Application of the reporting entity concept and lodgement of special purpose financial statements

This Research Report analyses the application of the reporting entity concept and the adoption of special purpose financial reporting, particularly by entities lodging financial statements with the Australian Securities and Investments Commission (ASIC) and with state-based regulators in Australia’s three most populous states, namely, Consumer Affairs Victoria, NSW Fair Trading and Queensland Office of Fair Trading. This Report does not cover entities that have their equity interests traded in a public market, such as listed companies, and some other entities with ‘public accountability’.

Panel versus GARCH information in unit root testing with an application to financial markets

In a search for more powerful unit root tests, some researchers have recently proposed accounting for the information contained in the GARCH of the innovations. However, while promising, tests with GARCH are difficult to implement, which has made them quite uncommon in the empirical literature. A computationally attractive alternative is to account not for GARCH but the information contained in a panel of multiple time series. The purpose of the current note is to compare the relative power achievable from these two information sources. © 2014 Elsevier B.V.

Exempt treatment of financial intermediation services under a value-added tax: an assessment of alternatives

Most countries with a value-added tax (VAT) exempt financial intermediation services from the tax. While exemption is generally perceived to be undesirable, it is also widely regarded as unavoidable because of technical difficulties in applying VAT to these services. This article reviews the standard rationale for exempt treatment and then considers the relative merits of two recent challenges raised in the tax literature. The first challenge involves the application of cash flow taxation to financial intermediation services in a manner that is consistent with an invoice/credit VAT (which is the dominant form). The second challenge proposes a comprehensive system of zero-rating of financial intermediation services, which is supported by a characterization of the household consumption of such services as non-taxable. The author argues that each of these alternatives to an exemption system suffers from both theoretical and practical implementation difficulties that make maintenance of exempt treatment the preferred approach, at least in the short term. There is, however, a simpler alternative to these fundamental reform options, involving modification of just one aspect of an exemption system to relieve some of its more problematic aspects. Many of the interpretative problems and associated inefficiencies that plague an exemption system arise from the need to distinguish between taxable and exempt financial services. The author argues that these difficulties can be eliminated, to a large extent, by basing the distinction on the form of prices. In support of this approach, he points out that it is consistent with the underlying reasons for the application of exempt treatment. The author considers a number of other possible modifications, but these are either rejected outright or viewed with a healthy skepticism. For example, the author is critical of the apparent rationale for the application of cash flow taxation to property and casualty insurers. He also rejects proposals that accept some looseness in the formulaic allocation by financial intermediaries of the costs of business inputs between exempt and taxable services for input credit purposes. In his view, an explicit reliance on pricing structures to draw the boundary between exempt and taxable services is preferable to the provision of relief for blocked input tax credits of financial intermediaries. Finally, the author is skeptical of the case for a policy response intended to address the tax bias under an exemption system for financial intermediaries to insource supplies.

Application of the adaptive reuse potential model in Hong Kong : a case study of Lui Seng Chun

There is an increasing complexity and interplay between all of the issues associated with property portfolio decisions. This paper explores the relationships between financial, environmental and social parameters associated with building adaptive reuse by way of a case study. A new model predicting adaptive reuse potential is applied to a heritage building in Hong Kong known as Lui Seng Chun. Such application can assist in the transformation of the building and property industry towards more sustainable practices, strategies and outcomes, by providing a means by which the industry can identify and rank existing buildings that have high potential for adaptive reuse. In Hong Kong's case it provides an ability for sustainable, responsive energy and natural resource management by allowing issues regarding excessive and inappropriate resource use to be identified and assessed, and appropriate management strategies to be implemented. Given the building's current age and condition, Lui Seng Chun has at least 25 years of physical life remaining. The further application of a multi-criteria sustainability evaluation tool supports the conclusion that an adaptive reuse strategy for this building will make a demonstrable contribution to the economic, social and environmental amenity of Hong Kong. The application of these techniques to other buildings with significant "embedded physical life" is highly recommended.

FM application in the hospitality sector

When applied to hotels, the terms “facilities management” and “hotel management” are in many ways synonymous. Certainly effective  management of the physical aspects in the hotel business is essential for maximum efficiency. This paper presents a research into facilities  management operations in medium sized hotels (11-50 rooms) in the UK. Medium sized hotels were selected for this research, since 90 per cent of UK hotels have fewer than 50 bedrooms. The key objective is to establish any trends that suggest a relationship between the application of facilities management techniques and the success of hotel businesses. Financial measures were not identified as being of critical importance and there seemed to be more of an interest in cost reduction than in income growth.

How prepared was Australia for international financial reporting standards? The case of listed firms

We measure the preparedness of listed firms for international financial reporting standards (IFRS) by changes in explanations from Australian GAAP to IFRS between the half-year and annual accounts. About one-third of sample firms changed their explanations for earnings, cashflows or equity by averages of about −7%, 67% and 3% respectively. Most changes are less than 5% for earnings and equity, and tax is the item most commonly revised. More profitable firms and firms with more reconciling items are most likely to change an explanation. In a telephone survey of chief financial officers, 70% revealed that the change followed an incorrect application of an accounting rule in the half-year accounts.

Financial statements in less developed countries : what do preparers demand?

This study reports on an empirical investigation of the characteristics, attitudes, and beliefs of preparers of external financial reports in a less developed country. The basic research instrument consisted of a questionnaire in two parts: the first addressing attitudes of professional accountants toward annual financial reports generally; the second, more specifically measuring the importance of the information items to preparers. Our results suggest that the independent auditor is the most influential group in decision-making processes. As in many developed countries, the auditor’s report and the regulatory framework are considered to have a major influence on financial reporting practices. Preparers believe that a lack of knowledge of external users’ needs and lack of reporting standards and accepted accounting principles are the main concerns with corporate financial reports in Iran. The results showed that the balance sheet, auditors’ report, and income statement in that order are the three most important parts of the annual reports.

Cross-sector transfer of consolidated financial reporting - conceptual concerns

This article addresses a major concern about the use of particular accounting concepts, notably those of control and assets, for whole-of-government consolidated financial reporting. While whole-of-government consolidated financial reports may resemble the formats required by accounting standards and so provide a benchmark for comparative purposes, inherent weakness in the specification of underpinning concepts means that proper and full application of the consolidation methodology cannot be assumed. A study of the whole-of-government consolidated financial reports of the Commonwealth, state and territory governments of Australia revealed that significant assets, obligations and controlled entities have not been included.

Globalising water accounting : lessons from the globalisation of financial reporting

Water management is a matter of global concern. To underpin sound management of water scarcity and quality issues requires high quality, consistent, understandable and credible information. In a world first, accounting and water industry experts in Australia have developed a system of water accounting as an accounting sub-discipline, analogous to financial accounting to guide national and intra-national decision-making. With a conceptual framework and a Preliminary Australian Water Accounting Standard in place, Australia’s approach is being evaluated internationally within the water and mining industries. Its fate as a discipline will depend upon regulatory politics as well as the intellectual and practical rigour of the system and the rate of its adoption. In this paper, we explore the application to water accounting of regulatory theories that have been valuable to gaining an understanding of financial accounting standards development. We predict the international path of the water accounting a sub-discipline of accounting, as an outcome of political forces.

Management control systems use, organisational capabilities and performance in universities: application of the resource-based view

Invoking the resource-based view (RBV), this study investigates relationships between management control systems (MCSs) use, including information use from performance measurement systems (PMSs), and organisational capabilities in the context of academic units of Australian universities. Increased competition and attention to distinctive capabilities amongst universities, particularly at their strategic operating unit level of Schools 1, provides the setting for application of this theoretic perspective. The objective of this study is to model various relationships between diagnostic and interactive use of MCSs, attention given to centrally-imposed and discretionary types of PMS information, the strength of capabilities of the academic unit and, in turn, performance of the academic units. This objective is investigated using a field survey in which a mail survey instrument is administered to a census of all Heads of Schools in all 39 universities in Australia. Valid responses were received from 166 Heads. Principal components factor analysis finds that Heads conceived capabilities of their unit in functional dimensions, not in generic dimensions as found in prior literature; Heads also considered performance measures in terms of their importance (critical or discretionary) rather than type (financial versus non-financial). Partial least-squares analysis is then used for path modelling, and several significant results are obtained. Highlights are that diagnostic MCS use and centrally-imposed performance measures, i.e., key performance indicators, but not interactive MCS use or discretionary performance measures, significantly relate to some or all of the strength of capabilities in the fields of teaching, research and networking, and in turn indirectly relate to performance of the academic units. The findings have practical implications for styles of control systems use; focus on selected key performance measures; and development of organisational capabilities for achievement of superior performance by academic schools in universities.

Financial crisis, Social pathologies and 'generalised perversion' : questioning Zizek's diagnosis of the times

Slavoj Zizek's work has been highly influential in the formulation of an emerging consensus among Lacanian social researchers, that we live in a society of generalised perversion whose initial fruits are the corrosion of democracy and the recent financial crisis. This position rests upon a notion of modern subjectivity that connects ‘commodity fetishism’ with clinical perversion in a pathological configuration, so that social theoretical identification of crisis tendencies, evaluative language about moral problems and diagnostic categories from the Lacanian clinic can be combined in a single figure. In this article, we question the series of conceptual links that constitute this position, tracing them from Zizek’s critique in his short work on the global financial crisis and his broader restatement of this analysis in the recent Living in the End Times, through the moment of his announcement of the notion of ‘generalised perversion’ in The Ticklish Subject, all the way back to fundamental propositions outlined in his earliest work. Our argument progresses through three claims. First, we show in the evolution of this position that it leads Zizek to equivocate in his diagnosis of contemporary society between two mutually exclusive categories (‘psychosis’ and ‘perversion’), indicating an antinomy in his work that is resolved in favour of ‘generalised perversion’ on empirical, not logical, grounds. Secondly, we offer a critical resolution of the antinomy through a critique of what we argue is Zizek’s mistaken over-extension of psychoanalytic reason beyond its legitimate scope of application. Finally, we point to some of the political implications of the way that Zizek speculatively resolves his logical difficulties, by analysing the consequences of his claim that generalised social perversion - the problem to be solved - involves a dethroning of the communal ego ideal. A communitarian streak, implicit in the potential conflation of moral denunciation with psychoanalytic diagnosis that the rhetoric of ‘perversion’ invokes, runs through Zizek’s work on capitalism, we propose in conclusion.

Web application protection against SQL injection attack

SQL injection vulnerabilities poses a severe threat to web applications as an SQL Injection Attack (SQLIA) could adopt new obfuscation techniques to evade and thwart countermeasures such as Intrusion Detection Systems (IDS). SQLIA gains access to the back-end database of vulnerable websites, allowing hackers to execute SQL commands in a web application resulting in financial fraud and website defacement. The lack of existing models in providing protections against SQL injection has motivated this paper to present a new and enhanced model against web database intrusions that use SQLIA techniques. In this paper, we propose a novel concept of negative tainting along with SQL keyword analysis for preventing SQLIA and described our that we implemented. We have tested our proposed model on all types of SQLIA techniques by generating SQL queries containing legitimate SQL commands and SQL Injection Attack. Evaluations have been performed using three different applications. The results show that our model protects against 100% of tested attacks before even reaching the database layer.