Functional fixation : experimental evidence on the presentation of financial information through different digital formats

This study examines whether, in the presentation of financial information, digital formats address the concern over users’ functional fixation. The accounting literature indicates that the presentation of financial information either within the financial statements or in the notes to the financial statements often creates functional fixation where users of financial statements fail to adjust for differences in accounting policy. This leads users to judge what would otherwise be identical financial situations as being different due to the different accounting policies and methods adopted. It has been suggested that the use of digital formats in presenting financial reports may overcome functional fixation. Using an experimental design involving accountants in public practice, the results indicate that the use of digital formats to present financial reports does not fully overcome the issue of functional fixation in the processing of financial information. Although the participants were able to identify and extract relevant information, irrespective of whether or not the information was presented within the financial statements or in the notes to the accounts, the evidence indicates that functional fixation remained when the participants made final decisions based on available information. This suggests that functional fixation may not be caused by access to or extraction of information but by the level of perceived significance based on where the information is reported in the financial statements. In general, the results indicate that current technology may not be able to fully reduce functional fixation in the evaluation of financial information prepared in accordance with different accounting policies and methods.

Understanding financial information used to assess small firm performance : an Australian qualitative study

Purpose The purpose of this paper is to investigate the reality of financial and management accounting in a small group of small firms. Specifically, from the owner's perspective, an exploration is undertaken to see what financial information is collected, how it is used (or not) to make business decisions and evaluate the firm's performance, and the role played by the accountant in that process. Design/methodology/approach A phenomenological paradigm underpins this exploratory study. Semi‐structured interviews were undertaken with the owners of ten small firms, where the focus was on understanding what happens in an organisational setting, as opposed to theory and textbook practice. Findings The qualitative data supported prior research in other countries. The in‐depth analysis revealed a very basic understanding of accounting information and problems with the financial literacy amongst these small firm owners. Accounting reports were not widely produced or used, so an informal assessment, such as how much cash was in the bank, was the primary means of assessing business performance. Accountants were used for taxation services, although some owners sought more general business advice. Originality/value An understanding is developed of why there might be a gap between textbook rhetoric and reality of accounting practice in small firms. The conclusion is that accounting textbooks need to include more information about the reality of financial management in small firms.

Accounting information systems in a centrally planned economy : the case of the General Company for Pipelines (GCP)

The paper has a twofold purpose. First it highlights the importance of accounting information in the economic development of developing countries, with a particular focus on the nation of Libya. Secondly, using the case of Libya's General Company for Pipelines (GCP), it demonstrates that the use of accounting information to achieve economic development goals is determined to a large extent by the political/ideological setting in which it is generated. The study is based on a literature review and archival research, reinforced by a qualitative case study comprised of interviews, attendance at meetings and a study of internal documents. A study of The General Company for Pipelines (GCP) revealed that frequent politically driven changes in the structure and number of popular congresses and committees severely limited the use of accounting information, relegating it to a formal role. In consequence, accounting information had litle effect on stimulating economic development in Libya. This study focuses on one case study which does limit generalisability. However, it also suggests fruitful research areas considering the historic factors which have determined the accounting role in developing and planned economies. By providing insights about social factors which have determined the use of accounting in a planned economy, this study has implications for similar economies as they move towards a more globalised mode of operations which enhance the role of accounting in meeting economic development needs. If devleoping countries are to harness the potential of accounting aid in the achievement of their development plans, the social and political setting in which accounting has been conducted needs to be understood.

Attribute exclusion strategies in airline choice : accounting for exogenous information on decision maker processing strategies in models of discrete choice

We examine the impact of individual-specific information processing strategies (IPSs) on the inclusion/exclusion of attributes on the parameter estimates and behavioural outputs of models of discrete choice. Current practice assumes that individuals employ a homogenous IPS with regards to how they process attributes of stated choice (SC) experiments. We show how information collected exogenous of the SC experiment on whether respondents either ignored or considered each attribute may be used in the estimation process, and how such information provides outputs that are IPS segment specific. We contend that accounting the inclusion/exclusion of attributes will result in behaviourally richer population parameter estimates.

Corporate governance, accounting and finance: a review

We review accounting and finance research on corporate governance (CG). In the course of our review, we focus on a particularly vexing issue, namely endogeneity in the relationships between CG and other matters of concern to accounting and finance scholars, and suggest ways to deal with it. Given the advent of large commercial CG databases, we also stress the importance of how CG is measured and in particular, the construction of CG indices, which should be sensitive to local institutional arrangements, and the need to capture both internal and external aspects of governance. The ‘stickiness’ of CG characteristics provides an additional challenge to CG scholars. Better theory is required, for example, to explain whether various CG practices substitute for each other or are complements. While a multidisciplinary approach to developing better theory is never without its difficulties, it could enrich the current body of knowledge in CG. Despite the vastness of the existing CG literature, these issues do suggest a number of avenues for future research.

Climate change and financial regulation : challenges for the financial sector post the Global Financial Crisis

Regulation has played a significant role in shaping the financial services sector in Australia over the past few decades. Regulatory changes have included the establishment of the Australian Prudential Regulation Authority (APRA), floating the Australian dollar, allowing foreign financial institutions to operate domestically, the introduction of the superannuation guarantee charge, and the removal of interest rate controls. As the economy emerges from the worst financial crisis since the great depression, a new force of change that is recognised as one of the most significant sources of risk and opportunity facing the business community in the foreseeable future is that of climate change. Climate change is expected to be a significant change agent in the financial services sector as extreme weather patterns, sea level rises, and atmospheric changes impact on asset values (both investment and lending), project finance, and risk products. The financial services industry will be particularly affected by these developments, both as a provider of financial products (capital, credit, investment, advice, and insurance), and also through its powerful influence on the economy in terms of capital allocation. In addition, industry constituents will be heavily impacted by government regulation in this area (reporting, emissions trading and environmental policies), with respect to their own business practices and also those of their clients. This study reports the results of interviews conducted with senior members of the finance sector working in the sustainability area to gauge their perceptions of the challenges facing the sector with respect to climate change. Our results confirm that that regulatory intervention will be critical to climate change response gaining traction and momentum. In particular, regulatory certainty will promote engagement, particularly in relation to the Carbon Pollution Reduction Scheme (CPRS), with other developments needed in terms of information disclosure, performance and remuneration, and incentive programs. Accordingly, the significant potential risks and opportunities that climate change presents to the sector, and the broader economy, will in part be managed/realised only if a swift and significant regulatory response is achieved.

Integrating hardware and software information flow analyses

Security-critical communications devices must be evaluated to the highest possible standards before they can be deployed. This process includes tracing potential information flow through the device's electronic circuitry, for each of the device's operating modes. Increasingly, however, security functionality is being entrusted to embedded software running on microprocessors within such devices, so new strategies are needed for integrating information flow analyses of embedded program code with hardware analyses. Here we show how standard compiler principles can augment high-integrity security evaluations to allow seamless tracing of information flow through both the hardware and software of embedded systems. This is done by unifying input/output statements in embedded program execution paths with the hardware pins they access, and by associating significant software states with corresponding operating modes of the surrounding electronic circuitry.

Open and trusted information systems/health informatics access control (OTHIS/HIAC)

Information and Communications Technologies globally are moving towards Service Oriented Architectures and Web Services. The healthcare environment is rapidly moving to the use of Service Oriented Architecture/Web Services systems interconnected via this global open Internet. Such moves present major challenges where these structures are not based on highly trusted operating systems. This paper argues the need of a radical re-think of access control in the contemporary healthcare environment in light of modern information system structures, legislative and regulatory requirements, and security operation demands in Health Information Systems. This paper proposes the Open and Trusted Health Information Systems (OTHIS), a viable solution including override capability to the provision of appropriate levels of secure access control for the protection of sensitive health data.

Correlating eye gaze direction, depth and vehicle information on an interactive map for driver training

The over represented number of novice drivers involved in crashes is alarming. Driver training is one of the interventions aimed at mitigating the number of crashes that involve young drivers. Experienced drivers have better hazard perception ability compared to inexperienced drivers. Eye gaze patterns have been found to be an indicator of the driver's competency level. The aim of this paper is to develop an in-vehicle system which correlates information about the driver's gaze and vehicle dynamics, which is then used to assist driver trainers in assessing driving competency. This system allows visualization of the complete driving manoeuvre data on interactive maps. It uses an eye tracker and perspective projection algorithms to compute the depth of gaze and plots it on Google maps. This interactive map also features the trajectory of the vehicle and turn indicator usage. This system allows efficient and user friendly analysis of the driving task. It can be used by driver trainers and trainees to understand objectively the risks encountered during driving manoeuvres. This paper presents a prototype that plots the driver's eye gaze depth and direction on an interactive map along with the vehicle dynamics information. This prototype will be used in future to study the difference in gaze patterns in novice and experienced drivers prior to a certain manoeuvre.