Accountability and human rights: A tentative exploration and a commentary

There continues to be many attempts to articulate what is meant by Human Rights but Griseri and Sepella's (2010, p. 176) adaptation of Leighton et al. (2002) as “entitlements that one holds by virtue of being a human being” takes us to the heart of the matter. What is it to be human and what does humanity demand of us? But the notion is far from settled; it is far from uncontentious; despite its domination by lawyers it is far from simply legalistic; and the matter has only relatively recently been taken up as a matter of focus amongst business and management academics. Human rights have, as yet, almost no presence in accounting and finance. This short essay seeks to provide an introduction to the practitioner papers presented in this issue of CPA and in doing so to provide some context within which the papers might be better appreciated. As happens too often for comfort, practice (at least regulatory and NGO practice) is still leading research and theory in the field of Human Rights. Providing that context offers us the opportunity to speculate on how – notwithstanding the potentially seminal papers that also appear in this issue – we might see accounting academe recognising and responding more widely to Human Rights.     

IFRS framework-based case study: Barrick Gold Corporation—Goodwill for Gold

The case of Barrick Gold Corporation: Goodwill for Gold utilizes a framework-based approach to examine the objectives, underlying concepts, and relevant IFRS guidance applied to goodwill. The questions presented in the case study progressively lead from the broad concepts underlying the preparation of financial data, in general, to the International Accounting Standards concerning recognition, measurement, and subsequent treatment of goodwill, specifically IFRS 3, IAS 36, and IAS 38. It challenges you to determine if these standards are consistent with the underlying concepts set forth in the IFRS’s conceptual Framework. This case illustrates the importance of professional judgment in the standard setting process by requiring you to examine the IASB’s published supporting documents including the Board’s Basis for Conclusions. In addition, the case includes a practical application problem that requires you to determine the financial statement effects of the subsequent treatment of goodwill.     

Academic entrepreneurial hybrids: Accounting and accountability in the case of MegaRide

The current paper focuses on how multiple values shape accounting and accountability practices in hybrid organizations. It concentrates on the complex domain of academic spin-offs, more fully described as hybrid knowledge-intensive organizations, aiming to understand how accounting and accountability practices can be constitutive of hybrid academic entrepreneurial logics and identities and how these, in turn, favor the development of accounting and accountability practices. The study employs a theoretically informed in-depth single case study of the academic spin-off MegaRide of the University of Naples Federico II (Italy) for the period January to May 2021. The findings show how, in MegaRide, hybrid academic entrepreneurial identities emerged at both the individual and organizational levels, leading to successful technology transfer, with an undeniable impact on the local context and society.     

Accounting for human rights: The challenge of globalization and foreign investment agreements

The triumph of neoliberalism has promoted trade and investment as the dominant routes to economic and social development. This has further enhanced the power of transnational corporations. Developing countries are increasingly expected to secure foreign investment to stimulate their economies and lift the local population out of poverty. However, foreign investment also has implications for protection and enjoyment of human rights. Transnational corporations manage their risks by imposing stabilization clauses on host countries that constrain their ability to protect and enhance human rights. Conventional accounting and corporate social responsibility reports seem to be unable to respond to the emerging agenda on human rights. This paper seeks to stimulate debates about the protection and enjoyment of human rights by drawing attention to the way corporations constrain governments and people through clauses in investment agreements. Some evidence is provided through an examination of an investment agreement relating to the Chad–Cameroon oil and pipeline project. The paper calls for the production of counter accounts to challenge the hegemony of corporations and create spaces for the enjoyment of human rights.     

Breakdowns of accountability in the face of natural disasters: The case of Hurricane Katrina

Hurricane Katrina, which struck the Gulf Cost of the United States at the end of August 2005, was one of the most costly and deadly natural disasters ever experienced by the United States. A breach of levees and the subsequent flooding of the city of New Orleans resulted in the displacement of more than 250,000 people. The death toll exceeded 1800 persons and total damages were estimated to exceed $125 billion. The response to the hurricane by city, state and the federal governments has been severely criticized by many commentators. The purpose of this paper is to examine breakdowns in accountability during and after the storm which were manifested by a lack of communication between government officials and a failure on the part of officials to act responsibly on behalf of victims, many of whom were poor, black and elderly. We also examine whether the breakdown in accountability may be traceable to institutional racism embedded in the history and geography of the city of New Orleans. Following McKernan's (2012) argument, the paper reinforces the need to go beyond a “calculative accountability” toward “the potential of accountability to enhance levels of responsibility for the other” (p. 259). It is this moral aspect to the concept of accountability that was sorely lacking in the response of government officials to Hurricane Katrina.     

Enterprise risk management and continuous re-alignment in the pursuit of accountability: A German case

COSO defines ERM as a set of activities that lead to organizational alignment and accountability, given structured work with stable, mobile and combinable information objects. This study argues against this representation by offering three insights developed from case research. We observe ERM as a practice that oscillates between IT-based representations and social interpretations, which never “adds-up” but creates circulation and movement instead. Rather than to produce a common understanding of corporate affairs, ERM communalizes the process of identifying risks and chances and promotes a quest for accountability. Thus, ERM does not focus on improving performance or compliance. Nevertheless, by separating subjects and objects in the organizational context, ERM creates space for otherness and heterogeneity. To the extent that these are mobilized as resources, ERM might offer “intelligence” beyond the coherence and homogeneity, which accounting systems represent.     

Value relevance of human capital based disclosures: Moderating effects of labor productivity,investor sentiment,analyst coverage and audit quality

Voluntarily disclosed employee costs in annual reports of listed firms are value relevant, according to US based studies. However, investors appear to fail to take full advantage of the signaling opportunities presented by these disclosures. This study suggests that labor productivity, audit quality, analyst coverage and high technology categorization moderate the value relevance of voluntarily disclosed employee costs in Malaysia, contributing a novel set of moderating variables to the human capital accounting and value relevance literature, and extending the extant literature to an emerging economy. The results are consistent with the findings from US based settings, after incorporating these moderating factors. Pertinent policy recommendations, based on these findings, are suggested.     

Rethinking agency theory in developing countries: A case study of Pakistan

We investigate if agency theory effectively explains agency conflict in the context of a developing country namely, Pakistan. Utilising data from 26 semi-structured interviews, we found that in Pakistan, there is no variation in risk preferences of principals (minority shareholders) and agents (majority shareholders). We also found that remuneration packages and board independence are not effective tools for governing owner managers in Pakistan. Thus, policy makers must shift their focus from soft internal governance mechanisms of appropriate remuneration and board independence. We propose for a rigorous external audit function, and appointment of independent directors and external audit firms by regulator.     

The contract,accounting and trust: A case study of an international joint venture (IJV) in the United Arab Emirates (UAE)

This paper reports on the results of a case study that examines the effect of the contract and accounting on inter-organisational trust in an international joint venture (IJV). The empirical setting of the research was an IJV relation between a United Arab Emirates (UAE) firm and its western partner. Data were gathered from multiple sources, including documents, observations, interviews and discussions with managers. The paper aims to explore the process of trust development and the role of the contract and accounting in this. We find that trust developed differently for the partners. Moreover the trust concerns of the partners were not the same. Based on this we conclude that trust was not automatically reciprocated. Instead it needs relating to other items such as the contract, accounting and also the institutional environment. The open-book accounting we observed could only be termed ‘partial’ because the western partner had access to the local partner's books but not the vice versa. But this partial open-book accounting created conflicts between the partners. We argue that developing one kind of trust through one particular medium may help one party but may damage the relationship between the partners.     

Twenty-one years of social and environmental accountability research: A coming of age

This study extends upon previous research into the profile and direction of social and environmental accounting research, analysing and critiquing 21 years of contemporary research in social and environmental accounting published particularly in four leading interdisciplinary accounting research journals covering the period 1988-2002 inclusive. It reflects upon selected seminal papers on the field, and presents an empirical analysis of SEA publication that updates Parker's (2005) findings. The prospect of a sharing of the territory between critical and managerialist approaches is envisaged, along with the application of multiple theoretical lenses. Social and environmental research show signs of more recent balancing between these two subject areas, while recent shifts in methodological approaches are increasingly emphasising the employment of content analysis/statistical relationships research and case/field/action/ethnograpic research. National practices/comparisons and regulations are leading topic areas occupying researchers. External disclosure, attitudinal studies and theoretical framework papers also attracted significant attention. The paper also overviews emerging research in three non-Anglo-Saxon countries and identifies leading and emerging scholars in the field. The SEA field exhibits considerable momentum, but is found to be largely driven by research and publishing infrastructure outside North American economics focussed research communities.     

Importing accounting: the case of Trinidad and Tobago

In the period immediately following its achieving independence, Trinidad and Tobago switched from a pattern of importing British professional accountants to one of importing British professional qualifications. It was also in this period that the first professional accounting association appeared: that is, eighty years after such bodies emerged in Britain and her settler colonies. This paper seeks to explain why the achievement of political independence in Trinidad and Tobago (and perhaps in some other British non-settler colonies) signified a critical turning point in the development of a local accounting profession. The paper also explores how the history of importing accounting impacted on the contemporary organization of the profession in Trinidad and Tobago.     

Regulating for corporate human rights abuses: The emergence of corporate reporting on the ILO's human rights standards within the global garment manufacturing and retail industry

Despite the ubiquitous nature of the discourse on human rights there is currently little research on the emergence of disclosure by multinational corporations on their human rights obligations or the regulatory dynamic that may lie behind this trend. In an attempt to begin to explore the extent to which, if any, the language of human rights has entered the discourse of corporate accountability, this paper investigates the adoption of the International Labour Organisation's (ILO) human rights standards by major multinational garment retail companies that source products from developing countries, as disclosed through their reporting media. The paper has three objectives. Firstly, to empirically explore the extent to which a group of multinational garment retailers invoke the language of human rights when disclosing their corporate responsibilities. The paper reviews corporate reporting media including social responsibility codes of conduct, annual reports and stand-alone social responsibility reports released by 18 major global clothing and retail companies during a period from 1990 to 2007. We find that the number of companies adopting and disclosing on the ILO's workplace human rights standards has significantly increased since 1998 – the year in which the ILO's standards were endorsed and accepted by the global community (ILO, 1998). Secondly, drawing on a combination of Responsive Regulation theory and neo-institutional theory, we tentatively seek to understand the regulatory space that may have influenced these large corporations to adopt the language of human rights obligations. In particular, we study the role that International Governmental Organisation's (IGO) such as ILO may have played in these disclosures. Finally, we provide some critical reflections on the power and potential within the corporate adoption of the language of human rights.     

Governmentality in accounting and accountability: A case study of embedding sustainability in a supply chain

This paper examines how the introduction of sustainability accounting has been used by an organization as a means to seek to govern social, economic and environmental issues relating to suppliers. The concept of governmentality and four analytics of government are proposed as a means to examine systematic ways of exercising power and authority. This theoretical framework illuminates the specific rationales and practices of government that enable particular aspirations of reform – such as sustainability – to be constituted. The analysis is informed by the discussion of the implementation of sustainability-orientated regimes of practice in the context of a single supply chain within a major supermarket chain in the UK against the theoretical analytics of government. The paper provides novel empirical insights into how sustainability accounting shaped forms of power, rationales and practices in a supply chain. It explores the extent to which senior decision-takers frame and use sustainability accounting to foster disciplinary effects based ostensibly upon social and environmental goals. These are found in practice to be reformulated primarily according to an economic (rather than social or environmental) regime of practice.     

Dissemination and institutionalization of public sector accounting reforms in less developed countries: A comparative study of the Nepalese and Sri Lankan central governments

One of the major issues in the developing world today is the alleviation of poverty and it is acknowledged that public sector accounting has a key role to play in this through the effective allocation of resources. Implementing public sector accounting changes in developing nations has been a key agenda of international organizations since the 1980s. This study, drawing on the ideas of new institutionalism, strives to explore the implementation of public sector accounting reforms in two less developed countries (LDCs), namely Nepal and Sri Lanka. The empirical findings of the study demonstrate that, while internationally propagated public sector accounting reform ideas have not gone beyond the trial/proposal stage in Nepal, colonialism has bequeathed on Sri Lanka the promotion of accounting education and training, enabling the country to implement some of these reform ideas. However, increasing resistance to accounting changes at the lower administrative level, witnessed in both countries, indicates a need to understand the contexts of LDCs and to fulfil basic preconditions prior to disseminating/embarking on reforms there.     

Environmental and Social Matters in Mandatory Corporate Reporting: An Academic Note

This note provides an overview of mandatory corporate reporting for environmental and social matters in Canada, the United States and the EU. When researchers and educators consider reporting on these matters, they often look to voluntary corporate reporting. However, we argue that a lot of related information exists in companies’ mandatory reports, either in the disclosures dictated by securities regulators, or via other required channels. Our objective is threefold. First, to describe what currently exists regarding mandatory reporting on environmental and social matters (to inform). Second, to discuss several of the current ongoing debates regarding such reporting (to encourage discourse). Third, to encourage research into the mandatory reporting of environmental and social matters.     

The extent of corporate governance disclosure and its determinants in a developing market: The case of Egypt

This paper assesses the extent of corporate governance voluntary disclosure and the impact of a comprehensive set of corporate governance (CG) attributes (board composition, board size, CEO duality, director ownership, blockholder ownership and the existence of audit committee) on the extent of corporate governance voluntary disclosure in Egypt. The measurement of disclosure is based on published data created from a checklist developed by the United Nations, which was gathered from a manual review of financial statements and websites of a sample of Egyptian companies listed on Egyptian Stock Exchange (EGX). Although the levels of CG disclosure are found to be minimal, disclosure is high for items that are mandatory under the Egyptian Accounting Standards (EASs). The failure of companies to disclose such information clearly shows some ineffectiveness and inadequacy in the regulatory framework in Egypt. Moreover, the phenomenon of non-compliance may also be attributed to socio-economic factors in Egypt. Therefore, it is expected that Egyptian firms will take a long time to appraise the payback of increased CG disclosure. The findings indicate that that—ceteris paribus—the extent of CG disclosure is (1) lower for companies with duality in position and higher ownership concentration as measured by blockholder ownership; and (2) increases with the proportion of independent directors on the board and firm size. The results of the study support theoretical arguments that companies disclose corporate governance information in order to reduce information asymmetry and agency costs and to improve investor confidence in the reported accounting information. The empirical evidence from this study enhances the understanding of the corporate governance disclosure environment in Egypt as one of the emerging markets in the Middle East.     

Shunning careers in public accounting firms: The case of Indonesia

A rapidly growing emerging economy such as Indonesia has an increasing need for qualified accountants to service the many needs of business. However, the current dearth of qualified accountants is becoming critical, and this situation will only get worse as Big 4 firms, mid-tier firms and local firms struggle to recruit enough trainees to qualify as professional accountants. This study examines the plight of the Indonesian accounting profession by investigating why accounting students are shunning the profession, possibly leading to the demise of the Indonesian profession as we know it today.The study shows that although career intention constantly changes as new experiences are encountered, background factors matter. Ethnicity, living in an urban or rural environment, and where one is educated all matter to career intention. Further, one's own self-efficacy, such as English language ability, and other people's views are all influential in where we want to work.To address this looming crisis in the profession the Indonesian government needs to implement policies that ensure that the education curriculum addresses English language literacy, especially in rural areas; and the profession needs to engage more with remoter universities in rural locations to recruit high achieving students to provide greater diversity in the profession.     

Earnings management and firm financial motives: A financial investigation of UK listed firms

This study focuses on the investigation of motives for and characteristics of UK firms that engage in earnings management activities. It concentrates particularly on the provision of voluntary accounting disclosures, the violation of debt covenants, management compensation, and on the equity and debt capital needs of firms and their relation with the use of earnings management. The study examines also the earnings management inclination of firms that seek to meet or exceed financial analysts' forecasts. The findings generally indicate that firms with low profitability and high leverage measures are likely to use earnings management. Also, firms that are in equity and debt capital need and are close to debt covenant violation also appear to be inclined to employ earnings management practices. Likewise, firms tend to use earnings management to improve their financial numbers and subsequently reinforce their compensation and meet and/or exceed financial analysts' earnings forecasts. In contrast, the study shows that firms that provide voluntary accounting disclosures appear to be less inclined to make use of earnings management.     

Corporate governance and risk reporting in South Africa: A study of corporate risk disclosures in the pre- and post-2007/2008 global financial crisis periods

The 2007/2008 global financial crisis has reignited the debate regarding the need for effective corporate governance (CG) through sound risk management and reporting practices. This paper, therefore, examines the crucial policy question of whether the quality of firm-level CG has any effect on the quality and extent of corporate risk disclosures (CRD) in South Africa (SA) with particular focus on the pre- and post-2007/2008 global financial crisis periods. Using one of the largest datasets to-date on CG and CRD, from 2002 to 2011, and distinctively drawing on a multiple theoretical perspective, we find that CRD are largely ‘non-financial’, ‘historical’, ‘good news’ and ‘qualitative’ in nature over the ten-year period investigated. We also find that block ownership and institutional ownership are negatively associated with the extent of CRD, whilst board diversity, board size and independent non-executive directors are positively related to the extent of CRD. By contrast, dual board leadership structure has no significant connection with the extent of CRD. Our results are robust across a raft of econometric models that adequately address different types of endogeneity problems, as well as alternative CG and CRD proxies. Our findings are largely consistent with the predictions of our multi-theoretical framework that incorporates insights from agency, legitimacy, institutional, resource-dependence, and stakeholder theories.     

Management controls in family-owned businesses (FOBs): A case study of an Indonesian family-owned University

This paper reports on the results of a case study of management controls in an Indonesian family-owned University. The paper attempts to understand the nature and dynamics of management controls in the operations of the University. Data for the analyses are gathered from multiple sources including document analysis, observations and semi-structured interviews. The findings of the case study showed that culture and social relations are very instrumental in the management of the University [Ansari, S. L., & Bell, J. (1991). Symbolism, collectivism and rationality in organizational control. Accounting, Auditing and Accountability Journal, 4(2), 4–27]. Decisions such as recruitment, rewards, performance evaluation, and resource allocations are often made in cognizance of social and cultural factors. The strong influence of culture and social relations in the organization thus made formal management controls less relevant. These findings have implications for understanding management controls in FOBs especially in the developing world.