bluuebunny/crossref_metadata_2025 huggingface dataset:
The integrity of information created through book entries
Authors: Gouws D.G. , van der Poll H.M.
Published: August 2011

We know more about the past than about the future. Accounting information and knowledge of the past come from the fact that the methods we use to arrive at beliefs about the past are generally more reliable than those generating predictions of the future. Because future uncertainty is linked to the arrow of time, its increase coincides with the flow of time from the past and present to the future. To facilitate and decrease uncertainty, accountants produce an ever‐increasing amount of future‐oriented information through the use of inter alia book entries. The integrity issues of this method of information creation are investigated in this article. It is found that the integrity of information may be affected when book entries are used.
Value‐added tax on new residential properties: A comparative study regarding developers registered for VAT purposes
Authors: Julyan L.
Published: August 2011

This paper reports on a research study of value‐added tax (VAT) that applies to new residential properties developed by developers who are registered for VAT purposes. The objective of the research was to compare the current VAT provisions relating to new housing in South Africa with those of the United Kingdom, Canada and Australia. Similarities and differences were determined and discussed. It was ascertained that the selected countries all have special rebates or concessions regarding new housing, whereas South Africa has none.
Information technology and the education of professional accountants
Authors: Wessels P.L.
Published: August 2011

One of the objectives of accounting education at South African universities is to prepare students for positions as professional accountants. The bulk of current education at South African universities focuses on the acquisition of technical knowledge through courses or modules focused on financial accounting. The South African Institute of Chartered Accountants, which is the dominant professional accounting body in South Africa, is mainly responsible for prescribing the body of knowledge that is taught. However, current accounting education is challenged by major changes in the environment in which professional accountants are operating. One of the major factors that affect this environment is the impact of information technology on the accounting profession. The purpose of this article is twofold: firstly, to investigate the extent of the changing environment in which professional accountants will need to operate in future, focusing specifically on information technology; and secondly, to determine the need for future research that will identify strategies for closing the gap between the current education of accountants at South African universities and what will be expected from them in their profession in future.
Quality assurance in internal auditing: An analysis of the standards and guidelines implemented by the Institute of Internal Auditors (IIA)
Authors: Marais M.
Published: August 2011

Via the Institute of Internal Auditors, founded in 1941, the internal auditing profession actively promote the quality of internal auditors and internal audit activities. Since 1999, internal auditing standards have been revised. From 1 January 2002, all internal audit activities/any consultant rendering internal auditing services must undergo quality control, according to the provisions of Attribute Standard 1300. The revised internal auditing standards on quality control in internal audit activities reflect fundamental changes for the internal auditing profession. This article analyses the formal prescriptions and guidelines on quality in internal audit activities contained in the internal auditing standards and related practice advisories.
Die openbaarmaking van skripdividendskemas in Suid‐Afrika
Authors: Olivier P. , van der Merwe A. , DuRand I.
Published: August 2011

Scrip dividend schemes provide shareholders with the option to choose shares instead of a cash dividend. Scrip dividends became popular in South Africa after the introduction of Secondary Tax on Companies (STC) in 1993. Thus far, no guidance on the recognition, measurement or disclosure of scrip dividends has been issued by the South African Institute of Chartered Accountants (SAICA). This article proposes disclosure regarding scrip dividend schemes that will provide relevant information to the users of financial statements. The proposed disclosure is based on the assumption that entities recognise and measure scrip dividends in accordance with the re‐investment method, as opposed to the capitalisation issue method.
Should employee share options be expensed in an entity’s financial statements?
Authors: Sacho Z.Y. , Wingard H.C.
Published: August 2011

This paper investigates the debate as to whether employee share options (ESOs) should be expensed in an entity’s financial statements as required by the IASB’s IFRS 2 – Share‐based payment (2004). The paper presents arguments for and against expensing ESOs, demonstrating that compensation of employees via ESOs is a bona fide expense in terms of the recognition and measurement criteria of the IASB Framework. It concludes that, the substance of an ESO transaction is that the entity pays an employee for his services, albeit with a different financial instrument. Consequently, the accounting treatment of such compensation should be the same as for any other payment of services of an employee.
A review of the capital budgeting behaviour of large South African firms
Authors: du Toit M.J. , Pienaar A.
Published: August 2011

This article reports on the results of a survey on how companies listed on the main board of the JSE Securities Exchange SA make a capital investment decision in practice. The respondents to the survey questionnaires provided answers regarding the methods that their companies use to evaluate capital investments, as well as to evaluate mutually exclusive projects. The results suggest that South African companies prefer to use the internal rate of return (IRR) and net present value (NPV) to evaluate capital investments. In addition, there appears to be a correlation between the methods that companies use and the size of their annual capital budget. Finally, a hypothetical problem was presented to the respondents, who were asked to choose between two mutually exclusive projects. Interestingly, the majority of the respondents chose the project which added the least value.
The academic success and failure of black chartered accounting graduates in South Africa: A distance education perspective
Authors: Sadler E. , Erasmus B.J.
Published: August 2011

This study was based on the perceptions of lecturers and black CTA students at Unisa, a South African distance education university regarding on factors that contribute to black students’ academic success and failure. The main purposes of the study were to help black CTA students to understand the reasons for success and failure better, and to improve lecturers’ teaching approach(es). The research shows that students and lecturers have divergent views on what factors contribute to academic success or failure and the relative importance of the various factors.
Financial reporting by South African long‐term insurers: A comparative study
Authors: von Wielligh S.P.J. , van den Berg J.P.
Published: August 2011

The objective of this study was to identify the impact of a perceived inadequacy of authoritative South African financial reporting guidance for long‐term insurers, on the basic financial statement characteristic of comparability. The authors attempted to identify areas of non‐comparable presentation and disclosure and to suggest relevant guidance. To assess comparability, the financial statements of five insurers were evaluated using a checklist specifically developed for this study. This process identified seven main categories of significant non‐comparable presentation and disclosure practices. Solutions were proposed for these areas, based inter alia on existing international literature and guidance.
EVA versus traditional accounting measures of performance as drivers of shareholder value – A comparative analysis
Authors: de Wet J.HvH.
Published: August 2011

Several researchers and practitioners, notably Stern Stewart Consulting Company and Associates, have claimed that economic value added (EVA) is superior to traditional accounting measures in driving shareholder value. Other researchers have refuted these claims by supplying data in support of traditional accounting indicators such as earnings per share (EPS), dividends per share (DPS), return on assets (ROA) and return on equity (ROE). This study endeavoured to analyse the results of companies listed on the JSE Securities Exchange South Africa, using market value added (MVA) as a proxy for shareholder value. The findings do not support the purported superiority of EVA. The results suggest stronger relationships between MVA and cash flow from operations. The study also found very little correlation between MVA and EPS, or between MVA and DPS, concluding that the credibility of share valuations based on earnings or dividends must be questioned.
An empirical analysis of career choice factors that influence first‐year Accounting students at the University of Pretoria: A cross‐racial study
Authors: Myburgh J.E.
Published: August 2011

This cross‐cultural study examined the career choices of Asian, black and white students at the University of Pretoria to identify the factors motivating Accountancy students to become chartered accountants (CAs), as only 2.5 per cent (609) of 24 308 registered CAs in South Africa in 2005 were black, and only 6 per cent (1573) were Indian. Understanding the attitudes and the perceptions of CA first‐year students (identifying key career choice factors) can help course administrators/curriculum designers (the South African Institute of Chartered Accountants (SAICA) and the Public Accountants and Auditors’ Board (PAAB)) to align marketing and recruiting strategies with specific personal occupational preferences of different racial groups enrolled for local CA courses. Factors such as decision time‐frame of career choice, socio‐economic background, students’ perceptions of the benefits/constraints of the CA profession, and other jobrelated factors, were analysed. Students attributed their career choice to their school Accounting performance. Most chose this career in Grades 8 to 11. All three groups like the availability of employment as a CA. Constraints were the cost of qualifying (according to black students), and the difficulty of qualifying (Asian and white students).
The attitudes and perceptions of South African accounting academics about research
Authors: Nieuwoudt M.J. , Wilcocks J.S.
Published: August 2011

The South African government is restructuring tertiary education, and subsidies to universities that do not build and strengthen their research capacity will be severely restricted. Hence, academics must publish more research. This study used a questionnaire to gauge the personal opinions and perceptions of and attitudes towards research held by South African Accounting academics. The questionnaire was based on international debates and discourses on Accounting education and research that suggest factors that might affect research production and consumption, and on informal discussions with colleagues in the discipline. Tertiary institutions can use this constructive information to build a research culture and improve research output among these academics, by changing perceptions where needed and empowering Accounting academics to conduct research. The results indicate that the main limitations to research output are inadequate qualifications and a lack of skills with regard to conducting research (only 10 per cent of the respondents possess a doctoral degree), insufficient time for conducting research, financial factors, a lack of mentorship and departmental support, and difficulty finding research topics. The debate on “teaching versus research” is also ongoing.
Should the IASB consider exercise date accounting for outstanding employee share options?
Authors: Sacho Z.Y. , Oberholster J.G.I.
Published: August 2011

This article investigates the most appropriate accounting treatment for expensing the fair value of employee share options (ESOs) in financial statements. The debate centres around whether the grant date or the exercise date is the most appropriate date for determining the value at which the ESOs are eventually accrued within the financial statements. After examining accounting models for each of the above measurement dates, the article concludes that exercise date accounting best reflects the economic substance of the ESO transaction. Therefore, the IASB should consider revising its definition of equity to encompass only existing shareholders, leaving all other financial obligations to be classified as liabilities.
A study of the ethical views of final year South African accounting students, using vignettes as examples
Authors: Sadler E. , Barac K.
Published: August 2011

The aim of this paper is to gauge the ethical views of male and female final year Accounting students in South Africa and to compare the results with similar studies performed in Australia and Ireland. The study also discusses the desirability of including an ethics course in the Accounting curriculum as a strategy to improve the ethical standing of the accounting profession. The most important self‐reported factor that influenced students’ ethical behaviour was the fear of getting caught. It was recommended that professional accountancy bodies should be more transparent in respect of their disciplinary procedures in order to discourage unethical behaviour. Ethics training initiatives should also address whistleblowing, and whistleblowing should be encouraged. Furthermore, universities should integrate ethics more fully into all courses in the Accounting curriculum of prospective professional accountants.
Students’ perceptions of the usefulness of an annual report project for the development of skills and knowledge
Authors: Stainbank L.
Published: August 2011

This study looks at an annual report project that simulates a real‐life situation to encourage students to integrate knowledge, develop skills and values appropriate to self‐directed enquiry and research, use technology, work in groups and be active participants in the learning process, question, seek answers and learn independently. Students selected the annual report of a Top 150 JSE‐listed company and answered questions on aspects of financial and managerial accounting, auditing and finance. A questionnaire investigated whether project participation enhances skills (such as judgment, interpretative, listening and problem‐solving skills) and abilities (such as thinking critically, asking pertinent questions, organising). There were significant differences in students’ perceptions, including gender and language differences. The results show accounting educators using such projects which skills and knowledge areas need to be addressed elsewhere in the curriculum and whether to include such a project in their programmes.
Board structure and intellectual capital performance in South Africa
Authors: Swartz N‐P. , Firer S.
Published: August 2011

This article examines the relationship between board structure and the intellectual capital performance of South African publicly listed companies. Board composition was analysed in terms of gender and ethnic diversity, using cross‐sectional multiple regressions. The population of the study included all South African companies listed on the JSE Securities Exchange during 2003. The final sample, after the transformation of the data, consisted of 117 companies. The empirical results indicated a positive significant relationship between the percentage of ethnic members on the companies’ boards of directors and intellectual capital performance. Based on the results of this study, it is argued that South African publicly listed companies may be able to enhance their intellectual capital performance by using an ethnically diverse board of directors.
Tax compliance obstacles encountered by small and medium enterprises in South Africa
Authors: Abrie W. , Doussy E.
Published: August 2011

It is internationally acknowledged that small and medium enterprises (SMEs) play a vital role in enhancing a country’s economic growth and in creating jobs. It is therefore in the public interest and in the interests of all governments to support SMEs. A study concentrating on the tax function in small and medium manufacturing concerns operating in the Gauteng Province in South Africa was recently undertaken. In this article, which is based on the study, the authors identify the main problem areas that manufacturing SMEs in the Gauteng Province have to cope with in administering government taxes. The article discusses the administration process only, and not the taxes themselves. The authors have identified tax compliance requirements in South Africa as a stumbling block for SMEs. They suggest that the government seriously consider reducing the number of taxes SMEs have to administer, reduce the compliance requirements and make additional tools available to SMEs to assist them in administering taxes.
The usefulness of corporate annual reports in South Africa: perceptions of preparers and users
Authors: Stainbank L. , Peebles C.
Published: August 2011

This article investigates the sources of financial information used for decisions regarding the buying, holding and selling of ordinary shares. The results of this questionnaire‐based study indicate that the main source of information used by those who prepare annual reports is stockbroker advice, whereas users of such reports prefer communication with management. Preparers of annual reports support the notion that annual reports are a useful source of information, but users prefer the preliminary announcement. Preparers read the income statement more thoroughly, while users read the cash flow statement more thoroughly. The article also provides information on the qualitative criteria used for assessing the usefulness of accounting practices, and some comments on the importance of setting standards and the objectives of the South African Statements of Generally Accepted Accounting Practice.
Die inkomste‐ en kapitaalwinsbelastinghantering van kollektiewe beleggingskemas in effekte en kollektiewe beleggingskemas in eiendom: ’n kritiese beskouing
Authors: van Schalkwyk L. , Isaacs H.D.
Published: August 2011

Collective Investment Schemes in Securities (‘CISS’) and Collective Investment Schemes in Property (CISP’) are common business vehicles in the South African economy. Nevertheless, there is still some uncertainty with regard to the tax treatment of these business structures, as the application of the specific income tax and capital gains tax provisions applicable to CISS and CISP results in several anomalies. The purpose of this article is to identify and highlight these anomalies by discussing the specific income tax and capital gains tax provisions applicable to CISS and CISP, and to suggest how some of these anomalies should be treated for tax purposes. It is submitted that the legislator did not consider the legal nature and practical operation of a CISS when the tax provisions for CISS were drafted. The tax treatment of CISP is also not without difficulties, especially where the CISP is constituted as an open‐ended investment company (OEIC’).
Recognising an STC liability versus recognising a deferred tax asset for unused STC credits according to the IASB framework: a comparison
Authors: Venter E.R. , Stiglingh M.
Published: August 2011

South African companies have, in the past, not recognised an asset for unused Secondary Tax on Companies (“STC”) credits. AC 501, Accounting for “Secondary Tax on Companies (STC)”, which is effective for annual periods beginning on or after 1 January 2004, now requires South African companies to recognise a deferred tax asset for unused STC credits, to the extent that it is probable that an entity will declare dividends of its own, against which the unused STC credits can be utilised. In terms of AC 501 and IAS 12 (AC 102), Income Taxes (the local and international accounting standard on income taxes), the recognition of a liability to pay STC has to be postponed until the declaration of a dividend. Some accounting commentators have indicated that they find it anomalous to recognise a deferred tax asset in respect of unused STC credits, while no liability is recognised for the STC that would be payable on the future distribution of retained earnings. The objective of the study is to consider whether it is conceptually anomalous to recognise a deferred tax asset for unused STC credits while no liability is raised for the STC that would become payable on future dividend declarations on profits already recognised in the financial statements. The study concludes that it is conceptually anomalous to recognise a deferred tax asset for unused STC credits when no corresponding liability is raised.
Determining the optimal capital structure: a practical contemporary approach
Authors: de Wet J.H.vH.
Published: August 2011

Determining an optimal capital structure for a company is a multi‐facetted problem that has challenged and fascinated academics and practitioners for a long time. This study investigates capital structures used in different countries and industries and explores the different theories on capital structure that have been put forward to date. A trade‐off model, incorporating taxes and financial distress costs, is applied to determine the optimal capital structure for three companies listed on the JSE South Africa. One of the conclusions drawn from the results of this analysis is that great care needs to be taken in ensuring the reasonableness of the input data and the valuation model. Secondly, significant amounts of value can be unlocked in moving closer to the optimum level of gearing. Lastly, even when one is using a model such as the one illustrated, it may be preferable to try to operate within an acceptable interval rather than to try to attain the absolute optimum capital structure.
An empirical examination of the value relevance of intellectual capital using the Ohlson (1995) valuation model
Authors: Swartz G.E. , Swartz N‐P. , Firer S.
Published: August 2011

The debate on the determinants of firm value is ongoing; and the increasing gap in the book‐to‐market ratio (Lev & Sougiannis 1999) has yet to be explained in the financial literature. This article contributes to the debate by examining whether intellectual capital measured using the value added intellectual coefficient (VAICTM) (Pulic 1998) contributes to the explanation of the book‐to‐market ratio. This study used Ohlson’s 1995 valuation model and JSE Securities Exchange (SA) (JSE) data in an attempt to identify whether the book value of assets, accounting (accrual) earnings and VAICTM explain the behaviour of South African share prices. The panel data least squares model results indicate a significant relationship between share prices three months after year end, and abnormal earnings, abnormal cash dividends, book value of assets, the capital employed coefficient, and the human capital coefficient.
Applying the probability recognition criterion to recognise a deferred tax asset for unused ‘secondary tax on companies’ credits
Authors: Venter E.R. , Stiglingh M.
Published: August 2011

According to AC 501, Accounting for ‘Secondary Tax on Companies (STC)’, a deferred tax asset for unused STC credits is recognised if it is probable that an entity will declare dividends against which unused STC credits can be used. This study examined the dividend declaration profile of companies recognising a deferred tax asset for unused STC credits to satisfy AC 501. In a literature review, the term ‘probable’ was analysed, showing that future dividend declarations are only regarded as ‘probable’ if their likelihood is 64% to 79%. A survey revealed that 45% of the surveyed companies with unused STC credits recognised a deferred tax asset for unused STC credits in their 2004 financial statements, and therefore believed they had satisfied the probability recognition criterion in AC 501. The survey also showed that companies that recognised a deferred tax asset have a dividend policy shareholders are familiar with, and most declare dividends annually. These two indicators can help assess the probability of future dividend declarations.
Teaching styles versus learning styles in the accounting sciences in the United Kingdom and South Africa: a comparative analysis
Authors: Visser S. , McChlery S. , Vreken N.
Published: August 2011

Individuals learn in different ways, using several learning styles, but lecturers may not always present information and learning experiences that match students’ learning preferences. Mismatches between learning and teaching styles can lead to disappointment with the course of study, personal discouragement and underperformance. The learning styles of 735 undergraduate Accounting students and the teaching styles of 46 lecturers from one United Kingdom and one South African university were empirically surveyed, using the Felder‐Solomon Index of Learning Styles questionnaire to consider the students’ learning styles, and an adaptation of the questionnaire to analyse the lecturers’ teaching styles. The study compared learning and teaching styles between two universities in two different countries and then examined possible matches/mismatches between learning and teaching styles. Little mismatch was found (p‐values smaller than 0.3). Other results are discussed and recommendations are made in relation to understanding and meeting students’ learning needs and the needs of professional bodies.
The incorporation of actuarial expertise in overall audit strategies for listed South African long‐term insurers
Authors: von Wielligh S.P.J.
Published: August 2011

As a result of the significant influence of actuaries on policy liabilities and the related earnings in the financial statements of a listed South African long‐term insurer, auditors encounter a number of key issues and considerations relating to the incorporation of actuarial expertise in the audit process. Guidance for auditors to address these issues and considerations is discussed in this study. The guidance was developed as a significant element of a wider research project, the objective of which was the development of a best practice framework for the formulation of overall audit strategies for insurance contracts and the related earnings of listed South African long‐term insurers.
The South African business environment in which accountants function and the role of information technology in that environment
Authors: Wessels P.L.
Published: August 2011

South African business organisations operate in an environment that is changing rapidly. One of the key drivers of this change is advances in information technology (IT). Accountants are educated at various tertiary institutions to prepare them to be competent as information and knowledge workers in the South African business environment. This article aims to determine the nature and demands of the South African business and the IT environment in which accountants must function. This analysis identifies the context within which IT skills are applied by accountants by investigating the South African business and IT environment to determine how educational institutions could ensure that the students they deliver possess the critical IT skills they need to be competent in the South African business environment.
Factors affecting ethical judgement of South African chartered accountants
Authors: Maree K.W. , Radloff S.
Published: August 2011

The start of the twenty‐first century was marred by a spate of company collapses that involved fraudulent accounting activity. In many cases, company executives, many of whom belonged to the accounting profession, perpetrated the fraud. As a result, internationally, the accounting profession has suffered an enormous loss of goodwill, and its reputation as a profession with integrity has been severely harmed. Accounting professionals are no longer accorded the high regard they commanded in the past.The consequences for the profession have been far‐reaching: accounting now faces a long, uphill battle to restore its reputation and to regain the trust of the international business community. This study replicates two famous international studies in the South African context. The focus of the study was to establish whether factors such as the Code of Professional Conduct of the South African Institute of Chartered Accountants (SAICA), the corporate ethical environment and their age influence the ethical judgement of individual accountants. The first such study was conducted in the United States of America (USA), and it was followed by similar research in Turkey. The results of these two studies suggested very different factors that could influence accountants’ ethical judgement. The study reported in this article investigated South African chartered accountants; and its results were similar to those obtained in the US study.
Determining a taxable capital gain or an assessed capital loss: some problems
Authors: Olivier L.
Published: August 2011

Despite the South African legislature’s intention to introduce capital gains tax (CGT) as a simple and clear tax, it is an extremely complex tax. Several provisions of both the Eighth Schedule to the Income Tax Act 58 of 1962 and the Act itself have to be taken into account in determining whether a taxable capital gain or an assessed capital loss has arisen during the year of assessment. The application of these principles is often surrounded by uncertainty. Hence, the purpose of this article is not only to provide an overview of some of the different provisions that have to be taken into account and the interaction between them, but also to highlight some of the problems arising from the application of the principles themselves.
Recognition of restricted receipts by not‐for‐profit organisations: problems, standards and empirical results
Authors: Rossouw J.
Published: August 2011

Not‐for‐profit organisations often have accounting problems in the recognition of donations where donors impose restrictions on how funds are spent. The specific receipts which cause most problems relate to grants made ‘in advance’, grants received for a specific purpose, and capital grants. This article investigates whether some of these restricted receipts must be recorded as income in the income statement; whether others must be recorded directly against a fund, or whether unused funds must be recorded as a liability. This article discusses these problems and the principles of accounting standards already issued specifically for not‐for‐profit organisations in some countries. This article also presents the results of an empirical study done in South Africa which has a bearing on the recognition of certain restricted receipts. Recommendations are made on the most appropriate way for not‐for‐profit organisations to record receipts in advance, receipts for specific purposes and capital grants in their accounting systems.
The design and implementation of Activity Based Costing (ABC): a South African survey
Authors: Sartorius K. , Eitzen C. , Kamala P.
Published: August 2011

Activity Based Costing (ABC) has been researched extensively in developed countries. Research on these issues in South Africa is limited. This article creates a better understanding of the design of ABC systems in South Africa, comparing ABC implementation in South Africa to that in several developed/developing countries. A quantitative methodology was adopted to evaluate the extent of ABC implementation. A survey‐case study methodology was used to identify reasons for implementation/ non‐implementation, problems and critical success factors relating to implementation. The results show that the extent of ABC implementation in South Africa is lower than that found in developed countries, but the evidence is inconclusive. Nevertheless, the results suggest that the issues facing ABC implementers in South Africa are similar to those faced in many other countries. This study provides South African companies with a comparative framework of important variables to be considered in implementing ABC.
A procurement fraud risk management model
Authors: Venter A.C.
Published: August 2011

The high occurrence of procurement fraud requires the management of an enterprise, the risk manager of the enterprise and the internal auditor to address procurement fraud risks effectively within the enterprise risk management concept. The purpose of the article is to explain a procurement fraud risk management process which will serve as a comprehensive framework for enterprise risk managers and for internal auditors to limit the enterprise’s exposure to procurement fraud as far as possible. The study by Venter (2005) on which the article is based proposes a procurement fraud risk matrix which can be used to manage fraud risks within the procurement function efficiently. This matrix is based on the Committee of Supporting Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management ‐Integrated Framework which is specifically applied to address the procurement fraud risk problem.
Application of the value chain concept in the audit of policy liabilities and the related earnings of listed South African long‐term insurers
Authors: von Wielligh S.P.J.
Published: August 2011

Gaining an understanding of the business and accounting processes of the insurers concerned is a key element of the complex, high‐risk external audits1 of listed South African long‐term insurers. In this empirical study, the value chain concept developed by Porter in the 1980s is customised for listed South African long‐term insurers. Furthermore, the accounting support processes that affect the high‐risk components of policy liabilities and the related earnings of these insurers are identified. The generic value chain and list of accounting support processes developed in this study are useful tools to assist auditors in gaining an understanding of the business and accounting processes of these insurers.
The ability of students to convert their knowledge of IT concepts into IT competencies
Authors: Wessels P.L. , Steenkamp L.P.
Published: August 2011

The current syllabus (programme of education) prescribed by the South African Institute of Chartered Accountants (SAICA) emphasises that it is important for students to acquire knowledge and skills in interacting with information technology (IT). One of the basic IT skills identified by SAICA is the ability of students to apply controls to personal systems in order to ensure the processing integrity of IT resources and to ensure that IT resources are secure and properly safeguarded. The research questions investigated in this article are whether and where students acquire the knowledge and skills they need in using passwords as a control mechanism, and whether they actually apply the knowledge and skills they have acquired when they access information systems and networks. On the basis of a survey, the article concludes that there is a definite increase in the level of students’ knowledge of which actions are considered to be good password practices from the time when they have recently matriculated to their third year. However, it is also clear from the results of the survey that these competencies are not yet being fully applied in the real‐world arena of accessing online password‐protected accounts.
Investigating causality between cash flow and profitability: an econometrics approach
Authors: Bezuidenhout A. , Mlambo C. , Hamman W.D.
Published: August 2011

In financial analysis, forecasting often involves regressing one time series variable on another. However, to ensure that the models are correctly specified, one needs to first test for stationarity, co‐integration and causality. In testing for causality, the variables should be stationary. If non‐stationary, one can estimate the model in difference form, unless the variables are co‐integrated. This article determines whether cash flow and earnings variables are stationary, and which variable causes the other, using econometric analysis. In most cases, cash flow variables are found to cause earnings variables. This is so when the models are estimated in levels. However, when estimated in first differences, the causal relationship tends to be reversed such that earnings cause cash flows. Further study is recommended, whereby panel data could be used to improve the power of the tests.
The impact of XBRL on the financial reporting supply chain: a South African case study
Authors: Buys P.W.
Published: August 2011

In recent times there have been major developments in the areas of digitising business information, which can impact the financial reporting supply chain. Such developments include the eXtensible Business Reporting Language (XBRL) technology. The South African regulator of financial services and a major South African retirement fund administrator were recently the first South African organisations to embark on an XBRL proof of concept initiative as part of an attempt to enhance their financial reporting supply chain, from initial data recording, to the submission of the reports, to the analysis of the data. This paper provides highlights of this initiative against the background of current XBRL developments, the financial reporting supply chain and the digitising efforts of such supply chains.
An exploratory study of chartered accountants’ awareness and understanding of XBRL
Authors: Nel G.F. , Steenkamp L.P.
Published: August 2011

eXtensible Business Reporting Language (XBRL) is an important new technology for the electronic communication of business and financial data and, by implication, relevant to, inter alia, chartered accountants. Because research in Australia and the USA showed unacceptably low levels of awareness and understanding of XBRL, research was conducted to determine the levels of awareness and understanding of XBRL in South Africa. The study was limited to chartered accountants. The results showed that the majority of chartered accountants in South Africa are currently unaware of XBRL and few fully understand it. In spite of these findings, the majority of respondents acknowledged the fact that it was necessary for either them or someone in their organisation to investigate the matter of XBRL in the near future.
Factors impacting on the future of the IASB
Authors: Sacho Z.Y. , Oberholster J.G.I.
Published: August 2011

This paper investigates the factors influencing the future of the IASB, using as the point of departure, a review of its historical progression towards becoming the global accounting standard‐setting authority. It concludes that the IASB is an organisation vulnerable to (1) political lobbying of influential institutions, (2) US accounting authorities decision makers, (3) potential accounting scandals, and (4) cultural differences resulting in the misapplication of its standards around the world. Such factors should be borne in mind when charting the next steps for the IASB and in evaluating the comparability and quality of accounts produced under IFRSs around the world.
Current practices for resource allocation in external audits of listed South African long‐term insurers
Authors: von Wielligh S.P.J.
Published: August 2011

The purpose of this study was to determine current practices for two salient aspects of the audits1 of listed South African long‐term insurers by empirically analysing prevailing practices. First, current practices for the composition of the audit teams responsible for these audits are determined. Thereafter current practice is determined for the proportion of audit time spent by the different specialists on audit teams on the audit of the high‐risk components of policy liabilities and the related earnings. When allocating audit staff and establishing continuing professional development plans for staff the auditors of all listed and unlisted South African long‐term insurers could use the findings of the study as benchmarks.
An analysis of service‐oriented architecture (SOA) to determine the impact on the activities performed by the external auditor of a SOA service consumer
Authors: Butler R.
Published: August 2011

Various forms of IT sourcing used by audit clients create issues of concern for external auditors. This article investigates the nature and basic characteristics of service‐oriented architecture (SOA), a modern information system architecture strategy, to ascertain whether the use of SOA by a service consumer audit client would have an impact on the activities typically performed by the external auditor. It was found that SOA presents a complete shift in the way IT application functionality is constructed and integrated and inevitably effects changes in the accounting system and the related internal controls of the SOA service consumer. As a result SOA has a significant impact on the activities performed during the audit process and introduces various SOA‐related aspects that need to be considered by the external auditor of a SOA service consumer.
An analysis of cost of capital, capital structure and capital budgeting practices: a survey of South African listed companies
Authors: Correia C. , Cramer P.
Published: August 2011

This study employs a sample survey to determine and analyse the corporate finance practices of South African listed companies in relation to cost of capital, capital structure and capital budgeting decisions.The results of the survey are mostly in line with financial theory and are generally consistent with a number of other studies. This study finds that companies always or almost always employ DCF methods such as NPV and IRR to evaluate projects. Companies almost always use CAPM to determine the cost of equity and most companies employ either a strict or flexible target debt‐equity ratio. Furthermore, most practices of the South African corporate sector are in line with practices employed by US companies. This reflects the relatively highly developed state of the South African economy which belies its status as an emerging market. However, the survey has also brought to the fore a number of puzzling results which may indicate some gaps in the application of finance theory. There is limited use of relatively new developments such as real options, APV, EVA and Monte Carlo simulation. Furthermore, the low target debt‐equity ratios reflected the exceptionally low use of debt by South African companies.
Evaluating the information content of nominal and inflation‐adjusted versions of the measure Economic Value Added (EVA)
Authors: Erasmus P.D.
Published: August 2011

This study implements inflation adjustments, as proposed by International Accounting Standard 15 (IAS15), to determine an inflation‐adjusted version of Economic Value Added (EVA). The relationships between the nominal (EVAnom) and inflation‐adjusted (EVAreal) versions of EVA, and market‐adjusted share returns are investigated, and compared with those of residual income, earnings and operating cash flow. Relative information content tests suggest that earnings have the strongest relationship with share returns, while the results of the incremental tests indicate that the EVAnom and EVAreal components do not provide statistically significant information content beyond that provided by residual income.
The effect of audit committee composition and structure on the performance of audit committees
Authors: Ferreira I.
Published: August 2011

This article attempts to examine audit committee composition and structure affecting and leading to enhanced audit committee performance, with due regard for the principles of good governance and international best practices. The article recommends the ideal composition and structure of the audit committee to assist committees to meet their requirements, to ensure optimal performance and to improve the effectiveness of their oversight of financial reporting and corporate governance. The framework developed could also be used as a guideline in the selection and recruitment process for audit committees. The requirements are based on the regulatory requirements of the King II Report on Corporate Governance in South Africa (2002), the Companies Amendment Act 20 of 2004, the Corporate Laws Amendment Bill (2006), the Public Finance Management Act (PFMA), the JSE Limited requirements, the Blue Ribbon Committee Report (1999) and the Sarbanes‐ Oxley Act of 2002 in the USA.
The purposive approach to the interpretation of fiscal legislation ‐ the winds of change
Authors: Goldswain G.K.
Published: August 2011

This study examines the way in which our judiciary approach the interpretation of fiscal legislation. It traces the roots of the historical approach (the strict and literal approach), its shortcomings and the modifications to such an approach when it leads to an absurdity. It then analyses whether the advent of the Constitution (Constitution of the Republic of South Africa Act 108 of 1996) has been a catalyst for a change from the strict and literal approach. The conclusion reached is that the Constitution has been a catalyst for a change in approach ‐ to a purposive approach. One of the results of the change in approach means that the taxpayer now has a realistic opportunity to question and even have unjust and unfair interpretation decisions of the past reversed in the appropriate circumstances.
Internal auditors’ compliance with the IIA Standards: a worldwide perspective
Authors: Sadler E. , Marais M. , Fourie H.
Published: August 2011

This article deals with internal auditors’ use of and compliance with the Standards for the Professional Practice of Internal Auditing, as well as the Practice Advisories, issued by the Institute of Internal Auditors (IIA). The results reported here form part of a global research project, the 2006 Common Body of Knowledge in Internal Auditing (CBOK) study. The research shows that internal auditors worldwide believe that overall, their organisations comply with the Standards. Reasons for not using the Standards relate to organisational attributes such as management’s perceptions that these do not add value and are too time‐consuming to comply with.
Professional accountancy education in selected ECSAFA countries: a comparative study
Authors: Stainbank L. , Ramatho G.
Published: August 2011

Investigations into professional accountancy education gathered impetus with the publication of The impact of globalisation on accountancy education by Karreman in 2002. This publication provided a comparative analysis of professional accountancy education in 25 countries worldwide, using a model developed for the classification of accountancy education systems. The rationale behind such an exercise is to promote educational exchange and facilitate educational development. The Karreman study only covered two countries in Africa, namely South Africa and Kenya. This study expands the Karreman study by comparing and benchmarking the professional accountancy education programmes in six member countries of the Eastern, Central and Southern African Federation of Accountants (ECSAFA) using the Karreman methodology. This study reports the results of a questionnaire survey to which seven accountancy bodies located in six countries responded. The results of this study revealed mostly agreement with the Karreman model. All the countries could be categorised as developing countries with common law/Roman‐Dutch legal systems and with a strong British influence. Thus similarities in regulation, education and practical experience are expected. The professional bodies tend towards professional selfregulation with low to medium membership regulation. All countries require practical experience before qualifying, and a theoretical approach to the final examination predominates. The study also shows that there is co‐operation in the region.