From risk society to audit society

Contrary to what is sometimes claimed, the 2008 banking crisis occurred in an ultra-regulated environment. Legislative and regulatory financial-security regimes have in fact multiplied in recent years. The economic crisis is accelerating the transition of the risk society towards the audit society. But the G20 （Group of Twenty） declarations in Washington and London also reveal a managerial utopia： the march towards a society of confidence or harmony that would make controls superfluous. In this context, the article seeks to call upon philosophical, sociological and managerial references to risk, from Foucault to Power by way of Beck, Giddens ＆ Ewald, to shed light on the official declarations of the leaders of the world＇s main economies. The documentary corpus examined includes all the G20 works published between November 8, 2008 （preparation for the Washington Summit） and April 2, 2009 （conclusions of the London Summit）. The political philosophy underlying the G20＇s works remains fundamentally liberal, even though saving the worldwide market economy involves established security systems as well as self-control and control of others. In the end, the leaders do not decide between reinforcing the existing tools and inventing new systems. The updating of security technologies is meant to serve the preservation of the capitalist managerial utopia. This gives rise to a new variant of Beck＇s risk-society paradigm, too often confined to environmental threats alone, in three phases： （1） The crisis is a consequence of financial modernity and in particular of the inefficiency of regulation in the face of growing sophistication in techniques; （2） To restore confidence, the states and international institutions want, paradoxically, both to reinforce regulation and promote flexibility; （3） Thereupon, flexi-security controlled by worldwide economic governance characterizes the second financial modernity.     

Do auditors perform governance functions？ A research on the change of performance notice

Whether auditors provide high-quality audit services has been a concern of academics for a long time, but it has not clear answer. In this paper the author studies this problem from the real basis of audit activities, in view of an endless stream of the performance of listed companies notice ＂change＂ phenomenon. The author finds that auditing is the important reasons of listed companies notice ＂change＂, auditor can improve disclosure quality, is the gatekeeper to accounting information. The author also finds that there may be exist collusion of listed company with auditor, SEC should enhance inspection of the implementation of listed companies notice of earnings.     

Board independence, ownership structure, audit quality and income smoothing activities： A study on Malaysian market

The 1997 economic crisis faced by many East Asian economies has generated a substantial amount of debate largely focused on issues such as the roles and functions of good corporate governance （CG）. Lack of transparency has been singled out as the major culprit of the crisis and it has been alleged to cause management to indulge themselves in unhealthy activities such as income smoothing （IS） act. The paper extends Nasuhiyah, Hian, Sob and WEI （1994） by incorporating contextual variables that proxy for CG, ownership structure and audit quality. The empirical analysis is conducted on a sample of Bursa Malaysia listed companies for a period between 1991 and 2000. The main intention of taking this time span is to observe to what extend has previous business operations inculcated the feature of CG in the running of their companies＇ activities despite not being obligatory for them to uphold. The results showed that the existence of non-executive directors and the presence of brand name auditors to be significant in hindering the management from indulging in IS. The study opens the way for a richer understanding of the links among CG, ownership structure, audit quality and IS in Malaysia.     

An analysis on dealing with audit failure

Many highly publicized accounting scandals of the recent past seriously caused enormous losses to investors, hindered the healthy development of the capital market and damaged the credibility of the accounting profession. This paper gives a trial analysis on the reasons and precautionary measures of audit failure.     

The discussion on audit risk and prevention of accounting firm

This paper analyses audit quality control, brain gain, time pressure of CPA, follow-up education of auditors by firms. The reasons of audit risk rising of CPA are discussed. Based on the foregoing analysis, the author puts forward some measures about self-construction, processes and others of firms and CPA to reduce audit risk of CPA.     

An empirical study on information content of accounting earnings and cash flow

Based on deep analyzing the colluding and checking relation of income statement and cash flow statement, this paper chooses and designs the corresponding profit index, carries on the comparative study of information content between accounting earnings and cash flows. The paper utilizes the financial data of Chinese listed company in manufacturing industry from 2003 to 2005, adopts the price model and analyzes empirical study about two kinds of profit indexes and value relevance. Studies have suggested： accounting earnings and cash flows all have relevant relations to stock prices; however, the relevance between cash flow and stock price is stronger, and cash flows have higher information quality.     

Accounting for goodwill under FRS 136： Case of Malaysian plantation companies

The introduction of FRS （financial reporting standards） 136 to Malaysian PLC＇s （public limited company） in 2006 indirectly formalized accounting for purchased goodwill for the first time. Based on a sample of 2006 annual reports of 10 Main Board companies from plantation sector, the study finds the level of desired disclosure has yet to be met. Whilst the intention of the standard is noble, actual practice for first time reporting entities indicate that Malaysian PLC＇s and their auditors have far to go before they can meet the expectation set by FRS 136 in particular and International Financial Reporting Standards in general.     

Working capital management and corporate performance： Case of Malaysia

Working capital always being disregard in financial decision making since it involve investment and financing in short term period. However, it is an important component in firm financial management decision. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The intention of this study is to examine the relationship between working capital management and firm profitability. Cash conversion cycle is used as measure of working capital management. This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist of six different economic sectors which are listed in Bursa Malaysia. The coefficient results of Pooled OLS regression analysis provide a strong negative significant relationship between cash conversion cycle and firm profitability. This reveals that reducing cash conversion period results to profitability increase. Thus, in purpose to create shareholder value, firm manager should concern on shorten of cash conversion cycle till optimal level is achieved.     

Evaluation of the asset＇s value by using fuzzy two-stage discounted cash flow model

This paper establishes the fuzzy discounted cash flow model to settle the uncertainties of the cash flow and discount rate in two-stage DCF model, to take the imprecise of the time period of the supernormal growth phase with considering the investor＇s attitude to risk. Firstly, the discount rate and the growth rate are fuzzified as triangular fuzzy numbers in this fuzzy discounted cash flow model. Then the intrinsic value of an asset can be evaluated by the arithmetic operation on interval and λ- signed distance method under the framework of DCF approach. Finally, a listed company at Shanghai Stock Exchange is analyzed as the case to demonstrate the process of stock value calculation by the fuzzy discounted cash flow model.     

Dependencies between price duration,volatility, volume and return on the Warsaw Stock Exchange

The successive changes of asset prices are the most visible manifestation of financial markets dynamics. There exist different views about factors generating these changes, but many researchers and practitioners agree that the most important among them is the impact of information flow. According to the market microstructure theories, it depends mainly on the behavior of informed and uniformed traders. In the paper, we investigate dependencies between the possible proxies of information process： price duration and corresponding to it volume change and return. Our main objective is to answer the question about the most important factor in the process of discovering information by uniformed traders. We apply a set of models for volatility, volume and duration data. Our analysis is performed for selected equities listed on the Warsaw Stock Exchange and uses tick-by-tick data. The obtained results show that the stock liquidity on this leading stock market in Central and Eastern Europe is the most important factor influencing the process of discovering information by uninformed traders.     

Missing quarterly earnings benchmarks, CEO cash compensation and institutional ownership

Research suggests that transient institutions, i.e., institutions with short-term investment horizon,make management focus on short-term earnings goals. This study examines incentive in terms of CEO cash compensation that explains why management concentrates on short-term earnings results when transient institutions hold high levels of ownership. Using quarterly consensus analysts＇ expectations as a proxy for short-term earnings benchmarks, the author finds that CEO cash compensation and the frequency with which management misses quarterly earnings benchmarks in a year （MISSNUMt） are more strongly negatively associated in firms with high transient institutional ownership than in firms with low transient institutional ownership, suggesting that transient institutions strengthen the inverse relation between CEO cash pay and missing short-term earnings benchmarks and hence increase pressure on management in terms of cash pay for short-term results. Moreover, the author shows that change in CEO cash compensation is positively associated with change in transient institutional ownership, consistent with the idea that selling shares by transient institutions influences the boards of portfolio firms in CEO cash compensation decision. This study contributes to the governance literature and is relevant to business managers by providing additional evidence that transient institutions provide less patient capital and may not benefit long-run firm value creation.     

Controversies over fair value accounting： The case of SMEs

This study analyses IASB＇s stipulations on fair value usage in its standard designed for SMEs and the reactions of national standard setters, preparers and users of financial reporting in this respect. It tries to clarify fair value applications such as market value and value in use and the appropriateness of their usage for the case on hand. This research determines the inconsistencies within IASB ED IFRSfor SMEs （2007） related to the usage of fair value, underlined by the respondents＇ comment letters. The content analysis of all the above, conducted according to the type of economy and nature of respondent, along with the statistical techniques applied, indicates a partial approval of fair value usage under the following conditions： clarification of the concept, details on its usage in relation to market liquidity and the nature of the asset, additional guidance regarding the measurement methods. We advocate for the value in use, an application of the fair value based on internal valuations, which offers an adequate cost-benefit rate. The final version ofIFRSfor SMEs highlights both the preference of market information over the internal valuations and the insufficient information regarding solutions suited for non-liquid markets. It may be appropriate for the IASB, maybe in collaboration with the IVSC, to provide guidance and details regarding the implementation and disclosure of the valuation techniques applicable to this type of entities.     

Financial reporting of cash flow： Arbitrary items and management preferences

The international financial reporting standard for cash flow statement （IAS 7） provides options for the classification of certain cash flow items （arbitrary items）. Therefore, business firms may classify the arbitrary items using the option that would maximize their own interest. This reduces the comparability of financial statements amongst business firms. This study aims to investigate the factors explaining management preferences in the selection of financial reporting practices on the arbitrary cash flow items. It concludes that managers tend to magnify the CFO reported in order to maximize the shareholders＇ wealth, which in turn would maximize their compensation. Managers of business firms with a relatively smaller size of CFO tend to classify interest paid and dividends paid as non-CFO in order to magnify their CFO. They also tend to classify interest received as CFO in order to inflate their relatively smaller size of CFO up to expectation. Similarly, managers of business firms with a relative larger size of dividends paid would classify the dividends paid outside CFO.     

Control and its role in the process of ensuring knowledge continuity

With the commencement of the 21st century, the information age, knowledge economy and integration of information and knowledge among production factors, organizations show increasing interest in knowledge management. Managers are trying not only to preserve knowledge and transfer it efficiently within their organization, but also to ensure that it is not lost when a knowledge employee leaves the organization. Therefore, it is indispensable for organizations to monitor, record, transfer and preserve their knowledge. In order to ensure efficient preservation of knowledge by the organization, it is essential to integrate the area of the so-called knowledge continuity into the general management and ensure its maximum value. The goal of the article is to identify the role of control in the transformation process and its impact on ensuring knowledge continuity within the organization. A partial goal lies in identifying output quality control by means of productivity One of the conclusions of the article is that in today＇s economic situation, ignoring the existence of knowledge continuity could result in a crisis of management of knowledge and its loss.     

Perfection solutions of supervisory audit in Chinese listed companies

Operational mechanism of supervisory audit in Chinese listed companies is not ideal, the supervisory effect of the listed company rely on features of supervisors＇ board and member of the supervisors＇ board. Based on the comparison of supervisory audit in Britain, Germany, France and Japan, and the empirical research on 100 listed companies in a share market, the paper analyses supervisory audit in Chinese listed companies, and proposes some perfection solutions to strengthen supervisory audit.     

The effectiveness of internal audit in Malaysian public sector

Internal audit in Malaysian public and private sector organizations underwent a steady organic growth since gaining a foothold in the management process in the 1970s. The management of the Malaysian public sector is continuously maturing in facilitating foreign input in national development, echoing similar advances expounded by the internal audit units of private sector organizations. The main difference being the public sector addresses the interest of a much wider group of stakeholders. Rapid development in infrastructures and industries positioned Malaysia on the fringes of globalization and the world market. This enlarges the crucial role of internal auditing to ensure transparency, integrity, quality and improved service delivery; among myriad positive aims, remain the end point of any process area. This study explored the significance of internal auditing in the Malaysian public sector, and its subsequent extent and influence in public sector hierarchy and decision making. Data was collected from responses to a questionnaire distributed to head of internal auditors, internal auditors and other staff of internal audit departments from various categories of public sector departments and agencies in Malaysia. The study concluded that the internal audit function in the public sector in Malaysia is curtailed by understaffing and hampered by inadequate support from top management while, the auditors seldom extend their full cooperation. The auditors themselves lack appropriate knowledge and training on effective auditing approaches. The negative perception accorded to internal audit led to inaction by management on recommended remedies which only serve to nullify the positive contribution internal audit potentially holds to elevate the service delivery quality of the public sector.     

Financial statements in less developed countries： What do preparers demand？

This study reports on an empirical investigation of the characteristics, attitudes, and beliefs of preparers of external financial reports in a less developed country. The basic research instrument consisted of a questionnaire in two parts： the first addressing attitudes of professional accountants toward annual financial reports generally; the second, more specifically measuring the importance of the information items to preparers. Our results suggest that the independent auditor is the most influential group in decision-making processes. As in many developed countries, the auditor＇s report and the regulatory framework are considered to have a major influence on financial reporting practices. Preparers believe that a lack of knowledge of external users＇ needs and lack of reporting standards and accepted accounting principles are the main concerns with corporate financial reports in Iran. The results showed that the balance sheet, auditors＇ report, and income statement in that order are the three most important parts of the annual reports.     

Malmquist indices of productivity growth for Islamic and conventional banks in Malaysia

This paper studies the total factor productivity （TFP） of banks in Malaysia with the emphasis on comparing the relative productivities of Islamic and Conventional banks. The Malmquist index approach is used to decompose productivity growth into technical efficiency and technological change. The productivity growth is measured and decomposed into technical change and efficiency change. The efficiency change is further decomposed into pure efficiency change and scale efficiency. It is found that Islamic banks＇ productivity growth is limited by its lack of technological change compared to its conventional counterparts. Nonetheless, both types of banks are operating at the correct level in terms of scale or size.     

Research on environmental accounting information disclosure for thermal power enterprises in China： Current situation, countermeasure and implement way

Along with the unceasing expansion of the human society production and the economic activity scale, the influence and harm of the social economy to the global environment is more and more serious. As one of the high-polluting industries in China, the environment problems of the thermal power enterprises attract attention from the country and society. It is crucial for the country to improve the laws and regulations about the disclosure of environmental accounting information gradually, and the thermal power enterprises should also disclose more valuable environmental accounting information to the public. This paper analyzes and elaborates the current situation, countermeasure and implement way of the environmental accounting information disclosure systematically.     

Role of supply chain management in target costing

Standard costing is used as a control for product costing. But with life cycle becoming shorter, costing should be done at the design and development stage of a product. This is achieved through target costing.The implementation of target costing and target pricing is done with the ultimate purpose of cost reduction, cost understanding, continuous improvement, competitiveness, early purchasing and supplier involvement, and improved design and accountability by manufacturers. The study explores the participation of the purchasing and supply chain management＇s role in target costing and target pricing process. Supply management plays an active role in monitoring the ongoing cost and performance of suppliers during the early stages of product development. Implementation of target costing and target pricing in various organizations are also explored. Leading Japanese manufacturers have used target costing and target pricing systems to their advantage and the paper also examines the adaptation of the Western companies to these proactive cost management techniques to improve their product development processes.