Accounting Faculty Research and Publications

Does the Board of Directors’ Risk Oversight Disclosure Influence Novice Investors’ Risk Assessments and Decisions?

Ikseon Suh — Thu, 17 Jan 2013 07:27:56 PST

The Effects of Disclosure Type and Audit Committee Expertise on Chief Audit Executives’ Tolerance for Financial Misstatements

Carolyn S. Norman et al. — Wed, 05 Sep 2012 13:55:53 PDT

This study involves an experiment where 73 Chief Audit Executives and deputy Chief Audit Executives determine the amount of adjustment required to correct a misstatement. We manipulate the financial reporting location of the misstatement (recognized vs. disclosed) and the level of audit committee expertise (high vs. low). The results indicate that financial reporting location has significant effects on internal auditors’ decisions to correct misstatements. Specifically, internal auditors are more willing to waive disclosed misstatements relative to recognized misstatements. Contrary to expectations, the results do not indicate that increased audit committee expertise and associated increases in audit committee members’ perceived powers cause internal auditors to be less willing to waive misstatements.

Ex Ante Severance Agreements and Timely Disclosures of Bad News

Qianhua Ling — Fri, 31 Aug 2012 08:54:39 PDT

This study explores the puzzle of CEO severance agreements by examining the association between the existence of ex ante severance agreements and the timeliness of bad news disclosures. Classifying severance agreements by type and the way boards grant them, this article documents a positive association between the timeliness of bad news disclosures and the existence of an ex ante single-trigger severance agreement, especially when it is granted alone. This association remains positive in the CEO’s last year of tenure where performance is poor. Further analyses show that this association is stronger among CEOs with a high-variable pay structure than among CEOs with a low-variable pay structure. These results suggest that an ex ante single-trigger severance agreement may play a role in forming timely disclosures of bad news and that paring it with a high-variable pay structure enhances the chance of its success.

Implications of Being a Highly Rated Organization: Evidence from Four-Star Rated Nonprofits

Qianhua Ling et al. — Fri, 31 Aug 2012 08:36:07 PDT

This study examines a group of nonprofits rated four stars by Charity Navigator. The purpose is to determine whether this select group of charities exhibits characteristics associated with top charitable organizations, or whether the four-star rating achieved is limited to the more narrow financial metrics employed in the methodology utilized by Charity Navigator. This study finds that organizations rated four stars by Charity Navigator show a lower level of excess cash holdings, report a lower level of compensation expenses and exhibit lower sensitivity of compensation to performance. Financially, these organizations are less vulnerable than their lower rated peers. The results from this study shed light on the continuing debate of the effectiveness of rating agencies to accurately identify top performing charitable organizations.

Section 382: Recent Developments And The New Poison Pill

Suzanne Baierl et al. — Wed, 15 Aug 2012 13:00:12 PDT

Firms that sustain net operating losses (NOL) over several consecutive years often have little chance of generating profits in the future that can be used to offset these losses. Without the Code's anti-avoidance provisions, such as Section 382, investors could pursue an aggressive tax planning strategy of investing in a loss company solely to avoid taxes by exploiting the company's NOL carry forward. The recent government bailouts of ailing firms prompted the IRS to issue notices explaining how Section 382 applies in situations where the US government becomes an owner of loss companies. This article discusses the current and future implications of the IRS notices, the recently enacted Section 382(n), and the new 5% Poison pill. These developments, along with the growing prevalence of 5% poison pills and how to account for fluctuations in fair market value, will increase corporate scrutiny of tax positions having Section 382 implications.

Personal Values Profiles and Value Types of the Most Influential People in Accounting

Don Giacomino et al. — Thu, 09 Aug 2012 12:59:59 PDT

This chapter reports on the results of a study of values of the most influential people in accounting. The study measures the personal values and value types of people included in the 100 most influential people in accounting in Accounting Today and managing partners in the largest 100 public accounting firms.

We also compare the results of our study with those of a study of exemplary physicians' values. Both studies found that the influential accountants and exemplary physicians rate Power and Influence very low among their personal values.

We also compared our study with other studies that we have conducted on personal values of accounting, students, business students, Big 6 accountants and Japanese managers. The value types of the various groups surveyed show high agreement, with the exception of the Japanese managers group. All groups in our survey, however, ranked Achievement and Benevolence among the ten value types - near the top of their lists, while they ranked Tradition and Power near the bottom of their lists.

Designing and Implementing an Accounting Assessment Program

Michael Akers et al. — Thu, 26 Jul 2012 13:30:06 PDT

The Accounting Department at Marquette University responded to the desire to improve processes and to external pressures by designing and implementing an assessment program. The selection and involvement of the assessment team, the development of the 6 intended student outcomes, the establishment of the quantifiable goals, the development of the measurement tools used to evaluate the goals, and the identification of mechanisms used to provide feedback are examined. Results of the implementation indicate that improvement is needed in the following areas: oral communication skills, business writing skills, and microcomputer skills.

Free Up Funds for Estate Expenses with Section 303 Redemptions

Robert M. Kozub et al. — Thu, 26 Jul 2012 11:18:49 PDT

Generally, proceeds received by shareholders for a corporation's redemption of its own stock are dividends, taxed under the principles established by Section 301. Therefore, whether a corporation distributes cash or property, the distribution is not deductible by the corporation and is ordinary income to the shareholder to the extent of the corporation's earnings and profits. Sections 302(b) and 303 provide 5 important exceptions to the general rule. These exceptions allow the cash or other property received by the shareholder whose stock is being redeemed possibly to qualify as the proceeds from the sale or exchange of property.

An Examination of the Differences Between Personal Values and Value Types of Female and Male Accounting and Nonaccounting Majors

Michael Akers et al. — Tue, 17 Jul 2012 14:02:06 PDT

Research has shown that a person's values affect his or her behavior. While there has been considerable research regarding the ethical perceptions and behavior of business students, there has been limited research regarding the personal values that affect such perceptions and behavior. This study was designed to determine the differences between values and value types of accounting and nonaccounting majors, as well as differences between values and value types of males and females. The values survey questionnaire developed and validated by Schwartz (1992) was used for this study. The instrument, containing 56 values, was administered to business students in three upper-division courses at a private, Jesuit, Catholic university in the Midwest. Value types were derived by grouping responses to the 56 values. Results of the study show there are significant differences between accounting and nonaccounting majors for 13 values (Inner Harmony, Choosing Own Goals, Independent, Enjoying Life, An Exciting Life, A Varied Life, Curious, Self-Discipline, Creativity, Influential, National Security, Social Recognition, Daring), and for five of ten value types (Achievement, Hedonism, Power, Self- Direction, Stimulating). Significant differences exist between responses of females and males for nine values (Ambitious, Sense of Belonging, Broadminded, Politeness, Self-Discipline, Authority, Reciprocation of Favors, A World at Peace, Social Power) and two value types (Conformity, Power). The interaction between gender and major was also examined. By major there were more differences between females than between males, and by gender there were more differences between accounting majors than nonaccounting majors. An understanding of students' values and their value types is beneficial to administrators, educators and businesses. Specifically, the findings of this study can be used to enhance recruiting, retention, scheduling, teaching and training of students and business professionals.

The New Governmental Reporting Model: Is It a Field of Dreams?

Robert Yahr et al. — Fri, 15 Jun 2012 13:48:21 PDT

Tax Rate Predictions Affect Roth vs. Traditional IRA Choice

Lloyd Doney et al. — Wed, 02 May 2012 11:16:56 PDT

An Effective and Efficient Analytic Technique: A Bootstrap Regression Procedure and Benford's Law

Ikseon Suh et al. — Tue, 10 Apr 2012 09:37:15 PDT

Disclosure and Cross-listing: Evidence from Asia-Pacific Firms

Li Li Eng et al. — Thu, 15 Mar 2012 10:45:41 PDT

Purpose – The purpose of this paper is to examine whether both country disclosure environment and firm-level disclosures are associated with cross-listing in the USA or London or otherwise.

Design/methodology/approach – The authors test the association using a sample of Asia-Pacific firms covered in the Standard and Poor's, 2001/2002 disclosure survey, capturing the country-level disclosure using the Center for International Financial Analysis and Research (CIFAR) score. The firm-level disclosure is measured using the S&P disclosure score. The authors conduct a logistic regression analysis and a two-stage least squares analysis to examine whether the outcome, cross-listing or not, is associated with the country disclosure environment and firm-level disclosures.

Findings – The authors find that Asia-Pacific firms from weak disclosure environments and having higher firm-level disclosure scores are more likely to seek listing in the USA. Further, the paper provides initial evidence that these Asia-Pacific firms are as likely to seek listing in London as in the USA. No significant difference was found in S&P scores between US and London cross-listings after controlling for the effects of other variables. This suggests that firms that cross-list in London present similar disclosure levels to firms that cross-list in the USA.

Originality/value – The paper's findings contribute to the cross-listing literature on disclosure by showing that the interaction between firm-level disclosure and country-level disclosure has an impact on whether a firm cross-lists in the USA/London or not. The authors' comparison of US cross-listings versus London cross-listings provides the first evidence that disclosures of US and London cross-listings are not significantly different.

Information Systems Content in the CMA Examination

Michael Akers et al. — Tue, 28 Feb 2012 10:53:20 PST

This study examines 12 recent CMA exams administered from June 1987 through December 1992 to determine the extent of information systems (IS) coverage. We evaluated each exam using a definition of IS knowledge and skills from the common body of knowledge developed by the Institute of Management Accountants (IMA). The results of the study indicate that the IMA has recognized the importance of IS knowledge, as evidenced by the extent of exam coverage and the relevance of the items tested. Because information systems courses are included in a model curriculum recommended by the IMA, the results of this study may be useful to accounting faculty in designing accounting systems courses.

Environmental Auditing: An Examination of Internal Audit Involvement

Michael Akers et al. — Tue, 21 Feb 2012 11:31:24 PST

The Statement of Responsibilities of Internal Auditing clearly indicates that environmental audits and risk assessment of environmental issues are within the scope of internal auditing. The problem is that most internal auditors have limited technical background with respect to environmental issues. According to a recent survey, almost all companies are conducting environmental audits. The companies are conducting these because of the need to monitor compliance with regulator authorities, and because of the recognition of the increased risks associated with environmental issues and the potential for liability. The majority of companies responding to the survey have technically oriented departments conduct environmental audits.

Personal Values of Certified Internal Auditors

Michael Akers et al. — Mon, 20 Feb 2012 14:21:13 PST

Internal auditors are being asked to assist in the development of codes of conduct and to audit ethical compliance and thus are expected to adhere to strict standards of behavior. It is, therefore, important for the Institute of Internal Auditors and other organizations to understand the personal values that underlie behavior in order to determine whether internal auditors' values are consistent with the Standards of Conduct. This article reports the results of a study, which focuses on the personal values of certified internal auditors. The study's main purpose is to determine if the personal values and value systems of CIAs are consistent with the values implied or explicitly stated in the Institute of Internal Auditors Standards of Conduct. More specifically, the study attempts to determine if values and value systems differ among CIAs regarding gender and age groups, and compares CIAs' values with other professional accountants' values.

Internal Audit's Role in Systems Development: The CEO's Perspective

Meredith Maher et al. — Thu, 16 Feb 2012 14:58:43 PST

For the past 30 years, the development of the role and management's expectations of the internal audit function as related to information technology has been an evolutionary process. A sample of CEOs were surveyed to ascertain their opinions on internal audit's involvement in systems development, including whether internal auditors' independence is compromised by such involvement and whether auditors should act as consultants for systems development projects. The prevailing sentiment among the CEO respondents was that internal auditors should be involved primarily in testing the accuracy of the systems being developed. A comparison of CEOS' and chief audit executives' opinions shows, surprisingly, that the CEOs surveyed placed more importance on auditor independence than the audit executives, who emphasized the importance of auditors' consulting services.

An Examination of Management Accountants’ Use and Perception of Expert Systems

Michael Akers et al. — Tue, 14 Feb 2012 10:01:45 PST

Although there has been a number of articles written about the possible use of expert systems by management accountants, there has been limited research to support such predictions. The primary purposes of this paper are to examine management accoun-tants’ use and perceptions of expert systems. A survey instrument was designed to eli-cit responses (Likert scale and open-ended) about management accountants' perceptions of the current and future use of expert systems and to determine their knowledge, interest and involvement with such systems. The findings of this study indicate that although respondents are moderately interested and involved with expert systems, they have a limited knowledge of those systems. The respondents do agree that expert systems will be utilized more in the future, and that management accountants will be involved in the development and use of expert systems. Expert systems will be utilized to reduce inventories and improve productivity. The respondents, however, do not agree that expert systems are currently used for the management accounting applications used in this study. Also, their expectations regarding the current and future use of expert systems are significantly different. Expectations of the future use of expert system can be found in management accounting literature over the past fifteen years. The findings of this study indicate prior expectations have not materialized.

Formation and Consequences of Going Conern Opinions: A Review of the Literature

Jodi Gissel — Tue, 13 Dec 2011 10:09:52 PST

Your EQ Skills: Got What it Takes?

Michael Akers — Wed, 09 Nov 2011 07:38:38 PST

Your EQ skills: got what it takes? So you thought the CPA exam was your last test? Read on.

Question: Is success in life and career determined primarily by rational intelligence (the IQ or intelligence quotient) or emotional intelligence (the EQ or emotional quotient)? In other words, what's more important: intelligence or intuition? Historically the professional accounting literature has placed little emphasis on behavioral issues such as EQ, although human behavior underlies most of what is written and taught about professional accounting. Now managers place increased value on behavioral skills that help people in the workplace. Look at this statistic: The productivity of one-third of American workers is measured by how they add value to information. Doesn't that describe CPAs exactly? This article will examine the ways in which EQ is crucial to CPAs' success and how they can cultivate EQ if they haven't got a lot of it.

The AICPA and the Institute of Management Accountants recognize that emotional intelligence skills are critical for the success of the accounting profession. In CPA Vision 2011 and Beyond: Focus on the Horizon (www.cpavision.org), the AICPA identifies emotional ...