Why good projects fail anyway

Big projects fail at an astonishing rate--more than half the time, by some estimates. It's not hard to understand why. Complicated long-term projects are customarily developed by a series of teams working along parallel tracks. If managers fail to anticipate everything that might fall through the cracks, those tracks will not converge successfully at the end to reach the goal. Take a companywide CRM project. Traditionally, one team might analyze customers, another select the software, a third develop training programs, and so forth. When the project's finally complete, though, it may turn out that the salespeople won't enter in the requisite data because they don't understand why they need to. This very problem has, in fact, derailed many CRM programs at major organizations. There is a way to uncover unanticipated problems while the project is still in development. The key is to inject into the overall plan a series of miniprojects, or "rapid-results initiatives," which each have as their goal a miniature version of the overall goal. In the CRM project, a single team might be charged with increasing the revenues of one sales group in one region by 25% within four months. To reach that goal, team members would have to draw on the work of all the parallel teams. But in just four months, they would discover the salespeople's resistance and probably other unforeseen issues, such as, perhaps, the need to divvy up commissions for joint-selling efforts. The World Bank has used rapid-results initiatives to great effect to keep a sweeping 16-year project on track and deliver visible results years ahead of schedule. In taking an in-depth look at this project, and others, the authors show why this approach is so effective and how the initiatives are managed in conjunction with more traditional project activities.     

A spreadsheet analysis of different costing systems

This note describes a project that uses a spreadsheet to illustrate the conceptual similarities and differences between actual, normal, and standard costing systems, under both variable and absorption reporting formats. Budgeting and variance analysis are also included in the illustration. The purpose of the project is to enhance, via a comprehensive numerical example, the student's understanding of these three costing systems. A spreadsheet formulation enables the student to perform sensitivity analysis, while eliminating the need for repetitive income statement formatting and calculations.     

Beyond the mechanics of spreadsheets: using design instruction to address spreadsheet errors

Given that the usage and complexity of spreadsheets in the accounting profession are expected to increase, it is more important than ever to ensure that accounting graduates are aware of the dangers of spreadsheet errors and are equipped with design skills to minimize those errors. Although spreadsheet mechanics are prevalent in accounting curricula, less attention has been given to design considerations that can reduce the incidence of spreadsheet errors. The extant literature provides evidence of the most common types of spreadsheet errors and explanations as to why they occur. Using the work of Panko and others, this paper outlines a three-step approach for introducing spreadsheet design practices to novice spreadsheet developers. To facilitate design instruction, this paper provides a summary of foundational readings related to spreadsheet errors as well as specific teaching strategies for addressing the most common spreadsheet errors identified in the literature.     

Risk analysis for accounting models: A spreadsheet simulation approach

Risk analysis can be performed on accounting models using spreadsheet add-ins having statistical forecasting and simulation capabilities. Modeling uncertainty, performing a simulation, and viewing probability distributions of key output variables present to students the risk within a modeled relationship. This use of technology for accounting instruction is presented for capital budgeting, budgeted cash flow, and a budgeted income statement.     

Home mortgage analysis for cultivating crucial spreadsheet and model development skills

Accounting practitioners and academics have identified spreadsheet and model development skills as important for accounting graduates to possess. We present an adaptable mortgage analysis project that provides a practical setting in which students can develop critical spreadsheet modeling skills while demonstrating knowledge of several important principles of accounting and finance. The developed spreadsheet model is designed in a structured manner to permit changing the necessary financial terms and facilitates performing sensitivity analysis on critical variables.The analysis requires an informed decision be made between employing a fixed rate mortgage or an adjustable rate mortgage (ARM) for financing a home purchase. Important theoretical skills required to arrive at an acceptable solution include understanding of present value concepts, effective rate method of interest calculation, and amortization of principle balance. The student must also verify proficiency with the necessary theoretical and practical skills of effective spreadsheet design and model development     

Why "good jobs" are good for retailers

Too many retail managers believe that they must offer bad jobs to keep prices low. As a result, almost one-fifth of American workers suffer low wages, poor benefits, constantly changing schedules, and few opportunitie for advancement. The author's research reveals, however, that the presumed trade-off between investment in employees and low prices is false. To meet short-term performance targets, many retailers cut labor. The unmotivated and poorly trained employees who remain often cannot keep up with their tasks in a complex operating environment. The result is a vicious cycle, in which lower sales and profits tempt managers to cut even more employees. Retailers such as QuikTrip, Mercadona, Trader Joe's, and Costco instead create a virtuous cycle of investment in employees, stellar operational execution, higher sales and profits, and larger labor budgets. They also make work more efficient and fulfilling for employees, improve customer service, and boost sales and profits through four practices: simplify operations by offering fewer products and promotions, train employees to perform multiple tasks, eliminate waste in everything but staffing, and let employees make some decisions.     

Optimal warranty arrangements for the design of accounting information systems

This paper investigates optimal price/warranty arrangements for the design of accounting information systems (AISs) when the user of the system has alternative sources of information. A mathematical model is developed that focuses on two systems design scenarios commonly encountered in practice: (1) enhancement and (2) replacement. In an enhancement scenario the AIS user hires the AIS designer to enhance the value of the current AIS by incorporating additional features into the original system. Systems replacement, on the other hand, implies that the designer produces a new system that makes the original system obsolete. Under a replacement system, a simple limited warranty implements the user's optimal decision rule so that no losses occur due to unobservability of the user's decision. For the enhanced AIS design however, the user's action may depend upon the signal from the user's preexisting AIS. Therefore, when the user's decision is not observable, the designer does not know if the user's decision is a result of the systems enhancement or a result of the original system. Due to incomplete contracts, a more complex and costly warranty arrangement is required. Hence, losses occur under enhancement AIS although quality can be maintained with a limited warranty. Since it is difficult to assess the quality of the information system prior to purchase, the potential for a market failure exists where high-quality systems are driven from the market by low quality systems. These findings show that a market failure can be prevented in the design of information systems through contractual warranty arrangements. These warranty arrangements, however, must be tailored to the specific design task.     

A contingency framework for the design of accounting information systems

Most of the research to date concerning the design of an accounting information system has taken a rather narrow and inflexible view of accounting information. The primary intent of this paper is to provide a broader and more adaptive framework for designing such systems. A contigency approach, which takes into account the environment, organizational attributes, and managerial decision making styles, is advocated. In this context, several hypotheses are offered concerning the requisites of an accounting information system.     

Banking for the public good

Bank shareholders cannot be expected to provide good stewardship to banks because there is a conflict of interests between the shareholder owners and a non-mutually owned bank's depositors; who provide the bulk of the funds in traditional retail banks and are willing to accept a lower return on their savings than shareholders, in return for lower risk exposure. Regulation is required to protect depositors where deposit insurance schemes are at best partially funded and underwritten by taxpayers, who in turn need to be protected, and to deliver financial stability, a public good. Once some banks become ‘too big (to be allowed) to fail’ (TBTF), they enjoy additional implicit public (taxpayer) insurance that enables them to fund themselves more cheaply than smaller banks, which gives them a competitive advantage. The political influence of big banks in the US and the UK is such that they can be regarded as financial oligarchies that have hitherto successfully blocked far reaching structural reform in the wake of the ‘Global Financial Crisis’ and lobbied successfully for the financial sector liberalisation that preceded it. The TBTF problem and associated moral hazard have been worsened by mergers to save failing banks during the crisis and as a result competition within a number of national banking systems, notably the UK, has been significantly reduced. Solutions alternative to making the banks small enough to be allowed to fail are considered in this paper, but it is difficult to be convinced that they will deliver banks that promote the common or public good. It is argued that regulating retail banking as a utility and pooling insurance against financial instability using pre-funded deposit insurance schemes, with risk related premiums that can also serve as bank resolution funds, should be pursued; and that capital leverage ratios and/or Financial Activity Taxes might be used to ‘tax’ the size of banks.     

The just design and use of management control systems as requirements for goal congruence

Management control systems (MCS) are designed to achieve the greatest possible goal congruence, such that people pursue personal goals that are conducive to the organizational goal. Both the use and the design of MCS are crucial for achieving goal congruence, but they are thought to be contingent to specific external situations. We analyze the basic concepts of justice and fairness, and argue that these two facets of justice, which we label “formal” and “informal” justice, need to be put in the context of MCS use and design. We argue that both formal and informal (in)justice are determinants for MCS to achieve specific levels of goal congruence, independently of the situation.We conclude that there are two stable types of goal congruence, labeled “maximum goal congruence” – where both MCS design and MCS use are just – and “minimum goal congruence” – where both design and use are unjust; and two unstable types of goal congruence, labeled “occasional goal congruence” – where the MCS design is unjust but its use is just – and “perverse goal congruence” – where the design is just and the use is unjust. This provides a framework for future empirical research on the subject.     

The design and use of performance management systems: An extended framework for analysis

Issues in the area of performance management and management control systems are typically complex and intertwined, but research tends to be based on simplified and partial settings. Simplification has made the work easier to carry out, but it has come at the price of increased ambiguity and conflicting findings from different studies. To help mitigate these issues, this paper puts forward the performance management systems framework as a research tool for describing the structure and operation of performance management systems (PMSs) in a more holistic manner. The framework was developed from the relevant literature and from our observations and experience. In particular, it elaborates the 5 questions of Otley's [Otley, D., 1999. Performance management: a framework for management control systems research. Management Accounting Research 10, 363–382] performance management framework into 12 questions and integrates aspects of Simons’ levers of control framework.Anecdotal evidence suggests that the extended framework provides a useful research tool for those wishing to study the design and operation of performance management systems by providing a template to help describe the key aspects of such systems. It allows an holistic overview to be taken while making this a feasible task. The paper uses material from two field studies to illustrate how the framework can be used to provide an overview of the major performance management issues within an organization.     

Exploring the generative power of performance measurement systems design

Prior studies recognise the enabling power of incompleteness in the design of Performance Measurement Systems (PMS). We add to these studies by exploring the ‘time dimension’ of incompleteness as a way to delve into the generative power of design. To this aim, we rely upon the experience of a knowledge-intensive organization during the design of a new PMS. While knowledge complexity engaged the participants within an open-ended design process, incomplete measures were associated with unfolding memories of the past and confident beliefs in future solutions, which generated effects through the knowledge gaps that they entailed, as well as through the projections in the past and in the future that they enabled. By delving into the time dimension of incompleteness, we add to prior studies on PMS design by showing the relationships between managers' hopes for the future, patterns of memory (and forgetting) of the past and incompleteness in design. In particular, we show that although incomplete measures stimulate managers' aspirations and search for further possibilities, it is forgetting about the past (its evolving memories) that triggers this search, facilitates new actors entering the design process and enables unpredictable outcomes of design.     

Optimal choice of characteristics for a nonexcludable good

In this model, a principal decides whether to produce one indivisible good and which characteristics it contains. Agents are differentiated along two substitutable dimensions: a vertical parameter that captures their valuation for the good, and a horizontal parameter that captures their disutility when the characteristics are distant from their preferred ones. When valuations are private information, the principal produces a good with characteristics more on the lines of the preferences of the agent with the lowest valuation. Under asymmetric information on the horizontal dimension, the principal biases the decision in favor of the agent who incurs the highest disutility.     

What's good for you is good for me: The effect of CEO inside debt on the cost of equity

We find an overall negative relation between CEO inside debt holdings and the cost of equity capital. Such a negative relation holds in an instrumental-variable analysis, a test using changes in variables due to CEO turnover events, a test using seasoned equity offering (SEO) underpricing as an alternate cost of equity measure, and a difference-in-differences test based on the implementation of Internal Revenue Code Section 409A Final Regulations. Additionally, the negative relation between inside debt and the cost of equity capital is nonlinear, suggesting the existence of optimal inside debt compensation that can minimize cost of capital. The negative relation is less pronounced in firms with pre-funded executive pension plans and in firms that provide executives with the pension lump-sum option. We also provide evidence that inside debt lowers the cost of equity more for excessively levered firms. Collectively, these findings suggest that shareholders value the beneficial role of CEO debt-like compensation in constraining excessive managerial risk taking.     

Teaching accounting information systems using a case study approach

The Accounting Information Systems course has been a difficult and frustrating course to teach. This article explains the case study approach taken at BYU that seems to solve many of the problems encountered with this approach. The cases used are described as well as the benefits and problems encountered with this approach.     

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.     

碳排放交易基金计划为项目提供预先资金

亚行董事会批准了设立一个碳排放交易市场信托基金,以促进亚太地区清洁能源项目数量的增长.