Accounting Irregularities Research Articles

Evaluation navigation controlled gate of aging spillway on cavitation damage.

High-speed flow of clean water or water with sediment released from aging spillways may cause abrasion and cavitation on the concrete surface gradually. The occurrence of irregularities on the concrete surface can exacerbate the erosion problem. Which might jeopardize the safety of dams constantly, hence the rehabilitation efforts become urgent tasks in dam safety projects. This study employs a 3D Computational Fluid Dynamics (CFD) model to quantitatively analyze the cavitation risk on the aging concrete surface of the Chay 5 spillway in Ha Giang, Vietnam, under various operation scenarios. There are two standards used to measure cavitation: the cavitation index (σ) which indicates the danger due to the drop of pressure in rapid flow, and the new gasification index (β) which takes into consideration the formation and collapse of bubbles behind asperities. Three extreme flood cases may not result in potential cavitation because both σ and β exceed critical thresholds. Regarding the six controlled gate scenarios with normal water level, the σ profiles are approximated 1,0 showing a low likelihood of cavitation damage while the β values are smaller than 0.8, indicating a considerable risk of cavitation. Besides, the opening height of 100 cm poses the greatest risk of creating severe cavitation erosion in the concave area and slope portion. The flip bucket experienced the most vulnerable cavitation when the opening height is 400 cm. In addition, an approach to spillway surface rehabilitation involving specialized mortars has been presented. For aging conveyance structure, gasification index (β) takes into account irregularities surface, providing a more comprehensive assessment of the likelihood of cavitation damage than cavitation index (σ). After rehabilitation with anti-shrinkage high abrasion resistance mortar, the entire spillway surface is smooth. This allows for reducing the cavitation risk and improvement of life service thereof.

Uma via para a legitimidade: o caso das denúncias de fraude na Via Varejo

This teaching case addresses the history of Via Varejo S.A. which received reports of fraud and accounting irregularities at the end of 2019. The company appointed an investigation committee to conduct an independent and detailed analysis which found indications of fraud such as the manipulation of labor provisions, undue delays in writing off assets and accounting for liabilities; and failures in internal controls that could have resulted in material errors in the company’s accounts. The impact was approximately 1.19 billion reais, which fully recognized in their 2019 financial statements and the reexamination of previous periods was not deemed necessary. Considering this uncertain scenario, managers were faced with the following dilemma: how to behave in relation to society considering the findings of fraud? This teaching case is aimed at students in graduate majors in Administration and Accounting who want to study the assumptions of the Legitimacy Theory as well as analyze the actions of this company as strategies designed to maintain or recover its legitimacy.

ОБОСНОВАНИЕ РАЦИОНАЛЬНОЙ КОНСТРУКЦИИ СКОЛЬЗУНОВ ТЕЛЕЖКИ ПАССАЖИРСКОГО ВАГОНА

At the first stage, a detailed dynamic solid-state model of a passenger car is developed which has a bolsterless truck. The dynamic model is a system of absolutely rigid bodies interconnected by elastically dissipative linear and nonlinear force elements, hinges and contact forces. The adequacy of the car dynamic model and the reliability of the results obtained are evaluated the results of running tests. Based on the developed solid-state dynamic model, a comprehensive study of the effect of the friction factor on the guide block support surfaces on the safety and dynamic performance of a passenger car under various modes of movement along the track, taking into account irregularities is carried out. As a result of modeling, a range of rational values of friction moments on the support guide blocks is obtained. The composition of the composite material for the support surfaces of the truck guide blocks is selected using neurocomputer modeling methods, the manufacture of the proposed composite material is tested, experimental studies of the characteristics of composite elements confirming their properties and safety were carried out.

Effects of Corporate Governance on Creative Accounting Practices: Evidence from NSE-listed Companies in India

This paper investigates the effects of corporate governance on creative accounting practice in Indian NSE-listed public companies. To get insights and analysis of how mitigating effects of governance issues can impact creative accounting practices, a specific set of factors is identified and the multistage technique design is employed to collect samples of 51 companies with 255 firm-year observations for the years 2017–2021. The value of discretionary accrual as estimated using the modified Jones model. The panel data are used for analysis and testing the hypothesis with the help of Stata 15 version statistical software. The results of this study demonstrated that only audit independence has a considerable negative influence on creative accounting practice, indicating that increasing the number of audit independence could reduce unethical accounting manipulation in financial reporting practice. The paper digs further and provides additional details that the board size, return on asset and firm growth significantly appears under a flag of positive creative accounting practices. In contrast, the board’s independence, audit committee, firm size and leverage have no such influence on creative accounting practice. The study also recommends that companies should have an independent audit committee, so as to minimise the accounting irregularities in financial reports.

A study on the discretionary acts of local government and local government heads: focusing on accounting irregularity

ABSTRACT This study examines the relationship between allowances for bad debts in connection with tax and budget accounting irregularity. In particular, we tried to verify the relationship between the provision of distorted financial accounting information and the occurrence of budget accounting misconduct in pursuit of political benefits by theoretical discussion and empirical analysis. We collected the panel datasets for the period 2008 to 2012 from local governments in South Korea. The logistic regression confirmed the tendency in local governments of avoiding the detection of budget-related irregularity through the act of setting the allowance ratio for bad debts for tax. This can be highlighted as a problem, in that there is a discretionary portion in setting the ratio of the allowance for bad debts for tax and a lack of control of the distortion between the information on the budget accounting irregularity and the information in the financial accounting settlement.

Unraveling Financial Fraud: The Role of the Board of Directors and External Advisors in Conducting Independent Internal Investigations*

ABSTRACTAlthough firms are encouraged by the SEC and Department of Justice to conduct internal investigations following financial misconduct, prior research finds few benefits for investigating firms. This study examines a novel aspect of internal investigations—namely, whether the investigation is conducted by independent versus nonindependent teams—and explores the impact of these teams on investigation outcomes. Consistent with our predictions, we find that firms whose internal investigations are led by independent teams are more likely to retain external advisors, have a higher likelihood of CEO turnover, and face a lower likelihood of an SEC enforcement action than do firms whose investigations are led by nonindependent teams. Our findings demonstrate that the SEC grants enforcement leniency to firms that conduct an internal investigation, but this finding only holds when the investigation leader is considered independent. These results also suggest that appointing independent groups to lead internal investigations protects the firm, at the expense of the CEO, following accounting fraud. Our paper has important implications for researchers studying accounting irregularities as we are the first to show that independent board members and external advisors play a direct role in the resolution of financial misconduct through their job on the internal investigation team.

Does Executive Compensation Affect Accounting Irregularities? Evidence From Listed Firms in Indonesia

This research examined the association between executive compensation and accounting irregularities in Indonesia. Employing 1,100 firm-year observations during 2014 to 2017 period, we found that executive compensation is positively associated with accounting irregularities. This result is robust after we mitigated a serial order correlation of accounting irregularities and a self-selection bias using propensity score matching. We also discovered a positive relationship after considering alternative measures of accounting irregularities. Furthermore, we documented that the positive association between executive compensation and accounting irregularities is stronger for firms with higher board independence. Our findings provide important insights for regulators and Asian emerging market regulators who are considering promoting equity incentives for listed firms.

Do Narcissistic CEOs Affect Accounting Irregularities? Evidence from Indonesia

Narcissism is related to the need for recognition. Prior studies show that narcissist behavior may influence the CEO's actions engaged in accounting numbers manipulations. This study examines the effect of CEO narcissism on accounting irregularities in Indonesia. Indonesia provides a unique setting to test this issue because narcissistic behavior is an uncommon trait in the country. Consequently, it may influence the motivation of narcissistic CEO to manipulate accounting numbers. We test the issue by measuring CEO narcissism with the characteristics of CEO's photo on the annual report. We then conduct a simple logistic regression on that proxy to the Beneish M-Score as our accounting irregularities measure. In accordance with our expectations, we find no evidence of an association between CEO narcissism and accounting irregularities. This may attribute to the fact that Indonesia's social and cultural aspects lower the incentives for individuals, including CEOs, to engage in narcissistic behavior, thereby decreasing their motivation to use accounting numbers as a venue to get attention and recognition. Interestingly, this study discovered a significant negative relationship between CEO narcissism and accounting irregularities for firms audited by BIG4 auditors. This may indicate that BIG4 auditors can significantly mitigate the intentions and activities of narcissistic CEOs in manipulating accounting numbers to get better publicity.

К вопросу о построении имитационных моделей перевозочных процессов в программной среде Anylogic

An extended section of the railway line was chosen as the subject of the researching. The section under consideration is a set of separate points for various purposes: intermediate, cargo, precinct and marshalling stations. This structure is a system of interacting elements. The purpose of the research is to create a method for identifying factors that affect the throughput of the railway section, and the formation of a set of recommendations to minimize the impact of these factors on the implementation of transportation processes. The main tool for conducting research is simulation modeling, which makes it possible to represent the area under consideration as a system consisting of several elements. Each element has its own set of properties that directly affect the system as a whole. The main results of the research include the construction of a simulation model of transport processes on the considered section of the railway line. On the basis of the generated model, the possibilities of assessing changes in the traffic flow passing through this section are considered, taking into account all the key elements of the transportation process. These include the type of train, the number of cars in the composition, the speed of movement, travel times, etc. The obtained results can be applied when conducting a comprehensive assessment of the functioning of existing railway lines. Also, based on the data obtained, it is possible to create a database, the content of which will be a data array that takes into account irregularities, failures of technical devices, and the occurrence of emergency situations. Based on the research, a method is proposed for estimating the throughput of an extended section of a railway line using a specialized Anylogic application package.

Etalon for Nanometrology Produced by Anisotropic Etching

Possibilities and results of using relief structures produced by anisotropic etching as etalons for linear measurements in nanorange are discussed. Two types of the structures with different profiles and with two approaches to estimation of influence of its sophistication degree on measurement results are considered. Analyze of methods and means of measurements of its geometric parameters and comparison of uncertainness of measurement results are conducted. The important condition for diminishing the measurements uncertainness is taking into account irregularities of a sample surface. These irregularities were evaluated by TEM and CD-AFM. Results of harnessing these types of structures are different also. The bureau International des Poids et Mesures recommended the structure with rectangular profile and its attestation procedure as an example for all national committees on linewidth metrology in nanorange. The structure with trapezoid profile that induced hopes for decision of basic tasks of nanometrology in past is occurred to be poorly in demand even on national scale.

Annual report readability and accounting irregularities: evidence from public listed companies in Indonesia

PurposeThis study aims to examine the association between annual report readability and accounting irregularities in Indonesia. Using 967 firm-year observations over the 2014–2017 period, this paper unable to find evidence that annual report readability is associated with accounting irregularities. The results are robust after using alternate measurements of accounting irregularities proxies and readability indexes. This paper also finds that the corporate governance mechanism and foreign shareholder structure did not moderate the association between annual report readability and accounting irregularities.Design/methodology/approachThe study uses an archival method with cross-sectional regression of 967 firm-year observations over the 2014–2017 period to investigate an association between annual report readability and accounting irregularities in an emerging market setting. To check the robustness of the results, this paper conducts a battery of robustness tests.FindingsThis paper finds evidence that annual report readability is not associated with accounting irregularities in Indonesia. The results are robust after using alternate measurements of accounting irregularities proxies and readability indexes. This paper also finds that the corporate governance mechanism and foreign shareholder structure did not moderate the association between annual report readability and accounting irregularities. This implies that the readability of annual reports does not have the ability to predict the likelihood of accounting irregularities in Indonesia. It is possible that firms with accounting irregularities will be inclined to voice simpler stories which can counteract the tendency of lies to be linguistically more complex. Indeed, according to the Education First English Proficiency Index, Indonesia is categorized at a low proficiency level. Furthermore, this paper also discovers that the average readability of the management discussion and analysis (MD&A) of Indonesian public listed firms is at an ideal score by having a Fog Index of 13.32. The findings provide valuable insights for stakeholders in using annual reports for their decision-making, especially in an emerging market setting and non-English speaking countries.Research limitations/implicationsIt is important to interpret the findings in the context of the limitations of the readability index the authors used. It is argued that Fog Index, Flesch-Kincaid and Flesch Reading Ease have their own limitations as considered inadequate to be used in the context of business and accounting narratives that are adult-oriented and specialist in nature (Jones and Shoemaker, 1994; Loughran and McDonald, 2014). Another caveat relates to the use of proxies for accounting irregularities. The M-Score and F-Score have some limitations in which, among others, were determined without considering the normal level of accruals or period where manipulations were absent (Ball, 2013).Practical implicationsOne reason underlying the result is that Indonesian firms, in general, do not consider the complexity of the annual report, particularly MD&A disclosures, as a tool to mask financial reporting irregularities. It is also possible that firms with accounting irregularities will incline to voice simpler stories because it is difficult to be untruthful (Lo et al., 2017). Indeed, according to Education First English Proficiency Index, Indonesia was categorized in low proficiency level and ranked 61st out of 100 countries being surveyed (Education First, 2019). As policymakers, locally and globally, are calling for more simplified reports including a plain English approach, the study can be insightful to their deliberations. It suggests that policymakers need to consider a country’s English proficiency, writing skills, regulatory environment and corporate policy on shaping the complexity and narrative of a firm’s communications.Originality/valueThe study contributes to a scarcity of research that investigates English-written annual reports in non-English speaking countries (Jeanjean et al., 2015; Lundholm et al., 2014). As such, the study findings provide insights related to MD&A in an under-researched area and contribute to improving MD&A not only in Indonesia but also in neighbor countries that share similar social, political and economic characteristics. Also, this study is important for foreign institutions or individuals investing on Indonesian-listed firms. According to Candra (2016), approximately 60% of companies listed in the Indonesia stock exchange are owned by foreign individuals or institutions. They rely greatly on the English texts of annual reports to understand the companies’ financial performance. Moreover, La Porta et al. (2002) asserted that firms with a majority of foreign shareholders (dominantly owned by foreign investors) are more likely to face information asymmetry, primarily due to geographical factors and language barriers.

Executive Ethics and Accounting Irregularities

Executive Ethics and Accounting Irregularities

The Price of Being Foreign: Stock Market Penalties Associated with Accounting Irregularities for U.S.‐Listed Foreign Firms

ABSTRACTWe examine the stock market consequences of disclosing accounting irregularities for U.S.‐listed foreign firms. After controlling for the severity of the irregularity and other firm characteristics, we find that foreign firms experience significantly more negative short‐window stock market reactions following irregularity announcements than do U.S. firms. Moreover, for a subsample of 64 irregularities of foreign firms that are listed on both a U.S. and home country stock exchange, we find evidence that restating firms' U.S. investors react more negatively to the same irregularity than their home country investors. This differential market reaction appears related to firm‐specific information risks that are greater for foreign firms than U.S. firms. Collectively, consistent with the reputational bonding hypothesis in prior literature, our results suggest that accounting irregularities cause U.S. investors to reassess the information risk associated with foreign firms.

Study of operation of natural draft cooling tower, with its hydraulic load reduced

A survey has been held of a BG-2600 natural draft cooling tower of thermal power plants, in the reduced hydraulic load mode. The technical condition of the reinforced concrete tower, the skeleton frame, the irrigation device, the water distribution system and the air duct windows has been inspected. Defects of the cooling tower structural elements have been identified. These include: horizontal sagging of the irrigation device, considerable gaps between its blocks and their partial destruction, problems with nozzles and structures of air duct windows. The identified defects are attributed to the causes of irregular water and air flows. The degree of irregularity of irrigation density and air flow in the tower has been estimated. Over the cross-section of the tower, a significant standard deviation from the average value or irregularity of irrigation density (30%) and irregularity of air flow (23.5%) has been established. The temperature and cooling curves of the cooling tower have been plotted taking into account irregularities of irrigation density and air flow rate. Normal and defective sections of the cooling tower have been identified based on working characteristics. Standard characteristics of the BG-2600 cooling tower have been plotted based on a nomogram. A comparative analysis of the working and standard characteristics has been held. The degree of influence produced by irregularities in water and air flows on the cooling process has been established. It has been found that the established irregularities in water and air flows result in a decrease in the temperature difference on average by 2°C and a decrease of cooling capacity by 7.3 Mcal/m2∙hr with a hydraulic load of 8840 m3/h. The results indicate a significant impact produced by irregularities of flows on cooling effect. The tasks to eliminate irregularities in distribution of flows as well as to increase the tower cooling efficiency have been formulated.

Development of the method operative calculation the recurrent diagrams for non-regular measurements

Researchers widely use methods for calculation of recurrence plots based on measurement of dynamics of a vector of states in a phase space for visual and quantitative analysis of the behavior of complex dynamic systems in various fields. Such methods have high potential capabilities. However, one cannot use them directly for the operative calculation of recurrence plots at the real speed of measurements of a vector of states, taking into account irregularity of measurements. One of the reasons is the lack of a method, which would be capable of operative and reliable mapping of recurrence states of real systems in recurrence plots at irregular measurements of a vector of states.We propose a method for the operative calculation of recurrence plots at irregular measurements. Its base is a scientific analysis of reasons for low reliability and impossibility of an operative calculation of recurrence plots, as well as search and substantiation of constructive methods for their elimination. Such methods include: current calculation of recurrence plots; improvement of a phase space by introduction of an operation of scalar product for vectors of states; adaptation of a recurrence threshold to measurement results. The base of a process of the current calculation of recurrence plots is a use of only current and previous measurements of a vector of states of the system. It is possible to reconcile two key factors of low reliability of mapping of recurrence states in diagrams related to uncertainty of a norm and a threshold of recurrence in the proposed improved phase space.The above has made possible to propose a threshold adaptation method for conical regions of recurrence. It has been proposed to use two adaptive thresholds with different angular parameters of recurrence cones in the calculation to ensure reliable mapping of recurrence states in diagrams under conditions of irregular measurement of a vector of states. We confirmed the operability of the proposed operative method for calculation of recurrence plots and illustrated it by an example with irregular measurements of the real dynamics of a vector of states of dangerous pollution in the urban atmosphere

Falls from a height at construction sites caused by incorrect use of collective protection measures

This article presents an analysis of accidents caused by falls from a height examined by the National Labour Inspectorate in 2013-2017. Accidents have been analyzed taking into account irregularities related to the use of collective protection measures. 121 events, which had occurred due to the lack or non-use of collective protection measures, were selected for detailed study. The article discusses 10 typical worksites and selected activities performed when accidents took place. It presents a statistical analysis of accidents caused by various irregularities in the use of collective protection measures and it presents descriptions of selected events. Using collective protection measures against falls from a height in the construction industry is an effective preventive technical solution, which does not physically burden workers and does not cause their discomfort at work. Therefore, legal provisions give them priority over personal protective equipment.

The Impact of Audit Employee Job Satisfaction on Audit Quality

I exploit a novel office-level dataset on employee job satisfaction from Glassdoor.com and a natural experiment based on local precipitation during the auditing time period to examine the effect of audit employee job satisfaction on audit quality. I find that a unit increase in job satisfaction (on a scale from 1 to 5) decreases absolute abnormal accruals by 0.7 standard deviations. Using AAERs, “Big R” and “Little r” restatements, I find that more satisfied audit employees are more likely to detect significant accounting irregularities, but not minor accounting errors. Among job satisfaction indicators, these effects are driven by management quality and career opportunities. Overall, this evidence demonstrates the importance of individual audit employees to the audit process and has practical implications for audit firms’ treatment of employees and audited firms’ information environment.

Corporate governance failure at Ricoh India: rebuilding lost trust

Subject area The case “Corporate Governance Failure at Ricoh India: Rebuilding Lost Trust” discusses the series of events post disclosure of falsification of the accounts and violation of accounting principles, leading to a loss of INR 11.23bn for the company, eroding over 75 per cent of its market cap (Financial Express, 2016). The case provides an opportunity for students to understand the key components of corporate governance structure and consequences of poor corporate governance. The case highlights the responsibility of the board of directors, audit committee and external auditors and discusses the changes required in the corporate governance structure necessary to ensure that such incidents do not take place. The case also delves into the classic dilemma of degree of control that needs to be exercised by the parent over its subsidiaries and freedom of independence given to the subsidiary board, which is a constant challenge all multinationals face. Such a dilemma often leads to the challenge of creating appropriate corporate governance structures for numerous subsidiaries. Study level/applicability The case is intended for MBA courses on corporate governance, business ethics and also for the strategic management courses in the context of multinational corporations. The case can be used to develop an understanding of the essential of corporate governance with special focus on the role of the board of directors, audit committee and external auditors. The case highlights the consequences and cost of poor corporate governance. The case can also be used for highlighting governance challenges in the parent subsidiary relationship for multinational corporations. The case can be used for executive training purposes on corporate governance and leadership with special focus on business ethics. Case overview This case presents the challenges faced by the newly appointed Chairman Noboru Akahane of Ricoh India. In July 2016, Ricoh India, the Indian arm of Japanese firm Ricoh, admitted that the company’s accounts had been falsified and accounting principles violated, leading to a loss of INR 11.23 bn for the financial year 2016. The minority shareholders were agitating against the board of directors of Ricoh India and were also holding the parent company responsible for not safeguarding their interest. Over a period of 18 months, Ricoh India had been in the eye of a storm that involved delayed reporting of financials, auditor red flags regarding accounting irregularities, a forensic audit, suspension of top officials and a police complaint lodged by Ricoh India against its own officials. Akahane needed to ensure continuity of Ricoh India’s business and also act quickly and decisively to manage the crisis and ensure that these incidents did not recur in the future. Expected learning outcomes The case provides an opportunity for students to understand the key components of corporate governance structure and consequences of poor corporate governance. More specifically, the case addresses the following objectives: provide an overview of corporate governance structure; highlight the role of board of directors, audit committee and external auditors; appreciate the rationale behind mandatory auditor rotation; appreciate the consequences of poor corporate structure; explore the interrelationship between sustainability reporting and transparency in financial disclosures of a corporation; understand management and governance of subsidiaries by multinational companies; and understand the response to a crisis situation. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 11: Strategy.

The Effect of Information Opacity and Accounting Irregularities on Personal Lending Relationships: Evidence from Lender and Manager Co-Migration

ABSTRACT We examine how personal lending relationships between lenders and managers are affected by information and accounting environments of borrowing firms. We address this question by exploring whether, following managerial turnover, lenders migrate with the manager from the firm where a relationship developed (origin firm) to the manager's new firm (destination firm). We find that the opacity of the external information environment of the destination firm significantly increases the probability of lenders' co-migration, while accounting irregularities at both the destination and origin firms decrease it. We also show that co-migration is affected by a lender's monitoring efficiency. A lender's monitoring efficiency increases its co-migration probability when a manager moves to an opaque firm, but not when she moves to a transparent one. When the destination or origin firm experiences accounting irregularities, even lenders with strong monitoring capabilities are mostly reluctant to continue their relationship with a migrating manager.

The Effect of Restatement Detection Speed on Reporting Credibility

A primary goal of the regulatory reforms enacted around the implementation of the Sarbanes-Oxley Act (SOX) was to improve the credibility of financial reporting. While earnings restatements resulting from accounting issues damaged investor trust prior to the implementation of SOX, we hypothesize that quicker detection of restatements in the post-SOX era should dampen investors’ skepticism that accounting problems will have long-lasting effects on reporting credibility. This study documents that irregularity-related restatements were detected more quickly after SOX, which is consistent with greater attention paid to reporting quality and higher levels of audit scrutiny. The results also show that investors have modest credibility concerns regarding firms that announced irregularity-related restatements in the post-SOX era, as the decline in the information content of earnings is short-lived and contagion effects for industry-peer firms are limited. However, this study shows that changes in reporting credibility are influenced by how quickly restatements are discovered and disclosed, as the adverse credibility effects are confined to accounting irregularities that have lengthy detection periods. The evidence from this study highlights the importance of monitoring mechanisms for discovering and resolving accounting irregularities quickly, as the market does not seem to have significant suspicions about ongoing reporting credibility for such firms.