistent with the evidence that the cumulative revisions of current earnings forecasts are generally associated with prior-year unexpected earnings components, and the association appears to be stronger as time progresses. Overall, this study provides evidence suggesting that the earnings components as required by FRS 3 help UK analysts to identify firms’ permanent and transitory earnings changes over different forecast horizons. This study also provides strong evidence supporting the informativeness of earnings components for analysts’ forecasts and the information set perspective of FRS 3 that highlights the importance of earnings components in predicting a reporting entity’s future performance.     

CRITICAL COMMENTARY: A RESPONSE TO COMMENTS MADE REGARDING “CHANGED RULES THEORY AND THE EVOLUTION OF ACCOUNTANCY”

Birkin @9pet al@2p. (1997) applied new arguments about the evolution of life on this planet to the evolution of accountancy and derived prospects from these new arguments. The arguments were based on discoveries made in the Burgess Shale as reported and explicated by Gould (1991). In particular, the Birkin @9pet al@2p. (1997) paper indicated that the use made of Social Darwinism within accountancy was incorrect according to these new arguments about evolution. The comments made regarding this paper claimed that Social Darwinism and the new arguments about evolution were not incompatible, that several errors of attribution were made and that the Birkin @9pet al@2p. (1997) paper failed to show that Darwin's theory of natural selection was incorrect. This response reveals how those comments were based on a misreading of the Birkin @9pet al@2p. (1997) paper and a misinterpretation of the fossil evidence of the Burgess Shale.     

“GETTING BY” AND “GETTING ON” IN SERVICE WORK: LESSONS FOR THE FUTURE OF ACCOUNTING?

The use of educated labour which can multi-task, make decisions and act responsibly facilitates the real subsumption of labour. By presenting data from an ethnographic study of students working in unskilled service jobs in the UK, we show that such workers are not subsumed totally but exhibit a resistant medium by extending their own frontiers of control and developing self-help policies. As many accounting students will have worked in the kinds of jobs reflected in our study, these experiences have important implications for the future of accounting in the USA and elsewhere where work within and outside the profession has been deskilled and educated labour is increasingly used to undertake lower skilled work     

CAPITAL AND FINANCIAL ACCOUNTING: A COMMENTARY ON BRYER'S “A MARXIST CRITIQUE OF THE FASB'S CONCEPTUAL FRAMEWORK”1

Bryer (1999) reiterates criticisms of the “balance-sheet” approach underlying the FASB's conceptual framework as failing either to explain or guide the development of financial accounting practice, and aims to demonstrate how operational and objective principles of financial accounting can be derived from Marx's labour theory of “surplus-value”. However, the potentially conflicting objectives of “Marxist” accountings remain unresolved, and Bryer's attempted derivation of accounting rules for individual business enterprises appears to misunderstand the rationale of Marx's detailed examination of the circuits of capital in Parts One and Two of Volume II of @9pCapital@2p and to offer no critical foundation for Praxis. It is argued here that the focus of a critical Marxist accounting would more appropriately shift to recognising the extraction of surplus-value from labour and its addition to the value of inventory during the process of production (rather than reporting profit as the result of sale). However, the practical application of such a principle would still require the use of convention-based allocations at least as arbitrary as those of conventional financial accounting and, more fundamentally, such a change of accounting principle could not in itself be sufficient to “force the secret of profit making” under the capitalist mode of production. The accounting would still be consistent with both Marxist and neoclassical economic theories of the nature of capitalism. Bryer's approach to deriving Marxist accounting rules cannot help us to understand the problematic nature of the power of modern financial accounting.     

Joint accounting choices: an examination of firms’ adoption strategies for SFAS No. 106 AND SFAS No. 109

We provide insight into an argument that firms minimize the costs imposed by new accounting standards through their adoption choices. Focusing on two standards with potentially large impacts on both balance sheet and income statement accounts for many firms, we present evidence that firms chose their strategies for SFAS No. 106 (OPEB) and 109 (DTAX) jointly rather than separately. We also provide insight into how firms view recurring versus non-recurring charges, and how they weigh the tradeoff between a large one-time (income decreasing) charge against the smaller, but longer lasting effects of amortization.

WE MAY REMEMBER BUT WHAT DID WE LEARN? DEALING WITH ERRORS,CRIMES AND MISDEMEANOURS AROUND ADVERSE EVENTS IN HEALTHCARE

This paper seeks to provide both a retrospective and prospective view on the issues surrounding the generation of adverse events within healthcare. It aims to deal with a range of issues around the individual as a means of making mistakes or violating the rules within the organisation. It sets the issue of patient safety into its historical context before highlighting the shift in thinking that accompanied the publication of an Organisation with a Memory (OWAM) by the Department of Health. The paper considers the challenges that surround the shift away from a person-centric approach to adverse events to one that recognises the importance of latent factors in shaping the conditions in which people can make mistakes and violate. The paper concludes by setting out several propositions for further research and the changes in managerial practice that are needed within healthcare in order to begin to achieve the core aim of OWAM which is to ensure that organisations remember and learn from adverse events.