No more than a messenger?

If a real estate agent describes a property as being “a golden opportunity to invest” the expression will be readily construed as mere “puffery”. The legal landscape changes when a real estate agent describes a property as “leased” and having a “guaranteed net income”. Can an agent avoid potential liability, for an inaccurate description, by arguing that they were merely acting as a messenger to pass on information received from their vendor client? The potential liability of real estate agent “messengers” was recently considered by the Queensland Court of Appeal in Banks & Anor v Copas Newnham Pty Ltd & Ors [2002] QCA 217.

Were regulatory changes in reporting "abnormal items" justified? : evidence of intra-period classificatory earnings management practices in Australia

Purpose Managers generally have discretion in determining how components of earnings are presented in financial statements in distinguishing between ‘normal’ earnings and items classified as unusual, special, significant, exceptional or abnormal. Prior research has found that such intra-period classificatory choice is used as a form of earnings management. Prior to 2001, Australian accounting standards mandated that unusually large items of revenue and expense be classified as ‘abnormal items’ for financial reporting, but this classification was removed from accounting standards from 2001. This move by the regulators was partly in response to concerns that the abnormal classification was being used opportunistically to manage reported pre-abnormal earnings. This study extends the earnings management literature by examining the reporting of abnormal items for evidence of intra-period classificatory earnings management in the unique Australian setting. Design/methodology/approach This study investigates associations between reporting of abnormal items and incentives in the form of analyst following and the earnings benchmarks of analysts’ forecasts, earnings levels, and earnings changes, for a sample of Australian top-500 firms for the seven-year period from 1994 to 2000. Findings The findings suggest there are systematic differences between firms reporting abnormal items and those with no abnormal items. Results show evidence that, on average, firms shifted expense items from pre-abnormal earnings to bottom line net income through reclassification as abnormal losses. Originality/value These findings suggest that the standard setters were justified in removing the ‘abnormal’ classification from the accounting standard. However, it cannot be assumed that all firms acted opportunistically in the classification of items as abnormal. With the removal of the standardised classification of items outside normal operations as ‘abnormal’, firms lost the opportunity to use such disclosures as a signalling device, with the consequential effect of limiting the scope of effectively communicating information about the nature of items presented in financial reports.

The determinants of fair value measurements of banks: International evidence

The purpose of this study is to investigate the accounting choice decisions of banks to employ Level 3 inputs in estimating the value of their financial assets and liabilities. Using a sample of 146 bank-year observations from 18 countries over 2009-2012, this study finds banks’ incentives to use Level 3 valuation inputs are associated with both firm-level and country-level determinants. At the firm-level, leverage, profitability (in term of net income), Tier 1 capital ratio, size and audit committee independence are associated with the percentage of Level 3 valuation inputs. At the country-level, economy development, legal region, legal enforcement and investor rights are also associated with the Level 3 classification choice. Lastly, ‘secrecy’, the proxy for culture dimensions and values, is found to be positively associated with the use of Level 3 valuation inputs. Altogether, these findings suggest that banks use the discretion available under Level 3 inputs opportunistically to avoid violating debt covenants limits, to increase earnings and manage their capital ratios. Results of this study also highlight that corporate governance quality at the firm-level (e.g. audit committee independence) and institutional features can constrain banks’ opportunistic behaviors in using the discretion available under Level 3 inputs. The results of this study have important implications for standard setters and contribute to the debate on the use of fair value accounting in an international context.

The determinants of fair value measurements of banks: International evidence

The purpose of this study is to investigate the accounting choice decisions of banks to employ Level 3 inputs in estimating the value of their financial assets and liabilities. Using a sample of 146 bank-year observations from 18 countries over 2009-2012, this study finds banks’ incentives to use Level 3 valuation inputs are associated with both firm-level and country-level determinants. At the firm-level, leverage, profitability (in term of net income), Tier 1 capital ratio, size and audit committee independence are associated with the percentage of Level 3 valuation inputs. At the country-level, economy development, legal region, legal enforcement and investor rights are also associated with the Level 3 classification choice. Lastly, ‘secrecy’, the proxy for culture dimensions and values, is found to be positively associated with the use of Level 3 valuation inputs. Altogether, these findings suggest that banks use the discretion available under Level 3 inputs opportunistically to avoid violating debt covenants limits, to increase earnings and manage their capital ratios. Results of this study also highlight that corporate governance quality at the firm-level (e.g. audit committee independence) and institutional features can constrain banks’ opportunistic behaviors in using the discretion available under Level 3 inputs. The results of this study have important implications for standard setters and contribute to the debate on the use of fair value accounting in an international context.

The use of income valuation methods to value rural property

Despite the advances that have been made in relation to the valuation of commercial, industrial and retail property, there has not been the same progress in relation to the valuation of rural property. Although the majority of rural property valuations also require the valuer to carry out a full analysis of the economic performance of the farming operations, this information is rarely used to assess the value of the property, nor is it even used for a secondary valuation method. Over the past 20 years the nature of rural valuation practice has required rural valuers to undertake studies in both agriculture (farm management) and valuation, especially if carrying out valuation work for financial institutions. The additional farm financial information obtained by rural valuers exceeds that level of information required to value commercial, retail and industrial by the capitalisation of net rent/profit valuation method and is very similar to the level of information required for the valuation of commercial and retail property by the Discounted Cash Flow valuation method. On this basis the valuers specialising in rural valuation practice should have the necessary skills and information to value rural properties by an income valuation method. Although the direct comparison method of valuation has been sufficient in the past to value rural properties the future use of the method as the main valuation method is limited and valuers need to adopt an income valuation method as at least a secondary valuation method to overcome the problems associated with the use of direct comparison as the only rural property valuation method. This paper will review the results of an extensive survey carried out by rural property valuers in New South Wales (NSW), Australia, in relation to the impact of farm management on rural property values and rural property income potential.

The Influence of Farm Management on NSW Rural Property Income and Total Average Annual Returns

The importance of agriculture in many countries has tended to reduce as their economies move from a resource base to a manufacturing industry base. Although the level of agricultural production in first world countries has increased over the past two decades, this increase has generally been at a less significant rate compared to other sectors of the economies. Despite this increase in secondary and high technology industries, developed countries have continued to encourage and support their agricultural industries. This support has been through both tariffs and price support. Following pressure from developing economies, particularly through the World Trade Organisation (WTO), GATT Uruguay round and the Cairns Group developed countries are now in various stages of winding back or de-coupling agricultural support within their economies. A major concern of farmers in protected agricultural markets is the impact of a free market trade in agricultural commodities on farm incomes, profitability and land values. This paper will analyse both the capital and income performance of the NSW rural land market over the period 1990-1999. This analysis will be based on several rural land use classifications and will compare the total return from rural properties based on the farm income generated by both the average farmer and those farmers considered to be in the top 20% of the various land use areas. The analysis will provide a comprehensive overview of rural production in a free trade economy.

Australia's disabling income support system : tracing the history of the Australian disability income support system 1908 to 2007 : disablism, citizenship and the basic income proposal

The present study examined the historical basis of the Australian disability income support system from 1908 to 2007. Although designed as a safety net for people with a disability, the disability income support system within Australia has been highly targeted. The original eligibility criteria of "permanently incapacitated for work", medical criteria and later "partially capacitated for work" potentially contained ideological inferences that permeated across the time period. This represents an important area for study given the potential consequence for disability income support to marginalise people with a disability. Social policy and disability policy theorists, including Saunders (2007, Social Policy Research Centre [SPRC]) and Gibilisco (2003) have provided valuable insight into some of the effects of disability policy and poverty. Yet while these theorists argued for some form of income support they did not propose a specific form of income security for further exploration. Few studies have undertaken a comprehensive review of the history of disability income support within the Australian context. This thesis sought to redress these gaps by examining disability income support policy within Australia. The research design consisted of an in-depth critical historical-comparative policy analysis methodology. The use of critical historical-comparative policy analysis allowed the researcher to trace the construction of disability within the Australian disability income support policy across four major historical epochs. A framework was developed specifically to guide analysis of the data. The critical discourse analysis method helped to understand the underlying ideological dimensions that led to the predominance of one particular approach over another. Given this, the research purpose of the study centred on: i. Tracing the history of the Australian disability income support system. ii. Examining the historical patterns and ideological assumptions over time. iii. Exploring the historical patterns and ideological assumptions underpinning an alternative model (Basic Income) and the extent to which each model promotes the social citizenship of people with a disability. The research commitment to a social-relational ontology and the quest for social change centred on the idea that "there has to be a better way" in the provision of disability income support. This theme of searching for an alternative reality in disability income support policy resonated throughout the thesis. This thesis found that the Australian disability income support system is disabling in nature and generates categories of disability on the basis of ableness. From the study, ableness became a condition for citizenship. This study acknowledged that, in reality, income support provision reflects only one aspect of the disabling nature of society which requires redressing. Although there are inherent tensions in any redistributive strategy, the Basic Income model potentially provides an alternative to the Australian disability income support system, given its grounding in social citizenship. The thesis findings have implications for academics, policy-makers and practitioners in terms of developing better ways to understand disability constructs in disability income support policy. The thesis also makes a contribution in terms of promoting income support policies based on the rights of all people, not just a few.

Prevalence of asymptomatic malaria and bed net ownership and use in Bhutan, 2013 : a country earmarked for malaria elimination

Background With dwindling malaria cases in Bhutan in recent years, the government of Bhutan has made plans for malaria elimination by 2016. This study aimed to determine coverage, use and ownership of LLINs, as well as the prevalence of asymptomatic malaria at a single time-point, in four sub-districts of Bhutan. Methods A cross-sectional study was carried out in August 2013. Structured questionnaires were administered to a single respondent in each household (HH) in four sub-districts. Four members from 25 HH, randomly selected from each sub-district, were tested using rapid diagnostic tests (RDT) for asymptomatic Plasmodium falciparum and Plasmodium vivax infection. Multivariable logistic regression models were used to identify factors associated with LLIN use and maintenance. Results All blood samples from 380 participants tested negative for Plasmodium infections. A total of 1,223 HH (92.5% of total HH) were surveyed for LLIN coverage and use. Coverage of LLINs was 99.0% (1,203/1,223 HH). Factors associated with decreased odds of sleeping under a LLIN included: washing LLINs nine months compared to washing LLINs every six months; HH in the least poor compared to the most poor socio-economic quintile; a HH income of Nu 5,001-10,000 (US$1 = Nu 59.55), and Nu >10,000, compared to HH with income of income group Nu 1,501-3,000 and HH located one to three hours walking distance from a health centre. Conclusions There was high coverage of LLINs in the study area with regular use of LLINs throughout the year. LLIN use for purposes other than malaria prevention was low. With high coverage and regular use of LLINs, and a zero prevalence of malaria infection found in historically high-risk communities during the peak malaria season, it appears Bhutan is on course to achieve malaria elimination.