Large Accounting Firms Research Articles

Skilled International Migration: An Analysis of the Geography of International Secondments within Large Accountancy Firms

In this paper the issue of skilled transient movements (international secondments) within large multinational accountancy firms are considered. The principal arguments in the paper are that chartered accountants are involved in transient moves through global secondment programmes as a response to the corporate strategy of the firm and as a tool which enhances the career development of the individual.

Inter-managerial competition and capital accumulation: it specialists, accountants and executive control

This paper examines the character of inter-managerial competition for executive control. Armstrong has argued that accountants dominate positions of executive management in the UK and USA because of their ability to define and solve the problems of ‘capital≐. The paper asks why IT specialists have not been able to gain access to executive positions in the UK despite their considerable and growing importance. In providing some tentative answers it questions the validity of Armstrong's model of inter-managerial competition and suggests that IT specialists and consultants may be in a position to launch a successful collective mobility project. Large accountancy firms may play a key role in this process particularly if they continue to expand their IT consultancy activity at the present rate.

A longitudinal and cross-sectional study of students' perceptions of the importance of job attributes

Entry-level employee turnover in large accounting firms is viewed by many as being excessive. Numerous studies have indicated that a link exists between job attribute dissonance and employee turnover. This study examines one possible cause for the dissonance. It is hypothesized that initial misconceptions on the part of the students as to what benefits their job will offer and subsequent changes in their perceptions of the relative importance of various job attributes will contribute to job dissatisfaction. Possible gender differences are also investigated. Cross-sectional study results indicate that students do not hold the same perceptions of the relative importance of various job attributes as workers. Longitudinal study results indicate that accounting graduates alter many of their beliefs previously held as students. Furthermore, the absence of important job attributes is associated with increased expressions of dissatisfaction and greater intentions to leave. These findings suggest that educators should enlarge their teaching role to include information pertaining to the work environment.

The Strategy Problem of the Medium-Sized Accounting Firm

The article reports the results of a case-study of a medium-sized accounting firm (MSAF) and two associated surveys. It argues that, based on this evidence and that of other relevant surveys, MSAFs must adopt a planned strategy of ‘dynamic stability’. MSAFsface increasing competition for their largest clients from a few very large accounting firms. This competition is probably irresistible. The article examines the problems of the proposed strategy and, based on the available evidence, concludes that ‘dynamic stability’ is feasible, and offers some guidance on its implementation.

Large Accountancy Firms in the UK: Operational Adaptation and Spatial Development

Recent growth in the accountancy sector has been accompanied by a series of structural changes, in particular the concentration, internationalisation and diversification of accountancy practice. At the same time, the future of the partnership structure of accountancy firms is in doubt because of litigation pressure. Within the UK internal structural change has been accompanied by the geographical expansion of the large accountancy firms that now dominate the national and regional accountancy markets.

Producer Services and the Regions: The Case of Large Accountancy Firms

This paper contains a review of recent trends and developments in the UK accountancy profession, and an analysis of the decentralisation of branch offices to the regions. Original material is used to explore the reasons for such growth in one region, Wales, and to analyse the social implications of the tertiarisation of subregional local economies as a result of the growth of service sector activities, such as accountancy.

Accounting: The Structure of a Growing Profession

Complete membership records of the Institute of Certified Public Accountants in Israel are analysed to determine the level of concentration and growth of the accounting profession. This study differs from previous studies in that it concentrates on the supply side of the market. Previously, because of the unique characteristics of auditing services, they were assumed to have no substitute. An analysis of firm switching by CPAs in Israel indicates the existence of substitutes in production. Low levels of overall concentration were found, although large clients are generally audited by large public accounting firms. The profession appears to be competitive as entry is quite easy and switching between firms by CPAs is common.

CATEGORY WIDTH COGNITIVE STYLE AS A FACTOR IN ACCOUNTANTS' PERCEPTIONS OF ACCOUNTING INFORMATION

ABSTRACTThis paper reports the findings of a laboratory experiment designed to investigate the relationship of category width (CW) cognitive style with accountants' perceptions of accounting information. Subjects drawn from large accounting firms in Sydney, Brisbane, and Melbourne, Australia, were classified into broad, medium, and narrow categories following the test devised by Pettigrew [19]. Subjects were requested to state their level of confidence in decisions they had made after receiving (1) conventional accounting information or (2) conventional accounting information and human resources accounting (HRA) information using a one‐group pretest‐posttest design. The results indicated a significant relationship between CW cognitive style and the accountants' confidence in their decisions. Furthermore, CW cognitive style moderated the accounting‐information/decision‐making relationship.

An Investigation of Managers' Adaptations to SFAS No. 2: Accounting for Research and Development Costs

Since 1975, Statement of Financial Accounting Standards No. 2 (SFAS#2) has required U.S. corporations to expense most research and development (R&D) costs in the period incurred, primarily because of the uncertain nature of future benefits derived from R&D (SFAS#2 [1974b, para. 39-49, 52]). However, SFAS#2 may have had some unintended economic consequences. (1) For small, research-intensive firms, required expensing of R&D costs generally would result in lower and/or more volatile reported earnings, lower stockholders' equity, and a higher debt-to-equity ratio. These could translate into higher capital costs and subsequently lower capital investment in these firms. The public record of position papers and testimony before the FASB [1974a] shows that smaller, developing firms (and several large public accounting firms) were strongly opposed to mandatory expensing of R&D. (2) If managers are evaluated on reported earnings, required expensing of R&D costs could bias managers against investments in R&D (e.g., in favor of other capitalizable investments) (AAA [1977] and Selto [1982]). For example,

How Effectively Does the "New" Accountant Communicate? Perceptions by Practitioners and Academics

The authors surveyed accounting department chairpersons in AACSB-accredited universities and the managing partners of the largest accounting firms in the country to determine their perceptions of how new accountants communicate and the perceptions of available instructional methodologies. The results reveal a strong dissatisfaction with both skills and training.

An Empirical Investigation of Auditor Involvement in Non-Audit Services

Public accounting firms' involvement in non-audit services for audit clients has been the subject of recent congressional hearings and discussions in the financial literature. Our purpose here is to determine the extent to which large public accounting firms provide different quantities and types of non-audit services to audit clients. This will allow us to infer the potentially different effects of prohibiting firms from providing specific non-audit services to audit clients. While summary statistics for total non-audit services are available,' these statistics include non-audit services for both audit and non-audit clients. Providing non-audit services for non-audit clients does not present an audit independence problem, which was the major concern of congressional hearings and discussions about non-audit services. Since available literature' indicates that non-audit services for non-audit clients can be large, an examination of non-audit services to audit clients seems useful. Furthermore, available summary statistics aggregate different types of services, some of which may have a greater impact on auditor independence than other services. The first section of this paper provides a description of current disclosure requirements for public accounting firms' involvement in non-audit

An Investigation of the Distribution of Power in the APB and FASB

The method of self-regulation exercised by the accounting profession has been increasingly criticized in recent years with one of the most direct assaults contained in the Metcalf Staff Report, The Accounting Establishment: A Staff Study [1976]. There it is implied that effective control over policy making boards is held by several large accounting firms (the Big Eight). This power is claimed to derive from the disproportionate representation on the Accounting Principles Board (APB) and the Financial Accounting Standards Board (FASB) maintained by the Big Eight, along with alleged control over board funding, staffing of research support groups, and representation on the overseeing Financial Accounting Foundation. Although no evidence of actual manipulation is presented, the subcommittee staff attempts to make a convincing case against the accounting establishment based on potential usurpations of the system by the Big Eight. Instigated by these and previous criticisms of private-sector policymaking in accounting, a number of changes have been made in the structure and composition of the policymaking mechanism. The accounting profession has become much more sensitive to its public image, desiring at least to convey the appearance that the standard-setting process is equitable to all interested constituencies. Thus, although bloc voting has not yet been documented (e.g., see Brown [1981]), it is still considered desirable to reduce any ostensible control by a single group such as the Big Eight. Accountants therefore should be concerned about

The Impact of Group Processing on Selected Audit Disclosure Decisions

The area of accounting uncertainties seems to pose a significant problem for both accountants and auditors. Probably the most noteworthy recognition of the problems of reporting on uncertainties and attesting to such reporting appears in The Commission on Auditors' Responsibilities: Report, Conclusions, and Recommendations (CAR Report) (Commission on Auditors' Responsibilities [1978, sec. 3]). Generally, the report cites a number of lawsuits successful against auditors and proposes that auditors not be required to modify their opinions when material uncertainties or contingencies exist and are adequately disclosed in the statements. Following the CAR Report, the Auditing Standards Executive Committee (AudSEC) of the American Institute of Certified Public Accountants (AICPA) proposed and then withdrew a Statement on Auditing Standards (SAS) consistent with the CAR recommendation (AICPA [1977]). Thus, problems presented by uncertainties still remain for the auditor who must decide what constitutes fair disclosure of uncertainties. Discussions with members of large accounting firms indicate that they often use groups to resolve difficult reporting problems. This practice seems to be increasing due, perhaps, to concern for potential litigation, reporting complexity, and more use of specialists in auditing. The ration-