Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.

Water Sensitive Urban Design (WSUD) application auditing

Background WSUD implementation in the Gold Coast City Council area commenced more than a decade ago. As a result, Council is expected to be in possession of WSUD assets valued at over tens of million dollars. The Gold Coast City Council is responsible for the maintenance and long-term management of these WSUD assets. Any shortcoming in implementation of best WSUD practices can potentially result in substantial liabilities and ineffective expenditure for the Council in addition to reduced efficiencies and outcomes. This highlights the importance of periodic auditing of WSUD implementation. Project scope The overall study entailed the following tasks: * A state-of-the-art literature review of the conceptual hydraulic and water quality treatment principles, current state of knowledge in relation to industry standards, best practice and identification of knowledge gaps in relation to maintenance and management practices and potential barriers to the implementation of WSUD. * Council stakeholder interviews to understand current practical issues in relation to the implementation of WSUD and the process of WSUD application from development application approval to asset management. * Field auditing of selected WSUD systems for condition assessment and identification of possible strengths and weaknesses in implementation. * Review of the Land Development Guidelines in order to identify any gaps and to propose recommendations for improvement. Conclusions Given below is a consolidated summary of the findings of the study undertaken. State-of-the-art literature review Though the conceptual framework for WSUD implementation is well established, the underlying theoretical knowledge underpinning the treatment processes and maintenance regimes and life cycle costing are still not well understood. Essentially, these are the recurring themes in the literature, namely, the inadequate understanding of treatment processes and lack of guidance to ensure specificity of maintenance regimes and life cycle costing of WSUDs. The fundamental barriers to successful WSUD implementation are: * Lack of knowledge transfer – This essentially relates to the lack of appropriate dissemination of research outcomes and the common absence of protocols for knowledge transfer within the same organisation. * Cultural barriers – These relate to social and institutional factors, including institutional inertia and the lack of clear understanding of the benefits. * Fragmented responsibilities – This results from poor administrative integration within local councils in relation to WSUDs. * Technical barriers – These relate to lack of knowledge on operational and maintenance practices which is compounded by model limitations and the lack of long-term quantitative performance evaluation data. * Lack of engineering standards – Despite the availability of numerous guidelines which are non-enforceable and can sometimes be confusing, there is a need for stringent engineering standards. The knowledge gaps in relation to WSUDs are only closing very slowly. Some of the common knowledge gaps identified in recent publications have been recognised almost a decade ago. The key knowledge gaps identified in the published literature are: * lack of knowledge on operational and maintenance practices; * lack of reliable methodology for identifying life cycle issues including costs; * lack of technical knowledge on system performance; * lack of guidance on retrofitting in existing developments. Based on the review of barriers to WSUD implementation and current knowledge gaps, the following were identified as core areas for further investigation: * performance evaluation of WSUD devices to enhance model development and to assess their viability in the context of environmental, economic and social drivers; establishing realistic life cycle costs to strengthen maintenance and asset management practices; * development of guidelines specific to retrofitting in view of the unique challenges posed by existing urban precincts together with guidance to ensure site specificity; establishment of a process for knowledge translation for enhancing currently available best practice guidelines; * identification of drivers and overcoming of barriers in the areas of institutional fragmentation, knowledge gaps and awareness of WSUD practices. GCCC stakeholder interviews Fourteen staff members involved in WSUD systems management in the Gold Coast City Council, representing four Directorates were interviewed using a standard questionnaire. The primary issues identified by the stakeholders were: * standardisation of WSUD terminology; * clear protocols for safeguarding devices during the construction phase; * engagement of all council stakeholders in the WSUD process from the initial phase; * limitations in the Land Development Guidelines; * ensuring public safety through design; * system siting to avoid conflicts with environmental and public use of open space; * provision of adequate access for maintenance; * integration of social and ecosystem issues to ensure long-term viability of systems in relation to both, vandalism and visual recreation; * lack of performance monitoring and inadequacy of the maintenance budget; * lack of technical training for staff involved in WSUD design approvals and maintenance; incentives for developers for acting responsibly in stormwater management. Field auditing of WSUD systems A representative cross section of WSUD systems in the Gold Coast were audited in the field. The following strengths and weaknesses in WSUD implementation were noted: * The implementation of WSUD systems in the field is not consistent. * The concerns raised by the stakeholders during the interviews in relation to WSUD implementation was validated from the observations from the field auditing, particularly in relation to the following: * safeguarding of devices during the construction phase * public safety * accessibility for maintenance * lack of performance monitoring by Council to assess system performance * inadequate maintenance of existing systems to suit site specific requirements. * A treatment train approach is not being consistently adopted. * Most of the systems audited have satisfactorily catered for public safety. Accessibility for maintenance has been satisfactorily catered for in most of the systems that were audited. * Systems are being commissioned prior to construction activities being substantially completed. * The hydraulic design of most systems appears to be satisfactory. * The design intent of the systems is not always clear. Review of Land Development Guidelines The Land Development Guidelines (TDG) was extensively reviewed and the following primary issues were noted in relation to WSUD implementation: * the LDG appears to have been prepared primarily to provide guidance to developers. It is not clear to what extent the guidelines are applicable to Council staff involved in WSUD maintenance and management; * Section 13 is very voluminous and appears to be a compilation of a series of individual documents resulting in difficulties in locating specific information, a lack of integration and duplication of information; * the LDG has been developed with a primary focus on new urban precinct development and the retrofitting of systems in existing developments has not been specifically discussed; * WSUDs are discussed in two different sections in the LDG and it is not clear which section takes precedence as there are inconsistencies between the two sections; there is inconsistent terminology being used; * there is a need for consolidation of information provided in different sections in the LDG; * there are inconsistencies in the design criteria provided; * there is a need for regular updating of the LDG to ensure that the information provided encompasses the state-of-the-art; * there is limited guidance provided for the preparation of maintenance plans and life cycle costing to assist developers in asset handover and to assist Council staff in assessment. * Based on these observations, eleven recommendations have been provided which are discussed below. Additionally, the stakeholder provided the following specific comments during the interviews in relation to the LDG: * lack of flexibility to cover the different stages of the life cycle of the systems; * no differentiation in projects undertaken by developers and Council; * inadequate information with regards to safety issues such as maximum standing water depth, fencing and safety barriers and public access; * lack of detailed design criteria in relation to Crime Prevention through Environmental Design, safety, amenity, environment, surrounding uses and impacts on surroundings; * inadequate information regarding maintenance requirements specific to the assessment and compliance phases; * recommendations for plantings are based primarily on landscape requirements rather than pollutant uptake capability. Recommendations With regards to the Land Development Guidelines, the following specific recommendations are provided: 1. the relevant sections and their extent of applicability to Council should be clearly identified; 2. integration of the different subsections within Section 13 and re-formatting the document for easy reference; 3. the maintenance guidelines provided in Section 13 should be translated to a maintenance manual for guidance of Council staff; 4. should consider extending the Guidelines to specifically encompass retrofitting of WSUD systems to existing urban precincts; 5. Section 3 needs to be revised to be made consistent with Section 13, to ensure priority for WSUD practices in urban precincts and to move away from conventional stormwater drainage design such as kerb and channelling; 6. it would also be good to specify as to which Section takes predominance in relation to stormwater drainage. It is expected that Section 13 would take predominance over the other sections in the LDG; 7. terminology needs to be made consistent to avoid confusion among developers and Council staff. Water Sensitive Urban Design is the term commonly used in Australia for stormwater quality treatment, rather than Stormwater Quality Improvement Devices. This once again underlines the need for ensuring consistency between Section 3 and Section 13; 8. it would also be good if there is a glossary of commonly used terms in relation to WSUD for use by all stakeholders and which should also be reflected in the LDG; 9. consolidation of all WSUD information into one section should be considered together with appropriate indicators in other LDG Sections regarding the availability of WSUD information. Ensuring consistency in the information provided is implied; 10. Section 13 should be updated at regular intervals to ensure the incorporation of the latest in research outcomes and incorporating criteria and guidance based on the state-of-the-art knowledge. The updating could be undertaken, say, in five year cycles. This would help to overcome the current lack of knowledge transfer; 11. the Council should consider commissioning specialised studies to extend the current knowledge base in relation to WSUD maintenance and life cycle costing. Additionally, Recommendation 10 is also applicable in this instance. The following additional recommendations are made based on the state-of-the-art literature review, stakeholder interviews and field auditing of WSUD systems: 1. Performance monitoring of existing systems to assess improvements to water quality, identify modifications and enhancements to improve performance; 2. Appropriate and monitored maintenance during different phases of development of built assets over time is needed to investigate the most appropriate time/phase of development to commission the final WSUD asset. 3. Undertake focussed investigations in the areas of WSUD maintenance and asset management in order to establish more realistic life cycle costs of systems and maintenance schedules; 4. the engagement of all relevant Council stakeholders from the initial stage of concept planning through to asset handover, and ongoing monitoring. This close engagement of internal stakeholders will assist in building a greater understanding of responsibilities and contribute to overcoming constraints imposed by fragmented responsibilities; 5. the undertaking of a public education program to inform the community of the benefits and ecosystem functions of WSUD systems; 6. technical training to impart state-of-the-art knowledge to staff involved in the approval of designs and maintenance and management of WSUD projects; 7. during the construction phase, it is important to ensure that appropriate measures to safeguard WSUD devices are implemented; 8. risks associated with potential public access to open water zones should be minimised with the application of appropriate safety measures; 9. system siting should ensure that potential conflicts are avoided with respect to public and ecosystem needs; 10. integration of social and ecosystem issues to ensure long-term viability of systems; provide incentives to developers who are proactive and responsible in the area of stormwater management.

Supermarkets and private standards : unintended consequences of the audit ritual

Recent scholarship has considered the implications of the rise of voluntary private standards in food and the role of private actors in a rapidly evolving, de-facto ‘mandatory’ sphere of governance. Standards are an important element of this globalising private sphere, but are an element that has been relatively peripheral in analyses of power in agri-food systems. Sociological thought has countered orthodox views of standards as simple tools of measurement, instead understanding their function as a governance mechanism that transforms many things, and people, during processes of standardisation. In a case study of the Australian retail supermarket duopoly and the proprietary standards required for market access this paper foregrounds retailers as standard owners and their role in third-party auditing and certification. Interview data from primary research into Australia’s food standards captures the multifaceted role supermarkets play as standard-owners, who are found to impinge on the independence of third-party certification while enforcing rigorous audit practices. We show how standard owners, in attempting to standardize the audit process, generate tensions within certification practices in a unique example of ritualism around audit. In examining standards to understand power in contemporary food governance, it is shown that retailers are drawn beyond standard-setting into certification and enforcement, that is characterized by a web of institutions and actors whose power to influence outcomes is uneven.

Education for all : providing curriculum for students with disabilities in a standards-based environment : implications for Queensland schools

This report investigates lessons learned by educators in the United States when providing a standards-based curriculum for all students including Students with Disabilities (SWD). Assumptions about implementation of these lessons are then made to the Queensland school system. Queensland mainstream schools currently provide a standards-based curriculum for over sixteen thousand-four hundred students with mild-moderate disabilities and appear to be challenged by this new educational reform and its implications to school and teacher practices, beliefs and attitudes. The analysis of US research, literature and educational policy for this report, has provided some implications for Queensland schools in the areas of student participation, achievement and curriculum planning to provide an “education for all”. The analysis and comparison of legislation and policy, which demonstrates some significant similarities, provides greater validity for the application of lessons learned in the United States to the Queensland context. The key findings about lessons learned provides Queensland schools with some assumptions as to why and how they need to refocus school leader and teachers’ practices, beliefs and attitudes to provide an “education for all”. These lessons infer that school leaders and teachers to explicitly focus on equity, expectation, accountability, performance, alignment and collaboration so that effective curriculum is provided for SWD, indeed all students, in the Queensland standards-based curriculum environment.

Enforcing minimum labour standards in Australia from 2010 : correcting or compounding problems

Fair Work Australia is to provide the institutional framework for the Australian industrial relations system from January 2010. Its creation provides the opportunity to improve minimum labour standards’ enforcement in Australia. However, the experience of the past must be appreciated and traditional assumptions about the operation of the Australian enforcement system discarded if the new institution is to be effective in its role. This paper focuses on the role of unions in enforcement as well as institutional location issues to expose a number of central enforcement problems that those seeking to establish new systems and processes should consider. A number of recommendations in respect of the structure of Fair Work Australia and the continuing role of unions are suggested.

A tri-dimensional approach for auditing brand loyalty

Over the past twenty years brand loyalty has been an important topic for both marketing practitioners and academics. While practitioners have produced proprietary brand loyalty audit models, there has been little academic research to make transparent the methodology that underpins these audits and to enable practitioners to understand, develop and conduct their own audits. In this paper, we propose a framework for a brand loyalty audit that uses a tri-dimensional approach to brand loyalty, which includes behavioural loyalty and the two components of attitudinal loyalty: emotional and cognitive loyalty. In allowing for different levels and intensity of brand loyalty, this tri-dimensional approach is important from a managerial perspective. It means that loyalty strategies that arise from a brand audit can be made more effective by targeting the market segments that demonstrate the most appropriate combination of brand loyalty components. We propose a matrix with three dimensions (emotional, cognitive and behavioural loyalty) and two levels (high and low loyalty) to facilitate a brand loyalty audit. To demonstrate this matrix, we use the example of financial services, in particular a rewards-based credit card.

How can preservice teachers be measured against advocated professional teaching standards?

Australia has had many inquiries into teaching and teacher education over the last decade. Standards for teaching have been produced by national education systems with many state systems following suit. The Queensland College of Teachers (QCT) advocates ten professional teaching standards for teachers and preservice teachers. How can preservice teachers be measured against advocated professional standards? This study investigated 106 second-year preservice teachers’ perceptions of their development against the QCT standards. A pretest-posttest survey instrument was developed based on the QCT standards and administered to these preservice teachers before and after their science education coursework. Percentages, ANOVAs and t-tests were generated to analyse the results. Findings indicated that 22 of the 24 paired pretest-posttest items were highly significant (p<.001). Percentage increases ranged from as low as 27% in the pretest to as high as 97% in the posttest, yet, there were two items with lower significance (i.e., working in professional science education teams and supporting students’ participation in society). Understanding preservice teachers’ perceptions of their abilities to implement these standards may be a step towards the process of determining the achievement of teaching standards; however, more rigorous measurements will need to be developed for both teachers and preservice teachers. University coursework and related assessments can provide an indication of achieving these standards, especially authentic assessment of preservice teachers’ practices.

Innovative cartography standards for Web-GIS portals : case study of the 'Survey of Israel's' Web-GIS Portal

Maps have been published on the world wide web since its inception (Cartwright, 1999) and are still accessed and viewed by millions of users today (Peterson, 2003). While early webbased GIS products lacked a complete set of cartographic capabilities, the functionality within such systems has significantly increased over recent years. Functionalities once found only in desktop GIS products are now available in web-based GIS applications, for example, data entry, basic editing, and analysis. Applications based on web-GIS are becoming more widespread and the web-based GIS environment is replacing the traditional desktop GIS platforms in many organizations. Therefore, development of a new cartographic method for web-based GIS is vital. The broad aim of this project is to examine and discuss the challenges and opportunities of innovative cartography methods for web-based GIS platforms. The work introduces a recently developed cartographic methodology, which is based on a web-based GIS portal by the Survey of Israel (SOI). The work discusses the prospects and constraints of such methods in improving web-GIS interfaces and usability for the end user. The work also tables the preliminary findings of the initial implementation of the web-based GIS cartographic method within the portal of the Survey of Israel, as well as the applicability of those methods elsewhere.

Interoperable Standards Development : Final Report

Since 1995 the buildingSMART International Alliance for Interoperability (buildingSMART)has developed a robust standard called the Industry Foundation Classes (IFC). IFC is an object oriented data model with related file format that has facilitated the efficient exchange of data in the development of building information models (BIM). The Cooperative Research Centre for Construction Innovation has contributed to the international effort in the development of the IFC standard and specifically the reinforced concrete part of the latest IFC 2x3 release. Industry Foundation Classes have been endorsed by the International Standards Organisation as a Publicly Available Specification (PAS) under the ISO label ISO/PAS 16739. For more details, go to http://www.tc184- sc4.org/About_TC184-SC4/About_SC4_Standards/ The current IFC model covers the building itself to a useful level of detail. The next stage of development for the IFC standard is where the building meets the ground (terrain) and with civil and external works like pavements, retaining walls, bridges, tunnels etc. With the current focus in Australia on infrastructure projects over the next 20 years a logical extension to this standard was in the area of site and civil works. This proposal recognises that there is an existing body of work on the specification of road representation data. In particular, LandXML is recognised as also is TransXML in the broader context of transportation and CityGML in the common interfacing of city maps, buildings and roads. Examination of interfaces between IFC and these specifications is therefore within the scope of this project. That such interfaces can be developed has already been demonstrated in principle within the IFC for Geographic Information Systems (GIS) project. National road standards that are already in use should be carefully analysed and contacts established in order to gain from this knowledge. The Object Catalogue for the Road Transport Sector (OKSTRA) should be noted as an example. It is also noted that buildingSMART Norway has submitted a proposal

Addressing Challenges for Internationalisation and Mobility in Engineering Through CDIO Standards

There is a growing need for international transparency of engineering qualifications, and mechanisms to support and facilitate student mobility. In response, there are a number of global initiatives attempting to address these needs, particularly in Europe, North America and Australia. The Conceive-Design-Implement-Operate (CDIO) Initiative has a set of standards, competencies, and proficiency levels developed through a global community of practice. It is a well-structured framework in which best-practice internationalisation and student mobility can be embedded. However, the current 12 CDIO Standards do not address international qualifications or student mobility. Based on an environmental scan of global activities, the underpinning principles of best practice are identified and form the basis of the proposed 13th CDIO Standard — “Internationalization and Mobility”.

Creating an asset registry for railway electrical traction equipment with open standards

An asset registry arguably forms the core system that needs to be in place before other systems can operate or interoperate. Most systems have rudimentary asset registry functionality that store assets, relationships, or characteristics, and this leads to different asset management systems storing similar sets of data in multiple locations in an organisation. As organisations have been slowly moving their information architecture toward a service-oriented architecture, they have also been consolidating their multiple data stores, to form a “single point of truth”. As part of a strategy to integrate several asset management systems in an Australian railway organisation, a case study for developing a consolidated asset registry was conducted. A decision was made to use the MIMOSA OSA-EAI CRIS data model as well as the OSA-EAI Reference Data in building the platform due to the standard’s relative maturity and completeness. A pilot study of electrical traction equipment was selected, and the data sources feeding into the asset registry were primarily diagrammatic based. This paper presents the pitfalls encountered, approaches taken, and lessons learned during the development of the asset registry.