Earth bound: the rise and fall of a ground-breaking venture

Earth Sanctuaries Ltd (ESL) intends to offer its entire asset base for sale. ESL's primary objective is to conserve Australia's biodiversity, by breeding and preserving fauna profitably by running sanctuaries, environmental consultancies and related tourist facilities. This "ailing company" is also undergoing a management restructuring and attempting cost reduction. ESL was was one of the first firms to adopt AASB 1037. The implications for the accounting profession are discussed.

Not so easy being green?

Small and medium enterprises (SMEs) make up the bulk of modern economies. In Australia alone, there are about 951,000 small businesses in the private non-agricultural sector, employing 3.1 million people. For professional advisers and managers of these SMEs, the growing community concern for environmental issues will have quite an impact and SMEs are likely to find that ecological issues will become a big part of the daily management and strategic development of their firms. There are a few inherent problems standing in the way of greater environmental performance by Australia's SMEs. SMEs' lack of time and expertise is sometimes used as an excuse for inaction. But one way to get around this could be through outsourcing.

An exploratory study into the accountancy firms chosen by industrial company IPOS in Australia from 1994 to 2004

This study is an exploration into the choice of independent accountants made by industrial initial public offering (IPO) companies in Australia between the years 1994 to 2004. The aim of this research is to determine which companies are more likely to use one of the Top 5 accountancy firms and in so doing we seek to offer some insight into understanding the likelihood of IPO companies adopting the services of the big accounting firms. Our findings show, as predicted, that the majority of industrial IPO companies, and particularly the larger companies, used one of the Top 5 accountancy firms as their independent accountant. However, unexpected was that certain industry types were less likely to hire a Top 5 accounting firm for their independent accounting services compared to other industry categories. Our studies also found that after the year 2000 a smaller percentage of companies used independent accountants than between 1994 and 1999. Many factors contribute to the selection of an independent accountant and this paper provides some understanding of identified factors and the influence that they have over the choice of independent accountants by industrial company IPOs.

Mastering the global market

There is an urgent need to expand the number of qualified accountants in China and, particularly, the number of local accountants whose qualifications are recognized internationally. During this period of rapid transformation, the Deakin Master of Professional Accounting program, which includes the CPA Program of CPA Australia, has been developed to assist in meeting China's needs for internationally recognized accountants. The first group of students to study a new university course incorporating the CPA Australia qualification graduated at a specially convened graduation in Beijing on August 22 this year. The increasing awareness of the need for stringent corporate governance procedures and ethical business practice in the global market, as well as the need for China to develop knowledge of modern business activities, has been a priority as the course has been taught.

Re-emergence of the public accounting profession in China : a hegemonic analysis

This paper draws on Gramsci's concept of hegemony to examine and explain the circumstances leading to the re-emergence of the public accounting profession in China in the early 1980s. In particular, the paper attempts to understand the political and ideological influence upon the professionalisation process of the Chinese accountants. The paper not only highlights a major difference between the professionalisation process of the public accounting profession in China as compared to the West, but also the authoritative and dominant role assumed by the Chinese state in the whole societal set-up. Through effectively exercising its political and ideological leadership, the state successfully mobilised the Chinese accountants in the implementation of its economic-related agenda. The paper demonstrates that the state has clearly achieved hegemony within the accounting community, and further suggests that the state-accounting profession relationship could be likened to the father–son relationship as encompassed within the Confucian notion of wu lun.

Exploratory study into the accountancy firms chosen by industrial company IPOs in Australia from 1994 to 2004

This study is an exploration into the choice of independent accountants made by industrial initial public offering (IPO) companies in Australia between the years 1994 to 2004. The aim of this research is to determine which companies are more likely to use one of the Top 5 accountancy firms and in so doing we seek to offer some insight into understanding the likelihood of IPQ companies adopting the services of the big accounting firms. Our findings show, as predicted, that the majority of industrial IPO companies, and particularly the larger companies, used one of the Top 5 accountancy firms as their independent accountant. However, unexpected was that certain industry types were less likely to hire a Top 5 accounting finn for their independent accounting services compared to other industry categories. Our studies also found that after the year 2000 a smaller percentage of companies used independent accountants than between 1994 and 1999. Many factors contribute to the selection of an independent accountant and this paper provides some understanding of identified factors and the influence that they have over the choice of independent accountants by industrial company IPOs.

Money laundering : of watchdogs, bloodhounds and guide dogs

June 2003 was a very important month from the perspective of money laundering control. The main administrative money laundering control duties took effect on 30 June 2003, thereby changing many of the business practices that were part of the South African business landscape. In the same month, South Africa gained membership of the Financial Action Task Force (FATF) which is the main international standard-setting body in respect of money laundering control. At the meeting where South Africa’s membership was endorsed, the FATF also adopted a new and more stringent set of money laundering control standards that all countries will have to meet. As South Africa is implementing its money laundering control legislation, thought must therefore be given to amendments that may be required to comply with the new set of international standards. In this state of flux, accountants and auditors have a very important role to play. Not only do they have to comply with the legislation but they will also be required to provide guidance to those clients who are bewildered by the new requirements. Obviously auditors will also have to consider non-compliance with these laws when planning and carrying out an audit.

Perceptions of e-commerce as an academic discipline in Australian universities

This paper presents findings from a study on perceptions of e-commerce as an academic discipline in Australian universities. The study examined Australian universities' perceptions on whether e-commerce should be regarded as a business-oriented discipline or a technology-oriented discipline and further whether e-commerce should be considered as a distinctive discipline. Data was collected from official websites of all Australian universities and was categorized in accordance to award titles, host faculty and program structures. Findings showed that most Australian universities perceived e-commerce as a business-oriented discipline. However, there was no consensus on whether e-commerce should be considered as a distinctive discipline.

Ethics education for accounting students - a toolkit approach

In 2006, the International Accounting Education Standards Board (IAESB), an independent standard-setting board of the International Federation of Accountants (IFAC) released an information paper entitled Approaches to the Development and Maintenance of Professional Values, Ethics and Attitudes in Accounting Education Programs. The information paper stems from a global research project on ethics education in the accounting profession. The paper is designed to stimulate discussion and debate on the subject of ethics education and includes the provision of an Ethics Education Toolkit to encourage and assist accounting educators and member bodies of IFAC to implement ethics education programmes. Through a review of the literature, this paper considers why we should teach ethics, the types of ethics interventions that have been undertaken and the issues in teaching ethics to accountancy students. The paper then describes in detail the Ethics Education Toolkit and provides some evidence on the positive reaction of a group of students who are taught ethics, based on the principles and practice included in the toolkit.

Risk management and ethical environment : effects on internal audit and accounting control procedures

This study examines the impact of the scope of risk management and ethical environment on internal audit activities and the quality of accounting control procedures (ACPQ). The conceptual framework for the study is guided by COSO’s frameworks on internal controls and enterprise risk management and data from a questionnaire survey of 64 Australian firms are analysed using a structural equation model. The results of the study support that (1) internal audit activities have a significant intervening effect on the relationship between the scope of risk management and ACPQ, and (2) a direct and positive relationship exists between ethical environment and ACPQ. Our findings suggest that widening the scope of risk management activities do not directly improve ACPQ, but that it leads to more extensive internal audit activities and in turn such activities promote better ACPQ. Further, the results indicate that fostering a more ethical environment directly leads to higher ACPQ. These results have implications for the design of internal controls, namely with respect to the role of internal audit activities and ethical environment in enhancing ACPQ.

Managers' trust, reliance on control mechanisms and performance of subordinates

Many organisational scholars claim that interpersonal trust between managers and subordinates will bring about a number of positive organisational outcomes including enhanced job performance in subordinates. Recent management accounting literature implies that the trust's positive effect on performance is achieved by using trust-based controls such as 'social control'. While the former indicates a direct positive relationship between trust and performance, the latter indicates an indirect positive relationship between trust and performance through controls. Whether the trust's relationship with performance is direct or indirect is particularly important issue for management accountants because of the possible implications of the nature of the relationship for the design and exercise of management control in organisations.

Accounting services and SMEs : an Australian study

Background: The observance of regulation has become a fundamental part of life for the conduct of business around the world. Governments and their duly appointed designates, acting in the interest of the collective public, have relied on regulation to moderate economic and social behaviour through the imposition and enforcement of rules. While it can be commonly accepted that such a prescriptive framework may be necessary for the achievement of desired economic and social outcomes, regulation does impose costs on society and on individual firms. These costs, which can include the costs for government departments to administer, the cost for firms to comply, and the multitude of indirect costs such as lost innovation and productivity or their interrelated opportunity costs, have received ample attention.

Accountants are key advisers to all businesses on all aspects of doing business, including regulation. As such, it is appropriate that ACCA has sponsored this study, which explores the regulatory issues facing SMEs and the critical role that accountants and other organisations play in helping SMEs be aware of, comply with and generally manage effectively the regulations that apply to their business.

ACCA has consistently argued for a balanced view to be taken on regulation, recognising that certain rules are necessary for the fair development of business and for employees’ rights. Yet at the same time, ACCA recognises that SMEs are likely to be disproportionately burdened by regulatory requirements and, as a consequence, it actively campaigns for fairness in regulation, recognising the issue as a significant factor in the success, productivity and growth of small businesses.

Overview: This study complements similar research commissioned by ACCA in the United Kingdom and Canada (Blackburn et al. 2006), with the aim of helping to provide a more international picture of the effects of regulation on adviceseeking by SMEs and how accountants can help SMEs meet their regulatory obligations.

The research commenced in November 2006 and was conducted over the Australian summer period 2006/7, among SMEs and accounting practices, as follows:

* telephone survey among 250 SMEs
* postal survey among 130 accounting practitioner firms.

Key findings: The SME section of this study revealed the following points.

* Most SMEs (between 70% and 80%), agreed that the regulations under review were reasonable, however there were significantly high levels of concern regarding:
* the number of regulations affecting their business (80%)
* staying up to date with changing regulations (80%)
* complexity of regulation or the ease of understanding regulations (77%)
* inequity, or the cost of regulation in proportion to the business (66%)
* duplication, or being required to provide the same information to more than one government department (55%).
* External accountants were the most common source of advice, being used by 72% of SMEs; this was followed by federal government agencies,    62%; trade or industry bodies, 61%; and a lawyer or solicitor, 53%.
* Highest levels of satisfaction with the advice provided were recorded for lawyers/solicitors (94%), banks (91%) and external accountants (90%).
* Overall, 80% of SMEs who had used accountants rated their service as excellent or good. Thirty per cent gave accountants an excellent rating.
* Accountants rated particularly well on the following attributes:
* the potential for a long-term relationship with the business (81% excellent/good)
* technical understanding of the regulatory requirements that apply to the business (79%)
* ability to meet the needs of the business (77%)
* understanding of the business of the SME and its operations (73%).

The survey of accounting practitioners produced the following information.
* The results indicate that SME firms with fewer than 10 employees are the main source of revenue for the respondent accounting practitioners.
* Virtually all accountants provide regulatory advice, primarily in the areas of taxation (particularly Goods and Services Tax, GST), and Do-It-      Yourself (DIY) superannuation requirements. These services provided the accountants with their largest business growth in the two years before the time of the survey.

Seventy-nine per cent of accountants referred their SME clients to external professional advisers. Their comments indicate (see Appendix 4) that some accountants consider their role to be as convenors or advisers for their SME clients. Importantly, according to the accountants, SME firms with fewer than 10 employees did not update their knowledge of regulatory requirements; they relied on their accountant for the right advice. The main types of external adviser to whom accountants referred their SME clients were lawyers and financial planners.

* Accountants expressed their concern regarding the complexity and amount of regulations affecting their SME clients.
* The accountants also stated that they would like to provide additional advice to their SME clients.
 
Confidence intervals – SME survey:  The survey sample size was 250 SMEs from the total of 1.2 million Australian SMEs. Any estimate of proportions agreeing or disagreeing with particular statements must be considered with respect to the margin of possible statistical error. Owing to the small sample size, generalising the results from this study to a wider population of SMEs may be constrained.

A 95% confidence interval of the sample mean for the following estimates based on a percentage agreement of 75% to a proposition with a sample size of 250 would be from 69.5% to 80.5%. The 95% confidence interval for estimates of any other value will diverge slightly in magnitude from the numbers given.

In general then we can be highly confident that the actual sample mean will be within approximately ± 5% of the figure given, with a survey of this size. Confidence intervals – acounting practitioner survey IBISWorld estimates reveal a figure of 9,222 accounting practices in Australia as at June 2006 (IBISWorld 2007). The sample size of 133 accounting practitioners gives a 95% confidence limit that the results reported from the mail-out survey are within the ± 5% confidence interval of the reported values.

Conclusions:  This report describes the results of two parallel surveys undertaken on the impact of business regulation on small and medium-sized enterprises in Australia and on the perceptions of accounting firms about the ways in which the regulatory impact on the SME sector drove their business.

The survey of SMEs provides empirical support for many of the concerns raised with the Regulation Taskforce, which reported to the Australian government in 2006. Many businesses are concerned about the volume and complexity of government legislation as it applies to their business. They are concerned that they are unable to keep up with new legislation and that there is apparent duplication of reporting requirements across the various tiers of government.

The survey of accountants revealed that accounting firms derive a significant proportion of their revenue from SMEs. While the SMEs are concerned with regulatory changes, the accountants surveyed reported that the major growth areas in their businesses were in what could be seen as traditional accounting areas of tax and superannuation. Some SMEs sought advice on areas such as employment law, environmental regulation and health and safety but it appears that many accountants refer their clients to specialists in these areas. Recent changes to the laws regarding financial planning in Australia may lead to changes in the market for financial advice in Australia, with many accountants apparently regarding this as a key driver of future business opportunities.

The surveys were conducted using a similar instrument to similar surveys conducted in the UK and Canada and reported in Blackburn et al. (2006). Comparisons of the Australian survey results with those from the UK and Canada seem to support the perception that Australian business is not over-regulated, but the SME sector is concerned with the volume and complexity of regulation. This suggests that the SME sector wants to see improvements to Australia’s regulatory regime as a result of the work of the Regulation Taskforce undertaken in 2005/6. In its response to the work of the Taskforce the government agreed with 158 of the 178 specific recommendations of the Taskforce. This now needs to be followed through at all levels of government.

Accountants in all three countries understand their SME clients’ concerns with the burden of regulation and they are prepared to advise their clients where appropriate or refer them to specialist advisers. Most business growth for accountants has come from the taxation area. Very few accountants in the UK or Australia specialise in providing advice in the areas of environmental regulation or health and safety regulation.

International comparisons show that in all three countries accountants are generally highly regarded by SMEs for their professionalism and competence. The major area of client concern is the value for money offered by the accountant’s service. In an era of rapidly shifting professional and technical boundaries, accountants need to be more strongly attuned to levels of client satisfaction. Lawyers, financial planners and a plethora of specialist advisers operate in the business services market and if they have an opportunity to take business from accountants by competing on price they may well do so. This suggests a stronger role for professional accounting bodies in monitoring the broader business services market for opportunities and threats on behalf of their membership.

What influences accounting students' attitude towards accounting as a profession?

Several issues have been linked with the choice of an accounting major, and more specifically choice of accounting as a career path, including perceptions of the professional attributes required of accountants. The present study addresses two main themes: undergraduate students’ perceptions of the accounting profession and influences on decision to major in accounting. The study is motivated by the prior research of Marriott and Marriott (2003) that indicated exposure to accounting studies has a negative effect on attitudes towards the profession.

The results show that students’ perceptions of the profession related to work activities and prestige of the profession. Further analysis examining the influences on choice of an accounting major revealed three major factors: intrinsic interest in the content of accounting courses, influences of parents and friends together with perceptions of job status of accounting related to career advancement and salary. When compared with the Marriott and Marriott (2003) study, the present study showed students had more positive attitudes to studying accounting. There were however significant differences between local and international students in attitudes to the accounting profession.

Behind the scene of knowledge sharing : the impact of task complexity

Numerous empirical studies on knowledge management have examined the relative effectiveness of various enablers, such as organizational structure, technology, culture, managerial system and strategy for knowledge creation and sharing in organizations. While these studies play a critical role in helping us to appreciate the importance of organizational enablers in knowledge management, they have neglected to examine the possible effects of task complexity on the nature and efficacy of knowledge sharing. This study investigates how task complexity influences the mode and effectiveness of knowledge sharing among professional accountants in Malaysia. In particular, it highlights the relationships between different task dimensions and modes of knowledge sharing, and the impact of knowledge sharing on professional competency. This study adopts a process oriented approach based on Nonaka’s (1994) knowledge sharing model. This study reveals that task complexity is significantly related to knowledge sharing. Tasks carried out by professional accountants vary from repetitive or clearly-defined procedural tasks to unstructured tasks that required professional judgment and expertise for successful task performance. While professional accountants are generally keen to gain access to knowledge databases to source for possible task solutions, they are generally hesitant to share their tacit knowledge by transforming the knowledge into explicit form. The finding suggests that there may be cultural-related factors that inhibit sharing of one’s tacit  knowledge totally and completely. This study also shows the existence of a  significant relationship between knowledge sharing and professional  competency, suggesting that the importance of the internalization mode of  knowledge sharing in sustaining the competitive edge of professional  accountants.