Conventional Accounting Research Articles

Accounting for the social economy: the socioeconomic impact statement

Abstract**: Organizations within the social economy have unique characteristics, yet their accounting procedures do not reflect this uniqueness, and rather are designed for private‐sector organizations that exchange their goods and services in the market. We argue that conventional accounting creates a perception that social economy organizations are users of resources and separate from the private and public sectors, rather than creators of value and an integral part of our society (Quarter, Mook, and Richmond, 2003a). This paper addresses the accounting needs of social economy organizations by presenting a model of social accounting—the Socioeconomic Impact Statement—that may help bring out the impact of such organizations. The paper presents a demonstration project of the potential utility of the Socioeconomic Impact Statement.

Symmetric accounting to integrate ‘goods’ and ‘bads’ in the double-entry framework: Logically stretching the domain of conventional accounting to the other half space

Abstract Conventional accounting deals with “goods,” resources that are of positive value to firms. This paper extends it to symmetrically deal with “bads,” items that are detrimental to firms. Goods (bads) are recorded on the debit (credit) side of the balance sheet. Likewise, receivables, i.e. anticipated increases, of goods (bads) are on the debit (credit); payables, i.e. anticipated decreases, of goods (bads) are on the credit (debit). Bads include environmentally hazardous items as well as impaired goods with high closure costs. Use of a cost accounting system to record goods and bads in an integrated manner is also briefly explored.

The bottom line

The complex relationships unfolding as people flow across borders in the 20th and 21st centuries hold infinite possibilities for research. In this work, we consider one aspect of our contemporary global economy—US immigration policy and its relationship to accounting disclosure. We review the processes of social discourse and accounting myth making in general, and provide a context of immigration policies in the US. Our concern, that the accounting profession presents a particular reality, focuses on how it obscures significant relationships between immigrant employment and financial reports and thus our observed muddled meaning to profit—“the bottom line”. Conventional accounting rhetoric suggests that the bottom line represents appropriate business transactions, successful performance, and a basic “stewardship contract” fulfilled, and recent debates regarding “earnings management” lament the affront of these obligations. Yet, this conventional view obscures complex social relationships, one being the use of immigrant labor in achieving these results, and we provide evidence of some of those most deleterious effects.

PERBANDINGAN PENGARUH EVA DAN PENGUKURAN KINERJA LAINNYA TERHADAP IMBAL HASIL SAHAM DI INDONESIA

The purpose o f this study is to examine whether Economic Value Added9 (EVA) is more highly associated with stock returns than other conventional accounting- based measures such as Earnings before Extraordinary Items, Cash Flow from Operation, and Residual Income, as claimed by Stern Stewart. Using pooled ordinary least square method or Panel Data on 121 Indonesian- listed companies in Jakarta Stock Exchange over the period 2001-2003, the test emphasizp on two approaches. Relative Information Content describes the association ofeach individual performance measure relatively with stock returns and Incremental Information Content describes the association of each performance measure with stock return individually and simultaneously. The relative information content tests reveal that earnings to be more closely associated with stock returns than EVA®, Cash Flow from Operation, and Residual Income. The incremental information content tests reveal that earnings and Cash Flow from Operation to be more closely associated with stock returns than EVA® and Residual Income. Other tests for components of EVA® reveal only Cash Flow from Operation and Accruals to be significantly associated with stock returns, where Cash Flow from Operation and Accruals are equal with earnings.

Improving national accounts

Purpose – To present empirical and theoretical evidence that our national accounts are improper for model applications. To propose a design for a micro foundation of the basic economic data that will give analytical national accounts. To present arguments for the need for an academic and scientific foundation of national accounting.Design/methodology/approach – Reviews published works in the field. In the theoretical discussion simple index algebra and Edgeworth‐Bowley boxes are used.Findings – Shows that conventional accounting methods and deflation procedures imply inconsistent national accounts.Research limitations/implications – To fulfill the idea presented, that new designs for sampling of basic data‐based on new data technology have to be considered and developed. Also a new accounting system has to be developed based on modern administration systems.Practical implications – If the idea is fulfilled a new kind of national accounts suited for meaningful and analytical model applications will be avai...

Environmental management accounting as a reflexive modernization strategy in cleaner production

Understanding the material purchase value of wastes and emissions and related processing costs is the essential contribution of an Environmental Management Accounting methodology proposed by a United Nations expert working group organised through the Division for Sustainable Development (UNDSD). Tracing costs and benefits according to this UNDSD methodology, considered as a “reflexive” modernization strategy in this article, sheds new light on cleaner production initiatives for corporate sustainability. Information on the first category of costs, waste and emission treatment, is generally the most accurate. Information on the second category, prevention and environmental management costs, is more difficult to determine because this category overlaps with, or is confused with, the first category of costs. Data for the two novel and innovative cost categories of the material purchase value of waste and emissions and related processing costs are even harder to obtain. Frequently, the costs are either hidden in overhead accounts or are not recorded because they are not required in conventional accounting systems. The outcome is that companies, even though they may profess otherwise, have very little knowledge about their full environmental costs, cost saving opportunities, or how best to achieve cleaner production initiatives to promote corporate sustainability. A more systematic application of the UNDSD EMA methodology would provide a better record of costs and act as a catalyst in promoting cleaner production processes. This application inevitably requires “reflexive institutions” including “reflexive corporations”, that is, corporations with the capacity to examine the side effects of their operations as modernization rebounds upon them.

Accounting “gets real” in dealing with virtual manufacturing

PurposeOf relatively recent origin is the virtual organisation where companies are able to marshal the necessary competencies from a range of independent external agents through the strategic use of outsourcing mechanisms. The paper discusses the challenge of accounting for intellectual capital (IC) and intangible assets and presents a financial analysis and background of companies exhibiting different levels of virtuality, from traditional manufacturing to virtual manufacturing.Design/methodology/approachThis paper is based on the interaction of the researchers with three companies examining their positions on the continuum from traditional to virtual manufacturing. Case studies of the companies and some key financial results for a period of years are presented in order to explore implications and inform strategic decisions.FindingsIt concludes that conventional financial reporting for IC and intangibles has limited scope. This is elaborated through contrasts in a number of conventional accounting measures and some others, less conventional, to highlight the implications of the intellectual capital employed. The results are reported and implications of these discussed in the context of the companies whose background and activities are briefly outlined.Practical implicationsThe measurement and management of the intangible assets and intellectual capital of organisations has been the focus of recent research in accounting and finance. This has applied to the corporate reporting of financial results involving its impact on the balance sheet, managerial accounting concerned with decisions and the internal use of various financial and non‐financial performance measures and finance where market values of companies have been shown to differ significantly from their book values as shown in published accounts.Originality/valueThe content will be of interest to academics studying issues surrounding the reporting and decision making concerning intellectual capital and intangibles. Additionally, managers and consultants whose companies are engaged in outsourcing and or virtual/semi‐virtual manufacturing should find the results informative.

Making accounting accountable in the public sector

Accounting is conventionally constituted and practised as a quantitative discipline which emphasises the use of money values. Where such values are unavailable or inappropriate, non-money quantifications or qualitative forms of information take precedence. However, the boundaries of conventional accounting remain imprecisely defined and this creates a jurisdictional tension between monetary and non-monetary systems of accountability. This issue is examined within the context of the Australian and New Zealand public sectors, where recent regulatory changes have mandated the valuation for financial reporting purposes of a broad range of government controlled resources that are of a non-financial character. Rationales for this expanded use of money values are re-evaluated within the context of practical and theoretical issues associated with their application, particularly with regard to the accountability of public sector institutions. This accountability theme is then extended in terms of the need to make accounting itself more accountable within the public sector.

Product mix decisions and production lot sizes

According to the earlier research related to the product mix decisions, the approach called throughput accounting seems to provide much better results than conventional management accounting. However, all the examples so far have assumed that cycle times in used resources are not dependent on any other variable. In practice, the situation is not so simplified; the decisions related to production lot sizes will affect the cycle time requirement of a product in a particular resource, and, in the case of capacity constraint, the product's and system's profitability. The main cause for this is the setup time in a particular resource. As can be concluded from the results of this paper, the appropriate lot sizing decisions will enable system to produce more with its existing resources and therefore increase its profits significantly. As the performed sensitivity analysis suggests, the differences between traditional management accounting and throughput accounting will become increasingly insignificant after lot sizes have been somewhat increased. According to shown results it is being suggested that lot sizing decisions are rather important for the profitability of manufacturing unit, and especially in capacity constraint resource(s) the use of smaller lot sizes should be avoided.

Valuation and reporting of intangibles ? state of the art in 2004

For 500 years, companies have been obliged to report their operations and success, or lack of it, to their stakeholders. Traditionally, this function has been performed by conventional accounting methods. However the recent corporate collapses have shown us that traditional financial accounting methods do not always work. Indeed, there has been a growing demand in the last decade for organisations to report on the intangible resources they deploy in their operations to give a more balanced view of their output. The objective of this paper is to look at how intangible resources maybe measured, valued, and disclosed meaningfully to organisational stakeholders in an effort to secure sustainable advantage over competitors or levels of performance that exceed social and economic budgetary expectation.

Stocks of knowledge, simplification and unintended consequences: the persistence of post-war accounting practices in UK agriculture

In this paper, agricultural gross margin accounting is examined as an institutionalized practice, within a theoretical framework that embraces Giddens's theory of structuration and new institutionalism in sociology. An analysis of the transmission and maintenance of the institution suggests that it persists through the dominant advisory group within the industry. The development of private commercial consultancy in the industry and the decline of the university based government advisory schemes in the period from the Second World War led to simplified management accounting practices that are resistant to change. Another factor is the role of accounting education in the agricultural sector in the same period, and the paucity of conventional accounting knowledge in the sector. This study is based on both historical and written data covering the period from 1939 to 2003, and on interviews obtained from industry participants in 2001–2003. It is unusual in that it examines an accounting practice in which participation is voluntary, but that has become embedded and used nationally in the industry for over 40 years. It is also a story of how an academic innovation was diffused, with unintended consequences.

Scoring bank loans that may go wrong: a case study

A bank employs logistic regression with state‐dependent sample selection to identify loans that may go wrong. The data consist of some 20 000 loans for which a number of conventional accounting ratios of the debtor firm are known; after two years just over 600 have gone wrong. Inspection shows that the state‐dependent sampling technique does not work because the data do not satisfy the standard logit model. Several variants on this model are considered, and it is found that a bounded logit with a ceiling of (far) less than 1 fits the data better. When it comes to their performance in an independent data‐set, however, the differences between the various methods of analysis are negligible.

‘Presenting’ the past: perspectives on time for accounting and management history

Concepts of time in accounting and management historiography have only previously been considered as partial subsets of other methodological issues. This paper investigates our concepts of historical time with a view to offering alternative foundations to the unidirectional linear concept of chronological time employed in historical research project design and execution. Its analytical approach is pluralist in that it draws upon the historiographic writings of historians and historical theorists of traditional and post-modern persuasions, both within and beyond the accounting and management history fields. It addresses teleological, historicist and narrativist temporal underpinnings and considers historical practice in relation to assumptions about and interpretations of continuity and discontinuity. Time is extended beyond its conventional accounting and management chronology to include consideration of co-present, cyclical, relativist, structuralist and spatial time. Intrinsic and reflexive relationships between past, present and future are explored. The paper argues for a postmodern pluralisation of our historiographic approaches to time and their informing revisitations of historical accounting and management subjects with a view to better understanding that which we thought we already knew.

AN EMPIRICAL STUDY OF RELATIVE EFFICIENCY OF THE BANKING INDUSTRY IN BAHRAIN

The paper investigates relative efficiency of the banking industry in Bahrain by employing a panel of 31 banks for the years 1998 and 2000. We employ non‐parametric (Data Envelopment Analysis) to examine five efficiency measures, namely, cost, allocative, technical, pure technical and scale efficiency scores. We also investigate the conventional accounting measures of performance, and correlate them with five measures of efficiency to investigate whether higher accounting performance impact the bank cost efficiency. Our results show that, on the average, the banking industry in Bahrain is profitable with average ROE and ROA being 10.36% 1.622% in 1998 while 13.49% and 2.097% in 2000 respectively. The average allocative efficiency (inefficiency) is about 73% (37%), whereas the average technical efficiency (inefficiency) is about 56% (78%). This indicates that the dominant source of inefficiency in Bahrain banks is due to technical inefficiency rather than allocative inefficiency, which is mainly attributed to diseconomies in scale. Overall, average scale efficiency (inefficiency) is about 79% (26%), and average pure technical efficiency (inefficiency) is about 71% (41%), suggesting that the major source of the total technical inefficiency for Bahrain banks is pure technical inefficiency (input related) and not scale inefficiency (output related). The results also indicate that all banks have improved their efficiency levels and experienced some gains in productivity. Finally, regression analysis is used to investigate the determinants of the overall efficiency scores. We find that larger and profitable banks are more likely to operate at a higher level of efficiency. Also, another finding reveals that market power plays an important role in cost and technical efficiencies. Notably, banks with greater contribution from shareholders tend to be more technical efficient

A ‘time–space odyssey’: management control systems in two multinational organisations

This paper analyses the effects of implementing an Enterprise Resource Planning system (ERP) upon management control in two multinational organisations. How ERP was configured in each corporation created different forms of distance and relations between headquarters and the scattered subsidiaries. The construction of spatial and temporal separations (i.e. distance) and how they were understood and managed had profound effects on management control. In one organisation the ERP reproduced existing structures and distance which permitted conventional accounting controls based on action at a distance to be maintained. The second organisation used ERP to collapse distance through real-time information in a matrix structure. This did not increase centralisation but rather produced constantly changing loci of control and managerial feelings of ‘minimalist’ control.

A Statement of Accounting Concepts for Level 1 of the Conceptual Framework?

The type of reporting found in corporate governance includes financial reporting, but over time various arguments have developed regarding a tension found between conventional and financial type reporting, especially as to the role of financial statements. Further tensions follow from the introduction of economic and social issues within both conventional accounting and financial reports.This article argues that distinct, though related, frameworks at particular levels are required. The mingling of conventional accounting with financial and economic ideas and issues is evident in the conceptual framework (CF) project where there is reference to economic benefits and costs in making economic decisions for the allocation of resources. This results in a misconception of the function of these distinct types of information. An unravelling of particular issues will require a Statement of Accounting Concepts (SAC) for Level 1 of the CF.

What is measured counts: harmonized corporate reporting and sustainable economic development

Abstract Keynes argued for the continued prioritization of economic goals over social needs on grounds that the time was not right for social conscience to prevail: “For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight” (1930, cited in Schumacher, 1973 , p. 22). This essay illustrates the role that accounting plays in confining management practices within the “economic necessity” tunnel amidst social and environmental degradation. A recent report on The World Bank’s performance in developing countries is used to argue that the conventional accounting framework is not an appropriate tool to guide organized effort in balancing the competing-interdependent needs of multiple stakeholders.

ACCOUNTANTS’ RESPONSES TO THE ENVIRONMENTAL AGENDA IN A DEVELOPING NATION: AN INITIAL AND EXPLORATORY STUDY ON FIJI

This paper initially highlights the potential role(s) of accountants in ensuring environmental sensitivity in businesses through the mechanism commonly referred to as environmental accounting. It then proceeds to discuss their actual involvement in these issues through a review of past literature on the role of accountants in environmental management accounting and reporting in organizations and the presentation of a local study on environmental accounting. This study seeks to gain insights into the preparedness of accountants in Fiji to handle environmental accounting within the conventional accounting framework. The findings of this research are reflective of contemporary international studies, suggesting that Fiji accountants are conspicuously absent from environmental management accounting and reporting in organizations. This has been attributed to their lack of competence in environmental matters and the voluntary nature of the present environmental accounting practice. Even though the characteristics of a developing nation which pose practical difficulties for the implementation of environmental accounting in a country like Fiji need to be acknowledged, a more proactive stance from the local accountancy profession, academics, the private and public sector is warranted. It is envisaged that this initial research will add to the limited literature on environmental accounting in developing nations and provide a useful framework for further studies, especially those in the South Pacific context.

Assessing Business Zakat At Pusat Zakat Selangor: Between Theory and Practice

The main objective of this study is to determine the value measurement used by zakat collection centres, particularly Pusat Zakat Selangor (PZS), in measuring business zakat among companies owned by Muslims in Selangor territory. The study found that PZS assessed zakat from companies financial statements based on historical cost, and not current value as hypothesised by previous researchers. The continuous use of historical cost may lead to negative wealth transfer for zakat beneficiaries particularly in time of rising prices. Even though certain adjustments are made to the assessment, however the purpose of such adjustment is merely to reflect the Islamic philosophy of the implementation of halal and haram as well as different views of Islamic Accounting and Conventional Accounting in recognising income and expenses.

Integrated social accounting for nonprofits: A case from Canada

Whereas social accounting has been strong in its critique of conventional accounting, to date it has not been as effective in developing accounting frameworks consistent with its principles. This is particularly true for nonprofit organizations. The costs of nonprofits can be easily measured; however, not captured by conventional accounting is the value of their nonmonetized resources such as volunteers. This paper argues that social accounting for nonprofits would benefit by creating accounting statements that combine the economic and social impact of an organization (referred to as an integrated approach). After discussing some historic examples of integrated social accounting, the paper presents a Canadian case study in which the value added by volunteers of a nonprofit organization is combined with its financial statements in an Expanded Value Added Statement. By combining social and economic information, a very different performance story of the organization emerges.