bluuebunny/crossref_metadata_2025 huggingface dataset:
Ethical Reasoning and Equitable Relief
Authors: Fleischman Gary M. , Valentine Sean , Finn Don W.
Published: October 2007

Professional manager perceptions were investigated in this study using a survey containing two equitable relief situational vignettes to investigate empirically two of the four steps from Rest's (1986) ethical reasoning process. Business societal perceptions of the equitable relief subset of the innocent spouse rules were also investigated, focusing on the knowledge of evasion and abuse factors.

The results indicated that the ethical reasoning process was significantly related to ethical decision making and Rest's (1986) model. Furthermore, decision makers were more likely to judge that relief be granted in an equitable relief scenario involving abuse than to one not involving abuse. The knowledge of evasion factor contained in both scenarios appeared to influence indirectly respondents' judgments to deny equitable relief, while the presence of emotional abuse strengthened relief judgments. Finally, the study presents a general framework involving the interrelationship of Congressional intent with societal perceptions regarding subjective equitable relief tax-law provisions that are associated within a societal context.
The Effect of Audit Inquiries on the Ability to Detect Financial Misrepresentations
Authors: Lee Chih-Chen , Welker Robert B.
Published: October 2007

Recent professional promulgations recommend the use of audit inquiry for fraud detection. One benefit of audit inquiries is that they may induce interviewees to act in ways that facilitate the discovery of intentional financial misrepresentations (deception). We conducted two experiments to assess the ability of prospective accountants (upper-level accounting majors) to detect intentional financial misrepresentations in audit inquiries. These accounting majors served as proxies for entry-level accountants. Our results indicate that participants have poor deception detection ability in evaluating a response to an inquiry, even when they receive deception detection training prior to the inquiry, and when repeat questions are added to the inquiry to heighten the level of stress with which interviewees must cope. However, our results also suggest that the inquiry process may change the way participants view interviewees. Participants were more skeptical of verbal financial representations (e.g., valuation, existence) after they observed an inquiry regarding the representations. These results suggest that an inquiry does not significantly increase the ability of entry-level accountants to detect deception accurately, but it may benefit fraud detection by inducing a skeptical mindset for their evaluations of financial representations.
The Impact of Financial Information and Voluntary Disclosures on Contributions to Not-For-Profit Organizations
Authors: Parsons Linda M.
Published: October 2007

This study uses a field-based experiment combined with a follow-up laboratory experiment to investigate whether accounting information reduces perceived uncertainty about nonprofit operations. Potential donors were sent, via a direct mail campaign, fundraising appeals containing varying amounts of financial and nonfinancial information in order to determine whether individual donors are more likely to contribute when accounting information or voluntary disclosures are provided. Participants in a lab experiment were asked to assess the usefulness of the different versions of the fundraising appeals.

A logistic regression provides evidence that some donors who have previously donated use financial accounting information when making a donation decision. The results are inconclusive regarding whether donors use nonfinancial service efforts and accomplishments disclosures to determine whether and how much to give, but participants in the lab experiment judged the nonfinancial disclosures to be useful for making a giving decision.
New Product Development: How Cost Information Precision Affects Designer Focus and Behavior in a Multiple Objective Setting
Authors: Booker Donna M. , Drake Andrea R. , Heitger Dan L.
Published: October 2007

The development of new products that satisfy customer needs in a costeffective manner is key to survival for many organizations. The role that cost information plays in new product development (NPD), such as its effect on designers' focus and crucial NPD performance measures, is unclear. This experimental study extends existing accounting NPD research by investigating the effect of two levels of cost information precision (specific versus relative) and new products (radical versus incremental) on designers' focus and two common NPD performance measures: product cost and product features. The results indicate that compared to relative cost information, specific cost information increases designers' focus on cost minimization for incremental but not radical products. However, providing designers with specific cost information results in more cost-effective designs for both types of products. In addition, contrary to expectations, more cost-effective designs do not come at the expense of reduced product features. The results show that the role played by cost information in NPD is more complex than has been suggested in prior literature.
Long Series of Information and Nonprofessional Investors' Belief Revision
Authors: Pinsker Robert
Published: October 2007

This paper reports the results of an experiment designed to examine the effect of disclosure pattern (sequential versus simultaneous) and direction of information (positive/negative versus negative/positive) on nonprofessional investors' belief revisions. An important feature of the experiment is that long series of information are used. Prior research has largely examined individuals' belief revisions using short series of information.

Results indicate that individuals revise beliefs to a larger extent when the disclosure pattern is sequential rather than simultaneous. The findings extend the prior belief revision literature by providing evidence that results hold using long series of information: the current experiment uses 20 pieces of information, whereas most accounting studies only use four pieces of information. Results also contribute to the extant financial accounting literature on nonprofessional investors that is particularly relevant given the larger number of inexperienced investors entering the marketplace and recent legislation that requires more detailed firm disclosures (e.g., the Sarbanes-Oxley Act [SOX] of 2002).
Attention to Evidence of Aggressive Financial Reporting and Intentional Misstatement Judgments: Effects of Experience and Trust
Authors: Rose Jacob M.
Published: October 2007

This study extends prior research by examining the effects of dispositional trust, induced skepticism, and fraud-specific audit experience on attention to aggressive financial reporting practices and judgments of potential misstatement. In an experimental analysis using 125 practicing auditors, this study finds that auditors who are less trusting of others attend more to evidence of aggressive reporting than do more trusting auditors, and higher levels of induced skepticism increase attention to aggressive reporting. Further, auditors who pay more attention to evidence of aggressive reporting are more likely to believe that intentional misstatement occurred. General audit experience was not a predictor of auditors' attention to aggressive reporting or auditors' judgments about intentional misstatements. Auditors with more fraud-specific experience, however, were more likely than auditors with less fraud-specific experience to believe that intentional misstatement had occurred when evidence of aggressive reporting exists.
Culture, Implicit Theories, and the Attribution of Morality
Authors: Wong-On-Wing Bernard , Lui Gladie
Published: October 2007

Recent research (Choi and Nisbett 1998, 2000; Choi et al. 1999; Ji et al. 2000; Nisbett et al. 2001) has repeatedly shown that compared to Westerners, East Asians pay greater attention to situational factors and endorse a more holistic theory of causality. Based on this robust finding, the present study examined the extent to which Americans and Chinese differ in their causal judgment about, and their reaction to observed fraudulent behavior. The results show that compared to Americans, the Chinese were more sensitive to situational factors. They were less likely to attribute fraudulent behavior to individual dispositions, and less likely to agree to punitive measures that are directed at the target person. Implications for both practice and research are discussed.
Academic Instruction as a Determinant of Judgment Performance
Authors: Wright William F.
Published: October 2007

Auditors evaluate the collectibility of commercial loans when they conduct financial audits of financial institutions. Task-specific academic instruction and practice provide for acquisition of relevant credit analysis knowledge—but the relative benefits of academic instruction and practice versus training and practical experience remain unclear (e.g., Bonner and Walker 1994; Hammond 1996). First, loan judgments made by second-year graduate business students completing an elective course in credit analysis are compared with judgments made by audit seniors with similar business experience but without any credit analysis training or experience. The graduate business students' judgments are significantly more accurate and less biased, with more consensus, given the criterion of the mean judgment of twelve highly experienced financial institution audit partners. Second, as a test of the benefits of academic instruction and practice versus CPA-firm training and practical experience, the judgments of the graduate business students are compared with judgments provided by experienced auditors (seniors and managers): similar levels of judgment performance are indicated. Models of the loan judgments of the different groups of participants based on attributes of the borrower explain why the graduate business students performed especially well.
Strategic Performance Measurement Systems, Job-Relevant Information, and Managerial Behavioral Responses—Role Stress and Performance
Authors: Burney Laurie , Widener Sally K.
Published: October 2007

This study explores managerial behavioral responses associated with the extent to which a firm's performance measurement system is linked to its strategy (SPMS). We hypothesize that an SPMS is positively associated with higher levels of job-relevant information (JRI) and lower levels of role stressors, which are then associated with higher levels of managerial performance. Using survey data from over 700 respondents, we find that an SPMS positively affects performance through its relations with JRI and role ambiguity (RA). Managers perceive that they have higher levels of JRI and lower levels of both role conflict (RC) and RA when they have an SPMS closely linked to strategy. In turn, performance is higher when managers perceive that their RA is lower. Additionally, we find that the link to the evaluative process, complexity, and managerial experience moderate the relations between an SPMS and JRI, RA, and RC.
Empowerment, Motivation, and Performance: Examining the Impact of Feedback and Incentives on Nonmanagement Employees
Authors: Drake Andrea R. , Wong Jeffrey , Salter Stephen B.
Published: October 2007

Motivated employees play a key role in organization success, and past research indicates a positive association between perceptions of empowerment and motivation. A prominent model put forth by Spreitzer (1995) suggests that two major components of control systems will positively affect employee feelings of empowerment—performance feedback and performance-based reward systems. This experimental study contributes to the behavioral accounting literature by examining how specific types of performance feedback and performance-based rewards affect three psychological dimensions of empowerment. Also, we use a relatively simple context to investigate whether predictions validated on surveys of managers also hold for lower-level workers. Our results suggest that feedback and rewards affect the dimensions of empowerment differently for lower-level workers than they do for managers. Namely, performance feedback was positively associated with only one dimension and performance-based rewards had negative effects on two out of the three dimensions. In addition, overall motivation was not significantly associated with two of the three empowerment dimensions. Implications of this study are that techniques that work to increase manager perceptions of empowerment may not work at lower organizational levels and, even if successful, the related increase in employee motivation may not be significant.
Effects of Supervisor Power on Preparers' Responses to Audit Review: A Field Study
Authors: Fedor Donald B. , Ramsay Robert J.
Published: October 2007

This study investigates the role of audit review as feedback to workpaper preparers. Specifically, we examine whether review affects preparers' attempts to improve their performance, manage their reviewers' impressions of their work, and seek additional feedback from their reviewers. We also examine the effects of preparers' perceptions of their reviewers' power. Power has previously been shown to be a critical construct affecting feedback. Our findings suggest that perceptions of reviewer power affect preparers' responses to review. Specifically, referent power appears to have the most positive effect on preparer's responses, while perceptions of coercive power have detrimental effects.
Sink or Skim: Textbook Reading Behaviors of Introductory Accounting Students
Authors: Phillips Barbara J. , Phillips Fred
Published: October 2007

Despite the significant emphasis that most instructors place on textbooks in introductory accounting courses, little research exists to describe how students interact with their textbooks. Using learning journals, 172 undergraduate students provided detailed, real-time accounts of their experiences with 13 chapters of an introductory financial accounting textbook. Using the method of grounded theory, supplemented with quantitative tests of association, this study begins to characterize textbook use from a student perspective. Results indicate that, for students, reading is a motivated behavior, with the specific motives varying across different groups of students and leading to different consequential actions. Academically strong students appear to read with the primary goal of understanding assigned material, as evidenced by their willingness to (1) engage in reading before the related material is covered in class, (2) persist when material becomes difficult, and (3) establish defined action plans that promptly resolve confusion. In contrast, weaker students appear to read with the primary goal of reducing anxiety, by deferring reading and terminating it when comprehension becomes difficult. The findings of this study are used to create instructional guidance that instructors can provide to students and to direct future research by outlining important and interesting questions requiring further investigation.
The Relationship between Moral Reasoning and Plagiarism in Accounting Courses: A Replication Study
Authors: Abdolmohammadi Mohammad J. , Baker C. Richard
Published: October 2007

We investigate the relationship between moral reasoning and plagiarism by students in accounting courses. Using the Internet tool, turnitin.com (http://www.turnitin.com), we define plagiarism as the percentage of words copied from the Internet without proper acknowledgement of the source. We use writing assignments at the beginning and the end of the semester in three undergraduate and three graduate capstone accounting courses to hypothesize and find support for a significant inverse relationship between moral reasoning, as measured by the Defining Issues Test, and plagiarism. We also find evidence of significantly more plagiarism at the end of the semester than the beginning, and an inverse relationship between plagiarism and grade point average.
Identifying and Evaluating Audit Issues: The Case of VITALOGISTICS
Authors: Asare Stephen Kwaku , Wright Arnold M.
Published: October 2007

This case invites you to identify audit issues and evaluate an audit team's judgments and decisions on a new engagement (VITALOGISTICS). You will consider a variety of issues in the client acceptance, planning, execution, and reporting phases of an Integrated Audit. Identifying the audit issues and evaluating the audit team's decisions will enhance your: (1) appreciation of the role of research in audit practice; (2) recognition of the conflicting pressures faced by auditors and the potential for these pressures to compromise audit work; and (3) understanding of the requirements of the Integrated Audit and how it differs from the requirements of an audit of financial statements.
Using Case Materials to Research Professional Standards on Revenue Recognition Issues
Authors: Krishnan Sudha , Mintz Steven M.
Published: October 2007

MicroStrategy, Inc. is a software company listed on NASDAQ. Since the company came out with an initial public offering (IPO) in June 1998, it has always been identified as a successful, growing company with positive net income. On March 20, 2000, the company announced that it would restate its financial statements for all years since its IPO. This announcement caused its share price to fall 60 percent in one day. The case summarizes management's actions and asks you to identify issues relating to revenue recognition policies under generally accepted accounting principles (GAAP).
An Empirical Assessment of the Rise and Fall of Accounting as an Academic Discipline
Authors: Fogarty Timothy J. , Markarian Garen
Published: October 2007

The history of accounting as an academic discipline is a short one. Although the study of accounting in institutions of higher education is roughly coextensive with the rise of the business school, the need for a dedicated group of full-time faculty in this area is not as well established as other business disciplines. This paper pertains to the recent trajectory of the accounting professoriate. Disciplinary success should be evidenced by the broader recognition of importance of and high demand for its work, and the numerical increase of its practitioners. Although the value and importance of accounting is a maintained hypothesis within the field, how accepted this idea is in the business school is an empirical question. This paper illustrates the number and distribution of accounting faculty over a 20-year period through the consideration of a number of specific research questions. The results show that after a decade-long increase, the number of the full-time accountancy faculty in the U.S. in the last decade has declined. This decline is not uniform, but instead is patterned in ways that raise further doubts about the future of the discipline.
A History of U.S. Higher Education in Accounting, Part I: Situating Accounting within the Academy
Authors: Wyhe Glenn Van
Published: October 2007

Where we have been can tell us a great deal about where we are going. If we wish to direct the future, then understanding the past can help us see how much we actually influence that direction. Ignorance of the past, on the other hand, allows unrealistic expectations and creates unnecessary frustration. The history of accounting higher education in the United States is most informative for anyone who wants to influence the future direction of our profession. The purpose of this paper is to provide a brief overview of the history of accounting higher education in the U.S., from its beginnings to its settled position in the university. This historical overview informs us that the profession of public accounting had everything to do with establishing and growing accounting education. Around the time of the Second World War, however, forces were set in motion that would try to pull accounting education from the grasp of public accounting. The belittling of public accounting, first in the name of the new management accounting and then by the Foundation Reports, combined with public accounting leaders' ongoing desire for a five-year education requirement above all other educational reforms, resulted in accounting higher education's inability to single-mindedly identify its goals and work toward them.
Students' Approaches to Learning
Authors: Duff Angus , McKinstry Sam
Published: October 2007

This paper provides an overview of the students' approaches to learning (SAL) literature, including a review of the models, theories, and research instruments. SAL research has developed largely in the United Kingdom and Australasia, where its concepts are widely understood by academics. Yet little research using these ideas has been done in North America. To encourage American accounting educators to redress this imbalance, the paper describes the motivations for undertaking SAL research, describes conceptions of learning, and reviews a number of inventories developed by SAL scholars for applied research in the field. In addition, this paper traces the development of SAL research in the discipline of accounting education. Finally, the paper reviews 19 extant articles to offer suggestions for future research.
Tax Implications of Participating in Reality Television
Authors: Lightner Teresa , Ricketts Robert C.
Published: October 2007

This instructional case is intended for use as a tax research project to introduce you to a “real-world” issue that illustrates how statutes intended for one purpose are often used by tax advisors for seemingly unrelated purposes. The case is based on the ABC television show, Extreme Home Makeover: Home Edition, and the resulting tax treatment to the homeowners from the renovations provided by the show. This case allows you the opportunity to research a controversial tax issue that is currently undecided and asks you to assess the relevant authorities and determine whether the show's tax planning follows the intention of the law.
Understanding Accounting for Business Combinations: An Instructional Resource
Authors: Nurnberg Hugo , Sweeney Jan
Published: October 2007

In explaining Statement No. 141, Business Combinations (SFAS No. 141, FASB 2001b) and Statement No. 142, Goodwill and Other Intangible Assets (SFAS No. 142, FASB 2001c), accounting textbooks do not adequately describe the theoretical choices the FASB considered or the economic and political context in which the FASB developed these statements.

This instructional resource fills that gap. It compares purchase, pooling of interests (hereafter, pooling), and fresh start accounting, as well as various methods of accounting for goodwill under purchase and fresh start accounting; it also discusses the economic and political context in which the FASB deliberated. A simple example (and a separate more complicated homework problem) compares the effects of these methods on post-combination financial statements. The Teaching Notes discuss how to use this instructional resource to introduce these subjects and integrate them with other subjects covered in advanced financial accounting and merger and acquisition courses.
Computone Corporation: An Instructional Case in Earnings Management and Revenue Recognition
Authors: Stallworth H. Lynn , Braun Robert L.
Published: October 2007

During the boom of the 1990s, Computone Corporation was a high-tech company with viable hardware and software products. The company struggled financially, however, in this very competitive industry. This case demonstrates how the company employed earnings manipulation techniques that resulted in violations of GAAP through improper revenue recognition. Developed from SEC Enforcement Releases, the case demonstrates the SEC's willingness to prosecute corporations and individuals involved in fraudulent financial reporting. The case requires you to analyze the impact of improper revenue recognition on financial statements and to identify risk factors that may have provided incentive and opportunity to engage in fraudulent financial reporting. In addition, the case asks you to consider the potential effect of the Sarbanes-Oxley Act of 2002 and discuss corporate governance issues.
Accounting Educators' Opinions about Ethics in the Curriculum: An Extensive View
Authors: Blanthorne Cindy , Kovar Stacy E. , Fisher Dann G.
Published: October 2007

In this paper, we present the results of a comprehensive survey of accounting faculties' opinions and practices regarding ethics education. Consistent with recent state boards' decisions to require ethics continuing professional education (CPE) in the accounting curriculum, we find that accounting educators recognize the importance of ethics education to satisfy the profession's needs. Accounting educators rate themselves as the most appropriate source of ethics education and favor practical application over theoretical course content. In terms of the approach used to teach ethics, educators support integration over a stand-alone course and believe cases offer the most effective method for ethics instruction.
On Using Journal Rank to Proxy for an Article's Contribution or Value
Authors: Chow Chee W. , Haddad Kamal , Singh Gangaram , Wu Anne
Published: October 2007

This study explores the extent to which an article's value or contribution can be proxied by the ranking of the journal in which it is published. Following an approach commonly applied in prior journal ranking studies, we obtained eight-year citation counts for all articles published in 1992, 1994, 1996, and 1997 in nine accounting journals covered by the Social Science Citation Index®. For these four years combined as well as individually, we found that articles from the journals most often considered to be the top three (Journal of Accounting and Economics, Journal of Accounting Research, and The Accounting Review) do tend to be cited much more often than those from the other journals. However, across three different criteria for defining top articles, there were substantial classification errors from using publication in a topthree journal as a proxy for an article's contribution. The same patterns were obtained for major accounting sub-areas (e.g., financial accounting, auditing), and from a Google-based citation search covering 20 accounting journals. These findings strongly support the need to evaluate each article on its own merits, rather than abdicating this responsibility by using journal ranking as a proxy for an article's value or contribution.
Accounting Faculty Perceptions Regarding Diversity Issues and Academic Environment
Authors: Weisenfeld Leslie W. , Robinson-Backmon Ida B.
Published: October 2007

Recently, the Association for the Advancement of Collegiate Schools of Business (AACSB) International began requiring a descriptive summary of strategies used to address and ensure diversity, particularly when determining an institution's eligibility for accreditation. As a result, business schools (accounting programs) will have to define diversity with respect to their missions and cultural contexts (demographic make-up). Therefore, this study's objective is to provide comparisons between majority and minority accounting faculty respondents regarding diversity issues and the current academic environment. Survey results indicate women (Caucasian) and minorities, more so than men (Caucasian), feel departments are not diverse with respect to gender and race, and cite under-representation in terms of tenure and higher ranks. The respondents' written comments note current problems with diversity initiatives related to reverse discrimination, “window dressing” rather than real commitment, and market constraints (supply and soaring salaries). While three-fourths of the respondents are comfortable with their current work environment, about 30 percent of the women and 23 percent of the minorities perceive gender and ethnic discrimination, respectively. Although somewhat more women and minorities want to leave their current institution, all three groups agree the top two reasons are for more money and a better academic environment.
Women and Men in Accounting Textbooks: Exploring the Hidden Curriculum
Authors: Tietz Wendy M.
Published: October 2007

The purpose of this study is to examine the representation of gender in introductory accounting textbooks. A content analysis of the homework items, the pictures, and the stories contained in 19 introductory accounting textbooks was conducted using both a quantitative and a qualitative approach. The results show that women and men are represented very differently throughout textbooks, thereby reinforcing gender stereotypes and gender role stratification. Given the accounting profession's explicit desire to increase diversity, accounting faculty need to be more aware of the implicit messages conveyed by our pedagogical materials.
A History of U.S. Higher Education in Accounting, Part II: Reforming Accounting within the Academy
Authors: Wyhe Glenn Van
Published: October 2007

In the 1970s, efforts to reform accounting education revolved around the movement toward schools of accountancy (or independent departments). These efforts were largely unsuccessful. However, in the 1980s, the movement to expand accounting education beyond a four-year undergraduate degree resulted in American Institute of Certified Public Accountants (AICPA) members passing a rule mandating 150 hours of education for AICPA membership. The reaction to this rule was varied. Many state boards of accountancy and state legislatures adopted rules requiring 150 hours; however, the requirements for taking the CPA exam and licensure varied across states. After the rule's passage academicians responded by creating the Accounting Education Change Commission, whose purpose was to improve accounting education regardless of the number of credit hours students earned. Also, the AICPA shifted its attention to the possibility of expanding certification to practitioners who were not accountants. Both of these efforts were forestalled, and public attention shifted to the highly publicized accounting scandals of the 1990s. Efforts to reform accounting education since then have been led primarily by the National Association of State Boards of Accountancy (NASBA).
Reliance Corporation: Inventory Write-Downs and Reversals
Authors: Gujarathi Mahendra R. , Kohlbeck Mark
Published: October 2007

Reliance Corporation, a leading manufacturer of analog and mixed signal products and high performance memory products, experienced a significant downturn in 2004, resulting in a substantial inventory write-down of the memory products inventory. This case requires you to examine the issues of inventory valuation and disclosures and managerial motivations in managing earnings. A recovery of inventory values in the first quarter of 2005 provides a setting for evaluating subsequent financial statement reporting and for understanding the importance of ethics in financial reporting decisions. This case also provides you with an opportunity to research accounting literature, apply an accounting standard to a realistic setting, appreciate the judgments involved in financial reporting decisions, and understand difficulties in the evaluation of materiality.
Taxes and Valuation: Evidence from Dividend Change Announcements
Authors: Li Oliver Zhen
Published: October 2007

Under the U.S. tax system, dividends are historically taxed at a higher rate than capital gains and thus incur a tax-related penalty. I provide evidence that the dividend tax penalty partially offsets the positive signaling and agency cost effects of dividends for fully taxable individual investors. The level of institutional ownership and the frequency of institutional trading, which proxy for the likelihood that the marginal investor is not a fully taxable individual, mitigate the negative dividend tax effect. My results support the notion that taxes impact equity valuation. I contribute to the literature by isolating dividends' negative tax effect from their positive signaling and agency cost effects.
An Experiential Investigation of Tax Professionals' Ethical Environments
Authors: Bobek Donna D. , Radtke Robin R.
Published: October 2007

This paper investigates the ethical environment in which tax professionals operate by eliciting practicing tax professionals' personal experiences with ethical dilemmas in tax engagements. Since organizational culture can play a role in creating an environment where ethical decision making is encouraged (Arnold et al. 1999, 2000; Booth and Schulz 2004), we expected that tax professionals' self-identified ethical dilemmas would be related to their assessments of the ethical environments of their firms. Based on 146 responses from practicing tax professionals, most participants rated their ethical environment as very strong. Additionally, the 84 participants who did not describe a self-identified ethical dilemma rated the ethical environment of their firms significantly stronger than the 62 who reported a dilemma. Implications of this study include an emphasis on in-house ethics training and explicitly including rewards and sanctions regarding ethical behavior in performance evaluation systems.
The Future of Tax Research: From an Accounting Professor's Perspective
Authors: Shevlin Terry
Published: October 2007

I provide some suggestions for future research in the empirical accounting tax area. These suggestions repeat and build on the suggestions in Shackelford and Shevlin (2001). I also provide references to some research that I consider to be excellent examples of the points I wish to make. I think there are still many interesting questions to be examined, provided they are linked to some broad-based theory that connects results across a variety of research questions and research designs. I also think we (or some of the more senior faculty) might profitably consider entering into the tax policy debate by proffering normative statements based on our research.
Automatic Classification of Financial Accounting Concepts
Authors: Garnsey Margaret R.
Published: October 2007

Information and standards overload are part of the current business environment. In accounting, this is exacerbated due to the variety of users and the evolving nature of accounting language. This article describes a research project that determines the feasibility of using statistical methods to automatically group related accounting concepts together. Starting with the frequencies of words in documents and modifying them for local and global weighting, Latent Semantic Indexing (LSI) and agglomerative clustering were used to derive clusters of related accounting concepts. Resultant clusters were compared to terms generated randomly and terms identified by individuals to determine if related terms are identified. A recognition test was used to determine if providing individuals with lists of terms generated automatically allowed them to identify additional relevant terms.

Results found that both clusters obtained from the weighted term-document matrix and clusters from a LSI matrix based on 50 dimensions contained significant numbers of related terms. There was no statistical difference in the number of related terms found by the methods. However, the LSI clusters contained terms that were of a lower frequency in the corpus. This finding may have significance in using cluster terms to assist in retrieval. When given a specific term and asked for related terms, providing individuals with a list of potential terms significantly increased the number of related terms they were able to identify when compared to their free-recall.
Learning from WorldCom: Implications for Fraud Detection through Continuous Assurance
Authors: Kuhn J. Randel , Sutton Steve G.
Published: October 2007

The recent rash of corporate frauds and malfeasance has intensified the focus on continuous assurance as a viable enterprise risk-management tool. In line with this focus, the current study revisits the WorldCom fraud and explores the feasibility of implementing continuous assurance over key-event-transaction data as a means of facilitating early detection of the main fraud activities that occurred. There are three main objectives of the research. The first is to examine the key methods of fraud executed by WorldCom's management in order to design a continuous assurance model that would have provided the analytic monitoring necessary for early detection of the fraudulent transactions. The second objective is to provide a blueprint for the integration of the prescribed continuous assurance model in an SAP environment as a means of demonstrating the feasibility of such a continuous assurance strategy. The third objective is to explore the complexity derived from the use of multiple-legacy systems as a means of articulating the resulting higher risk and the negative impact on the feasibility of continuous assurance. WorldCom forms the centerpiece of the research study based on the multiple fraud conditions and the coexistence of both SAP enterprise software and a myriad of legacy-system applications.
ACTVE: A Proposal for an Automated Continuous Transaction Verification Environment
Authors: Dull Richard B. , Tegarden David P. , Schleifer Lydia L. F.
Published: October 2007

During recent years, there has been a significant increase in calls for corporate financial reporting transparency and for improved timeliness of financial information disclosures. To adapt to these changes in the financial reporting environment, auditors must look for methods and procedures to increase the effectiveness and efficiency of the audit process. Traditionally, a source of strong audit evidence has been the confirmation of an amount with a third party. Technology now exists to support the improvement and expansion of the confirmation process. To facilitate the timely confirmation of transactions and balances that involve external entities, this paper proposes ACTVE, an Automated Continuous Transaction Verification Environment. ACTVE is an interorganizational system by which data from an accounting information system can be electronically confirmed with a third-party's system. The system will provide timely audit evidence while significantly decreasing the transaction cost of obtaining confirmations. ACTVE will not only resolve confirmation response issues in today's audit environment, but will also support the new continuous assurance paradigm.
On the Association between Changes in Corporate Ownership and Changes in Auditor Quality in a Transitional Economy
Authors: Chan K. Hung , Lin Kenny Z. , Zhang Fang
Published: October 2007

This study uses agency theory to test whether the demand for quality-differentiated audits by listed Chinese companies is systematically associated with changes in ownership structure, which is characterized by the dominance of government and institutional owners in a transitional economy. Our empirical test results are supportive of agency theory. Specifically, we find that a decrease of government shares and a corresponding increase of institutional shares lead to a general increase in the demand for higher-quality audits in China's stock market. However, the influence of individual shareholders on a firm's auditor-choice decisions appears insignificant. Our results suggest that in the absence of institutional features typically found in freemarket economies that provide incentives for managers to supply credible accounting information via quality audits, the introduction of large institutional blockholders can be a good alternative for a transitional economy.
The Influence of Culture on Tax Systems Internationally: A Theoretical and Empirical Analysis
Authors: Richardson Grant
Published: October 2007

Although culture is assumed to play a role in the development of tax systems internationally, its influence is not well understood. This study draws on the cultural frameworks by Hofstede (1980) and Gray (1988) to develop a theoretical model of the influence of culture on tax systems internationally. It also empirically tests hypotheses that relate Hofstede's (1980) individualism, uncertainty avoidance, power distance, and masculinity cultural dimensions to some key values of tax systems: equity, simplicity, neutrality, and visibility. Based on data from 43 countries, the regression results show that individualism is significantly related to all of the tax values, while power distance is significantly related to equity, neutrality, and visibility; and uncertainty avoidance is significantly related to simplicity, neutrality, and visibility. However, masculinity is not related to any of the tax values in the regression analysis. These findings provide support for the importance of culture in influencing tax systems.
IFRS in the U.S.: It May Come Sooner Than You Think: A Commentary
Authors: Street Donna L. , Linthicum Cheryl L.
Published: October 2007

In April 2007, the Securities and Exchange Commission (SEC) announced the Commission's plan to seek comments on its intension to allow foreign private issuers a choice between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP). Even more significant, the Commission announced that it may, at some point in the future, consider allowing a choice between U.S. GAAP and IFRS for U.S.-headquartered issuers. In this commentary, we pose questions/issues to be carefully considered within the context of making these decisions. These include, but are not limited to, a consideration of whether eliminating the reconciliation could stall convergence efforts and/or minimize the joint efforts of the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) to improve problem areas for current financial reporting. We encourage academics to draw upon their research and expertise and engage in the discussion and debate by providing relevant comment letters to the SEC.
An Extension of the REA Framework to Support Balanced Scorecard Information Requirements
Authors: Church Kim S. , Smith Rod E.
Published: October 2007

In this paper, we propose extensions to the resource-event-agent (REA) framework to encompass the information requirements of the balanced scorecard and other management systems that incorporate nonfinancial measures. The REA conceptual accounting framework was designed to describe the information architecture related to an organization's economic activity (e.g., McCarthy 1982; Dunn et al. 2005). Geerts and McCarthy (2001b, 2002) extended the original REA to include value-chain level configurations, task-level configurations, and encompass a broader array of business economic phenomena. Yet, the REA framework remains closely tied to its accounting roots, with a focus on economic events and financial resources. A substantial number of organizations are adopting strategic management systems that include both financial and nonfinancial measures to overcome known limitations of systems based on traditional financial data alone (e.g., Said et al. 2003; Eccles et al. 2001; Ittner et al. 2003). We therefore examine whether the REA framework supports the information requirements of this broader domain and propose extensions to fill the gaps identified.
Creating a Business Process Diagram and Database Queries to Detect Billing Errors and Analyze Calling Patterns for Cell Phone Service
Authors: Borthick A. Faye , Jones Donald R.
Published: October 2007

In this case, students develop a business process diagram to understand the business situation and create database queries to detect billing discrepancies and manage costs for corporate cell phone service. Using a database query tool or audit software, students query a database with tables for call details, invoices, invoice details, plan rates, and users on plan. The queries are representative of those that accountants could develop to analyze transaction-level data to detect errors and develop insights about business operations. Query-based approaches to analyzing transaction data can enable businesses to make sense of their operations and ensure that they and their trading partners comply with their mutual agreements. The 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. No auditing expertise is needed. The case is appropriate for database analysis in accounting systems courses, compliance auditing in auditing courses, and cost analysis in managerial courses. The database is supplied in the form of a Microsoft Access® database.
Assessing Student Learning Outcomes in the Introductory Accounting Information Systems Course Using the AICPA's Core Competency Framework
Authors: Daigle Ronald J. , Hayes David C. , Hughes K. E.
Published: October 2007

This paper describes a unique learning outcome process for the assessment of an undergraduate course in AIS. Learning expectations targeted for assessment are the “functional competencies” promulgated in the AICPA's Core Competency Framework for Entry into the Accounting Profession (Framework) (1999). This paper first frames the importance of assessment for motivating faculty to foster “continuous improvement” in student learning, as well as demonstrating accountability to public officials, accreditation bodies, and university administrators. The paper then focuses on a specific example (case study) of AIS course assessment. Evidence of student learning is observed, albeit imperfectly, through triangulation of multiple direct measurements, supplemented by indirect measures such as student self-assessments. Results indicate that students became more competent in certain functional competencies and also reflect that the expected emphasis on certain competencies to be gained in the AIS course required modification to the assessment plan. AIS instructors were also able to leverage assessment information for improving the consistency of course content and pedagogy in future semesters. Triangulation, therefore, provides evidence that the AIS course achieved its student learning goals while meeting departmental objectives, including successfully supporting the AACSB's maintenance of accreditation review for the College of Business.
System Diagramming Techniques: An Analysis of Methods Used in Accounting Education and Practice
Authors: Bradford Marianne , Richtermeyer Sandra B. , Roberts Douglas F.
Published: October 2007

System diagrams (SD) are an integral component of system documentation and have become increasingly important in response to heightened awareness surrounding process improvement and documentation as well as compliance concerns with legislation such as the Sarbanes-Oxley Act. SD is also an important concept in accounting information systems and auditing education. This study examines SD commonly included in accounting curricula and compares the methods with those used by accounting practitioners. The SDs included in the study are system flowcharts, entityrelationship diagrams, data flow diagrams, resource-event agent models, process maps, and Unified Modeling Language. The results include analyses of frequency of use, purpose of use, and strengths and weaknesses based on several dimensions. Using a survey of accounting practitioners, we find that SD use in practice is not entirely consistent with what is included in accounting curricula. This study can be useful to accounting educators by providing insight into SD use in practice and comparing that to methods emphasized in accounting education. Educators can use the results to plan and modify their curricula, particularly in accounting information systems and auditing courses. Additionally, the practice community may find the results useful as they suggest differences in how, when, and why an SD method may be useful. Practitioners can also benefit from the descriptive analysis of current techniques employed across industries and accounting job functions.