bluuebunny/crossref_metadata_2025 huggingface dataset:
Accounting for Public Policy Actions: The Case of Motor Carrier Deregulation
Authors: ENIS CHARLES R. , MORASH EDWARD A.
Published: July 2005

An important concern of accounting policy is the provision of guidance for the reporting of relevant information related to economic events including public policy actions. In the case of motor carrier deregulation, the Financial Accounting Standards Board issued a specialized accounting standard which required all regulated motor carriers to write off as extraordinary losses the intangible assets associated with their interstate operating rights. The specific focus of the present research was to investigate the extent to which these reported accounting losses reflect real economic losses. The findings provide evidence that industry‐wide economic losses are unsubstantiated. The study concludes that a requirement that all firms involved in a regulatory reform to report write‐offs which are unsupported by entity‐specific transactions or events can result in serious economic consequences. Also discussed are the more general issues relevant to the promulgation of specialized accounting standards, the impact of accounting policy on public policy formulations, and accounting treatments for politically sensitive issues.
Project Evaluation and Accounting Income Forecasts
Authors: MADAN DILIP B.
Published: July 2005

It is shown that the economically justifiable criterion for project evaluation of maximizing current net market value is equivalent to maximizing the discounted net cash equivalent flow. It is argued that the appropriate income concept for project evaluation is therefore the one used in the system devised by Chambers, ‘Continuously Contemporary Accounting’.
The Royal Mail Case: A Legal Analysis
Authors: ASHTON R. K.
Published: July 2005

This paper examines the legal issues raised in the celebrated Royal Mail Case and the implications of the case for the practice today. It is argued, contrary to the literature, that the case was not about the utilization of secret reserves, but about the non‐disclosure of repayments by the Inland Revenue of overprovisions for tax and that defence counsel for the auditor succeeded because of the weak factual case presented by the prosecution. The paper then argues that whilst the factual basis of the prosecution's case was extremely weak, they had missed three fundamental points: the going concern concept, the materiality concept, and the point at which an overprovision for taxation should be recognized. Various minor issues in the case are also analysed, together with the effect they had on the outcome of the case. The implications of the case are then examined and in particular, the duties of auditors where compliance with statutory disclosure provisions conflicts with the requirement to show a true and fair view and whether cases involving technical accounting issues should be heard by specialist judges and assessors.
An Examination of Alternative Hypotheses Concerning Depreciation of Buildings
Authors: CRASWELL A. T.
Published: July 2005

Clinch (1983) examined the possibility that there are cash‐flow effects involved in the decision not to comply with the requirement to depreciate buildings. He interpreted his results as evidence that non‐compliance involved greater auditing costs than compliance and provided possible benefits associated with avoiding violations of debt covenants. In this paper, the analytical and empirical grounds for expecting increased auditing costs are discussed and it is argued that, in general, such cost increases may be expected to follow qualified opinions. However, as the sample tested by Clinch consisted predominantly of continuing qualifications, it is suggested that the increasedaudit fees reported by Clinch may not be attributable to the non‐compliance qualifications. A further test of the bond‐covenant hypothesis was conducted using an alternative research design. The results from this test are inconsistent with those reported by Clinch and with the suggestion that decisions not to depreciate buildings are driven by bond‐covenant considerations.
Funds Statements and the Two‐Entity Test: A Reply
Authors: ROBB ALAN J.
Published: July 2005

Partington et al. (1986) reject the criticism of the two‐entity test (Robb, 1985) on the general grounds that the article constained quotations out of contest, misquotations, incorrect assertions and incorrect referencing. It is accepted that there was one case of incorrect referencing but the other objections are rejcted. The conclusion is still drawn that the two‐entity test is impractical and depends for its operationality on clear definition of basic accounting terms.
Revenue Recognition in the Construction Industry: An Experimental Study
Authors: TROTMAN KEN T. , ZIMMER IAN R.
Published: July 2005

There have been suggestions that loan officers do not consider there is a problem in the availability of alternative revenue recognition methods, provided that sufficient disclosure of recognition procedures is made to enable adjustment of financial statements. On the other hand, the accounting literature on‘functional fixity’ suggests such adjustments are not made. The functional fixity literature has relied exclusively on testing for an accounting method effect on user predictions and decisions. As a result, the evidence can be interpreted as users being fixated on earnings and ignoring information about accounting methods or alternatively they may have given attention to that information and attempted a transformation although the extent of the adjustment was‘inadequate’. This paper suggests that the previous evidence on functional fixity is inconclusive about lenders’ suggestions that they adjust financial statements and that different actions may be required by lending institutions depending on which interpretation of the functional fixity literature is made. This study uses the joint methodologies of analysis of variance and protocol analysis to focus on both whether adjustments are made as well as whether alternative methods of recognizing profit from longterm contracts affect the judgements of experienced lenders. The results show that the majority of subjects did not attempt to adjust for alternative methods of recognizing revenues.
Accounting Education for the Twenty‐first Century
Authors: CHAMBERS R. J.
Published: July 2005

The task of accounting is to provide reliable knowledge. The standard textbooks and curricula give no analytical attention to what this means. They perpetuate processes that had their origins in the desire to conceal rather than to disclose. Recurrent criticism of the products of practice may only be averted if the educational establishment gives greater attention to the nature of money and prices, the conditions of valid measurement, the logic of choice, the regulation of complex processes, and the consequences of misdirected thought and misleading practices.
Estimating Current Cost Depreciation Expense Using Numerical Analysis and the STAPOL Technique: A Pedagogic Exposition
Authors: CRAIG RUSSELL , TIPPETT MARK
Published: July 2005

Current cost accounting (CCA) recommendations have led to complex measurement problems. This paper aims to provoke discussion of the use of numerical analysis and the STAPOL technique as a method for measuring current cost depreciation expense. The measurement method analysed has a scientific foundation, is simple to apply, and yields accurate results. With slight modification, the method analysed is also applicable to other areas of CCA characterized by intractable measurement problems. Unlike other papers which have used differential calculus to analyse the use of numerical analysis in accounting, the exposition in this paper depends on only a rudimentary knowledge of algebra.
The Effects of Uncertainty Reporting on Lending Officers’ Perceptions of Risk and Additional Information Required
Authors: GUL FERDINAND A.
Published: July 2005

This laboratory experiment investigates the perceptions which lending officers in Singapore have of risk and the additional information required when a client's financial reports receive a ‘subject to’ audit qualification. Using thirtyone bank lending officers in Singapore as subjects and a repeatedmeasurements ANOVA design, the conclusions of this study are that lending officers’ perceptions of risk and their demand for additional information required both increase as a result of a ‘subject to’ audit qualification.
The Pre‐Pacioli Indian Double‐entry System of Bookkeeping: A Comment
Authors: NOBES CHRISTOPHER W.
Published: July 2005

The claims made by Lall Nigam that the Bahi‐khata was a double‐entry system of accounting that predated Pacioli are challenged. Evidence purporting to support Nigam's claims is dismissed as hearsay.
Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally
Authors: GRAY S. J.
Published: July 2005

Research has shown that accounting follows different patterns in different parts of the world. There have been claims that national systems are determined by environmental factors. In this context, cultural factors have not been fully considered. This paper proposes four hypotheses on the relationship between identified cultural characteristics and the development of accounting systems, the regulation of the accounting profession and attitudes towards financial management and disclosure. The hypotheses are not operationalized, and empirical tests have not been carried out. They are proposed here as a first step in the development of a theory of cultural influence on the development of accounting systems.
The Eighteenth‐Century Origins of Cost Accounting
Authors: MEPHAM M. J.
Published: July 2005

A discussion of the important description of a manufacturer's costing and management accounting system which an eighteenth‐century Scottish academic, Robert Hamilton (1743–1829), gives in his book, An Introduction to Merchandize (1777/9). Hamilton's system is considered in the context of the economic developments which were taking place, contemporary practice and the works of other writers.
Deprival Value or Value to the Owner?—A Clarification
Authors: FRASER IAN A. M.
Published: July 2005

A critical examination of the asset valuation concepts of value to the owner and deprival value. It is argued that these concepts are not synonymous but are, indeed, totally disparate. Specifically, replacement cost is not a measure of value to the owner.
The Contribution of Non‐U.S. Institutions to Academic Accounting Journals
Authors: REEVE ROBERT C. , HUTCHINSON PATRICK J.
Published: July 2005

This study uses the weightings of accounting journal quality derived by Howard and Nikolai (HN, 1983) to produce a ranked list of the publishing contribution of the twenty‐five top non‐U.S. institutions for the ten‐year period 1977–86. A data base was created of all the contributions by non‐U.S. academics to the ten academic accounting and finance journals ranked highest in the HN study. The results of the analyses of this data base indicate: (a) the contribution of non‐U.S. countries to the accounting and finance literature; (b) the proportion of publications accounted for by the top twenty‐five non‐U.S. institutions; and (c) a ranking of the contributions of the top twenty‐five non‐U.S. institutions.
Wisdom or Widgets: Whither the School of ‘Business’?
Authors: SUBOTINK DAN
Published: July 2005

The development of quantitative methods has proved to be invaluable in contemporary academic life; it has opened up the world to empirical studies. Yet there is a cost. ‘The mind of man,’ writes John Dewey, ‘is taken captive by the spoils of prior victories’ (Gummere, 1988, p. 25). In the social sciences, and particularly in the business area, quantitative methods have become a fetish and have led to the crowding out of non‐empirical work. ‘Wisdom or Widgets’ examines the implications of this disturbing phenomenon.
Evolution of a Lease Solution
Authors: BURROWS G. H.
Published: July 2005

The lease solution most frequently advocated in the literature, that in which the after‐tax cash flows of leasing and borrowing are discounted by the after‐tax borrowing rate, is invariably associated with Myers, Dill and Bautista (MDB; 1976). This article, while accepting the basic assumptions underlying this solution, attempts to identify its origin and the process by which it evolved. The finding is that Bierman and Smidt (1966) pioneered this approach which has its antecedents in the works of Gant (1959) and McEachron (1959). Post‐MDB developments in this solution are analysed and a critique is offered of an alternative evaluation approach advocated in MDB's influential work.
Auditors' Responsibilities for Events Arising After Balance Date
Authors: STOKES DONALD J. , SULLIVAN GRAHAM G.
Published: July 2005

This paper critically evaluates relevant Australian and international professional documents applicable to the auditor's duties to audit and report on listed companies'annual accounts in the open‐ended period subsequent to balance date. This examination suggests certain defects within these documents of potentially serious legal consequence. Particular attention is focused on matters relating to the tenure of the statutory audit appointment, the derivative contractual arrangement and the notion of auditor reliance upon management. The extent to which compliance with professional documents, adopted throughout the profession, is a necessary and sufficient defence in lawsuits grounded in negligence claims is analysed. This analysis is sustained in terms of the legal standard of care that may be judicially applied in the determination of auditor liability in the open‐ended post balance date period.
Time in Accounting
Authors: CHAMBERS R. J.
Published: July 2005

All actions and the financial consequences of all actions are uniquely dated. The dates of actions and consequences are essential elements of their description and essential inputs to their understanding. However, in the course of time, the temporal uniqueness of financial events has come to be disregarded in periodical aggregative accounting. To this dereliction is attributable much of the confusion in argument and infelicity in practice that has stultified the striving for a perennially serviceable style of accounting.
The Use of a Statement of Changes in Financial Position to Interpret Financial Data: An Empirical Investigation
Authors: BRADBURY MICHAEL , NEWBY SONJA
Published: July 2005

This study provides empirical evidence on the use of a statement of changes in financial position by financial analysts to interpret and make judgments on information contained in annual reports. Analysts were required to answer five questions developed from claims made in a professional accounting standard about the purpose of the statement of changes in financial position. The results indicate that the statement of changes in financial position does not generally enhance financial analysis.
Accounting and the Input—Output Principle in the Prehistoric and Ancient World
Authors: MATTESSICH RICHARD
Published: July 2005

The paper offers mainly an interpretation of Professor Schmandt‐Besserat's archaeological research from an accountant's point of view. Its major conclusion is that those ancient people were the first to apply the input—output principle (inherent in every actual commodity transfer) to a representational, quasi‐numerical (and later numerical) system of record keeping. A second aspect of this paper reveals that both the token‐accounting of the ancient Middle East, as well as modern accounting, deal with two distinct but related duality aspects. The first kind of duality involves concrete transactions and belongs to physical reality, while the second kind of duality arises out of ownership and debt relations which belong to social reality. The paper demonstrates how these two types of duality are related and in which way the second type can be reduced to the first type. The final section examines the possibility of connecting the input—output principle manifested in token accounting with the duality principle encountered in ancient Greek accounting practice.
Insider Trading: Implications and Responses
Authors: HOGAN WARREN P.
Published: July 2005

An understanding of the implications of insider trading can only be achieved by analysing conflicting perceptions of what is meant by inside or privileged information. Empirical evidence on insider trading, mainly reflecting United States experiences, challenges assumptions not only about the impact of insider trading but also the efficiency of financial markets. There are hierarchies of market participants and rules on insider trading capable of practical implementation will only change the rankings. Companies have a property interest in their inside information and should bear the responsibility for its use.
The Significance of an ‘Orientation Postulate’
Authors: STEWART JENICE P.
Published: July 2005

Until the 1930s, the ‘orientation postulate’ was a popular means of rationalizing bookkeeping practice. This was during a period when the balance sheet was the focal point of reporting and inductive theory formulation was popular in accounting. However, after the 1930s, the balance sheet was no longer the focus of financial reporting. By the 1960s accountants sought a deductive mode of theory formulation and the ‘orientation postulates’ were abandoned. Evidence adduced suggests that an ‘orientation postulates'can be useful in addressing income statement as well as balance sheet issues, and is also useful in diminishing chaos and promoting logical and cohesive theory formulation. If a discipline has a common orientation, then less ad hoc principle formulation is likely to occur.
Inconsistency in U.S. Accounting Standards: The Treatment of Interest
Authors: FETTERS MICHAEL L. , LIVINGSTONE JOHN LESLIE
Published: July 2005

Consistency is an essential part of financial reporting: it applies both to the continuous use of the same accounting principles by an entity from period to period, and to consistency between various accounting principles used by the same entity. In the development of accounting standards, risks to users of inconsistencies can be reduced by good disclosure requirements, particularly so between various pronouncements. A study examining the treatment of interest found inconsistencies in two‐thirds of the relevant U.S. GAAP pronouncements.
Manuscript Additions to the Edinburgh University Copy of Luca Pacioli's Summa de Arithmetica
Authors: LEE GEOFFREY A.
Published: July 2005

The copy of Luca Pacioli's Summa (1494) now owned by the University of Edinburgh, Scotland, exhibits at the end fifty‐nine pages of manuscript additions, dating from the late fifteenth and early sixteenth centuries. There is evidence that this material was written in the main by Filippo Calandri, who published the first printed textbook of arithmetic in Florence in 1491/2. The author has deciphered most of the MS from photocopies.

The material has no reference to bookkeeping or accounting, but is a curious and interesting product of the Renaissance Italian mind. Much of it appears to be notes for a book on mensuration, probably by Calandri, and incorporating some matter from his Arithmetica. The MS also includes many astrological calculations, and a series of Latin aphorisms with a prologue, besides (in another hand) a few magic charms or spells.

The MS material is described and analysed, and the relation of its parts to one another, to Calandri and to Pacioli, is explored.
The Estimation of Realizable Holding Gains
Authors: TIPPETT MARK
Published: July 2005

The present paper outlines rules for estimating realizable holding gains within a current cost framework. The foundation for the procedures lies with a theorem properly named for Edwards and Bell (1961). The theorem is stated and proved and then employed to derive the relevant quadrature rules. Estimates of the holding gains applicable to U.K. manufacturing industry are then made. The estimates are found to be highly sensitive to the quadrature rule used.
Management Accounting Lag
Authors: DUNK ALAN S.
Published: July 2005

Kaplan (1984) claimed that there has been little innovation in the last sixty years in the design and implementation of management accounting systems. Current systems lag changes in manufacturing processes. This paper provides a framework to explain that this lag in organizations may be due to the perceived greater complexity and lesser relative advantage, compatibility, trialability and observability of administrative (e.g., accounting) innovations as compared with technical innovations. The empirical research not only supports the existence of an accounting lag, but also suggests that there may be a substantial reward for those organizations that can remedy it.
Positive Accounting: An Assessment
Authors: STERLING ROBERT R.
Published: July 2005

Positive accounting theory, using the book of the same name by Watts and Zimmerman (1986) as the primary source of information about that theory, is subjected to scrutiny. The two pillars — (a) value‐free study of (b) accounting practices — upon which the legitimacy of that theory are said to rest (and the absence of which is said to make other theories illegitimate) are found to be insubstantial. The claim that authorities — economic and scientific — support the type of theory espoused is found to be mistaken. The accomplishments — actual and potential — of positive theory are found to have been nil, and are projected to continue to be nil. Based on these findings, the recommendation is to classify positive accounting theory as a ‘cottage industry’ at the periphery of accounting thought and reject its attempt to take centre stage by radically redefining the fundamental question of accounting.
Distributable Profit in Britain Since 1980: A Critical Appraisal
Authors: MORRIS RICHARD D.
Published: July 2005

This paper critically evaluates the 1980 introduction into British company law of a new European‐based definition of distributable profit. The concept is defined in terms of cumulative realized profits but the law left to the British accounting profession the task of specifying what constituted realized profits. A review of British professional accounting exposure drafts and standards since 1980 reveals omissions, inconsistencies and ambiguities in the treatment of realized profits by the minority of those pronouncements that discussed the term. Consequently, since 1980, distributable profit has remained a flawed concept.
An Empirical Examination of Cash Flow Measures
Authors: CHARITOU ANDREAS , KETZ EDWARD
Published: July 2005

In recent years in the United States and Canada, there has been an increasing interest in cash flow reporting and a strengthening belief that information on cash flows is valued in the marketplace. However, little research has been devoted to the issue. Regulatory bodies in the U.S. (Financial Accounting Standards Board) and Canada(Canadian Institute of Chartered Accountants) require that an enterprise should disclose separately cash flows from operating, financing and investing activities in their cash flow statements. The data in the cash flow statements are expected to help investors assess the firm's liquidity, financial flexibility and risk. On the other hand, the British Accounting Standards Committee (ASC) does not require a statement of cash flows. This study employs a cross‐sectional equity valuation model to examine the association of cash flows from operating, financing and investing activities with security prices. A sample of 403 U.S. firms is used for the ten‐year period of 1976–85. The results of this study indicate that there exists a strong association between the various cash flow components included in the cash flow statements and the market value of the firm.
The Importance of History for Accounting Research
Authors: BRICKER ROBERT J.
Published: July 2005

This note responds to criticisms in this issue by Subotnik of my 1988 Abacus article. It rejects his claims that the findings in that 1988 article are devoid of social usefulness, that my discussion of knowledge accumulation ‘was partial’, and finally his suggestion of the futility in using citations as data and citation methods as tools of analysis. It is argued that Subotnik supports his criticisms with little more than rhetoric and unsupported assertions.
Early Arithmetics and Accounting Histories: A Comment
Authors: SCORGIE MICHAEL E.
Published: July 2005

A standard historical approach to the study of a particular topic is to reach back into the past and to discover and to document early contributions, and if possible to find the first instance. To have been the first or to establish who was the first is a claim to fame. In two recent articles published in this journal such claims were made. Unfortunately for those that follow, these claims by Lee (1989) and Previts, Parker and Coffman (1990) seem incorrect.
The Treatment of Non‐Recurring Items in the Income Statement and their Consistency with FASB Concept Statements
Authors: CAMERON ALEX B. , STEPHENS LYNN
Published: July 2005

This study provides evidence on the consistency of Accounting Principles Board Statement No. 30 (APB, 1973) classification criteria with the objectives of the Financial Accounting Standards Board's Concept Statements Nos 1 and 2 (FASB, 1978, 1980). It is hypothesized that the current APB 30 requirement to classify items of a non‐recurring nature in the operating section of the income statement decreases the predictive ability of income before extraordinary items. A random sample of 50 firms with non‐recurring adjustments to income, which were included in the operating section of the income statement, was selected from Standard and Poor's Corporation Records. Naive models were used to generate earnings per share forecasts for the year in which the adjustment to income occurred, the prior year and subsequent year.

The results indicate a statistically significant decrease in the predictive ability of earnings per share before extraordinary items associated with the year that the adjustment occurred and a significant increase in the variability of earnings per share. Also, differences in predictive ability were noted between small and large firms and firms with positive and negative adjustments to income.

The results of this study also imply that the managers of most firms with negative adjustments to income are not using the adjustments to smooth income for either the purpose of decreasing the variability of earnings or increasing predictability. The results are more consistent with the ‘big bath’ theory. These conclusions appear to be more relevant for smaller firms than larger firms.
Size of Audit Fees and Perceptions of Auditors'Ability to Resist Management Pressure in Audit Conflict Situations
Authors: GUL FERDINAND A.
Published: July 2005

Using a multi‐factor ANOVA design and forty‐nine bankers as subjects, this study examined the effects of audit fee size, management advisory services, audit firm size and competition on perceptions of the auditors'ability to resist management pressure in an audit conflict situation. It postulates that size of the audit fee is a major explanatory factor regardless of the provision of management advisory services, audit firm size or level of competition. Results supported the hypothesized effects of these variables and, in particular, that size of audit fee affects perceptions of the auditors'ability to resist management pressure regardless of the other variables.
Income Tax Effects on Asset Valuation and Managerial Analysis
Authors: CHEUNG JOSEPH K. , LI MANDY
Published: July 2005

Under an income tax structure that treats profits and losses unequally, the tax function is non‐linear. This note examines how this non‐linearity affects asset valuation and related managerial analyses.
Goodwill—an Example of Puzzle‐Solving in Accounting—a Comment
Authors: GRINYER JOHN R. , RUSSELL ALEX
Published: July 2005

Ma and Hopkins' (1988) paper on accounting for goodwill derives insupportable conclusions because its analysis is based on an inappropriate paradigm. This comment presents a supportable rationale for capitalization and amortization of purchased goodwill and concludes that the ‘unsolved puzzle’ that Ma and Hopkins present is likely to be a corroborating example for the ‘old’ matching‐based paradigm and a confounding example for the ‘new’ valuation‐based alternative.
Goodwill—an Example of Puzzle‐Solving in Accounting—a Reply
Authors: MA RONALD , HOPKINS ROGER
Published: July 2005

Grinyer and Russell's (G&R, 1992) contention that Ma and Hopkins (1988) have imposed the mutually exclusive rules of the valuation‐based paradigm on the matching‐based paradigm that underlies accounting practice is overly defensive and misguided. Our 1988 paper was an attempt to throw light on why there was so little agreement on the rules governing the treatment of goodwill. G&R's comment does not change our view that the only answer to the ‘puzzle’ lies in the lack of a full understanding of the nature of goodwill.
Accounting Earnings Announcements and Differential Predisclosure Information
Authors: ANDERSON TERESA
Published: July 2005

Recent studies have detected an inverse association between a firm's size and the stock price reaction to the firm's accounting earnings announcements, which has been interpreted as evidence that larger firms have relatively richer information sets. This study expands on this work, using two firm‐specific factors to capture both the time and flow‐per‐period elements of information production (period of listing and firm size respectively) and examines whether these variables are a better information proxy than is size alone. After controlling for firm size, a statistically significant inverse relationship between a firm's period of listing and the information content of its annual earnings announcement is detected. The findings have implications for standard‐setters as well as for auditors'assessment of the risk associated with audits of newly listed firms.
An Innovation in Auditing: Matrix Summaries of Journal Entries
Authors: SAMPSON WESLEY C. , OLAN MICHAEL J.
Published: July 2005

The authors of this paper propose a databse which summarizes journal entries in a way that can be used for audit planning and accumulating data for matrix‐derived financial statements. This dedicated system provides a significant internal control procedure hitherto unavailable. In addition, this system is expected to be more practical and easier for accountants to use than mainframe database systems.
Patterns of Research Output in the Accounting Literature: A Study of the Bibliometric Distributions
Authors: CHUNG KEE H. , PAK HONG S. , COX RAYMOND A. K.
Published: July 2005

This study examines whether any regularity exists in the publication pattern among accounting researchers. The empirical results reveal that a strong bibliometric regularity exists in the accounting literature: the number of authors publishing in papers is approximately 1/ncof those publishing one paper. It is shown that the accounting literature conforms very well to the model with c=1.872 if data are taken from a large collection of journals. When applied to individual journals, the result shows that values of c range from 2.220 to 4.368. The graduates of seven graduate programs are found to account for more than one‐third of the most prolific authors, indicating strong institutional dominance in the production of accounting literature.
Alexander Hamilton Church: His Family and Early Life
Authors: SCORGIE MICHAEL E.
Published: July 2005

The contribution of Alexander Hamilton Church (1866–1936) to accounting and management science is well known. Yet his biographers (Urwick and Wolf, 1984; Vangermeersch, 1988) found that his family and early life were enigmas. This paper opens the curtains drawn by Church and reveals details of his notable ancestry and his early life, including his first six months in the United States and Canada.
The Scope of Accounting History: A Note
Authors: PARKER R. H.
Published: July 2005

The writing of accounting history is increasingly dominated by writers in English discussing private‐sector accounting in English‐speaking countries of the nineteenth and twentieth centuries. This note emphasizes that the scope of accounting history is much wider than this.
An Examination of the Effect of Hypothesis Framing on Auditors’Information Choices in an Analytical Procedure Task
Authors: AYERS SUSAN , KAPLAN STEVEN E.
Published: July 2005

Libby (1985) contends that auditors’search for and evaluation of audit evidence, particularly during analytical procedures, is influenced by an explicitly or implicitly formulated hypothesis. Often a hypothesis may be‘framed’in alternative ways. For example, an auditor may frame analytical procedure results in terms of a‘misstatement’or a‘non‐misstatement’frame. The concern arises that alternatively framed, but otherwise identical, audit issues may be treated differently. This concern has led Kinney and Haynes (1990) to propose modifying auditing standards to direct auditors to adopt a‘misstatement’frame. The purpose of the present study was to examine whether alternative analytical procedure frames affect auditors’information choices in an analytical procedure task. An experiment was conducted in which auditors listed which information cues were relevant to explain an unusual financial statement fluctuation. Half of the information cues made a misstatement explanation more plausible whereas half of the information cues made a non‐misstatement explanation more plausible. The results indicate that hypothesis frame significantly affected auditors’information choices. Specifically, auditors in the misstatement (non‐misstatement) frame select more misstatement (non‐misstatement) cues as relevant. The hypothesis frame, however, did not significantly affect probability assessments.
Religion: A Confounding Cultural Element in the International Harmonization of Accounting?
Authors: HAMID SHAARI , CRAIG RUSSELL , CLARKE FRANK
Published: July 2005

Discussion of the influence of culture on the international development and harmonization of accounting has focused primarily upon indigenous characteristics which are confined within national boundaries. But cultural inputs, such as religion, which transcend national boundaries, should not be overlooked. Islam is a particular case in point. Its principles commit Muslims to a definitive code of ethical commercial and personal behaviour affecting both the structuring and financing of business affairs between the faithful, and between Muslims and non‐Muslims. Islam has the potential for influencing the structure, underlying concepts and the mechanisms of accounting in the Islamic world. Its potential for influencing accounting policy is illustrative of religion as a confounding element in the analysis of national idiosyncrasies in accounting practice and in deconstructing the impediments to international harmonization.
Where Do Clients Go when an Accounting Firm Goes Bankrupt?: The Case of Laventhol & Horwath
Authors: WOOTTON CHARLES W. , TONGE STANLEY D.
Published: July 2005

A chronicle is provided of some of the significant events in the life and death of the seventh‐largest accounting firm in the United States, Laventhol & Horwath (L&H). In examining the success of individual firms in acquiring L&H's large audit clients, we ascertain whether Big Six firms were the beneficiaries of L&H's demise. A by‐product of this examination is that public accounting firms should be wary of growth, per se. Specifically, more attention to their client selection standards is needed.
The First Australian Book on Accounting: James Dimelow's
Authors: CARNEGIE GARRY D. , PARKER ROBERT H.
Published: July 2005

Accounting historians have shown considerable interest in the first printed books published on accounting (from 1494 onwards) in various countries. This paper provides a detailed study of the first Australian book, published in sets between 1871 and 1873. It examines the factors determining the date and place of such first authorship. James Dimelow's life and career in Britain and Australia are discussed and his books (which were published in Britain as well as Australia) are systematically described. These books are placed within the contexts of the economic and cultural environment of colonial Australia and the nineteenth‐century British and Australian accounting literature. The differences between Dimelow's and John Scouller's books are explored and explained and possible influences of Dimelow on the later development of Australian accounting are proposed.
The Politics of Rule Development: A Case Study of Australian Pension Fund Accounting Rule‐Making
Authors: KLUMPES P. J. M.
Published: July 2005

Describing the politics surrounding accounting rule development may provide greater insights to such processes than analysing written submissions to rule‐making bodies. Over a twenty‐year period a rule‐making contest evolved between the accounting profession and an alliance of pension industry interest groups over the introduction of different forms of regulation (accounting standards versus legislative‐backed rules) relating to pension fund accounting. From the perspective of government, the debate about pension fund accounting reflects the outside‐initiative model (Cobb and Elder, 1972; Cobb et al., 1976). Issues were created by the (accounting and actuarial) professions, expanded in the relevant (pension and life insurance) industry and then gained entrance to the formal agenda of both regulatory and government deliberations. In this case the accounting profession failed to gain acceptance of its professional rule‐making activities. Alternative possible explanations as to why the alliance of interest groups eventually prevailed over the accounting profession are explored.
The Taxation of Capital Gains When the Cash Component of Income Is Taxed
Authors: SWAN PETER L.
Published: July 2005

Does an‘income’ as opposed to a‘consumption‐type’ or cash flow tax require a separate capital gains tax in addition to a tax on the cash component of income? Contrary to those who have adopted a Fisherian approach to this subject, the answer is shown to be ‘yes’. The misunderstanding arose from the mistaken use of NPVs of tax payments to calculate effective tax rates without controlling for the taxpayer's consumption stream. The absence of a capital gains tax of an‘ideal’ type initially reduces tax liabilities as systematic capital gains are artificially generated. Eventually, the horizontal inequity is converted into a tax‐induced investment distortion.
Independence and the State Auditor in Britain: A Constitutional Keystone or a Case of Reified Imagery?
Authors: FUNNELL WARWICK
Published: July 2005

The principles of state audit, in particular conceptions of independence, adhered to today in the major Westminster democracies originated in the British state audit reforms of the nineteenth century. State auditors prior to the nineteenth century were not expected to be independent of the executive. Instead, state audit was recognized as an executive function to be under the direct control of the executive. For a brief period in the mid‐nineteenth century, parliament was able to take advantage of a succession of weak governments to redirect the loyalties of state audit from the executive to the legislature. Although parliament wanted to be served by a state auditor who would keep it informed of executive spending, it did not alter the dominance of the Treasury over state audit. The executive sought to sustain through a discourse of independence the perception that the controls exercised by the executive over the state auditor did not constitute either a threat to audit independence or result in capture of state audit by the executive. The discourse constructed the image of state audit as a function which was able to work unimpeded and independent of the executive despite a legislative framework which contained significant financial, procedural and staffing controls.
A Critical Look at SFAS 34: Capitalization of Interest Cost
Authors: MOZES HAIM A. , SCHIFF ALLEN I.
Published: July 2005

In 1974, the Securities and Exchange Commission (SEC) noted that an increasing number of companies were capitalizing interest costs, and that this practice was not being adequately disclosed (FASB, 1979, par. 26). In light of the alternative practices concerning the accounting for interest and lack of adequate disclosure by companies that were already capitalizing interest, the SEC recommended that the Financial Accounting Standards Board (FASB) consider the issue of accounting for interest cost. As a result of the SEC's initiative, in 1979 the FASB issued Statement of Financial Accounting Standards [SFAS] No. 34, Capitalization of Interest Cost, which mandated uniform interest capitalization rules in accounting for interest costs associated with the acquisition of qualifying non‐current assets.

The purpose of this article is to examine SFAS 34 in terms of its financial statement impact, the congruence of its assumptions with economic behaviour, its effect on subsequent standards related to interest capitalization, and its implications on financial accounting standard setting.

To explore these issues we first illustrate the extent to which interest capitalization affects financial statements. We then empirically analyse the measure employed in SFAS 34 for the capitalization of interest cost in cases where debt is not directly linked with the acquisition of qualifying non‐current assets. In addition, we critically examine the treatment accorded interest cost in subsequent FASB standards. Our research suggests that SFAS 34′s rationale for interest capitalization is incompatible with firm behaviour, and that the rules for interest capitalization as reflected in various accounting standards are inconsistent. These findings suggest that in the case of interest capitalization the benefits of comparability in financial reporting are not realized. A policy recommendation is then offered to alleviate some of these difficulties. The recommendation is to disallow the capitalization of interest cost in the absence of a direct link between the debt and the acquisition of qualifying assets.
Standard Setting and Economic Consequences: An Ethical Issue
Authors: COLLETT PETER
Published: July 2005

This article examines difficulties associated with the Australian Conceptual Framework requirement that standard setters have to take into account the economic consequences of their decisions, particularly in relation to the possibility that qualitative criteria such as representational faithfulness might have to be sacrificed in the process. By identifying and assessing the ethical implications of the standard setting task, these difficulties are shown to be avoidable.
Are Audit Committees Red Herrings?
Authors: WOLNIZER P. W.
Published: July 2005

The common expectation of committees established in the wake of the corporate debacles during 1980s in the English‐speaking world is that the audit committee device will raise the standards of corporate accountability and governance by improving the quality of financial reporting. That expectation is based on the prevalent belief that by strengthening the independence of auditors and non‐executive directors audit committee members will monitor the financial reporting process in an independent manner. Unless accounting practices are reformed so that financial statements can be authenticated by recourse to reliable commercial evidence, audit committees are red herrings. Such reforms are essential if audit committee members are to keep under vigilant appraisal matters pertaining to the financial governance of, and reporting by, firms: the raison d'être of their appointment.
Cultural Relevance of Western Accounting Systems to Developing Countries
Authors: BAYDOUN NABIL , WILLETT ROGER
Published: July 2005

It has been suggested recently that the accounting systems used in developing countries may be irrelevant to their needs because they originate in Western countries with different cultural values. The accounting literature on this point, however, is vague in its assessment of exactly what aspects of Western accounting systems fail to meet the test of relevance. Furthermore, it is not clear whether the differences between the needs of users in various countries are differences in kind or only differences in degree. This article analyses these issues by introducing technical considerations in addition to the behavioural ones usually discussed and by separating out problems of accounting measurement from problems of accounting disclosure. This distinction is used to argue that it is the specific disclosure rules of particular calculations inherent in Western accounting systems rather than the transaction cost database that are most likely to fail to satisfy the needs of users in developing countries. The effect of the importation of the French Unified Accounting System to Lebanon is examined and an amended version of the Hofstede‐Gray cultural accounting framework is used to clarify the concept of cultural relevance.
Patrick Colquhoun
Authors: SCORGIE MICHAEL E.
Published: July 2005

Patrick Colquhoun, ‘the father of Glasgow’, established his reputation as an able accountant, businessman and manager in the 1780s. This reputation was overshadowed by his contributions to penal reform which he made in the 1790s when he resided in London. Radzinowicz (1956) and Foucault (1977) showed that Colquhoun, in conjunction with his friend Jeremy Bentham, the famous utilitarian economist, made a significant impact on penal reform. Their contribution was encouraged by the British government in the period of turmoil which followed the French Revolution. Bentham understood the role of accounting in the management of businesses (Goldberg, 1956; Hume, 1970; Gallhofer and Haslam, 1993). He alone recognized the importance of Colquhoun's accounting knowledge and business experience and how his pragmatism enhanced his powerful cases for the adoption of new socioeconomic systems. Until now this view of Bentham has been ignored. Other historians, driven by their special interests, concentrated on one phase of Colquhoun's diverse life. None attempted to analyse the relationship between his ideas for the reform of punishment, police and poor systems and his prior experience as an accountant, businessman and manager.

That relationship is the subject of this article and the objective of my research is to answer two questions. First, where did Patrick Colquhoun acquire his knowledge of business and accounting techniques? Second, how did he use his knowledge in the 1790s to build cases which influenced those in power to adopt new socioeconomic systems?
Lessee Reactions to Regulation of Accounting for Leases
Authors: GODFREY JAYNE M. , WARREN SUSAN M.
Published: July 2005

This study examines lessee firms’ responses to Australian Accounting Standard 17, Accounting for Leases (AAS 17, 1987) and Approved Accounting Standard ASRB 1008, Accounting for Leases (ASRB 1008, 1987). Both Standards required that lessees capitalize finance leases, thus bringing the finance leases of many firms‘on balance sheet’ and increasing reported leverage. If the capitalization requirement altered firms’ equilibrium contracting cost distributions sufficiently, firms would take actions to mitigate its effect, possibly by altering their capital structures. The study examines whether the capital structures of these firms did change in response to the requirement, and if so, how. The results indicate that firms responded to the Standards by reducing their reliance upon finance leasing and increasing their reliance upon non‐lease debt and shareholders’ funds. Firms do not appear to have used definitional interpretations to classify leases as operating rather than finance leases. As expected, the firms previously disclosing finance leases in footnotes experienced increases in non‐lease debt reliance while the control sample (firms that previously capitalized the lease obligations) experienced decreases.

Differences between control firms’ and footnote disclosure firms’ reactions to the Standard are generally consistent with contracting theory predictions. Control firms reacted to the loss of the potential to off balance sheet finance. Footnote‐disclosure firms reacted to the loss of an already utilized off balance sheet financing technique.