Constructing the governable small practitioner: The changing nature of professional bodies and the management of professional accountants’ identities in the UK

This article aims at contributing to the sociology of the accountancy profession by analysing how professional organisations govern the various categories that have emerged in the professional body throughout its history. To this end, the attempt by the Institute of Chartered Accountants in England and Wales to give an institutional existence to the category of “the small practitioner” is examined. The plasticity and the polysemic nature of the notion of smallness, which refers simultaneously to physical (small/big), geographical (local/global) and moral (anonymous/notorious) characteristics, offers a particular opportunity to show how these three dimensions have been integrated into evolving organisational arrangements and discourses aimed at legitimising the professional order. It is contended that the definition of what small practitioners are, and how they should be dealt with, can only be understood as part of the broader issue of governance of the accountancy community and the nature of the professional body. The ICAEW’s efforts to problematise the nature of small practices indicates a will to integrate distant modalities of accounting expertise into a single professional space, so as to prevent the physical and geographical distance between big and small firms from becoming too conspicuous a hierarchical distinction, and thus preserve the ideal of the community of peers upon which professional bodies have been built.     

Contemporary public sector accounting research – An international comparison of journal papers

This paper provides a broad review of the public sector accounting research in recent years, including that undertaken in the US. An analysis of this research reveals a methodological distinction between research undertaken in the US (using predominately functionalist methodologies, accompanied by positivistic quantitative research methods) and that undertaken in the rest of the world (using interpretive and radical/alternative methodologies, with qualitative research methods). The nature, causes and consequences of this distinction are discussed. The paper concludes with an exhortation for PSAR researchers to explore multiparadigmatic methodologies in future research.     

The Third Policeman: ‘The true and fair view’, language and the habitus of accounting

This paper explores the role and context of the ‘true and fair view’ (‘TFV’) in accounting and auditing. Utilising the work of Bourdieu as a lens, the paper argues that the world of the TFV is a subjective world with which we think we are objectively familiar. Bourdieu's ‘practical theory’ of habitus suggests that the TFV is shaped by the practice of ‘native virtuosos’ who have a ‘feel for the game’. The paper argues that the conceptualisation of the TFV privileges practice and authenticates the accounting habitus. Hence, whilst language maintains and reinforces social structures, it is in turn created by the routines of practice. By dominating the declaration of the TFV, the auditor effectively reinforces the status quo and the constitution of hierarchy and inequity that exists in the accounting field: the TFV, in Bourdieu's terms, ‘becomes what they are’.     

The impact of subjectivity in performance evaluation practices on public sector managers’ motivation

We conduct an explorative study to investigate the effect of subjectivity in performance evaluation practices on managerial motivation in public sector organisations. Increased subjectivity can enhance motivation if supervisors are able to provide better informational feedback. However, subjectivity is likely to reduce motivation if it reduces perceived mission clarity or negatively affects relations between supervisors and subordinates. Our analysis is based on a survey among 94 public sector managers in the Netherlands. We predict and find that subjectivity in performance evaluation practices reduces perceived mission clarity, which in turn decreases motivation. We also find that subjectivity negatively affects subordinate managers’ trust in their supervisor, which also reduces motivation. Jointly, these results indicate that the negative effects of subjectivity in performance evaluation practices outweigh its potential positive consequences, suggesting that New Public Management's focus on more objective performance measures can indeed be beneficial. By itself, however, this does not automatically imply that more objective systems in general are optimal in all public sector organisations as such systems may have dysfunctional side effects such as distortion of performance measures, gaming or manipulation. In addition, we find that the effects of subjectivity are moderated by organisational characteristics.     

The disciplinary process of the accounting profession: protecting the public or the profession? The Québec experience

The voluntary self-regulatory system of the accounting profession was criticized in recent years for its lack of effectiveness, of public representation, and the conflict between the profession's desire to protect its industry and its “role as self-regulator and protector of the public” (Coofee, Working Paper, Columbia Law School, 2001, p. 22 (available on SSRN Electronic Library at id=270944)). This study examines the role of disciplinary activities of the profession in protecting the public interest in the Canadian province of Québec, a jurisdiction where, although the profession is self-regulated, several rules are imposed by the government, including mandatory public participation and oversight by a regulatory agency.My results indicate that at the trial stage, which is heavily regulated and where public participation is high, public-interest violations predominate, are considered more serious than private-interest violations, and result in more severe sanctions. At the inquiry stage, which is characterized by a lower level of public involvement and a high degree of discretion, the results indicate that the decision of whether or not to prosecute a case depends on the cost of the disciplinary process, the notoriety of the case, and the risk that the case if prosecuted results in an acquittal. These findings suggest that the preponderance of the public interest over the private interest depends on the degree of regulation and public participation.     

Between bricolage and breakthroughs—framing the many faces of public sector innovation

Public sector innovation is often seen through the lens of private sector frameworks. This paper discusses to what extent the innovation typology derived from the private sector is appropriate for public sector contexts. Based on a discretionary classification of 1,536 qualitative examples of public sector innovations, the authors examine the nuances of change spanning from learning and incremental change to radical and systemic innovation. Measurement frameworks should better reflect the heterogeneity of learning and innovation in the public sector.     

CEOs’ experience of the Great Chinese Famine and accounting conservatism

This study investigates how a CEO's early-life experience of the Great Chinese Famine affects corporate accounting conservatism. We find that companies whose CEOs had experienced famines in early life adopted more conservative accounting policies. This famine experience effect is more pronounced in high uncertainty environments proxied by non-SOEs, politician turnovers and the adoption of International Financial Reporting Standards (IFRS). Additional tests indicate that CEOs with famine experience tend to support conservative accounting practices for contingencies and accelerate the recognition of asset impairments in negative events. Overall, consistent with imprinting theory, our results highlight the role of early-life traumatic experiences in shaping CEOs’ risk preferences and financial reporting policies.     

On the convergence of management accounting and financial accounting – the role of information technology in accounting change

In this article we theorize and conceptualize the recent convergence of management accounting (MA) and financial accounting (FA) with the advancements in information technology (IT), and explicate not only how this convergence is manifested in the technical and technological domain, but also how it is reflected in their convergence at the behavioral and organizational level.Drawing on the analytical model by Hemmer and Labro (2008), in which the forward-looking perspective of FA leads to forward-looking MA, we build a conceptual framing to analyze this convergence. According to this framing, information technology (IT) serves as a facilitator, catalyst, motivator, or even an enabler for the convergence of MA and FA. We further argue that convergence is a much broader phenomenon than claimed by Hemmer and Labro. It firstly covers the technical and technological domain, including the intentional integration of information systems and software, as well as the intentional combination of methods or standards, extending thereafter to the behavioral and organizational domain with the (un)intentional alignment regarding both functions and processes as well as the (un)intentional convergence regarding both work and roles. The applicability of this conceptual framing is illustrated with a set of examples.We present illustrations of the manifestations and outcomes of convergence in both the technical and technological domain (related to accounting standards, discretionary reporting, performance measurement, transfer pricing, competitor, customer and contractor analysis, due diligence in M&As), and the behavioral and organizational manifestation domain (related to accounting processes, work and the role of accountants, incentive systems, accounting and control in multinational companies, the control of business networks, the board of directors and venture capitalists). Based on our observations, we conclude that the forward-looking FA elements are often intertwined with MA, and vice versa, and that convergence in the technical and technological domain appears to precede convergence in the behavioral and organizational domain. In most of our observations, IT plays an important or even crucial role in this convergence process. In the light of these convergence observations, we open several avenues for further research.     

‘Passionate and professional’: reconciling logics in public service accounting

In order to deliver public value, the UK government sought to build relationships and connect ‘the public’ with public servants (including back-office workers), but with what effect? Drawing on interviews with public service accountants, the authors found that how these accountants conceptualized ‘the public’—as society or people—shaped whether public value was considered as a monetary or moral concept. Accountants who regarded the public as people spoke of an improper level of involvement and struggled to maintain their professionalism.     

The effect of the 150-hour requirement on new accountants’ professional commitment,Ethical orientation,and Professionalism

This study examines the professional commitment, ethical orientation, and professionalism of 414 accountants beginning their careers at two Big 5 public accounting firms. After comparing the accountants possessing 5-year degrees with those possessing four-year degrees, we find insufficient evidence to conclude that the 150-hour requirement affects new accountants’ professional commitment, ethical orientation, or professionalism.     

Educating digital natives for the future: accounting educators’ evaluation of the accounting curriculum

The global digital revolution has irrevocably transformed societies and industries. The accounting profession is predicted to experience a significant change in the future, due to technological developments. Practices will be automated and related positions obsolete, thus accounting graduates need to be educated for new and different tasks and positions. The current study focussed on these expected changes and how accounting profession, practice and, consequently, education will be affected and adjusted to these new technologies in an evaluation approach. A qualitative methodology was employed, investigating accounting educators’ perceptions of these developments. Semi-structured interview data and online accessible empirical data, such as podcasts, were analysed in two coding cycles. The findings illustrate that while significant changes are expected, participants’ opinions vary regarding the necessity of adjusting the accounting curriculum. Supportive changes include amending respective courses to emphasise classic skills, such as problem-solving, and contemporary skills, such as new technologies, to illustrate developments practically.     

The first course in accounting: students’ perceptions and their effect on the decision to major in accounting

Little empirical evidence exists regarding students’ perceptions of the first course in accounting and the effect of these perceptions on deciding whether or not to major in accounting. The purpose of this study is to begin examining student perceptions regarding the first accounting course and how those perceptions relate to selection of accounting as a major. The study separately examines initial perceptions and changes in perceptions over the semester for intended accounting and non-accounting majors, and assesses the association of individual accounting instructors with changed student perceptions. We then examine the relationship between perceptual changes, final grades, and individual instructors on decisions to major in accounting. Responses from 331 introductory financial accounting students from two universities indicate that while intended accounting majors perceived the course more favorably than non-accounting majors at the beginning and end of the semester, both groups exhibited relatively positive attitudes toward the course. However, these attitudes were similarly less favorable by the end of the course for both groups. We also found evidence of the important role individual instructors play regarding changing student perceptions and selection of accounting as a major. The analyses for selection of accounting as a major indicate that the decision depended on initially intending to major in accounting, performance in the first course, and individual instructors, but not on changes in perception regarding the first course.     

The impact of accounting standards convergence on Chinese firms’ overseas mergers and acquisitions

This paper investigates how accounting standards (AS) convergence influences Chinese firms’ overseas mergers and acquisitions (M&As) and shows that this convergence significantly promotes Chinese firms’ overseas M&As. Specifically, we find that both the probability of success and the value of transactions increases significantly in countries that implemented International Financial Reporting Standards (IFRS) prior to 2007. These results suggest that accounting standards (AS) convergence can improve the comparability of accounting information between China and other countries that have adopted IFRS. Moreover, we find that the impact of accounting standards (AS) convergence on state-owned enterprise (SOE) acquirers is weak. These findings demonstrate that accounting standards (AS) convergence can facilitate Chinese firms’ overseas M&As by improving the comparability of accounting information between China and target countries.     

Sustainability of the accounting and finance academic profession: students’ and supervisors’ views about the PhD supervision process

This study explores the research supervisory practices of accounting and finance PhD students at Australian and New Zealand universities. Given documented faculty shortages in the accounting and finance disciplines, such investigation is timely and relevant. In the context of student engagement with their community of academic practice and their intrinsic motivation related to individual competence and autonomy, situational adjustments are inevitable and explain some differences between students’ perceptions and supervisors’ expectations. Our findings demonstrate that, despite general satisfaction with the PhD supervision process, students articulated concerns regarding constructive feedback and pastoral care provided by their supervisors, as well as guidance regarding data analysis/statistics.     

The impact of SEC investigations and accounting and auditing enforcement releases on firms’ cost of equity capital

I study the impact of an SEC investigation (as captured by accounting and auditing enforcement releases) on a firm’s cost of equity capital. AAERs are often used in accounting literature as a proxy for fraudulent financial reporting. Fraudulent financial reporting should lead to an increase in cost of equity capital as a firm’s future cash flows become less certain. Overall, this study provides evidence of changes in cost of equity capital for firms targeted by an SEC AAER on the date the investigation is first made public.     

To austerity and beyond! Third sector innovation or creeping privatization of public sector services?

The shift of services out of state provision has been revitalized through a wave of policies linked to helping people make informed choices about health and social care and to extend competition and choice. This paper considers the rise of social enterprise and public service mutuals in the UK in the landscape of austerity, public sector rationalization, and re-structuring and draws on examples to demonstrate emerging alternative delivery models.     

New development: Leveraging ‘big data’ analytics in the public sector

This article examines the opportunities presented by effectively harnessing big data in the public sector context. The article is exploratory and reviews both academic- and practitioner–oriented literature related to big data developments. The findings suggest that big data will have an impact on the future role of public sector organizations in functional areas. However, the author also reveals that there are challenges to be addressed by governments in adopting big data applications. To realize the benefits of big data, policy-makers need to: invest in research; create incentives for private and public sector entities to share data; and set up programmes to develop appropriate skills.