Canadian Accounting Research Articles

Commentary: The Canadian Accounting Hall of Fame—An Analysis of Early Inductees and Immanent Critique*,†

ABSTRACTThe Canadian Accounting Hall of Fame (CAHF) has inducted 31 members during its first three years of operation, with the stated intent of establishing a critical mass of inductees “who have made significant contributions to the development of the Canadian accounting profession” and of creating “a curated biographical history of accounting in Canada.” This paper provides an analysis of the group and an immanent critique of CAHF given its mandate and aspirations. It begins with a close reading of CAHF's public statement of intent and policies to clarify what it is committed to achieving and to identify ambiguities and contradictions within its mandate. The characteristics of the initial inductees are then compared with baselines reflecting CAHF's mandate and are used to identify how ambiguities are resolved in practice. The current members of CAHF overrepresent financial reporting and auditing (compared with other areas of accounting competence), academics (compared with those in practice/industry), the more populated provinces (compared with the Prairies and Atlantic region), Chartered Accountants (compared with other legacy designations), and men (compared with women). Current practice also reveals unresolved ambiguities in the definitions of “Canada,” “Canadian,” “contribution,” and “impact,” as well as an underdeveloped presentation of historical context and documentation to interpret the inductees' contributions. Best practices for “retrospective cultural consecration institutions” are identified in the literature and align with CAHF procedures. The paper also examines critical commentary on CAHF in the press and identifies areas where its mandate is challenged by public expectations of inductees.

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A Canadian Response to the Pursuit of Global Sustainability Reporting Standards*

ABSTRACTAs business, government, and society continue to emphasize the importance of sustainability—both of individual organizations and of the natural world—accounting standard‐setting bodies want to be part of the process. In September 2020, in response to “urgent and growing demand” for more “consistent and comparable” sustainability reporting, the IFRS Foundation (the Foundation) released for comment a Consultation Paper on Sustainability Reporting. In the paper, the Foundation proposed the creation of a Sustainability Standards Board (SSB), which it would oversee alongside the IASB. The SSB would become, de facto, the global sustainability reporting standard setter. The Foundation received 577 responses to its proposal. These responses came from around the world and from a wide range of stakeholders. Thirty‐eight of the responses came from Canada. This study profiles the Canadian responses, contrasting them with the wider set of worldwide responses. Some uniquely Canadian features include user responses from a large number of pension funds and preparer responses solely from the energy sector. There was also a significant response from the Canadian accounting community, including from the full set of Canadian standard‐setting organizations. Five auditors general also responded. Overall, Canadian respondents supported both globalized sustainability reporting standards and the Foundation's creation of the SSB. This support aligns Canada's response with the worldwide response.

A Canadian Perspective on Indigenous Peoples and Accounting Research: Using a Systematic Literature Review to Promote Inquiry and Inclusion*

ABSTRACTThis study uses a systematic literature review to explore academic research at the intersection of accounting and Indigenous peoples, focusing on the Canadian context. We systematically identified 15 English‐language, peer‐reviewed articles published in the review period of 1979–2019. We conducted detailed content and thematic analysis of the articles. Overall, we noted that research in this area is based upon archival documents or reviews of prior literature rather than qualitative or survey research methods. We found that much of the research has been driven by a small network of scholars, focusing primarily on themes of governmentality, imperialism, and accountability and control. In addition, research on Indigenous peoples and accounting in Canada has slowed over the past decade, which is inconsistent with global trends. Based on the systematic literature review, we offer specific, actionable recommendations to support inquiry and inclusion in the area of accounting and Indigenous peoples to move both research and society forward toward reconciliation. Our detailed recommendations aim to advance our understanding of the relationship between accounting and Indigenous peoples, foster an understanding of accountability issues relevant to Indigenous peoples in the Canadian accounting context, enhance support for Indigenous peoples studying business and accounting, and encourage Indigenous peoples to consider careers in accounting.

Patterns underlying required competencies for CPA professionals: a content and cluster analysis of job ads

ABSTRACTIn today's dynamic environment, the adaptation of the accounting profession to meet actual socio-economic needs is a challenging, and yet necessary, task. This study analyzes the technical competency requirements signalled in 171 online job advertisements for accounting positions by Canadian organizations and contrasts them with the CPA Canada competency framework, which serves as the basis for the training and accreditation of professional accountants. Following a content and a cluster analysis of the job ads, three well-separated and meaningful profiles of positions are uncovered based on technical competencies that Canadian organizations required when hiring accountants: the financial reporting, the tax aggressiveness, and the performance management profiles. From a practical standpoint, this study provides the Canadian accounting professional body, as well as educators in the accounting field, with insights regarding the expectations of the job market. The study also has implications in accounting education beyond the Canadian context.

How ex-auditors remember their past: The transformation of audit experience into cultural memory

Researchers have examined the socialization of auditors at various stages of their professional development, but they have done little or no work on the continued effects of this socialization after auditors leave the firms. Put simply, they have not explored the ways that ex-auditors remember their past. Drawing on the literature in social memory studies and on 37 semi-structured interviews with ex-auditors who used to be employed at large Canadian accounting firms, we perform memory work to examine how ex-auditors transform their audit experience into cultural memory. The narratives of past audit experience elicited during the interviews reveal that ex-auditors develop a complex contemporary representation of this experience. When they solicited their communicative (individual) memories, our participants remembered multiple conflicts between their self-identity and the normative work environment during their time at the firms. However, when they reflected on the impact of their audit experience on their new careers, an alternative and much more collective version of this past emerged. Cultural memories with an elitist and class work dynamic that maintained and justified claims of professional and social superiority began to predominate. We argue that communicative and cultural memory are connected because it is communicative memory that allows cultural memory to take on social forms and exercise cultural domination. Our study makes three important contributions. First, it broadens the socio-temporal perspective of auditing research by highlighting the continued effects of the professional identity of auditors after they change careers. Second, it shows that representations of the past provide ex-auditors with a powerful means to promote their professional interests and structure power relationships within organizations. Third, it introduces the use of reflexive memory work as a rigorous methodological approach in accounting and organizational research.

The Impact of IFRS Adoption on an Agribusiness Company's Financial Statements

AbstractThis fictional case is based on a Canadian public company that produces greenhouse vegetables. Focusing on the differences between International Financial Reporting Standards (IFRS) and Canadian Accounting Standards for Private Enterprises (ASPE), this case provides students an opportunity to (1) apply IFRS in a real world setting; (2) prepare and reconcile financial statements under ASPE and IFRS; (3) analyze the impact of IFRS adoption on key financial ratios; and (4) detect and explain differences in financial statements under ASPE and IFRS through common size analysis.

Attracting Prospective Professional Accountants Before and After the CPA Merger in Canada

AbstractAs part of the unification of the Canadian accounting profession, a lot of effort has been devoted to organizational structures and systems. In these times of change, recruitment of prospective professional accountants remains an important factor for the Canadian and international development of the profession. In this paper, we explore professional accountants’ recruitment by accounting associations in Ontario before (CA, CGA, CMA) and after (CPA) the merger of the three professional accounting associations. We use a legitimacy framework to make sense of the recruitment website content of each association. We find, in the post‐merger period, that the CPA profession adopts a more passive approach to legitimacy management, focusing mainly on exchange aspects of legitimacy, whereas prior to the merger a wider range of legitimacy management strategies were deployed by the predecessor associations. Important implications ensuing from our study are discussed.

Mandatory management disclosure and mandatory independent audit of internal controls: Evidence of configural information processing by investors

We conduct an experiment where alumni participants from a Canadian accounting and finance undergraduate program assume they are in one of four regulatory regimes (manipulated between-subjects) and make investment potential evaluations for two firms (manipulated within-subjects): a firm disclosing no material weaknesses (No-MW disclosure firm) and a firm disclosing material weaknesses (MW disclosure firm) in internal controls over financial reporting (ICFR). We find evidence of configural information processing. For the No-MW disclosure firm, mandatory (versus voluntary) disclosure of ICFR material weaknesses and mandatory (versus voluntary) independent ICFR audit are substitutes in enhancing investment potential evaluations. However, for the MW disclosure firm, neither mandatory disclosure nor mandatory audit has any effect on investment potential evaluations. Supplementary experiments with undergraduate participants suggest that the pattern of configural information processing is a function of participants' knowledge of company disclosure incentives and the assurance value of an audit, wherein undergraduates with lower levels of knowledge are less able to perceive the effects of mandatory disclosure and mandatory audit on investment potential evaluations. Our findings have implications for regulators who are concerned about balancing the costs and benefits of different regulatory mechanisms.

Determinants of IFRS Compliance by Canadian Companies

The objective of this paper is to provide evidence on IFRS compliance by Canadian companies. The Canadian Accounting Standards Board (AcSB) required the use of IFRS for publicly accountable enterprises (other than pension plans) beginning on January 1, 2011. Specifically, the authors analyze the determinants of IFRS disclosure compliance for these companies. Canada provides a good setting for their research, because they measure the compliance in the first year of IFRS adoption when some of the companies are still allowed to use U.S. GAAP or local GAAP. They measure compliance by using an updated version of the instrument used in Hodgdon et al. (2009). The authors' results show that firm size, foreign sales proportion, and U.S. listing are positively associated with the IFRS compliance while the leverage ratio is negatively associated with the IFRS compliance of the sample firms. These results confirm the premise that firms with better information environment and better monitoring tend to comply well with the newly adopted accounting information.

Canada vs Britain in the imperial accountancy arena, 1908–1912: Symbolic capital, symbolic violence

This paper examines a struggle between Canadian accountants and their British confreres (led by the ICAEW) that took place in the period 1908–1912. The ICAEW, with the assistance of the British Colonial Office, tried to roll-back and/or construct on terms advantageous to itself, modifications initiated by Canadian chartered accountants to the deployment of the ‘CA’ designation within Canada. The ultimately successful resistance of the Canadian state-profession axis mitigated the possibility that locally trained accountants would be pushed down the professional status hierarchy. It thus helped to unify Canadian accountants and enhanced the possibility that colonial profession-state axes elsewhere in the British Empire would also assert their autonomy; as illustrated by the case of South Africa in the 1920s. The struggle is characterised, deploying selected concepts from Bourdieu's theoretical corpus, as involving the deployment of various forms symbolic capital to activate, over time, forms of symbolic violence at the different-but-interacting levels of profession and state. It involved, that is, cross-border multi-level ‘exchanges’ of symbolic violence in the political field over which state apparatus could allocate symbolic capital differentially to competing groups in the accountancy field who could in turn deploy it as symbolic violence within that field.

Does the Accounting Profession Discipline Its Members Differently After Public Scrutiny?

This study examines how the accounting profession disciplines its members for professional misconduct in periods of increased public scrutiny. We conjecture and find that increased public scrutiny of the Canadian accounting profession, marked by the establishment of the Canadian Public Accountability Board in 2003, is positively associated with the severity of punitive sanctions administered by the profession’s disciplinary committees. We find that disciplinary committees are more likely to also demand rehabilitation outcomes and greater future monitoring for offenders. Finally, reporting of discipline outcomes has increased in outlets internal to the accounting profession, but not in publications targeted outside to the public. This latter finding is consistent with the private interest theoretical model of professional ethics developed by Parker (Acc Organ Soc 19:507–525, 1994) as evidence of a latent motivation of the profession to protect its professional private interests. Exploratory analyses indicate that punishment, rehabilitation, and reporting in external publications significantly influence whether offenders return to good standing.

Attracting Millennials: Legitimacy management and bottom-up socialization processes within accounting firms

Abstract The competition to attract trainee accountants is fierce among accounting firms. Millennials seemingly have expectations in terms of work experiences and work environments that arguably cannot be ignored by accounting firms. This paper draws on a legitimacy framework to examine legitimacy management strategies utilized by large Canadian accounting firms in website communications directed at future employees. Our results demonstrate accounting firms appear to devote considerable effort to manage their legitimacy in the eyes of prospective employees and apparently use website communications to depict a work environment largely in accordance with Millennials’ system of values and beliefs. This suggests a bottom-up socialization process is taking place whereby accounting firms adapt the workplace in response to future employees’ expectations. Interviews with partners, managers and human resource advisors working in accounting firms support the idea of a bottom-up process. We conclude a two-way socialization process exists, where the firms and the new employees are both instigators and targets of socialization, jointly influencing what it is to be an accountant today.

Mandatory Management Disclosure and Mandatory Independent Audit of Internal Controls: Evidence of Configural Information Processing by Investors

We conduct an experiment where alumni participants from a Canadian accounting and finance undergraduate program assume they are in one of four regulatory regimes (manipulated between-subjects) and make investment potential evaluations for two firms (manipulated within-subjects): a firm disclosing no material weaknesses (No-MW disclosure firm) and a firm disclosing material weaknesses (MW disclosure firm) in internal controls over financial reporting (ICFR). We find evidence of configural information processing. For the No-MW disclosure firm, mandatory (versus voluntary) disclosure of ICFR material weaknesses and mandatory (versus voluntary) independent ICFR audit are substitutes in enhancing investment potential evaluations. However, for the MW disclosure firm, neither mandatory disclosure nor mandatory audit has any effect on investment potential evaluations. Supplementary experiments with undergraduate participants suggest that the pattern of configural information processing is a function of participants’ knowledge of company disclosure incentives and the assurance value of an audit, wherein undergraduates with lower levels of knowledge are less able to perceive the effects of mandatory disclosure and mandatory audit on investment potential evaluations. Our findings have implications for regulators who are concerned about balancing the costs and benefits of different regulatory mechanisms.

Fracking the Glacier: From mimicry to hybridization of professional accountantCanadian field

In this study we draw on postcolonial theory to examine how some professionals from “diverse” backgrounds are able to overcome systemic barriers and to theorize how the success of some individuals, over time, disrupts the reproduction of both discursive and material structures that legitimize and maintain exclusion. We examine how situating migrant accounting professionals in their bodies, as well as in temporal context, provides new insights that help to explain how exclusion operates within a professional field but also, how the agency of individuals evolves over time and has longer term implications for subsequent generations of professionals. Using post-colonial analysis of the narratives of twenty four accountants migrating to Canada, we show how early migrants from the colonial margins initially confront significant barriers that force them to mimic the performances of Canadian accountants in order to re-constitute their professional identities in Canada. However, over time, as early arriving migrant accountants re-establish their professional identities, they both actively and passively facilitate entry for subsequent arrivals. We argue that this is accomplished through disrupting the routine reproduction of the seemingly natural professional identity and social structure and through the iterative hybridization of the relatively homogeneous professional identity that has dominated the Canadian profession for over a century.

Machiavellianism, Moral Orientation, Social Desirability Response Bias, and Anti-intellectualism: A Profile of Canadian Accountants

Prior research has demonstrated that accountants differ from the general population on many personality traits. Understanding accountants’ personality traits is important when these characteristics may impact professional behavior or ability to work with members of the business community. Our study investigates the relationship between Machiavellianism, ethical orientation (idealism, relativism), anti-intellectualism, and social desirability response bias in Canadian accountants. We find that Canadian accountants score much higher on the Machiavellianism scale than U.S. accountants. Additionally, our results show a significant relationship between Machiavellianism and relativism, idealism, anti-intellectualism, and social desirability response bias. Our results indicate that professional Canadian accountants may not share the same personality characteristics as U.S. accountants. We extend previous research investigating Canadian accountants, by explicitly recognizing the impact of social desirability response bias, and by including anti-intellectualism.

An experimental examination of judgments of Chinese professional auditors in evaluating internal control systems

Researchers have tended to assume that Anglo-American theories and practices are equally applicable to other countries with their unique contextual environments. The aim of this research is to show that the theoretical model and empirical research findings in Anglo-American countries, with respect to evaluation of internal control systems, are not applicable to China. Specifically, there are two approaches to evaluate internal control systems: one is a risk-based audit approach, and the other is a control-based audit approach. Morrill, Morrill, and Kopp (2012) show that Canadian accountants who relied on a risk-first approach identified significantly more internal control deficiencies than accountants who relied on a control-first approach. Contrary to the research findings in Canada, this study provides experimental evidence that Chinese auditors who relied on a control-first approach identified significantly more internal control deficiencies than auditors who relied on a risk-first approach. The findings have implications for global convergence of auditing practices.

The Diversity of 'Diversity' in Canadian Accounting Firm Recruitment Websites

We examine use of the term ‘diversity’ in the recruitment websites of Canada’s eight largest public accounting firms. We find a range of distinct uses of the term. We note differences in the use of ‘diversity’ between Big Four accounting firms and the next four largest firms. The Big Four vary in their approaches to diversity, with Deloitte’s and KPMG’s websites addressing the most dimensions of diversity and the highest number of references to diversity. Diversity in the discourse of diversity arguably stems from variance in the institutional logics held by accounting firms. Our analysis reveals the business case logic and commercial logic are the most prevalent institutional logics in use. Some Big Four firms also adopt an inclusiveness logic.

New Canadian Accounting Standards for Private Enterprises and the Adoption Timing Decision

Prior research into the adoption timing decision of organisations in relation to newly promulgated accounting standards has focused exclusively on public enterprises and used economic cost–benefit frameworks as a main method of analysis. The current study examines the impact of a broader range of factors, including cost–benefit considerations, on the adoption timing decision of private firms with respect to the new set of Canadian accounting standards for private enterprises released in 2009. These factors were organised into a coherent framework using the theory of planned behaviour. The survey findings reveal that several items related to attitudes towards the behaviour, subjective norms and perceived behavioural control play a significant role in managers’ adoption behaviour. This study provides relevant insights for private enterprise managers, financial statement users, standard setters and academics.

Comparing Chinese and Canadian Accounting Students’ Expectations and Experiences

This paper examines differences between Chinese and Canadian accounting students’ perceptions of academicexperiences and expectations. The emerging adults from Chinese (n=862) and Canadian (n=434) universitiesexpressed their opinions by responding to a survey including questions rating various aspects of their universityexperiences, academic expectations, preferences to work independently or collectively, and support fromprofessors. Results indicate there were marked differences in all four categories between the two samples. Thestudy aims to offer insight for educators and institutions in preparing tomorrow’s accounting professionals towork and compete on a global scale and abide by technical and ethical standards.