Accounting problems and issues in cases of municipal boundary changes

Analyses the methodologies and accounting treatments used for the transfer of assets, liabilities, revenues and expenses resulting from municipal restructuring in Victoria during the early 1990s. It was found that most municipalities adopted simple or pragmatic methods, whereby fixed assets and associated liabilities were allocated physically avoiding the need for financial valuations.

Assets in Accounting: Reality Lost

The aim of this paper is to trace changes in the definitional concept of assets in an attempt to discover why professional accounting bodies in the major English speaking countries have adopted the problematic abstract 'future benefit' notion, which is so far removed from the simple concept of assets as exchangeable things or rights. It is suggested that in the future financial reporting requirements for business entities include a statement of 'separably exchangeable property' and legal obligations at the reporting date.

Empirical evidence from the corporate collapse literature suggesting re-examination of accounting standards in relation to valuation of assets

This paper examines the recent spectacular corporate collapses of Parmalat in Europe, Enron and WorldCom in the USA and HIH in Australia and argues for a re-examination of corporate governance regulations, particularly in relation to accounting standards regarding the valuation of assets. The recommendation that is put forward in this regard is based upon empirical evidence arising from further examination of the empirical results in (Hossari and Rahman, 2004). Specifically, the recommendation is based upon the realization that, among the 48 financial ratios across the 50-plus refereed studies, five financial ratios, all of which contained assets as one of the variables, were a relatively robust indicator of corporate collapse. The five ratios are: Net Income/Total Assets, Current Assets/Current Liabilities, Total Liabilities/Total Assets, Working Capital/Total Assets, and Earnings Before Interest and Taxes/Total Assets. This paper suggests that it's not the failure of the corporate collapse prediction models, rather it's the erosion of the reliability of some key input data, namely assets and the valuation thereof, that is largely responsible for the apparent failure of these models in capturing impending collapses, such as those that we witnessed in the recent past. Such empirical findings support the argument that assets are soft targets for misrepresentation, because of the leeway granted in accounting standards with regards to their valuation.

The importance of intangible assets in initial public offerings

This paper follows Beatty and Ritter (1986), who argue that lower uncertainty about the value of an initial public offering (IPO) reduces the 'need' for the underpricing of an IPo. Australian IPOs often identify the existence of intangible assets such as goodwill, licenses, brand names, trademarks, patents and capitalized research and development costs in the prospectus. This paper analyses if IPOs identifying the existence of such intangible assets in the prospectus might reduce uncertainty about their valuation and hence allow a lower underpricing return. While the reporting of intangible assets such as goodwill and license costs in the prospectus are not significant ingredients in the level of underpricing, the identification and valuation of intangible assets such as brand names, trademarks, patents and capitalized research and development costs is significant in reducing the level of underpricing return. Our findings are also consistent with previous studies concluding that both the size of the new issue and the use of an underwriter are important in the level of underpricing return.

Intangible assets and the underpricing of industrial company initial public offerings

This study analyses 262 industrial company initial public offerings (IPOs) in Australia from 1994 to 1999. It finds that the identification and valuation of brand name, trademark, patent and capitalized research and development cost intangible assets in the prospectus significantly reduces underpricing. The identification of goodwill and license cost intangibles does not appear to be significant to underpricing. This paper supports the Beatty and Ritter (1986) argument that IPOs may display financial and nonfinancial characteristics that lower the uncertainty about the value of the lPO and hence lower the underpricing of that IPO. Our findings suggest implications for the issuer who wants to maximize the value of the firm at the time of the lPO, the underwriter who is required to guarantee the success of the capital raising and for the initial investors who are looking to reduce their uncertainty about the valuation of the lPO.

Evaluation of fixed sample-size plans for Plutella xylostella (Lepidoptera: Plutellidae) on broccoli crops in Australia

Fixed sample-size plans for monitoring Plutella xylostella (L.) (Lepidoptera: Plutellidae) on broccoli and other Brassica vegetable crops are popular in Australia for their simplicity and ease of application. But the sample sizes used are often small, ≈10–25 plants per crop, and it may be that they fail to provide sufficient information upon which to base pest control decisions. We tested the performance of seven fixed sample-size plans (10, 15, 20, 30, 35, 40, and 45 plants) by resampling a large data set on P. xylostella in commercial broccoli crops. For each sample size, enumerative and presence-absence plans were assessed. The precision of the plans was assessed in terms of the ratio of the standard error to the mean; and at least 45 and 35 samples were necessary for the enumerative and presence-absence plans, respectively, to attain the generally accepted benchmark of ≤0.3. Sample sizes of 10–20 were highly imprecise. We also assessed the consequences of classifications based on action thresholds (ATs) of 0.2 and 0.8 larvae per plant for the enumerative case, and 0.15 and 0.45 proportion of plants of infested for the presence-absence case. Operating characteristic curves and investigations of the frequency of correct decisions suggest improvements in the performance of plans with increased sample size. In both the enumerative and presence-absence cases, the proportion of incorrect decisions was much higher for the lower of the two ATs assessed, and type II errors (i.e., failure to suggest pest control upon the AT is exceeded) generally accounted for the majority of this error. Type II errors are the most significant from a producer’s standpoint. Further consideration is necessary to determine what is an acceptable type II error rate.

Council amalgamations and restructuring in Victoria: how did we value the assets and liabilities?

This study aimed to identify and critically analyse the methodologies and accounting treatments adopted in the transfer of assets, liabilities, revenues and expenses resultingfrom municipal boundary changes associated with municipal restructuring (amalgamations) in Victoria during the early 1990s. In involved the collection and use of oral evidence obtained from officers of a sample of entities engaged in the process and focused on identifying and examining the methodologies used by municipalities. It has also been shown that local government is different from the commercial domain and the accounting profession has not adequately addressed some of these differences.

Accounting for local government boundary changes in South Australia : valuing assets and liabilities or valuing revenue streams

This paper examines the methodologies adopted in the transfer of assets, liabilities, revenues and expenses resulting from boundary changes associated with municipal amalgamations in South Australia during the late 1990s. It investigates the methods employed for apportioning these financial elements, valuations used and financial settlements required. Significant transfers occurred in only three cases. In two cases, councils used simple, pragmatic methods to apportion assets and liabilities, similar to those used previously in Victoria. In the third case a transfer price was calculated based on the net present value of revenues. This method is quite different from previous methods examined and is appropriate where one council will make significant future gains at another council's loss because of net revenue transfers.

Managing FM (support services): business risks in the healthcare sector

This paper presents research findings of 365 NHS Trust executives in the UK and builds on work carried out on risk perceptions and treatment in facilities management operations and business support activities in the NHS Trusts. The research utilises a business approach of viewing healthcare facilities not only as fixed “assets” occupying hospital sites and space, but it also considers them as that “tangible” part of the service chain process underpinning the provision of clinical services to both internal (departments or directorates) and external customers. The research found that customer satisfaction, service delivery certainty, customer involvement, service quality reliability, health and safety are highly rated by the NHS executives. The paper classifies healthcare related risk constructs into seven elements namely: customer care, corporate, legal, commercial finance and economics, business transfer, and facilities transmitted

Book review : Managing government property assets by Olga Kaganova and James McKellar (eds)

Managing Government Property Assets, edited by Olga Kaganova and James McKellar, is reviewed.

Fixed and floating charges : the latest conflicting law and how to address the gaps

Can book debts be subject to a fixed charge? This question was considered by the House of Lords in National Westminster Bank v. Spectrum Plus Limited [2005] UKHL 41 where the full House was against the idea of a fixed charge on book debts and insisted that only a floating charge had been created. The law in this area is still vague and uncertain in Australia. This paper argues that the financiers and the companies should be given the freedom to decide how they wish to structure their charge documents. The paper sets out to argue that, in respect to the use of book debts as security for a loan, the only way for both the financiers and the companies to do business is to create a sustained workable fixed charge or even multiple fixed and floating charge on book debts. The author explains how this could be possible and how the proposed model would not deny the statutory priority rights of the preferential creditors.

Managing knowledge and intangible assets

This comprehensive handbook is very popular with HR practitioners, line managers, and anyone else who needs an overview of the legal and managerial aspects of managing people in organisations.

In this edition, over 50 chapters have been updated to reflect current workplace relations law, including the new Forward with Fairness Transition Act changes. There is also a new chapter on "Government Funded Traineeships - A guide for HR Professionals".