Conventional Accounting Research Articles

The Restoration Methodology for Valuing Goodwill

A method is proposed by which the goodwill of a business may be valued whenever the conventional accounting method is not available. This ‘restoration’ methodology involves using a combined cost and income approach to value the benefits a hypothetical purchaser of an operating business obtains, by reference to the costs, delays and risks it avoids, by acquiring the operating business rather than the business's identifiable assets alone. Such a value approximates that of the goodwill of the business. To provide some guidance as to how the restoration methodology might be used in a real situation, the actual sale of an interest in the Gove bauxite and alumina joint venture business is considered, where the existence and value of the business's goodwill was a factor in determining whether land‐rich stamp duty was payable in respect of the transaction. When the benefits gained by the purchaser of the Gove business are identified by reference to the costs, delays and risks it avoided by purchasing the business rather than the assets, it is not difficult to understand why such a sophisticated purchaser paid (and a pre‐empted purchaser was prepared to pay) an amount equal to or greater than the value of the business's identifiable assets in order to obtain those benefits.

Counting Beans and Time: A Temporal Contract Accounting Model for Flexible Financial Reporting and Continuous Auditing

There have been calls in the accounting literature for the co-existence of multiple accounting standards and multidimensional financial reporting that can meet the requirements of different financial information users and continuous auditing. Despite some initial effort of decades ago, little progress has been made to improve the conventional double-entry accounting to meet those financial reporting challenges. To address this research gap, in this conceptual modeling paper I propose a theory-based temporal contract accounting (TCA) model by building on prior research in the accounting literature. The TCA model takes a contract view of the firm and count for not only spatial resources but also spatial-temporal resources. While much future research work remains to be done, the conceptual model has the potential to offer important benefits for flexible financial reporting and continuous auditing.

Growth Decomposition of Indian Economy, 1981-2007

The present paper attempts to evaluate the economic performance of India for the period of 1981-2007, using the conventional growth accounting technique, also known as “Solow growth model”. In particular, it examines the relative contributions of factor accumulation and productivity growth in the economic growth of the economy. The main objective is to check if the growth is sustainable. Also, an attempt is made to find the proximate explanation of any major ups and downs that happened in the economy during this period. The paper concludes by arguing that the recent spectacular performance of the Indian economy is mainly fuelled by improvement in TFP.

Impact of Aggregated Cost of Human Resources on Profitability: An Empirical Study

In Nigeria, the past decades have witnessed a transition from manufacturing to service based economics. The fundamental difference between the two sectors lies in the very nature of their assets. The former sectors are driven by physical asset like plant, and machinery while the later sector is driven by knowledge, skill and attitude of the employee. This had lead to a paradigm shift in expenditure on those assets and interest. As expenditure on human resource increases also lead to the demand for its inclusion in financial report. Expenditure on human resource has two components, the expense and the investment. Conventional accounting treat both as revenue expenditure, this aggregated approach has a negative effect on the profitability. This study examined the relationship between (1) The aggregated cost of human resource and organizational profitability. (2) The effect of the disaggregated cost of human resources on organization profitability. Data was extracted from internal source using a structured information card and annual financial report. Regression analysis was used. The findings show that there is a positive relationship between profitability and human resource cost. It also shows that changes in profitability can be explained when the expenditure on human resource are segregated into revenue expenditure and capital expenditure. The study recommends amongst other, that BETA NIG PLC should imbibe the culture of capitalizing and reporting all investment on human resource that improve the quality and productivity.

A Review of Carbon Accounting in the Social and Environmental Accounting Literature: What Can it Contribute to the Debate?

This paper sets out to understand how carbon accounting has been tackled in the social and environmental accounting (SEA) literature, in order then to investigate what the preoccupations and gaps in this literature might tell us about the SEA ‘project’ more generally. It finds that the SEA literature on carbon accounting is already large, fast-growing, rich and varied. There is a mix of critical, philosophical or normative discussions about carbon accounting, and empirical studies of carbon accounting, with specific clusters of papers in carbon management accounting, carbon financial accounting, carbon disclosure and reporting, and carbon accounting education. Nevertheless, when compared with the scope of carbon accounting in practice, it is evident that there is considerable potential for SEA researchers to broaden their engagement with other types of carbon accounting, in particular market-enabling, physical and political forms, and to collaborate with other professions and practitioners. Carbon accounting could be emancipatory: attracting new researchers into the SEA field, encouraging greater interdisciplinary cooperation and mutual learning, offering tremendous opportunities for engagement with practice and education, and helping to imagine new accountings free from the shackles of conventional accounting.

Ijarah Accounting: A Comparison of International Accounting Standard-17 & Financial Accounting Standard-8

Financial reporting is very important aspect of any business as it determines financial rights and liabilities of the parties involved. With the advent of Islamic finance the issue of financial reporting as per Islamic law was raised, which was then addressed by the Accounting and Auditing Organization of Islamic Financial Institutions [AAOIFI]. There exist differences as well as similarities under both regimes of accounting [conventional and Islamic]. As in many countries, relevant changes in laws for application of Islamic accounting are yet to be made, hence Islamic Financial Institutions [IFIs] in those countries are bound to follow conventional accounting standards. This study is intended to highlight the financial issues emerging due to application of conventional accounting standard in Ijarah accounting by IFIs. Comparison of two accounting standards IAS-17 and FAS-8 as well as their implications is discussed. We found in the process that although an informed effort is being made by experts in Islamic finance to match, revenue as well as cost to customers, with conventional financial industry, however contract of leasing and Ijarah carries more financial, legal and accounting differences than similarities, hence application of conventional lease accounting is not appropriate for an IFI.

Trends in the regional allocation of public investment in the post-bubble Japanese economy

With reference to the assumptions presented by Yamano and Ohkawara (J Reg Sci 40:205–229, 2000) on the specification of a production function with region-specific individual effects on public capital, this paper introduces a new benchmark index in order to analyze the Japanese government’s investment allocation policy across subnational regions, with an emphasis on efficiency, equity, and/or redistribution under trade-off restrictions. This index, termed the equity–growth allocation share of public investment herein, is derived from a conventional Solow growth accounting approach. Specifically, it is defined as a region’s share of the periodic change in the nation’s public capital, where its growth contribution with its interregional spillover effects to overall output growth is the same across subnational regions. We apply this index to the post-bubble Japanese economy, which was beset by efficiency–equity trade-offs between Tokyo’s unipolar development and balanced growth given a prolonged recession. We find a shift from a pro-efficiency to a non-pro-efficiency allocation policy in the mid-1990s. This finding therefore rules out the inference that the government chose an inverse policy direction thereafter and instead implies that it rather attempted to balance efficiency and redistribution.

Anthony G. Hopwood: Academic Iconoclast and Entrepreneur 1944–2010

A nthony Hopwood was born on May 18, 1944 in Stoke-on-Trent in England and died on May 8, 2010 in Marlow, England. He was a pioneer in behavioral accounting research. He contributed to that area with both his research and as the founding editor of Accounting, Organizations and Society (AOS), the leading behavioral accounting research journal, the reason for which he likely is best well known by scholars internationally, both in and outside of accounting. He held that position for 35 years. As Zeff (2008, 3) described it, in his remarks introducing Anthony at his Hall of Fame induction:

TEORI AKUNTANSI MASA KINI

<p><em>This paper presents the development of the scope of accounting theory because of the growing need for information which is presented in the financial statements. The specific objective of financial statements is to present the consolidated financial position, results of operations, and changes in financial position in accordance GAAP (General Accepted Accounting Principles). The definition of this accounting purposes have weaknesses or limitations.Critics of the limitations of conventional accounting that must be done parallelization with practices in the present economic institutions that continue to grow with various forms of economic transaction of business done. This paper discusses the five major developments in accounting theory scope of the present and future who attempt to address the above challenges, namely: Accounting for the public economy (accounting socioeconomic); Accounting for human resources (human resources accounting); Accounting for the cost of capital (accounting for the cost of capital); Report of financial forecasts (reporting of Financial forecasts); The trend towards multi-national accounting. This proves, that the accounting as a science must continue to conduct research and intensive studies to give birth to the theory of accounting in accordance with the needs of economic civilization of the present and future need.</em></p> <p><em> </em></p> <p><strong><em></em></strong><em></em></p>

Book Reviews

Book Reviews

Sistem Informasi Penjualan Pemasangan Kacafilm “HS Auto Film"

The growing market share in many business areas especially in service area is causing the use of conventional accounting system being ineffective. One of the companies which still using the conventional one is a window film set-up service company called HS Auto Film. The process of processing sales data is less accurate and slower in the contrary of the developing sales data. Computer-based window film set-up Sales Information System is built in order to make the processing data more accurate and faster. The information system is built using Visual Basic programming language along with .NET framework technology and SQL Server database that embedded in the application itself. The making and development process of the Sales Information System is using waterfall method. Waterfall method consists of user requirement, analysis, design, implementation, and testing. Entity Relationship Diagram , Data Flow Diagram and Flowchart are a lso used in the Information System design. The output of this application design is a desktop application that can help user to control the set-up of window film , manage payment bill, and manage document in accounting in faster and more accurate way. The information system can be developed later using web-based system so that the development and maintenance can be done easier.

Intangible Investment and Regional Productivity in Great Britain

Melachroinos K. A. and Spence N. Intangible investment and regional productivity in Great Britain, Regional Studies. Investment in intangible assets is considered to be an important driver of territorial competitiveness and wealth creation. Nevertheless, conventional growth accounting analyses treat most intangibles as intermediate expenditure and thus fail to capture the full effect of intangibles on output expansion and productivity dynamics. This situation has changed recently as a result of research that approaches a wider range of intangibles as capital. Based on such a national study, this paper investigates the significance of intangibles as a source of regional economic growth in Great Britain and the effect of these assets on the productivity performance between 1995 and 2004. Melachroinos K. A. and Spence N. 无形投资与区域生产力在英国，区域研究。无形资产的投资被视为地域竞争力与财富创造的驱动力。但传统的成长会计分析将大多数的无形资产视为居中花费，因而无法掌握无形资产之于产量扩张与生产动力的整体效益。此一情况由于最近将广泛的无形资产视为资本的研究而有了转变。本文根据上述的全国性研究，探讨无形资产做为英国区域经济成长来源的显著性，以及这些资产在 1995 至 2004 年间之于产能表现的效益。 无形资产 全要素生产力 英国 区域 Melachroinos K. A. et Spence N. L'investissement incorporel et la productivité régionale en Grande-Bretagne, Regional Studies. On considère que l'investissement dans les immobilisations incorporelles est une force motrice importante de la compétitivité territoriale et de la création de richesse. Cependant, les analyses classiques de la comptabilité de croissance traitent la plupart des immobilisations incorporelles comme des dépenses intermédiaires et, par la suite, ne traduisent pas suffisamment l'effet global des immobilisations incorporelles sur l'accroissement de la production et la dynamique de la productivité. Récemment, la situation a changé suite à la recherche qui considère une gamme plus grande d'immobilisations incorporelles comme du capital. A partir d'une telle étude nationale, cet article cherche à examiner l'importance des immobilisations incorporelles comme source de la croissance économique régionale en Grande-Bretagne et l'impact de ces actifs sur la productivité entre 1995 et 2004. Immobilisations incorporelles Productivité totale des facteurs Grande-Bretagne Régions Melachroinos K. A. und Spence N. Investition in immaterielle Vermögenswerte und regionale Produktivität in Großbritannien, Regional Studies. Die Investition in immaterielle Vermögenswerte gilt als wichtiger Faktor der territorialen Konkurrenzfähigkeit und Vermögensbildung. Dennoch werden die meisten immateriellen Vermögenswerte in herkömmlichen Wachstumszerlegungsanalysen als intermediäre Ausgaben behandelt, weshalb der vollständige Effekt dieser Vermögenswerte auf die Produktionsexpansion und Produktivitätsdynamik nicht erfasst wird. Diese Situation hat sich vor Kurzem aufgrund von Forschungsarbeiten geändert, in denen ein breiteres Spektrum von immateriellen Vermögenswerten als Kapital aufgefasst wird. Auf der Grundlage einer solchen nationalen Studie wird in diesem Beitrag die Signifikanz von immateriellen Vermögenswerten als Quelle des regionalen Wirtschaftswachstums in Großbritannien und die Auswirkung dieser Vermögenswerte auf die Produktivitätsleistung im Zeitraum von 1995 bis 2004 untersucht. Immaterielle Vermögenswerte Gesamtfaktorproduktivität Großbritannien Regionen Melachroinos K. A. y Spence N. Inversión intangible y productividad regional en Gran Bretaña, Regional Studies. Las inversiones en activos intangibles se consideran un factor importante de la competitividad territorial y la creación de riqueza. Sin embargo, en los análisis convencionales sobre la compatibilidad de crecimiento, la mayoría de activos intangibles son tratados como gastos intermedios y, por tanto, no se capta todo el efecto de los activos intangibles sobre la expansión de la producción y las dinámicas de la productividad. Esta situación ha cambiado hace poco como resultado de un estudio que aborda una gama más amplia de activos intangibles como capital. Basándonos en un estudio nacional de este tipo, en este artículo analizamos cuál es la importancia de los activos intangibles como una fuente de crecimiento económico regional en Gran Bretaña y el efecto de estos activos en el rendimiento de productividad entre 1995 y 2004. Activos intangibles Productividad total de los factores Gran Bretaña Regiones

Book Reviews

Book Reviews

Incremental Information Content of Financial and Non-Financial Performance Measures

Previous research has yielded mixed results concerning the connections between financial and non-financial measures of performance; furthermore, the relative value of these measures has yet to be effectively investigated. This paper contributes to the discussion of non-financial metrics by investigating the predictive value of multiple non-financial performance measures as compared to financial performance measures. This analysis includes quarterly panel data gathered from 31 US airline companies during the period of 2003-2007, to test the hypothesis that non-financial measures are in fact leading indicators for lagged financial performance and therefore have greater incremental information content than that provided by financial measures. The results of this study indicate that various non-financial performance measures can be leading indicators for lagged accounting numbers. Consequently, non-financial measures have an incremental information content advantage over conventional accounting numbers. Finally, the lag-search results suggest that the benefits in improving non-financial measures of performance would take place in the short-term. Thus, they can be included in managers’ compensation plans to encourage enhanced performance.

Bayesian integration of large SNA data frameworks with an application to Guatemala

We present a Bayesian estimation method applied to an extended set of national accounts data and estimates of approximately 2500 variables. The method is based on conventional national accounts frameworks as compiled by countries in Central America, in particular Guatemala, and on concepts that are defined in the international standards of the System of National Accounts. Identities between the variables are exactly satisfied by the estimates. The method uses ratios between the variables as Bayesian conditions, and introduces prior reliabilities of values of basic data and ratios as criteria to adjust these values in order to satisfy the conditions. The paper not only presents estimates and precisions, but also discusses alternative conditions and reliabilities, in order to test the impact of framework assumptions and carry out sensitivity analyses. These tests involve, among others, the impact on Bayesian estimates of limited annual availability of data, of very low reliabilities (close to non-availability) of price indices, of limited availability of important administrative and survey data, and also the impact of aggregation of the basic data. We introduce the concept of `tentative' estimates that are close to conventional national accounts estimates, in order to establish a close link between the Bayesian estimation approach and conventional national accounting.

Impact Metrics for Social Innovation: Barriers or Bridges to Radical Change?

Addressing society's complex problems means fundamentally challenging systems and their economic, social and environmental dimensions. Current measurement tools and evaluation approaches are grounded in conventional accounting practices, and thus tend to a focus on the outcomes of products and services, mainly evaluating economic performance. This presents a particular challenge when it comes to evaluating the impacts of social innovation, which have intended effects beyond economic and financial. This paper describes conventional measurement tools and their limitations for evaluating social impact, and proposes that developmental evaluation is more suited to evaluating social innovation. The consequences of not developing new metrics for social innovation are discussed in terms of the disadvantages for decision-making.

PENGARUH TEKNOLOGI DAN TUNTUTAN KONSUMEN TERHADAP PROFESI AKUNTANSI SAAT INI

PENGARUH TEKNOLOGI DAN TUNTUTAN KONSUMEN TERHADAP PROFESI AKUNTANSI SAAT INIThe objective of this article is to describe how technology and customer need influence accounting profession. Advanced technology has been changing almost all of human life. Innovations of computer equipment and program, as well as manufacturing tools influence accounting profession. This can be shown by generating various kinds of accounting computer application program and application of Material Requirement Planning (MRP), Computer Integrated Manufacturing (CIM), and Statistical Process Control (SPC). Customer’s need of accounting profession also has been changing paradigm that is as long as adhered. Conventional accounting is connoted by bookkeeping and auditing, while recently it is forced to develop its knowledge content and extent service spectrum e.g. management consultancy, strategic planning, and service consultancy of ISO 9000 and 14000. Keywords: accounting, influence, profession, technology

The yes, no decision is easy now: Is human capital accounting challenge for accountants

Human resource accounting (HRA) is an old concept in corporate and academic research while new in economics. This study explores new dimension for valuation of human capital asset (HCA), through parallel comparison with international financial reporting standards (IFRS). During the study, few weaknesses were identified in conventional accounting standards. Based on these finding, new model for valuation of HCA was developed. The objective of this study was to encourage both researchers and professionals to implement HRA concept in business world. Based on the observations, it is concluded that in current era businesses consider HRA as an effective tool to manage human resource (HR). Key words: Human resource accounting (HRA), human capital asset (HCA), human resource (HR), IFRS/IAS earnings; NBM, net benefit model.

Human Resource Accounting

Human Resource Accounting (HRA) involves accounting for expenditures related to Human resources as assets as opposed to traditional accounting which treats these costs as Expenses that reduce profit. Accountants have recognized the value of human assets for at least 70 years. Human resource accounting is not a new issue in conomics. Economists consider human capital as a production factor, and they explore different ways of measuring in in education, health, and other areas. Human resource accounting (HRA) is an attempt to identify, quantify and report made in Human resources of an organization that are not presently accounted for under conventional accounting practice. The concept of investment in employees; the human capital of the organization, push forward a view that one is looking for a profit to be gained from the and therefore the focus is on the development of employees for a specific purpose to gain. Investment in professional training is often treated as an industrial relation activity, and not as an essential decision like for the plant or technology. When we consider human assets accounting, the under lined idea is, we are considering the human inventory stock of a company incorporated available to the organization to perform the activities. T he concept of human resource accounting can be basically examined from two dimensions:(I) the in human resources; and (ii) the value of human resources. The expenditure incurred for creating, increasing, and updating the human resource quality is known as in human resources. Such yields fruitful results like higher productivity and higher income to the organization.

Analysis of the True and Fair View Concept: An Islamic Perspective

The requirement of giving a ‘True and Fair View’ (TFV) was introduced in 1947 into the Companies Act in the UK and later disseminated to the Companies Acts of Commonwealth countries. The requirement is ‘fairly presented’ in the USA, which has a similar connotation to the ‘true and fair’ of the UK. In addition, the IAS, being highly influenced by the Anglo-American perspectives, has also adopted a similar requirement. Therefore, it is clear that the concept of TFV is significant in conventional accounting and forms the basis of establishing a framework for accounting regulation. However, since such a concept has only been referred to by AAOIFI and MASB, the question arises as to whether the concept is applicable to Islamic accounting. Or whether a different concept would be more appropriate to cater specifically for Islamic accounting, since as argued, Islamic accounting is different from the conventional accounting. While the Islamic standard setters are busy promulgating Islamic accounting standards, they seem to overlook the most fundamental element of financial reporting, which is a basis to develop the standards. A possible basis is the concept of giving a “True and Fair View” (TFV). The main aim of this paper is to critically examine the concept of TFV under the Islamic perspectives. The study tries to analyze the applicability of the TFV concept in Islamic accounting. It further explores the position and roles of TFV in the Islamic context. Finally, the paper will determine whether the TFV override is relevant and applicable in Islamic accounting. As the overall findings, the applicability of the concept of TFV is established by analyzing the history and regulation of TFV, the current scenario and the roles of the concept which includes the overriding principle. It is found that TFV concept is not contrary to Islamic Shari’ah. Moreover, there are roles for the TFV and its override. Based on the findings, the study suggests that the Islamic standards setters retain the term as it is not against Islamic Shari’ah and to avoid any confusion to the users of financial statement. Therefore, the concept of TFV should remain in Islamic accounting until a better phrase which is better suited to the Islamic context is coined. Thus, the concept of TFV, at least for now, is actually applicable to Islamic accounting.