Professional Skills and Capabilities of Accounting Graduates: The New Zealand Expectation Gap?

Much has been written about teaching and learning deficiencies in accounting education. Universities have grappled with the challenge and developed a number of strategies to address the concerns raised. Many of the recommended strategies for addressing these deficiencies have included a focus on the development of professional capabilities and skills. This paper reports on a study which has identified the capabilities which are considered to be the most important for successful practice in accountancy during the first years after graduation and identified the extent to which New Zealand universities have focused on these in the delivery of their study programmes. Most attempts to measure the nature and extent of change to accountancy degree programmes have collected data from current or graduating students or from the university itself. This study instead collected feedback from accountancy graduates employed in public practice with three to five years post graduation professional experience and from their workplace supervisors. This paper reports on the results of the graduate feedback, provides a useful insight into where progress has been made and identifies where further improvement is necessary.     

Trends in Auditor Reporting in Australia: A Synthesis and Opportunities for Research

The purpose of this review is to synthesise the existing research literature regarding audit reporting and, in particular, the going concern decision. We consider the findings of research conducted in Australia and New Zealand on these issues. We then analyse trends in audit reporting from 2005 to 2013. We identify an increase in auditors’ reports highlighting going concern issues well beyond the global financial crisis period confirming that this period represents a period of prolonged economic uncertainty. We identify trends by audit firm type, by industry and company size. We analyse the subsequent year outcomes for firms receiving going concern opinions. We also identify opportunities for future research.     

INVESTMENT DECISION CRITERIA USED BY LISTED NEW ZEALAND COMPANIES

This paper reports the results of a survey of listed New Zealand firms with regard to their investment objectives, their methods of evaluating investment projects and of estimating appropriate hurdle rates, and methods used to evaluate and adjust for project risk differences. Comparisons with similar studies of firms located in the U.S. and Australia indicate that New Zealand firms use accepted normative financial analysis techniques to a much lesser degree than firms in these other countries. The relatively greater usage of accounting-based rather than market-based measures by New Zealand firms is particularly marked.     

Burnout among university accounting educators in Australia and New Zealand: determinants and implications

Increased teaching workloads combined with pressures to publish in limited outlets has intensified the burnout potential among accounting educators in Australia and New Zealand. However, amongst the few studies on tertiary accounting education, the focus has so far been only on burnout arising from student contact intensity. We broaden this literature by examining how other worklife characteristics contribute to burnout. Based on 158 responses from Australian and New Zealand accounting academics, we find evidence for emotional exhaustion due to high workload. However, professional efficacy continues to remain high. Qualitative responses offer deeper insights on how various burnout factors are interrelated.     

Differential shareholder wealth and volume effects surrounding private equity placements in New Zealand

Private equity placements in New Zealand exhibit a strong positive relationship between abnormal announcement returns and the price at which shares are placed. The relationship suggests that placement price conveys important information regarding firm quality and value. This is significant as the New Zealand market has different regulations governing private equity placements compared to other countries. For example, private placement purchasers in New Zealand can buy shares at substantial discounts and immediately sell on-market without disclosing these trades to the market for a period of at least 5 days. Private placements issued at a premium exhibit a permanent positive impact on firm value. In contrast, those placed at a discount experience negative announcement returns and show a significant run-down in returns following the announcement. Private placements spark a large increase in trading activity in the 5 days following an announcement and the increase is particularly strong for those placed at a discount. We also find that companies that privately place equity in New Zealand are typically low book to market, thinly traded stocks. Therefore, the immediate returns available to purchasers of discounted shares may reflect fair compensation for these risks.     

A BUDGETHOLDING EXPERIMENT IN NEW ZEALAND

This paper provides a case study of a New Zealand health centre which embarked on a budgetholding (similar to UK fundholding) trial in 1992. The case study is grounded in the changes underway in the New Zealand public sector and in the management and organisation of health care. The case discusses the impact of the budgetholding trial on the practice and reflects on the future of budgetholding in New Zealand. Initial indications are that general practitioners are moving away from practice based budgetholding and are combining into Independent Practice Associations (IPAs) to facilitate contract negotiations and to provide additional leverage in dealing with secondary care providers.     

Capital gains tax,managed funds and the value of dividends: The case of New Zealand

The taxation of capital gains for Managed Investment Funds in New Zealand was abolished in October 2007, putting these entities on a similar footing to private investors. Prior to this change most private investors were not taxed on capital gains from investments in New Zealand companies, whereas Managed Funds were taxed on these gains. New Zealand company dividends carry imputation tax credits and thus had a tax advantage for Managed Funds before October 2007. After the change the value of dividends relative to capital gains declined substantially for Managed Funds. The evidence is that the market value of the dividends, particularly for high dividends, also declined substantially subsequent to the tax change.     

Changes in accounting curricula: discussion and design

This paper illustrates a model accounting curriculum developed to meet the needs of future accounting professionals. In addition, it offers a process for encouraging change in accounting curricula and discussion concerning teaching, pedagogy, and curriculum development. Calls for change in accounting education from academics and professional accountants are reviewed and the conclusion is reached that accounting education, as a whole, is still in need of reform.     

Contrarian Investing in a Small Capitalization Market: Evidence from New Zealand

This paper investigates the performance of accounting–based contrarian investment strategies in the New Zealand market. The return patterns of these strategies are then related to risk–based and behavioral–based explanations of the contrarian anomaly. Based on our analysis of the risk–return characteristics of the various strategies, we attribute the first year underperformance and second year outperformance of the value portfolios to expectational errors caused by noise trading in the relatively illiquid New Zealand market. The longer two–year correction process is in contrast to the much larger and more developed U.S. and Japanese markets, where value stock price corrections have been found to occur more rapidly. This provides support for the conjecture that longer horizons are required for value strategies to pay off in imperfectly competitive markets than in competitive markets.     

Cultural relativity of accounting professionalism: Evidence from New Zealand and Samoa

This study investigates the value orientations of two culturally distinct countries in the South Pacific, namely, Samoa and New Zealand, with a view to providing empirical evidence on the relationships between accounting and culture. It uses Rokeach's value survey (1973), Schwartz and Bilsky's motivational domains (1987, 1990), and Hofstede–Gray framework to establish the possible linkages between values and accounting professionalism. The results provide culture-related evidence that suggests the possibility for the existence of major differences in the levels of accounting professionalism in the two countries. This study may have implications for the application of International Financial Reporting Standards (IFRS) and the analysis of differences in judgments of professional accountants on measurement, disclosure, and ethical issues. It is the first substantial accounting study on Samoa.     

A Knowledge Synthesis of Anti-Black Racism in Accounting Research*†

This structured literature review synthesizes studies that have investigated questions related to anti-Black racism—namely, the discrimination and marginalization of Black people—in the accountancy literature and identifies opportunities for future research. This study is part of a larger research project that reviewed 161 articles and identified four themes relevant to accounting research on discrimination in general: anti-Black racism, imperialism and postcolonialism, intersectionality, and diversity. Based on the 25 anti-Black racism articles reviewed, this paper finds four key subthemes: demand for accountancy services and racial discrimination in accountancy practice, the racialization of professional accounting qualifications, Black professionals in academia, and the supply-side fallacy. Furthermore, because studies at the intersection of anti-Black racism and accounting are limited, this study proposes future research directions that will advance knowledge on various topics related to anti-Black racism.     

The new global accounting community: Rationale for dialogue to establish its accountability?

The reputation of the accounting community is an important intangible asset. The community persistently builds its reputation through disclosure of reputation signals that crystallize its status with the commercial social system [Riahi-Belkaoui and Pavlik, 1992; Raar J. Beyond ethics: a community platform to secure moral integrity. Australian Accounting Review 2006;16(1):41–50]. Therefore, as a community in the global village, it is an institution of accountability, which in turn is dependent on honesty and trust (Lee, 1995). The intention of this conceptual paper is to provide discourse that induces questions for reflection in the call for values underpinning the integrity and ethical stance of the profession. To an extent ethical codes assist, however in an international professional community the self-governance procedures and investigations of a local professional body may now be outside its geographical jurisdiction. Walker [Walker RG. The ASRB: policy formation, political activity and research. Paper presented at Accounting Association of Australian and New Zealand (AANZ) annual conference in Sydney; August, 1985] suggests that accounting rules are only symbolic behaviour unless compliance is monitored, and sanctions are imposed [Walker RG. The ASRB: policy formation, political activity and research. Paper presented at Accounting Association of Australian and New Zealand (AANZ) annual conference in Sydney; August, 1985. p. 12]. The internationalisation of accounting standards appears to present an opportune period in the evolution of a self regulatory accounting profession to consider the issues of moral values and integrity and ask the question, what does this international profession stand for?     

The effects of monetary policy shocks on exchange rates: Evidence from New Zealand and Australia

This study investigates the effect of monetary policy shocks in New Zealand and Australia on their respective exchange rates from 1985 to 1998 using vector autoregression methodology. The results show that monetary policy shocks do contribute to the variability of both exchange rates, but these movements are not always consistent with theory. In particular, there is little support for the overshooting hypothesis. Also the results show that the exchange rates do not always move in the direction normally anticipated, particularly for New Zealand. A contraction in monetary policy may lead to a depreciation of the domestic currency rather than an appreciation.     

Transaction costs in an illiquid order‐driven market

Transaction costs in many international equity markets are much larger than those in the USA. This raises questions such as what trade size these reported trading costs relate to and whether investors can reduce trading costs by timing their trades. We show, using data from the order‐driven New Zealand market, that transaction costs are frequently lower for larger trades, particularly in small stocks, and investors are able to reduce costs by timing their transactions. While investors who require immediate execution incur transaction costs that are much higher than reported average costs, patient investors can trade at much better rates.     

Intergenerational Equity: Treatment of Infrastructure in New Zealand Local Government Financial Planning

This paper examines how local government authorities plan and financially provide for infrastructure while considering the needs of current and future communities. In New Zealand the Local Government Act 2002 provides a mandate for local authority planning through the requirement to publish Long Term Council Community Plans (LTCCPs). Our content analysis of the LTCCPs, annual plans and annual reports of five New Zealand local authorities reveals that these local authorities make conscious decisions about infrastructure that reflect concern for matters of intergenerational equity. They do so despite problems in relation to valuation, depreciation, deferred maintenance and financing of infrastructure assets.     

Towards market differentiation in the accounting profession: The case of Australia and New Zealand

The literature on the evolution of the accounting profession has frequently explained that the changes in the structure of the profession over the last century or more have often been used to achieve closure of the profession. The profession is once again in a state of flux. The Australian accounting profession has undergone major changes and is contemplating more transformation. The sole accounting body in New Zealand has made a major shift from monopoly over accounting practice to free competition for all. Examining the recent developments in Australia and New Zealand, the paper shows that the objectives behind the current changes in the two countries are identical. They are primarily no longer seeking closure and are moving towards achieving market differentiation. The paper then demonstrates that this strategy shift can be seen as an outcome of the new market orientated socio-economic environment of these countries. The outcome of the change is a profession that is trying to be consumer focused with a corporatist structure, within the shade of professional identity.     

Discourse Surrounding the International Education Standards for Professional Accountants (IES): A Content Analysis Approach

The development and implementation of the International Education Standards (IES) for professional accountants is currently an important issue in accounting education and for educators interested in a shift toward international education standards more broadly. The purpose of this study is to investigate professional and research discourse regarding the IES by identifying and analysing articles in accounting publications. Two research questions were formulated to explore the topics in the publications and the opinions expressed towards the IES. Several electronic databases were used to access the articles and a content analysis approach was used to examine 110 articles published in English during the period from January 2003 to August 2011. The relatively small number of publications addressing the IES is surprising and possible reasons for this are discussed. The majority present a positive picture of the IES, however the analysis highlights key themes in mixed opinion and more critical articles and also reviews the challenges to IES implementation that are dominant in the discourse. The findings of this study suggest further discussion and professional debate of issues surrounding the accounting IES is needed. Reflection on the discourse can inform further implementation of the international standards in accounting and also developments in international education standards for other professions.