Volume 4 No 2 2005
FRRaG : The electronic journal of the Accounting Standards Interest Group of AFAANZ
ISSN 1449-2318
Index
Refereed articles
Barbara Mescher, "Directors and accountants and the obligation to ensure proper accounts are kept"
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Jodie Nelson and Majella Percy, "The Transparency of Executive Stock Option Disclosures in Australian Annual Reports"
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Jannine Poletti Hughes, "Ultimate Control and Corporate Value: Evidence from the UK"
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Torbjörn Tagesson, Mikael Dahlgren, Mattias Gamlén and Marcus Håkansson, "Swedish Financial Managers’ Attitudes towards the Implementation of the IASB’s Standards- The Relationship between Attitudes towards Harmonisation and the Internationalisation of the Corporation"
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Karen Van Peursem and Lela D. Kitty Pumphrey, "Internal Auditors and Indpendence: An Agency Lens on Corporate Practice"
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Professional comments
Dean Ardern and Robert Keys, "The IASB’s Research Project on Intangible Assets and Goodwill led by the AASB"
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Glenn Brady, "The IASB’s Research Project on Extractive Activities led by the AASB"
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John Goodwin, "The History of Earnings Restatement Accounting Practice in Australia: A Note"
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Ahmad Hamidi-Ravari, "The IASB’s Research Project on Joint Ventures led by the AASB"
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Phil Hancock, "Future of the Urgent Issues Group in Australia"
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Refereed articles
Barbara Mescher, "Directors and accountants and the obligation to ensure proper accounts are kept"
Abstract:
Directors have a legal obligation to ensure their company keeps proper financial records enabling the preparation of financial statements. This is the basis of the relationship between directors and accountants. This article examines this relationship and some of its difficulties; for example, how directors satisfy the legal obligation to monitor company accounts. The law permits directors to rely upon accountants but directors’ reliance and/or monitoring may be problematical due to the perceived flexibility of some of the accounting standards. The directors’ solvency declaration is the product of the complementary roles of directors and accountants but the issues identified raise questions concerning the quality of the declaration.
Jodie Nelson and Majella Percy, "The Transparency of Executive Stock Option Disclosures in Australian Annual Reports"
Abstract:
We investigate the transparency of executive stock option disclosures of Australian firms for the financial years 2000 and 2002. Transparency is measured using an index based on the requirements of the accounting standards dealing specifically with the disclosure of executive stock options. Our study also examines the relationship between firm characteristics and disclosure transparency and the difference in transparency between 2000 and 2002. We find that the transparency of executive stock option disclosures is low but improves a little in the year 2002. We also find that the existence of a compensation committee is positively associated with transparency with size being the only significant control variable. Our results are consistent with the contention of Hope (2003a) that managers of firms appear to be treating mandatory requirements as voluntary, possibly due to the low levels of enforcement of the accounting standards.
Jannine Poletti Hughes, "Ultimate Control and Corporate Value: Evidence from the UK"
Abstract:
This paper investigates the importance of ultimate control in determining corporate value in a sample of UK firms. Specifically, it examines the value relevance of three aspects: shareholdings with higher voting rights than cash flow rights; individual ultimate controllers; and mechanisms to exercise control. The results suggest that firm values fall only when a shareholder has at least twice as much voting rights than cash-flow rights. Ultimate control exerted by institutional investors was shown to reduce firm values, as opposed to other types of investors or widely held firms. There was no significant evidence of an association between controlling mechanisms and value discounts.
Torbjörn Tagesson, Mikael Dahlgren, Mattias Gamlén and Marcus Håkansson, "Swedish Financial Managers’ Attitudes towards the Implementation of the IASB’s Standards- The Relationship between Attitudes towards Harmonisation and the Internationalisation of the Corporation"
Abstract:
The aim of this paper is to examine the attitudes, among financial managers in listed Swedish companies, towards the implementation of the IASB’s standards in Sweden from 2005. Furthermore we will analyse if there is a significant connection between attitude towards the implementation of the IASB’s standards and the internationalisation of the company. The overall results show that the financial managers among Swedish listed companies are cautiously positive towards the implementation of the IASB’s standards. The study also shows that there is a significant connection between extent of internationalisation and attitude towards the implementation of the IASB’s standards.
Karen Van Peursem and Lela D. Kitty Pumphrey, "Internal Auditors and Indpendence: An Agency Lens on Corporate Practice"
Abstract:
This paper draws on relational governance and agency theory to evaluate the relationships between internal auditors and work associates. This is an important topic because the internal auditor is expected to monitor and report on information quality and their relationships within the organisation may or may not contribute to this purpose. The method employed was to analyse speech acts from interviews with practising, senior internal auditors. Findings indicate that the internal auditor acts as an 'agent' and ‘monitor’ for a variety of issues and to various ‘principals’, and that there is a risk that a conflation of roles between the internal auditor and senior management could occur. Conclusions are drawn as to the implications of these dilemmas for their independence. We also conclude with suggestions for further research including replication in other contexts and quantitative studies to explore the effects of gender, regulatory differences, age of audit division and experience.
Professional comments
Dean Ardern and Robert Keys, "The IASB’s Research Project on Intangible Assets and Goodwill led by the AASB"
Abstract:
In October 2002, the IASB asked the AASB to take responsibility for a broad and long-term research project on intangible assets and goodwill. The project is, with some exceptions, a comprehensive project comprising two interrelated phases to be undertaken sequentially: (1) accounting for internally generated intangible assets, internally generated goodwill and separately purchased intangible assets; and (2) accounting for intangible assets and goodwill acquired in a business combination. Phase 2 will involve a post-implementation review of the intangible asset and goodwill aspects of IFRS 3 Business Combinations, and the amendments to IAS 36 Impairment of Assets and IAS 38 Intangible Assets that give effect to IFRS 3. Prior studies have indicated that reliable measurement poses a significant impediment to the recognition, measurement and remeasurement of intangible assets. Consequently, a major emphasis of the project will be on issues relating to reliable measurement. This paper outlines the project and reports on the initial stages of the project work.
Glenn Brady, "The IASB’s Research Project on Extractive Activities led by the AASB"
Abstract:
In April 2004, the IASB approved a project plan for a team of national standard setters led by the AASB to undertake a long-term research project on the extractive industries. With the adoption of IFRSs in Australia, the role of the AASB in research projects is an important way in which Australia can influence the deliberations of the IASB. This paper outlines the project and reports on the initial stages of the project work.
John Goodwin, "The History of Earnings Restatement Accounting Practice in Australia: A Note"
Abstract:
The accounting treatment of prior-period adjustments has changed more than once over the past few decades. Earnings restatements are changes to prior-period net profit from revenues and expenses that should have been reported in that period. Given the recent interest in earnings restatements in the U.S. and in International Accounting Standards, this note describes the accounting treatment of prior-period adjustments to earnings. This note has been expedited by the recent changes in Australian accounting standards on this issue.
Ahmad Hamidi-Ravari, "The IASB’s Research Project on Joint Ventures led by the AASB"
Abstract:
In April 2003, the IASB asked the AASB to take responsibility for a broad and long-term research project on joint venture arrangements. With the adoption of IFRSs in Australia, the role of the AASB in research projects is an important way in which Australia can influence the deliberations of the IASB. The joint ventures research project has the added feature of helping to enhance cooperation with other standard setters in the region with a view to influencing such deliberations from a regional perspective. This paper outlines the project and reports on the initial stages of the project work.
Phil Hancock, "Future of the Urgent Issues Group in Australia"
Abstract:
In November 2005 the Australian Accounting Standards Board (AASB) issued an Invitation to Comment (ITC) on a Proposed Interpretations Model for Australian Accounting Standards with a closing date of 18 January 2006. The proposed model recommends the abolition of the Urgent Issues Group (UIG), with the interpretations role assumed by the AASB. In this editorial note, it is contended that to disband the UIG before resolving the roles and functions of the AASB in the new environment would be premature. Instead, the current UIG structure should be retained and a review of both the AASB and the UIG undertaken in the post 2005 environment.
FRRaG: The electronic journal of the Accounting Standards Interest Group of AFAANZ, hosted by the School of Accounting, Curtin Business School