Teaching note: Traditional and activity based costing systems

A significant portion of the current managerial accounting literature contrasts the benefits and importance of activity based costing (ABC) systems with the more traditional cost accounting systems. This paper questions this tendency of making such a stark contrast, by placing ABC systems within a wider cost accounting framework. Initially, the framework is developed by providing an overview of the product costing, control and decision making process. Also outlined are the various costing systems in terms of their objectives, advantages and deficiencies. A schema for integrating the costing process with decision making and performance evaluation criteria is then conceptualized. The role of ABC is recognized and integrated within this framework. The link between ‘traditional’ and ABC systems is also studied via an analysis of the conventional wisdom in some of the leading texts in managerial accounting. The analysis demonstrates that there is still much ambiguity in both the contrasting and the linking of ABC with the more traditional costing systems.     

Hybrid performance evaluation of sustainable service and manufacturing supply chain management: An integrated approach of fuzzy dematel and fuzzy inference system

The aim of this paper is to propose a comprehensive framework for simultaneously measuring the performance of sustainable service and manufacturing supply chain management. Application of the proposed approach also results in reduced uncertainty of the performance measurement process caused by qualitative criteria evaluation. The proposed approach consists of two main steps. First, the fuzzy decision‐making trial and evaluation laboratory (DEMATEL) method has been used to determine important criteria by avoiding low influences; and then a Mamdani fuzzy inference system model has been adopted and applied for performance evaluation of sustainable supply chain management (SSCM). This model is employed in order to cope with the vagueness that exists in the SSCM performance investigation due to the vagueness intrinsic in the evaluation of criteria. In the proposed model, human reasoning has been modelled with fuzzy inference rules and has been set in the system, which is an advantage compared with those models in which fuzzy set theory and multicriteria decision‐making models are integrated. The proposed approach has been implemented in the pipe and fitting industry in order to highlight its application in real life. Sensitivity analysis has been carried out to determine the influence of service and manufacturing criteria on SSCM performance. The findings reveal that sustainable manufacturing criteria compared with sustainable service criteria have more effect on the performance of SSCM.     

The Ex Post Performance of Four Portfolio Selection Algorithms

This paper explores the ex post performance of four widely cited (and sometimes applied) normative portfolio selection models. Each is supposed to solve the same portfolio selection problem relative to the same mean-variance efficiency criteria. It has been shown elsewhere, and this paper confirms, that the models result in vastly different ex ante stock selection strategies. However, the acid test of normative theory is ex post performance relative to a set of efficiency criteria or some other standard. The empirical results reported here show that, with one exception, the ex post performance of the models is consistent with the same mean-variance efficiency criteria, and, over a predictable range of outcomes, consistently outperform the index portfolio based on Standard & Poor's 500 Stock Index.     

持续改进的企业内部财务控制有效性标准的研究——基于组织循环理论的分析框架

本文试图在组织循环理论的分析框架下,吸收国外内部控制先进理念,将内部财务控制制度建设和内部财务控制有效性评估标准的确立有机结合起来,以创建持续改进的企业内部财务控制有效性评估标准,力图解决国际公认的评估标准在中国本土化和实践操作层面上的应用问题。     

IT环境下企业内部控制模式探讨

本文对IT环境下的企业内部控制进行了探讨。分析了信息技术对内部控制的影响,对IT控制、IT环境下的内部控制等概念进行了辨析,分析了COSO内部控制整合框架和风险管理框架、SOX法案,COBIT,ITIL及我国企业内部控制规范等目前国内外广泛采用或研究的内部控制框架或法律规范,提出了内部控制系统、内部控制系统的工程实施体系、内部控制系统的评价体系是内部控制模式不可分割的三要素,并对它们进行了详细分析。     

Risk,Return, and Performance Measurement: A Case of Unrealistic Expectations?

Client criteria imposed upon active asset management companies to hold only high-quality (HQ) investments in achieving specific Treasury-adjusted spreads and above-average rates of return effectively mandate a passive management policy and can be met only with very low probability. HQ investments do not consistently outperform either medium (MQ) or low quality (LQ) investments over time regardless of whether returns are measured monthly, quarterly, or yearly. Further, both time series and cross-sectional results show that HQ sectors are generally associated with ex post returns that are lower than those for either MQ or LQ sectors. Finally, HQ sectors do not outperform MQ and LQ sectors in consistently surpassing Treasury spreads or crediting rates. These results suggest that periodic evaluation of asset performance in light of such stringent criteria misunderstands the dynamic nature of the market as well as fundamental risk/return relationships.     

Different uses of performance measures: The evaluation versus reward of production managers

This study examines how the importance that is attributed to a variety of financial and non-financial performance measures depends on the type of use – evaluation versus reward. Survey data, collected on a sample of industrial companies, provide consistent evidence of a difference in the importance attached to performance measures for these two uses. More importance is attached to both financial and non-financial performance measures for the periodic evaluation than for variable rewards. The study also shows that the influence of production strategy and departmental interdependence on the importance attached to performance measures differs for evaluation and reward uses. A production strategy focused on differentiation by product-performance has a negative effect on the importance attached to financial measures for variable rewards but no effect on their importance for periodic evaluation. Moreover, departmental interdependence decreases the importance attached to financial measures for variable rewards but not for periodic evaluation. Departmental interdependence also has only a positive effect on non-financial measures for periodic evaluation and no effect on non-financial measures for variable rewards. Overall, the data suggest that it is essential to distinguish between different uses when studying performance measurement choices and their determinants.     

Precautionary principle and discursive strategies: classifying and managing risks

The paper covers an integral risk concept consisting of a criteria-based risk evaluation, a novel proposal for risk classification and corresponding risk management strategies aimed at an analytic-deliberative approach in risk regulation. For this purpose, technical and scientific as well as social scientific concepts were integrated into a single conceptual framework. Eight criteria were selected for evaluating risks: probability of occurrence, extent of damage, incertitude, ubiquity, persistency, reversibility, delay effect and potential of mobilization. With respect to these criteria, six risk classes were formed in which risks may exceed thresholds determined by deliberative action. Effective and practicable management strategies were deduced for each risk class. The characterization and classification of risks provide a knowledge base for designing risk policies and class-specific management strategies. Three major management categories were identified: risk-based, precautionary and discursive strategies. In deliberative processes actors need to agree on norms and procedures to manage risks. If the results reflect the agreement of previous discourse procedures, political decisions become more legitimate. Because the risk evaluation, risk classification and management strategies are based on the concept of analytic-deliberative processes, the essential requirements for an effective and democratic risk policy are met.     

Performance effects of setting targets and pay–performance relations before or after operations

This study investigates both theoretically and experimentally whether and how ex post use of relative performance evaluation (RPE) information in determining performance target levels and profit sharing ratio (PSR) levels affects employer profit performance. Our findings show that employers use RPE information, i.e. peer performance, to adjust performance target levels and PSR levels to reflect economic conditions. More importantly, we find that ex post use of RPE information, i.e. peer performance, improves profit performance. However, ex post adjustment of target levels and PSR levels based on peer performance have different performance implications. Specifically, we find that ex post target contracts improve employer residual profit over ex ante target contracts, while ex post PSR contracts do not improve employer residual profit over ex ante PSR contracts. Our supplemental analyses suggest that this difference is likely because employees are more sensitive to prior period compensation determined by ex post PSRs than ex post targets. Compared to ex post targets that are likely perceived to be fair based on peer performance, ex post PSRs based on the peer performance can be used opportunistically by employers and/or are perceived so by employees, which leads to future repercussions manifested in lower employee effort and employer residual profit.     

The process of measurement in managerial accounting: A psycho-technical systems perspective

This paper develops a formal framework of the act or process of measurement in managerial accounting. Although the traditional paradigm of measurement underlying accounting treats it as a technology designed to represent properties of events and transactions in numerical terms, this paper is based on the notion that managerial accounting measurement is intended to facilitate behavior, and thus requires an alternative view of measurement as a “psycho-technical system”. The paper presents the psycho-technical framework and examines its application in selected areas of managerial accounting: human resource accounting, social accounting, divisional performance evaluation, zero-based budgeting, standard costing, and evaluation of internal control systems.     

INTEREST ON EQUITY CAPITAL AS AN EX POST COST: A REPLY

It is argued by Zafiris that the conceptual framework relevant for decisionmaking is also relevant for performance evaluation. He uses this argument to justify the charging of interest on equity capital in determining income. Implicit opportunity costs are thus included in both observed results and in the standard against which performance is measured, revalued in the former case. This argument, in both its general and particular forms, involves two principle misconceptions: about the significance and purpose of implicit opportunity costs, and about what Buchanan means by "what might have been", which in fact corresponds to Demski's ex post performance measure.     

政府生态预算绩效评价调查研究——基于问卷调查的实证分析

政府预算绩效评价侧重于社会经济方面的评价,难以全面反映政府环境管理效果。文章从理论上论证了创新政府生态资源环境管理绩效评价载体、建立政府生态预算绩效评价指标体系的优势,认为指标体系应由决策绩效和执行管理绩效两大模块组成,并以平衡计分卡为分析框架构建指标体系遴选模型。以问卷形式向968名公众展开调查,最终得到由2个一级指标、4个二级指标和22个三级指标构成的政府生态预算绩效评价指标体系。以政府生态预算绩效评价指标体系为基础,设计调查问卷并进行实证分析,寻找政府环境管理的规律,为建立以生态预算绩效评价指标为基础的政府环境管理决策机制和约束机制,及以信息和网络技术为基础的公众监督约束机制提供支持。     

LOCAL AUTHORITY ACCOUNTING – THE DEVELOPMENT OF A CONCEPTUAL FRAMEWORK

A number of writers have bemoaned the lack of a conceptual framework for public sector accounting. This paper surveys briefly the recent accounting history of UK local authorities. It continues with an outline of a number of frameworks which are available and concludes that an inclusive framework based on the concept of worldviews, recognising the variety of views and perspectives, would be more appropriate. This is then applied to explain the current debate on capital asset accounting, suggesting that there has been a major shift in the worldviews of accounting policy makers from fiduciary stewardship towards performance evaluation. The need for further research is recognised.     

Capital Structure and the Ex‐Dividend Day Return

We apply an option‐pricing framework to the ex‐dividend behavior of common stocks. The framework explains the observed behavior of positive returns on the ex‐dividend day and predicts that ex‐dividend day returns will be higher for firms with greater financial leverage. Empirical testing supports the prediction. In contrast to prior studies, we find that dividend‐capture activity has no significant impact on ex‐dividend behavior, and we offer an explanation based on the importance of tick intervals.     

Portfolio performance measurement using APM-free kernel models

A general asset-pricing framework is used to derive a conditional asset-pricing kernel that accounts efficiently for time variation in expected returns and risk, and is suitable to perform (un)conditional evaluations of passive and dynamic investment strategies. The positive abnormal unconditional performance of Canadian equity mutual funds over the period 1989–1999 becomes negative with conditioning, and is robust to the removal of ex post index mimickers. The reversal in the size-based performance results with limited information conditioning is alleviated somewhat with an expansion of the conditioning set. The performance statistics are weakly sensitive to changes in the level of relative risk aversion of the uninformed investor. Unconditional positive performances based on averages of individual fund performances lose their significance when cross-correlations are accounted for using the block-bootstrap method. Estimates of survivorship bias due to the elimination of funds with shorter lives, which range from 36 to 58 basis points per year, are stable across performance models but differ across groupings by fund objective.     

The Impact of New Zealand's Public Sector Accounting Reforms on Performance Control in Museums

Accounting by most New Zealand museums was subject to public sector reforms requiring private sector -style financial reporting, and service performance reporting. This study into the impact of the reforms on how museum managements pursue successful performance found museums adopting a more accounting-oriented approach to planning and evaluation. Service performance reporting has facilitated the periodic evaluation of non-financial targets by managements, but as currently constituted the reporting model is flawed, particularly in its implications for essential long-term resource capacity of museums. This threatens its effectiveness for promoting good performance. Non-accounting based professional practices also have a role in museum success.     

基于人民银行绩效审计评价体系的思考

在审计转型引导下,绩效审计成为近年审计新型主力。本文基于人民银行绩效审计实践,提出绩效审计评价体系构想,即评价指标体系、评价标准体系以及评价分析及赋值规则,解决用什么来识别或判别绩效、以什么为基准参照,以及以什么尺度来评价绩效的问题,希望提供一种较为简单可操作的模式参考。同时,基于目前绩效审计开展的主要难点,本文提出了部分建议,以期为推进绩效审计提供参考。     

The effects of frequent testing in an income tax course: An experiment

This study provides initial empirical evidence from an introductory income tax course of the effects of exam frequency on student learning throughout a course (original learning), on retention of material covered, and on student evaluation of the learning process. An experiment was conducted during the spring and fall semesters of 1991, in which a single instructor taught four sections of an introductory, senior-level income tax course at a large, state university. The experimental group (two sections) was given six periodic exams prior to a cumulative final; the control group (two sections) was given three periodic exams before the cumulative final. Near the end of the course, both groups evaluated the instructor and the course. Results indicate that the experimental group performed significantly better than the control group on the periodic exams given throughout the semester. Although the experimental group had a higher mean performance on the cumulative final exam, the difference was not statistically significant. The course and instructor evaluations by the experimental group were significantly better than those by the control group.     

On measuring volatility and the GARCH forecasting performance

We apply a new algorithm based on Fourier analysis to compute the volatility of a diffusion process. By using simulations of the continuous-time GARCH model, we show that our method performs well in computing integrated volatility. We show that linear interpolation of high frequency observations induces a downward bias in estimating integrated volatility. By measuring ex post volatility with our method, we find that the forecasting performance of the GARCH model is improved with respect to what is established when classical methods are employed. These results are confirmed by the analysis of exchange rate high frequency time series.     

Performance Regularity: A New Class of Executive Compensation Packages

The ability of standard executive stock options to incite managers to adequately select the assets of their firm has been extensively questioned by academics and practitioners. However, very few alternatives exist or have been proposed to better control the investment strategies of top managers. The present article studies the evaluation and sensitivity of a new class of executive stock options well designed for the control of managers. Such packages are aimed at giving incentives to CEOs to maintain a regular performance over time and a stable volatility level. The importance and implications of the choice of the different parameters as well as their robustness with respect to standard financial criteria are examined. In brief, this article studies in a utility-based framework a new type of executive stock options that can be useful to protect and enhance the economic performance of corporations.