Reporting accountant appointments and accounting restatements: Evidence from UK private companies

In recent years, regulators have exempted an increasing number of companies from the requirement to appoint auditors, yet little is known about the role of the accounting profession in preparing and validating the financial statements of unaudited companies. In this paper, we examine empirically the factors associated with the appointment of reporting accountants. We then provide novel evidence on whether unaudited UK small private companies are less likely to restate their annual accounts when they have been prepared by an external accountancy firm (i.e., a reporting accountant). Based on a cross sectional analysis of a large sample of small private unaudited UK companies, we find that, in accordance with the ‘confirmation hypothesis’, larger companies that voluntarily disclose more financial information are more likely to appoint a reporting accountant. We also find that the accounts of companies with a reporting accountant are significantly less likely to be restated than those without. This result is more pronounced for companies disclosing more financial information and for those employing a larger accounting firm. Given the dwindling number of private companies opting for audits, our findings contribute to debates on the role of the accounting profession in enhancing private company financial reporting quality.     

Employers’ Perceptions of Information Technology Competency Requirements for Management Accounting Graduates

Abstract

Management accountants work in a computerized workplace with information technology (IT) for producing financial ledgers and for reporting. Thus, the role of the management accountant has shifted from capturing and recording transactions to analyzing business issues. The research question is: what IT knowledge and skills do employers require of management accounting graduates? An exploratory field research approach was used; chief financial officers and their subordinates at some of New Zealand's largest firms were consulted. These respondents were consistent in their requirements. They emphasized intermediate proficiency with some Microsoft tools (Excel, Word, PowerPoint, and Outlook) and sufficient familiarity with the structure and navigation of an enterprise resource planning system to process transactions such as accounts receivable. Of those requirements, Excel for analysis was the most important. Our contributions update and augment the literature by clarifying the perceptions of employers regarding the IT competencies required of management accounting graduates.     

Determinants of the voluntary adoption of digital reporting by small private companies to Companies House: Evidence from the UK

This study examines the factors that influence the voluntary adoption of the digital reporting of the statutory accounts and returns to the company registry (Companies House) by small private companies in the UK. We analyse survey data from 343 members of the Association of Chartered Certified Accountants working in small companies or in practices with small company clients in the UK. The data is examined using statistical methods, mainly PLS-SEM. Our results show the following factors positively influence the voluntary adoption of digital reporting by small private companies: the relative advantage from standardisation benefits, the company's technology competence and support from top management. We also provide evidence that the complexity of the company's accounting system and technology costs inversely influence this voluntary adoption. The study contributes to the emerging literature by expanding our understanding of how the standardisation of financial information flows benefits small private companies. The results should be of interest to small companies and their accountants, regulators in the UK and other jurisdictions planning digital reporting initiatives or seeking to reduce administrative burdens on smaller entities.     

User involvement in the standard-setting process: A research note on the congruence of accountant and user perceptions of decision usefulness

This is an exploratory study which examines whether accountants and users of financial statements hold congruent or incongruent views on the decision usefulness of accounting information. This issue is important to the question of whether users require direct involvement in the standard-setting process, or whether their views may be adequately represented in the process by other participants such as accountants. Drawing on the sociology of professions literature under which professionals, such as accountants, are assumed to seek to maintain the judgement domain and indeterminacy of their professional task, it is hypothesised that accountant and user views on decision usefulness will be incongruent in those situations where a change in accounting method reduces judgement domain or indeterminacy. Specifically, it is hypothesised that, compared to users, accountants will perceive a lower degree of decision usefulness to be associated with a change in accounting method that reduces judgement domain or indeterminacy. Using a survey questionnaire, developed around a series of accounting method change scenarios, and administered to a sample of accountants and investment analysts (as an example of users), support was found for our hypothesis in relation to judgement domain, but not for indeterminacy.     

Software section

Abstract

In this study, first year commerce students in Australia were surveyed about their perceptions of their accounting studies and their perceptions of the attributes required of professional accountants. The paper specifically addresses the factors important in determining whether first year students intend to become accountants. The study uses a logistic regression model incorporating demographic and academic factors, as well as students' perceptions of the work of accountants, to predict intention to become an accountant. The results show that the perception of importance of generic skills, intrinsic interest in the discipline area, and course satisfaction were significant in determining intention to pursue a career as an accountant. As many students formed their judgments about the work of accountants from their accounting studies, the findings have implications for accounting educators in terms of the enthusiasm and motivation required in teaching accounting, as well as curriculum development that reflects the skill set required for an increasingly sophisticated business environment.     

Quantitative skills: is there an expectation gap between the education and practice of management accountants?

The extent to which management accountants are receiving appropriate training in quantitative methods is examined. It finds a disparity between the wide range of quantitative techniques covered within the Chartered Institute of Management Accountants' syllabi and the limited use made of many of the techniques in practice. It also reports a rich picture of differing expectations of the role of quantitative skills in the work of a management accountant. The study finds that quantitative skills are seen by both employers and accounting educators as contributing to the portfolio of skills required by management accountants. Also, they give a rigour to the examination process that is seen as a challenging ‘rite of passage’ into the profession. It is concluded that knowledge and understanding of the range of quantitative techniques available to organizations is a powerful differentiator for the accounting profession, even if the occasions upon which accountants are required to draw upon much of that knowledge are few and far between.     

Communication skills in accounting education: Perceptions of academics,employers and graduate accountants

Communication skills are central to intellectual interaction between the providers and the recipients of information. The importance of accounting starts with the gathering and processing of information and ends with the communication of processed information. This paper examines the communication skills which employers, academics and graduate accountants consider necessary to the newly graduated accountant. It also identifies and considers the differences in perception which occur between these groups and suggests solutions to the communication gap. This study confirms findings from previous research that new graduate accountants experience communication-related problems in early employment. In addition, it provides evidence that the Australian accounting curriculum has contributed to the development of communication skills. However, the paper highlights the need for the reconsideration of an emphasis on communication skills in the accounting curriculum, a role which arises from the very nature of accounting as the processing and communication of information.     

Structure,formality and the importance of financial and non-financial information in strategy development and implementation

The strategic management literature indicates that there is high variety in the form and nature of strategic processes within organizations. By contrast, writers on strategic accounting tend focus on the structure and formality of strategic activities and call for a balance of financial and non-financial information to support strategic processes. This study explores the conceptual basis for this perspective and also investigates empirically whether such characterisations hold in practice. The empirical part of the study draws on questionnaire responses by senior corporate accountants and interviews held with a subset of respondents from this group. The results indicate that strategy development and implementation activities tend to be structured and formal, and while greater emphasis is placed on financial information in strategy implementation, in strategy development both financial and non-financial information are used. Differences however prevail across firms as to what is considered to be strategic and the role played by financial and non-financial information varies across companies. A high degree of organization specificity also exists in the uses of strategic accounting information. The study found support for normative ideals within the firms investigated but high organizational particularity also pervades the deployment of strategic accounting information.     

Evidence that independent research projects improve accounting students' technology-related perceptions and skills

Advances in technology require that accountants possess skills to obtain information from various sources, complete computer-based projects, and use computers as a tool to achieve other business-related objectives. Students not only need to develop skills to access information but, more importantly, they also need to improve their perceived ability to utilize computers successfully. This paper describes a project in which accounting students were required to independently analyse a publicly-traded company using text- and Internet-based resources. The goals were to concurrently develop students' computer-based skills and improve perceptions toward technology. In addition, since research using nonaccounting students has shown that self-efficacy and confidence in the use of technology differs between the genders, this study also analysed gender-related differences in perceptions towards computers. The results show that the project enhanced students' Internet knowledge and skills to access information from multiple sources. Students also improved their perceived ability to use computers to analyse technical problems, their computer-based project completion skills, and their understanding of the Internet. Furthermore, while female students indicated lower perceived ability to work on technology-related projects before the assignment, participation in the project elevated their confidence levels. In general, this paper demonstrates the value of designing assignments to improve students' perceived computer-related abilities, and provides insight into gender differences in perceptions towards technology.     

The Importance of Mutual Understanding Between External Accountants and Owner–Managers of SMEs

This study investigates the perspective of the owner–manager of a small or medium‐sized enterprise (SME) on the importance of mutual understanding with an external accountant. Mutual understanding means that the owner–manager understands what the accountant is saying and feels understood by the accountant. The results, based on 310 completed surveys of Belgian owner–managers, show that owner–managers who have a high level of mutual understanding use the advice of their external accountant more extensively. This is in turn positively linked to the financial health of an SME. Furthermore, several drivers that enable the establishment of a high level of mutual understanding are explored. Owner–managers with a high level of mutual understanding consider their accountant as a strategic partner, experience a high level of proactive behaviour with them, have a higher frequency of formal contact, and perceive informal contact as important. External accountants should consider these opportunities in their client management and training of internal staff. Education of clients and openness also seem very important, as the level of a client's accounting knowledge, the number of accounting topics owner–managers deal with, and transparency towards the accountant are significantly positively related to mutual understanding.     

The making of the management accountant - Becoming the producer of truthful knowledge

In this paper, we analyse the practices through which the management accountant is constructed as a knowing subject and becomes a producer of truthful knowledge. We draw on a case study of an automobile equipment manufacturer in which management accountants play a central role. The centrality of their role is evidenced, among other aspects, by their participation in online reverse auctions, wherein they commit themselves and their company to long-term projects. This commitment is constitutive of their identity as knowing subjects and organisational truth tellers. However, the “validity” of the truth they produce can only be assessed over time. We argue that, in this firm, monthly performance review meetings constitute “accounting trials of truth” during which peers and senior management cross-examine the accounting truth presented. Preparations for these trials of truth constitute a form of subjectivation whereby management accountants act on their ways of being in the firm and become the producers of truthful knowledge.     

会计政策、会计估计变更对会计电算化的影响

我国的电算化已经历了20多年的发展,具备了一定的水平和较大的产业规模,对会计实践的影响重大而深远,它大大提高了会计信息处理的速度和准确性,为用户提供及时准确的会计信息;有助于加强管理,提高企业的竞争能力;能有效地减轻会计工作人员的负担;使会计的两大职能——财务核算和财务管理能更有效地互相结合、互相补充,充分发挥各自的职能。但在财务核算中,近年来新业务、新政策的不断出现导致的会计政策变更、会计估计变更使会计电算化在实际工作中出现了一些新情况、新问题。本文就产生的问题进行了系统说明,并就解决的办法进行了详细论述。     

Accounting Competencies and the Changing Role of Accountants in Emerging Economies: The Case of Romania

Over a recent short period, a number of interventions potentially helped move the Romanian accounting system away from being a tool simply used to support a planned economy. They include harmonization with the European Directives, the introduction of International Financial Reporting Standards (IFRS) and an increased move towards modern information technologies such as Enterprise Resource Planning (ERP) software. In this study, we directly explore these influences by applying job-offer analysis as a reflection of the current and future demand for accounting competencies. We first document current competencies expected from accountants in Romanian businesses and then assess the intervention impact on financial and management accountants. We hypothesize external influences would move Romanian accountants away from the traditional separate specialized positions towards more hybrid accounting positions, such as that adopted in the UK. Whilst our analysis supports a degree of transition with alignment to recent global trends, it also reveals some intransigence in the sense that management and financial accounting positions still tend to retain attributes associated with the two-cycle accounting system. Our findings have implications for harmonization issues and accounting education in Romania.     

提高我国注册会计师审计独立性的对策探讨

注册会计师只有在审计过程中真正做到客观独立,才能保证审计信息的可信性,从而树立起职业声誉,体现其社会价值.提高我国注册会计师审计独立性应从完善注册会计师的委托聘约机制、明确注册会计师的法律责任、规范会计师事务所的组织形式、提高注册会计师的自身素质、健全注册会计师的外部监管机制、优化执业环境等方面入手.     

Role conflicts of management accountants and their position within organisation structures

The research examines accountants' and managers' perceptions of management accounting roles under conditions of centralisation and decentralisation of the management accounting function. Decentralization was associated with greater interaction between accountants and other managers and with the provision of accounting information perceived as being more pertinent to managerial needs. However, whatever the structural relationship, there were criticisms of the accountants' passivity in management. Contrary to expectations neither interpersonal relationships nor excessive power of accountants were problematical, nor did many accountants show bureaucratic orientations. Their inability to meet service expectations were perhaps, related to ambiguity and stress emanating from the accounting workflows.     

新时代背景下会计职业的前途探究

由高速发展的计算机、通信、信息、网络等科学技术衍生的云计算、物联网、5G、人工智能,已经实实在在地融入到我们的生活中,这必将对会计职业的前途产生影响,引发了会计人员对自身职业前途的担忧。文章结合人工智能的广泛运用这一新时代科技背景,从会计角色内外两个维度进行分析研究,得出结论:会计人员向企业一线业务领域及二线管理职能领域渗透一定成为必然,会计人员只要定位好自己的工作努力方向,有针对性的学习和改进,有效培养和提升自身的能力,就一定会有所作为,而会计职业不仅不会消失,反而会在企业组织中发挥更大的作用。     

A work role perspective of accountants in local government service departments

In most of the largest U.K. local authorities the financial control function is highly centralised with no qualified accountant or controller located in each spending department. There now may be the beginnings of a trend towards employing accountants within service departments. The paper analyses how this new segment of public sector accounting appears to be becoming established, how the role of these accountants is being developed and the contrasting occupational values of accountants in service departments and those in the finance department. It is also shown how the existence of a strong accounting profession in local government can lead to different aspects of both the financial control structure and process in comparison with central government such that research results on the latter may not automatically hold at local level.     

The unethical practices of accountants and auditors and the compromising stance of professional bodies in the corporate world: Evidence from corporate Nigeria

Investors in Nigeria have lost several billions of dollars through the collusion of accountants and external auditors with companies’ management and directors to falsify and deliberately overstate companies’ accounts. As a consequence of unethical practices by accountants and auditors, which have resulted in the distress or occasionally the closure of companies, some indigenous Nigerian Managing Directors of multinational corporations such as Lever Brothers Nigeria Plc and Cadbury Nigeria Plc have been sacked and replaced with expatriates. Some companies placed under receivership have also lost billions of dollars due to professional misconduct by their official receivers. Contrary to the claim of ‘protecting the public interest,’ accountants and auditors may be partly responsible for cases of distress and closure of companies and banking institutions in Nigeria. However, the various Statutory Provisions and Acts relating to companies and professional bodies all place the responsibility on the accountants and auditors to detect and report to the regulators cases of suspected fraud and accounting malpractice. Through detailed consideration of cases of fraud, falsifications and deliberate overstatement of companies’ accounts, this paper examines the claim that the professional bodies are capable of protecting the public interest. It utilizes archival documents to provide evidence that suggests professional misconduct by accountants, particularly the members of the Institute of Chartered Accountants of Nigeria (ICAN). The paper provides further evidence that ICAN has been reluctant to either investigate or sanction its erring members. The paper posits that the reluctance or inability of the ICAN's “Investigation and Disciplinary Machinery” to either investigate or discipline the erring accountants and auditors suggests that whether by design or default, the ICAN's “Investigation and Disciplinary Machinery” operates to shield the activities of its erring members in accountancy firms from critical scrutiny.     

The impact of voluntary audit and governance characteristics on accounting errors in private companies

This paper examines the extent to which the audit and corporate governance characteristics of UK private companies are associated with defective accounting information. Despite the economic importance of private firms, relatively little is known about their financial reporting and governance characteristics. Using a large sample of UK private companies, we examine the effects of voluntary audit, board gender balance and financial expertise on the likelihood of errors occurring in published annual accounts. Our results indicate that audited accounts are approximately half as likely as unaudited accounts to contain errors. In addition to contributing to recent academic research in this field, our findings are likely to be of interest to policy makers, who are considering exempting more firms from mandatory audit. We also find that gender diversity among board members is positively associated with the accuracy of accounting information, though our primary measure of directors’ financial expertise has no significant effect.