bluuebunny/crossref_metadata_2025 huggingface dataset:
Earnings Management through Affiliated Transactions
Authors: Thomas Wayne B. , Herrmann Donald R. , Inoue Tatsuo
Published: April 2008

Prior research has investigated earnings management primarily through the use of discretionary accruals. We examine whether, in addition to discretionary accruals, firms further engage in earnings management using transactions with affiliated companies. When a parent company has a dominant relation over affiliated companies, the parent company can structure transactions between itself and affiliates in a way that allows it to achieve income-reporting objectives beyond the use of discretionary accruals. We address this research issue in Japan because Japanese firms issue both parent and consolidated financial statements. In addition to earnings management techniques that can be used to manage consolidated earnings, parent earnings can also be managed using transactions with affiliates. We find earnings management behavior for both parent and consolidated earnings around three earnings thresholds: avoiding losses, avoiding earnings declines, and avoiding negative forecast errors. Consistent with additional earnings management through affiliated transactions, parent earnings show stronger evidence of earnings management than consolidated earnings at each of these three earnings thresholds. Further tests indicate that the increased management of parent earnings around these three earnings thresholds is related to the firm's ability to use affiliated transactions, while the management of consolidated earnings is unrelated to the firm's ability to use affiliated transactions.
The Use of Discretionary Provisions in Earnings Management: Evidence from The Netherlands
Authors: Peek Erik
Published: April 2008

This paper studies the use of provisions in earnings management. I examine an extensive set of highly discretionary provisions, consisting of, among others, warranty provisions, provisions for maintenance cost, and provisions for underinsured risks, as reported by Dutch listed firms between 1989 and 2000. The empirical evidence indicates that Dutch firms use their discretion in recognizing these provisions under two circumstances. First, firms report unexpectedly large provisions to smooth current earnings increases. Second, when earnings are low relative to the previous year's earnings, firms report unexpectedly large provisions if they expect that current earnings are relatively transitory.
Psychic Distance and Budget Control of Foreign Subsidiaries
Authors: Hassel Lars G. , Cunningham Gary M.
Published: April 2008

This paper has two purposes: (1) to develop a theory about the impact of psychic distance on management control of multinational companies, and (2) to establish that psychic distance is an important factor for future research. We develop the concept of psychic distance, the interaction between geographic distance and culture, and test its impact empirically in a Finnish multinational company.

Results show that psychic distance interacts significantly with reliance on budget control in multinational companies, but not in the manner proposed. High budget emphasis is associated with high subunit performance in countries with small psychic distances, but not in countries with larger psychic distances. Budget participation dilutes this impact. This study confirms that psychic distance is a relevant factor to be considered in future research.
The Association between Macroeconomic Uncertainty and Analysts' Forecast Accuracy
Authors: Hope Ole-Kristian , Kang Tony
Published: April 2008

This study examines whether macroeconomic uncertainty affects the forecast accuracy of financial analysts in an international setting. We use inflation and foreign exchange volatility as measures of macroeconomic uncertainty. We find strong evidence that forecast accuracy decreases in the level of macroeconomic uncertainty. Further, we document that the negative association between forecast accuracy and macroeconomic variables is more pronounced for emerging economies than developed economies. Overall our results suggest that macroeconomic uncertainty represents a unique dimension in the complexities associated with predicting future firm performance.
Global Diversification and Corporate Disclosure
Authors: Cahan Steven F. , Rahman Asheq , Perera Hector
Published: April 2008

This paper examines whether a firm's level of voluntary disclosure varies with its level of global diversification. We argue that information asymmetries and agency costs arising from the global diversification of operations and financing increase the incentives for firms to disclose at a higher level. We measure global diversification of operations by factor-analyzing foreign shareholdings and foreign debt, and we measure global diversification of financing by factor-analyzing foreign sales and foreign subsidiaries. Using a sample of 216 firms from 17 countries selected from Fortune's Global 500 list and Botosan's (1997) disclosure index, we find that the level of voluntary disclosure is positively related to the extent of global operations, but is not related to the extent of global financing.
The Voluntary Disclosure of Pro Forma Earnings: A U.S.-Canada Comparison
Authors: Entwistle Gary M. , Feltham Glenn D. , Mbagwu Chima
Published: April 2008

This study compares managers' voluntary disclosure of pro forma earnings—an alternative measure to generally accepted accounting principals (GAAP) earnings—in the U.S. and Canada. The results indicate some distinct differences between the two countries in that U.S. managers (1) disclose pro forma earnings more frequently, (2) place greater emphasis on the pro forma earnings number relative to the GAAP earnings figure, and (3) make greater (income-increasing) adjustments from GAAP in calculating pro forma earnings than do their Canadian counterparts. While we find distinct differences in the use of pro forma between the U.S. and Canada, we do not find evidence that it is used for different purposes. Our evidence suggests that in both countries pro forma earnings is used by some corporations to affect users' perceptions of firm performance. Overall, given the differences in managers' use of pro forma, a form of voluntary disclosure, our results suggest caution in moving to a uniform (cross-border) system of financial regulation.
Corporate Governance and Investor Protection: Earnings Management in the U.K. and U.S.
Authors: Wright Charlotte J. , Shaw J. Riley , Guan Liming
Published: April 2008

This study extends the work of Leuz et al. (2003) by examining the incidence of earnings management in countries where the level of investor protection provided by the legal environment is high. We question whether Leuz et al.'s (2003) country clusters are overly broad in seeking to effectively explain the relation between countries' legal environments and earnings management. Hofstede (2001) notes that, while the U.K. and U.S. are similar in numerous respects, various cultural and organizational differences exist. Accounting research identifies a number of differences in corporate governance between the two countries that could influence earnings management. We examine samples of U.K. and U.S. firms that were taken private in a management buyout (MBO) so as to focus on situations epitomizing the conflict between corporate insiders and outside shareholders. Overall, our results indicate that managers in both the U.K. and U.S. manage earnings downward prior to an MBO, with U.S. managers being significantly more aggressive than U.K. managers. These results may be interpreted as indicating that Leuz et al.'s (2003) country cluster groupings are too broad to adequately explain the relation between countries' legal environments and the extent to which managers engage in earnings management.
Corporate Ownership Structure and Accuracy and Bias of Mandatory Earnings Forecast: Evidence from Taiwan
Authors: Chin Chen-Lung , Kleinman Gary , Lee Picheng , Lin Mei-Feng
Published: April 2008

The primary objective of this study is to examine the association between the quality of mandatory earnings forecast, measured by forecast accuracy and bias, and the ownership structure of Taiwanese firms, measured by the divergence between the ultimate owner's control and the equity ownership level. The study is based on 528 forecasts issued by Taiwanese-listed firms from 1999 to 2001, which were affected by the regulation on disclosure-of-earnings forecasts issued by the Taiwan Securities and Futures Exchange Commission (TSFEC). First, we find that concentrated ownership structures created agency conflicts between controlling owners and outside investors. Second, we also find that firms tend to issue more inaccurate and optimistically biased forecasts in the presence of the greater divergence between the ultimate owner's control and the equity ownership level. Third, the firms with serious agency problems tended to revise their forecasts more to reduce error or bias or manipulate accruals (e.g., through discretionary accruals) in order to avoid violating the 20 percent forecast error threshold as the end of the period approached. Finally, the resulting postmanaged forecast error or bias does not significantly vary with the level of ownership concentration
Collective User Participation in Specifying Requirements of an Information System: Minimizing Differences Between Minority and Majority Voting Subgroups
Authors: Coalter Terry M. , Hunton James E. , Price Kenneth H.
Published: April 2008

This article investigates the impact of collective user participation in specifying requirements of an information system. The objectives of this study are to (1) examine the attitudinal and behavioral reactions of group members in the voting minority when a majority-rule social decision scheme is used to determine decision outcomes, and (2) test the efficacy of two intervention techniques—justification and likelihood of amelioration—designed to minimize differences between voting minority and majority subgroups. In this study, referent cognition theory (RCT) is introduced into the accounting literature and, for the first time, RCT propositions are applied to social decision scheme research.

Study findings indicate that, when compared to the voting majority, the minority subgroup recorded lower levels of process fairness, outcome fairness, outcome satisfaction, and actual task performance. Two attempts were made to minimize differences between minority and majority voting subgroups. Although the two intervention techniques (justification and likelihood of amelioration) independently improved minority members' perceptions and performance, the greatest improvement was observed when the treatments were jointly manipulated. However, the highest levels of perceived fairness, satisfaction and task performance of minority members remained significantly below those of majority members.
REAL-D: A Schema for Data Warehouses
Authors: O'Leary Daniel E.
Published: April 2008

This article integrates McCarthy's REA (Resources-Events-Agents) model and the closely related REAL (Resources Events Agents Locations) model with general capabilities and requirements of data warehouses. REA/REAL contribute a theory for capturing information about events and a focus on control relationships. Data warehouses bring time-period information and a focus on information facilitating the creation of value. Using aspects from both camps, a hybrid schema is developed called REAL-D, REAL for Data warehouses. Existing data warehouse approaches lack theory, while REA/REAL are theory based. Unique demands on data warehouses, however, make additional requirements on REA/REAL, including (1) addition of time period as another dimension in order to allow rollups from hour to day to week to month to year, (2) addition of location to facilitate rollups from office to city to district, (3) change from a pure location dimension to a nonhomogeneous dimension that allows rollup from person to office, and (4) change of relationships of agents from one of control to a marketing-oriented one.
The Research Pyramid: A Framework for Accounting Information Systems Research
Authors: David Julie Smith , Dunn Cheryl L. , McCarthy William E. , Poston Robin S.
Published: April 2008

This paper extends Sowa's (1997) Meaning Triangle to develop a framework for accounting information systems (AIS) research—the Research Pyramid. This framework identifies relationships between objects in economic reality, people's concepts of economic reality, symbols used to record and represent economic reality, and the resultant accounting information systems that capture and present data about economic reality. The Research Pyramid has two major uses. First, the paper illustrates how the Research Pyramid can be used to identify new research questions to extend existing research streams. To be used in this manner, existing AIS research is classified along each of the edges of the Research Pyramid. Once an area of the literature has been analyzed, the edges that have not been studied extensively reveal potential primitive mappings for future exploration. Second, each primitive mapping is evaluated to identify which of four research methodologies (design science, field studies, survey research, and laboratory experiments) are likely techniques for use in future studies. This analysis can help researchers with strong methodological training to identify new, interesting questions to be answered that capitalize on their research strengths. As such, the Research Pyramid is a tool to characterize existing AIS research, identify areas for future exploration, and provide guidance on appropriate methodologies to apply.
A Comparison of Three Visual Representations of Complex Multidimensional Accounting Information
Authors: Dull Richard B. , Tegarden David P.
Published: April 2008

This study investigates the relationship between three visual representations (two-dimensional, three-dimensional fixed, and three-dimensional rotatable) of multidimensional data, and the subjects' ability to make predictions based on the data. Output of a momentum accounting system was simulated and graphics were rendered based on that information. An interactive computer program was developed and used to administer the laboratory experiment and collect results.

Subjects made prediction decisions based on the graphics produced for four companies. Each subject made predictions for one type of graphics representation for each of the four companies. Subjects using three-dimensional data that could be rotated provided the most accurate predictions. This finding is significant in a systems environment where visualizations and graphics are steadily increasing. The results should be considered when developing systems to provide accounting system users with information for making decisions, especially when the information to be presented is multidimensional in nature.
Continuous Online Auditing: A Program of Research
Authors: Kogan Alexander , Sudit Ephraim F. , Vasarhelyi Miklos A.
Published: April 2008

The progressive computerization of business processes and widespread availability of computer networking make it possible to dramatically increase the frequency of periodic audits by redesigning the auditing architecture around Continuous Online Auditing (COA). Continuous auditing is viewed here as a type of auditing that produces audit results simultaneously with, or a short period of time after, the occurrence of relevant events. It is arguable that continuous auditing can be implemented only as an online system, i.e., a system that is permanently connected through computer networking to both auditees and auditors. This article proposes a research agenda for the emerging field of COA. First, the history, institutional background, feasibility of and some experiences in COA are briefly reviewed. Thereafter, a number of research issues relating to the architecture of COA, factors affecting the use of COA, and the major consequences of COA are presented. Finally, a selected number of research issues are highlighted as priorities for future research in COA.
Consumer Responses to the CPA WEBTRUST™ Assurance
Authors: Kovar Stacy E. , Burke Kimberly Gladden , Kovar Brian R.
Published: April 2008

With the advent of WEBTRUST™, accountants are providing assurances about online transactions to consumers who may otherwise hesitate to engage in electronic commerce. This study explores the influence of assurance services on consumers' online transaction expectations and intent to purchase online. In short, the study supports the notion that many of the marketing efforts associated with WEBTRUST™ can have desirable effects on consumer behavior. Results suggest that consumers who pay more attention to the WEBTRUST™ seal and disclosures at the web site or who have been exposed to WEBTRUST™ advertising have higher online transaction expectations and stronger intent to purchase online than their counterparts. Similarly, consumers' knowledge about CPAs positively influences their online transaction expectations, but not intent to purchase online. However, the study also indicates areas of concern for practitioners and researchers. Only 56 percent of subjects noticed the seal, 27 percent clicked on the seal, and 8.5 percent had seen ads related to WEBTRUST™, indicating a need to investigate more effective marketing. In addition, these results suggest that consumers believe the WEBTRUST™ service should and does provide assurances that are clearly beyond its scope.
An Analysis of the Market for Systems Reliability Assurance Services
Authors: Arnold Vicky , Lampe James C. , Masselli John J. , Sutton Steve G.
Published: April 2008

As the accounting profession enters new assurance markets, many decisions as to the best manner in which such services can be provided must be addressed. For instance, the traditional audit/attest-reporting model may not provide adequate information to justify the cost of assurance services in some situations. Alternatively, potential clients may turn to other assurance providers who are willing to provide better quality services and/or more informative assurance reporting. In this study, we examine the impact of a two-tier reporting model on the market demand for assurance services on software product reliability. One tier uses the traditional binary report common with audit/attest services where a standard report notes whether a software product achieves a minimum standard, while the other tier of reporting provides for a graded assessment of multiple levels of quality. The results indicate that when a graded report that differentiates high-quality vendors from moderateor low-quality vendors is available (1) high-quality vendors are willing to pay for the report, (2) buyers are willing to pay a premium for the reduced risk associated with a highquality opinion, and (3) high-quality vendors are able to drive other vendors with inferior products out of the market. When only a binary report is available, the market is more confused and chaotic. Vendors are not able to signal quality clearly; the high-quality vendor is not able to dominate the market; there is less vendor demand for the assurance report; buyers are unable to determine their desired product and make less total profit. These results have several implications for the accounting profession and researchers as they work on the design of new assurance service models.
An Analysis of the Group Dynamics Surrounding Internal Control Assessment in Information Systems Audit and Assurance Domains
Authors: O'Donnell Ed , Arnold Vicky , Sutton Steve G.
Published: April 2008

Both the evolution toward online continuous auditing and new assurance services for information systems reliability have helped fuel changes in the audit/attest process. These changes have already been of concern in dealing with large organizations using complex information systems to process their accounting and business information. As a result, these changes have necessitated a change in focus from traditional accounting control processes to increasingly complex information-systems-based control processes for advanced technology applications. With the resulting increased complexity in the internal control assessment process, the move toward group decision making in the major accountancy firms is expected to accelerate—particularly for the control-assessment process. The research documented in this paper focuses on the impact of group decision making on decision quality within the internal control-assessment process for information systems environments. The results indicate that improved decision quality does result from group decision making and that these improvements arise even if much of the initial assessment work is done individually by group members before the group convenes for face-to-face discussions. The use of preliminary individual assessments does, however, appear to result in a common information-sampling bias. This is the phenomenon whereby group decisions become focused on information known by most or all group members, and information known by only one group member has a higher probability of not being introduced and recognized by the group.
Developing Database Query Proficiency: Assuring Compliance for Responses to Web Site Referrals
Authors: Borthick A. Faye , Jones Donald R. , Kim Ryan
Published: April 2008

This case illustrates how database queries can be used to provide continuous assurance in a situation where two trading partners want assurance of the other's compliance with their agreements. In this two-sided assurance situation, a car maker wants assurance that its dealers make timely responses to web site customers and the dealers want assurance that the car maker is sending them all the designated customer referrals. The queries, developed in Microsoft Access®, illustrate the kind of queries that accountants could prepare to perform continuous monitoring of business activities. In this situation, referrals not in compliance with the agreements might be sent automatically to car maker and dealer managements. Query-based approaches to continuous assurance are likely to become more common as trading partners devise new business relationships and want assurance that the other party is abiding by their mutual agreements.
A User's Willingness to Adopt a New Information System: The Influence of the Decision-Making Improvements and Performance-Monitoring Dimensions of the System
Authors: Burton F. Greg , Leitch Robert A. , Tuttle Brad M.
Published: April 2008

We investigate the influence of economic, risk preference, and agency components on a user's willingness to adopt a new information system. Using Vickrey auctions to elicit users' utility functions, we find that economic considerations are tempered by riskseeking behavior that leads to a lowering of bids for systems with greater economic benefit. With respect to agency issues, we find that subjects value their private information in that they bid less for systems that result in large decreases to their private information. This result is consistent with the prevalence of slack-inducing contracts in the field.
The Relevance of Transformational Leadership to Nontraditional Accounting Services: Information Systems Assurance and Business Consulting
Authors: Viator Ralph E.
Published: April 2008

This paper examines whether supervisors in nontraditional accounting services (vs. supervisors in financial auditing and tax services) are more likely to acquire transformational leadership skills, and, whether such skills impact subordinates' role clarity and role outcomes. Transformational leadership coincides with the AICPA's Vision Project's definition of leadership skills: the ability to influence, inspire, and motivate others to achieve results. The paper uses role theory to articulate specific links between transformational leader behavior, role clarity, and role outcomes (job satisfaction, organizational commitment, and job performance). Data was obtained through a mail survey to 1,150 AICPA members, with 416 usable responses obtained. Participants who primarily worked in the functional area of information system assurance and business consulting (ISA/BC) perceived that their supervisors demonstrated higher levels of transformational leadership, compared to participants from two other service areas (financial auditing and tax services). Transformational leadership was directly and positively associated with role clarity, job satisfaction and affective organizational commitment, and indirectly associated with job performance, across all three functional areas. The current study serves as a baseline, demonstrating transformational leadership is more likely to occur in public accounting functions that are less standard-intensive. However, future research must determine whether transformational leadership in nontraditional services translates into economic gain, i.e., into increased revenues and an expanded client base.
Researching the Revolution: Prospects and Possibilities for the Journal of Information Systems
Authors: Stone Dan N.
Published: April 2008

A summary of the recent published research suggests that the “top” academic accounting journals ignore systems and technology research topics. Fortuitously, the core focus of the Journal of Information Systems is exactly the set of accounting-related systems and technology issues (e.g., system controls, financial implications of technology) that are underexplored in both the MIS and accounting research literatures. Accounting systems and technology research, and the Journal of Information Systems, have an optimistic future. Developing accounting systems and technology research demands that researchers both value and promote excellence while simultaneously encouraging diversity.
The Reaction of Financial Analysts to Enterprise Resource Planning (ERP) Implementation Plans (Retracted)
Authors: Hunton James E. , McEwen Ruth Ann , Wier Benson
Published: April 2008

This study investigates the extent to which investors believe that enterprise resource planning (ERP) systems enhance firm value by examining changes in financial analysts' earnings predictions before and after they receive an announcement that a firm plans to implement an ERP system. A total of 63 analysts participated in a two (firm size: small and large) by two (firm health: unhealthy and healthy) randomized between-subjects design. The ERP announcement represented a within-subjects manipulation. The analysts' overall reaction to ERP implementation plans was positive, as mean post-announcement earnings forecasts were significantly higher than mean pre-announcement forecasts. Additionally, as expected, mean earnings forecast revisions in the small/healthy and large/unhealthy firm conditions were significantly greater than mean forecast revisions in the small/unhealthy firm condition.

Experimental results from the current study support archival findings reported by Hayes et al. (2001), who explored the same research questions, among others, by examining cumulative abnormal returns surrounding ERP announcements. Triangulation studies of this nature using multimethods (e.g., behavioral vs. archival) and complementary criterion variables (e.g., earnings forecasts vs. cumulative abnormal returns) are important to social scientists, as they provide insight into the reliability, consistency, and validity (both internal and ecological) of proposed theoretical relationships (Boyd et al. 1993; Flick 1992; Libby et al. 2002).
An Examination of Topical Coverage for the First Accounting Information Systems Course
Authors: Bain Craig E. , Blankley Alan I. , Smith L. Murphy
Published: April 2008

This study examines topics currently addressed in the introductory Accounting Information Systems (AIS) course and makes comparisons to past studies. The study includes an examination of 12 current AIS textbooks, syllabi from current AIS instructors, and the results of a survey of AIS faculty and professionals. The divisions of topics in the books and on the syllabi suggest that introduction to systems, internal control, and transaction processing are the most important topics to be covered. After these topics, the rankings diverge. The results of this study suggest that the emphasis historically placed on system analysis and design, while still important, is somewhat less than in the past. This was also apparent from the results of the authors' surveys of AIS faculty and professionals who use technology in their jobs. Both faculty and professionals agree that greater importance should be placed on teaching internal control and transactions processing, while moderate importance should be placed on software and hardware issues. Professionals ranked ethics and Internet education of greater importance than did faculty, while faculty rated computer fraud (which may tie in with ethics) and database management systems of greater importance than did the professionals. Professionals also placed higher importance on teaching software applications (particularly spreadsheet applications) than did faculty.
Impression Management with Graphs: Effects on Choices
Authors: Arunachalam Vairam , Pei Buck K. W. , Steinbart Paul John
Published: April 2008

Graphs are frequently used as decision aids. When properly designed, graphs facilitate decision making by highlighting important trends and relationships in the data. It is all too easy, however, to design graphs so that they do not accurately portray the underlying data (Tufte 1983). Indeed, there is considerable evidence that annual reports contain such improperly designed graphs (Beattie and Jones 1992a, 1992b; Courtis 1997; Johnson et al. 1980; Jones and Beattie 1997; Steinbart 1989). This paper reports the results of three experiments that investigated the effects of such improperly designed graphs on subjects' choices. The results of all three experiments show that improperly designed graphs can alter subjects' choices. These findings not only have important implications for the design and use of graphs as decision aids, but also raise potential policy issues.
Investigating the Impact of Auditor-Provided Systems Reliability Assurance on Potential Service Recipients (Retracted)
Authors: Boritz J. Efrim , Hunton James E.
Published: April 2008

The objective of this study is to assess the extent to which auditor-provided systems reliability assurance affects potential service recipients' (1) likelihood of recommending that their company enter into a contractual agreement with the service provider, and (2) comfort level with the reliability of the service provider's information systems. We conducted a full-factorial between-subjects experiment where the following four auditor assurances were either absent or present: availability, security, integrity, and maintainability. A total of 481 middle- and upper-level managers from a broad spectrum of functional areas participated in the study. Research findings indicate significant main effects with respect to all four assurances, as well as firm size, for the “likelihood” variable. Significant main effects were also obtained for the “comfort” variable with respect to availability, security, and maintainability (marginal significance), but integrity and firm size were nonsignificant. The amount of variance explained by the “availability” and “security” assurances (combined) was remarkably large (56 percent for “likelihood” and 43 percent for “comfort”) relative to the combined variance explained by the other two assurances (1 percent for “likelihood” and 1 percent for “comfort”). We also found evidence that respondents overweighed assurance reports on individual principles, as compared to a four-principle reliability report. Additionally, we found no significant difference in dependent variable responses when all four assurances were provided and the auditor's report focused on either the (1) effectiveness of controls or (2) reliability of the system. Research evidence offers key strategic guidance to the AICPA, CICA, and CPA/CA firms engaged in systems reliability assurance services.
Impact of Information Technology on Post-Earnings Announcement Drift
Authors: Asthana Sharad
Published: April 2008

Post-earnings announcement drift is among the most persistent market anomalies. Two possible causes of the drift are transaction costs that dissuade investors from trading on earnings information immediately, and the market's inability to fully interpret the implications of earnings information. This study hypothesizes that information technology advances have significantly reduced the transaction costs of trading equity stocks and improved the informational efficiency of the capital market. These two changes should, therefore, reduce drift.

Using a sample of over 27,000 firm-quarter observations for more than 1,600 firms, the results support the hypothesis that drift has declined significantly with the growth of information technology. The results are robust after controlling for factors correlated with time, changes in the value-relevance of earnings, and previously identified variables that affect the drift, such as size, investor sophistication, and magnitude and sign of analysts' forecast errors. The study provides evidence that the information technology revolution may reduce trading friction and improve informational efficiency.
Designing Learning Experiences within Learners' Zones of Proximal Development (ZPDs): Enabling Collaborative Learning On-Site and Online
Authors: Borthick A. Faye , Jones Donald R. , Wakai Sara
Published: April 2008

In recent years, learning has been reconceptualized from an additive process characterized by an individual's acquisition of knowledge to a socially enabled developmental process in which learners continually reorganize knowledge structures and create new representations. In the new view, learning is defined as the development that results from social interaction that affords learners increased access to roles in expert performances. Accepting the dual cognitive-social nature of learning creates a new problem for instructors: designing learning experiences that meld the cognitive and social aspects without subordinating either to the other. This article addresses the problem by presenting, justifying, and exemplifying an approach to designing learning experiences that support learners' development of capabilities so that they learn to do without assistance things that they could initially do only with assistance. The goal of this design approach is for learners to develop capabilities that they first experience in assisted or collaborative learning situations. Formally, this approach comprises designing learning experiences within learners' zones of proximal development (ZPDs), “the distance between the actual developmental level as determined by independent problem solving and the level of potential development as determined through problem solving under adult guidance or in collaboration with more capable peers” (see Vygotsky 1978, 86). The article illustrates the design phases with explanations of learning experiences for a master's course in information systems assurance.
The Effects of Exclusive User Choice of Decision Aid Features on Decision Making
Authors: Wheeler Patrick R. , Jones Donald R.
Published: April 2008

Decision Support Systems (DSS) frequently have multiple decision aid (DA) features, causing users to engage in exclusive choice behavior; i.e., choice between alternative DA features that results in one feature being used to the exclusion of all others. We hypothesize that: (1) users choose the least effective (least accurate) DA feature in certain predictability environments; (2) users choose the DA feature that they believe they are most competent with; and (3) choice between DA features improves performance compared to those assigned the same DA feature. We test these hypotheses in an experiment in which 164 participants act as loan officers who chose between two decision aids (a database aid and a regression aid). The results support our hypotheses. Users employed a choice heuristic that caused them to choose the least effective DA feature for the task more than or as often as the most effective DA feature. Results also indicate a positive relationship between perceived competence and DA feature choice, and the positive effect of DA choice. We conclude by describing the insights provided by the results into the heuristics of information technology choice.
Toward a Biometric Security Layer in Accounting Systems
Authors: Chandra Akhilesh , Calderon Thomas G.
Published: April 2008

This paper discusses theoretical and practical issues related to the use of a biometric-enabled security layer in accounting systems aimed at enhancing user authentication and reducing control risk. Originating in criminology, biometric technology has matured over the years with applications in diverse disciplines. However, its use in business and accounting is still in its infancy, and many issues about its role in information systems security are unresolved. The paper proposes an access decision framework that draws from the strategy and risk assessment literature to model processes where biometrics might be used to reduce control risk. Despite its potential strengths, biometric technology is not a panacea and represents one element in a portfolio of security mechanisms needed to protect information resources. The paper discusses challenges in implementing biometric technology and identifies avenues for future research.
Computational Models as a Knowledge Management Tool: A Process Model of the Critical Judgments Made during Audit Planning
Authors: Wright William F. , Jindanuwat Niramol , Todd John
Published: April 2008

Effective management of knowledge is essential for a CPA firm to remain competitive. Use of computational models of judgment processes and outcomes causes knowledge to be available for use and analysis. We present a comprehensive and integrated computational model of the difficult and knowledge-intensive judgments needed for successful audit planning. The model concludes on a client's going-concern status, applicable levels of inherent, control, and planned detection risk, and appropriate levels of statement- and account-level materiality. Most importantly, the model validly identifies the cause of significant fluctuations given causal hypotheses. The context is the sales and collection cycle of a manufacturing client. The model consistently replicates causal hypothesis judgments generated by the modeled auditor who exhibits considerable judgment expertise, i.e., his judgments typically coincide with actual causes. Concerning judgment expertise, the model reveals numerous linkages among judgments, subtle interdependencies in cue importance across judgments, and new findings concerning cue diagnosticity.
Linking Business Processes and Transaction Cycles
Authors: Klamm Bonnie K. , Weidenmier Marcia L.
Published: April 2008

Information technology enables companies to move from functional-managed, cycle-based organizations to process-managed organizations. Despite this change, business classes continue to be organized along functional lines and do not provide an overall, integrating framework (Walker and Ainsworth 2001). As a result, students may not understand business processes and the relationship between business processes and accounting transaction cycles. This paper presents a tutorial for a fictitious pizza delivery company to help students understand business processes and link them with accounting transaction cycles. Designed for a first semester accounting information system class, this comprehensive tutorial covers data flow diagrams; flowcharts; and resources, events, and agents (REA) modeling. The tutorial includes review questions and exercises. Teaching notes and solutions follow the tutorial section.
An Analysis of the Effects of Continuous Monitoring Controls on e-Commerce System Performance
Authors: Murthy Uday S.
Published: April 2008

This research investigates the effects on e-commerce system performance of alternative types of application controls that continually monitor transaction-processing activity. The three categories of controls examined were relatively simple controls involving calculations, more complicated controls requiring database lookups, and the most intensive controls involving the use of aggregate statistical functions. A test e-commerce platform comprising a sales order entry application was programmed using Active Server Pages (ASP) technology. The system, running on a Windows 2000 Server platform with the data in a SQL Server 2000 database, was stress-tested using Microsoft's web Application Stress tool. To gauge the performance of the system under low, medium, and high load conditions, various statistics were gathered including processor utilization, ASP requests per second, SQL Server transactions per second, ASP requests queued, and time to last byte of the main order processing script. Results revealed that calculation controls could easily be accommodated by the e-commerce system, regardless of system load. Lookup controls had a detrimental effect on system performance only when they were heavily used. Aggregate function controls had a dramatic negative impact on system performance. The results of this study are useful for both capacity planning and capacity management and provide support for both internal and external auditors requesting the inclusion of continuous monitoring controls in modern e-commerce systems.
Are Financial Auditors Overconfident in Their Ability to Assess Risks Associated with Enterprise Resource Planning Systems? (Retracted)
Authors: Hunton James E. , Wright Arnold M. , Wright Sally
Published: April 2008

The first objective of the current study is to examine the extent to which financial auditors recognize heightened risks associated with an enterprise resource planning (ERP) system, as compared to a non-ERP (legacy) system, in the presence of a control weakness over access privileges. The second objective is to assess the propensity of financial auditors to consult with information technology (IT) audit specialists within their firm when assessing ERP and non-ERP system risks during the planning stage of an audit. One hundred sixty-five auditors participated in an experiment in which we manipulated system type (ERP versus non-ERP) and measured auditor type (IT audit specialists versus financial auditors). Both auditor types indicate significantly higher business interruption, process interdependency, and overall control risks with the ERP, as compared to the non-ERP, system. Additionally, while IT audit specialists assess significantly higher network, database, and application security risks with the ERP system, financial audits do not recognize higher security risks in these areas. Perceived risk differentials from the non-ERP to the ERP system across all risk categories are significantly greater for IT audit specialists than financial auditors. Finally, financial auditors do not indicate a greater need to consult with IT audit specialists when auditing an ERP versus a non-ERP system and they are equally highly confident in the ability of financial audit teams to assess risks in both computing environments. Overall, evidence from this study suggests that financial auditors may be overconfident in their ability to assess ERP system risks.
The Effects on End-User Query Performance of Incorporating Object-Oriented Abstractions in Database Accounting Systems
Authors: Debreceny Roger S. , Bowen Paul L.
Published: April 2008

Object-oriented (OO) advocates assert that concepts such as generalization-specialization hierarchies (GSHs) and abstract data types (ADTs) make information systems more usable by increasing the level of abstraction of the data structure. This study analyzes the effects of GSHs and ADTs on the performance of end-users of accounting information systems. Two groups of experimental participants interactively developed Structured Query Language (SQL) queries to answer ten business questions. The control group (n = 28) used data stored in a traditional relational schema. The experimental group (n = 31) used the same data stored in an OO schema that included GSHs and ADTs. Both schemas implemented the same database accounting model of the sales cycle of a hypothetical company. Participants using the higher abstraction (OO) schema with GSHs and ADTs made fewer semantic errors than did participants using the traditional relational schema. The OO participants also required less time to formulate their queries. These results have several important implications. First, relational database vendors should continue, if not accelerate, their efforts to incorporate OO features such as GSHs and ADTs into their database systems. Second, users of accounting information systems need to improve their understanding of the implications of various data structures on their interactive queries. Third, research should investigate the effects of other abstraction mechanisms, including classification/instantiation and aggregation/decomposition, on query performance.
Analyzing a Potential Warranty Call Center Budget Overrun: Using Database Queries to Solve Business Problems
Authors: Borthick A. Faye , Jones Donald R.
Published: April 2008

In this case, students develop and use database queries to analyze possible causes of a potential budget overrun for telephone warranty service for a company that sells personal computers (PCs). Students query a Microsoft Access® database with tables for sales of PCs, estimates for technician time, employees, technician costs, and service minutes provided. The queries illustrate those that accountants could prepare to analyze transaction-level data to develop insights about business operations. Query-based approaches to analyzing transaction data are likely to become more common as businesses take advantage of the wealth of data available to them for solving business problems and exploiting emerging opportunities. This case is appropriate for students with rudimentary database querying proficiency, e.g., at the level developed by Borthick et al.'s (2001) case on assuring compliance for responses to website referrals.
Financial Reporting in XBRL on the SEC's EDGAR System: A Critique and Evaluation
Authors: Debreceny Roger S. , Chandra Akhilesh , Cheh John J. , Guithues-Amrhein Denise , Hannon Neal J. , Hutchison Paul D. , Janvrin Diane , Jones Roberta Ann , Lamberton Barbara , Lymer Andy , Mascha Maureen , Nehmer Robert , Roohani Saeed , Srivastava Rajendra P. , Trabelsi Samir , Tribunella Thomas , Trites Gerald , Vasarhelyi Miklos A.
Published: April 2008

This paper evaluates the implications of the proposed Securities and Exchange Commission (SEC) Rule (33-8496) which encourages companies to file reports in the eXtensible Business Reporting Language (XBRL) format. We examine the impact of the proposed rule in three domains: (1) the role of XBRL in financial reporting, (2) concerns with XBRL taxonomies, and (3) the impact of XBRL on the SEC's filing program. The paper adopts a descriptive approach to generate normative and prescriptive propositions with implications for research that will guide preparers, users, and regulators of XBRL-tagged information.
Using Information Display Characteristics to Provide Decision Guidance in a Choice Task under Conditions of Strict Uncertainty
Authors: Dilla William N. , Steinbart Paul John
Published: April 2008

This paper investigates the effects of two display characteristics on decisions in a preferential choice task under conditions of strict uncertainty. Participants receiving information in tabular format (n = 83) made fewer compensatory choices, more maximin choices, and selected dominated alternatives more often when outcome distributions were described in terms of a midpoint and variability rather than minimum and maximum values. In contrast, participants given data in a graphical format (n = 80) made more compensatory choices with midpoint-variability than with min-max graphs. Participants given information in graphical format selected fewer dominated alternatives than did participants who received the same information in tabular format. These findings have important policy implications. While it may be desirable to use display characteristics to influence employees to make decisions consistent with organizational policies, the desirability of providing such “persuasive” decision guidance is problematic in settings where the information provider and the decision maker are independent parties to an economic exchange.