Franchising in the Hospitality Industry: Accounting Aspects

Franchised businesses are a powerful factor in the American economy. The author provides a general overview of the area, citing statistics supporting its growth in the industry. Attention will be focused on accounting aspects of franchising, placing major emphasis on issues associated with the recognition of franchise fee revenue.

Impacto do racionamento nos resultados das empresas concessionárias do serviço público de distribuição de energia elétrica: um estudo nas empresas privadas da Região Nordeste

This work verifies the impact caused by the Emergencial Program of Reduction of Consumption of Electric Energy (energy-rationing program) in the results of the concessionary private companies of the public service of electric energy distribution localized in the Northeast Area. As the rationing invigorated from June 2001 to February 2002, its effects are diluted in the results presented by these companies in the second semester of 2001 and first quarter of 2002, with prominence for the last quarter of 2001, when the revenue of extraordinary tariff restore was instituted by the National Agency of Electric Energy (ANEEL), consequence of the so-called General Agreement of the Electric Sector made between the federal government and the companies of the electric sector. The structure of a generic electric sector and a historical review of the Brazilian electric sector from the time it was controlled by the private enterprises, including the State control period, about 1960, and returning to the control of the private enterprises in 1990, under a new regulation structure are presented. An explanation of the models of economic regulation that Brazil used for the electric sector is made, with prominence for the price cap that is the actual effective model. The process of tariff revision foreseen in the concession contracts signed by the federal government and the concessionary companies is presented, highlighting its two stages: the tariff rebalancing that defines the new price cap and the calculation of the factor X that establishes the efficiency goals for the companies. There is made a presentation of the Emergencial Program of Reduction of Consumption of Electric Energy and of the consequent General Agreement of the Electric Sector, which created the revenue of extraordinary tariff restore. A conceptual revision on reviews is presented, regarding to concepts, accomplishment and recognition. A brief review of the six companies that made part of the worked sample is also presented. Analyzing the quarters historical review and of amount of sold energy, it was possible to conclude that the energy-rationing altered the results of the studied companies significantly and that alteration was masked by the accounting process of the revenue of extraordinary tariff restore

Customer loyalty among daily disposable contact lens wearers

Background: Optometric practices offer contact lenses as cash sale items or as part of monthly payment plans. With the contact lens market becoming increasingly competitive, patients are opting to purchase lenses from supermarkets and Internet suppliers. Monthly payment plans are often implemented to improve loyalty. This study aimed to compare behavioural loyalty between monthly payment plan members and non-members. Methods: BBR Optometry Ltd offers a monthly payment plan (Eyelife™) to their contact lens wearers. A retrospective audit of 38 Eyelife™ members (mean. ±. SD: 42.7. ±. 15.0 years) and 30 non-members (mean. ±. SD: 40.8. ±. 16.7 years) was conducted. Revenue and profits generated, service uptake and product sales between the two groups were compared over a fixed period of 18 months. Results: Eyelife™ members generated significantly higher professional fee revenue ( P<. 0.001), £153.96 compared to £83.50, and profits ( P<. 0.001). Eyelife™ members had a higher uptake of eye examinations ( P<. 0.001). The 2 groups demonstrated no significant difference in spectacle sales by volume ( P= 0.790) or value ( P= 0.369). There were also no significant differences in contact lens revenue ( P= 0.337), although Eyelife™ members did receive a discount. The Eyelife™ group incurred higher contact lens costs ( P= 0.037), due to a greater volume of contact lens purchases, 986 units compared to 582. Conclusions: Monthly payment plans improve loyalty among contact lens wearers, particularly service uptake and volume of lens purchases. Additionally the greater professional fees generated, render monthly payment plans an attractive business model and practice builder.

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.

Accounting for revenue and other financing sources and concepts for reconciling budgetary and financial accounting /

Cover title.

Implementation guide to Statement of federal financial accounting standards no. 7, Accounting for revenue and other financing sources /

"June 1996."

Changes in accountancy costs for Tasmanian SMEs implementing computerised accounting systems

There have been powerful incentives for Tasmanian Small and Medium-sized Enterprises (SMEs) to adopt information technology to enable them to remain competitive and to comply with legislative regulations. This research study was undertaken to establish whether SMEs implementing computerised accounting systems have a subsequent change in their external accountancy fees. The research study employed a quantitative methodology using survey questionnaires. The study found that in less than 3% of cases SMEs reported a decrease in accountancy fees, in almost 45% of cases the organisation actually experienced a slight to substantial fee increase while 52% reported no change in accountancy fees.

An epistemic community as influencer and implementer in local government accounting in Australia

This paper adopts an epistemic community framework to explicate the dual role of epistemic communities as influencers of accounting policy within regulatory space and as implementers who effect change within the domain of accounting. The context is the adoption and implementation of fair value accounting within local government in New South Wales (NSW). The roles and functions of Australian local government are extensive, and include the development and maintenance of infrastructure, provision of recreational facilities, certain health and community services, buildings, cultural facilities, and in some cases, water and sewerage (Australian Local Government Association, 2009). The NSW state Department of Local Government (DLG) is responsible for legislation and policy development to ensure that local councils are able to deliver ‘quality services to their communities in a sustainable manner’ (DLG, 2008c). These local councils receive revenue from various sources including property rates, government grants and user-pays service provision. In July 2006 the DLG issued Circular 06-453 to councils (DLG, 2006c), mandating the staged adoption of fair value measurement of infrastructure assets. This directive followed the policy of NSW State Treasury (NSW Treasury, 2007),4 and an independent inquiry into the financial sustainability of local councils (LGSA, 2006). It was an attempt to resolve the inconsistency in public sector asset valuation in NSW Local Governments, and to provide greater usefulness and comparability of financial statements.5 The focus of this study is the mobilization of accounting change by the DLG within this wider political context. When a regulatory problem arises, those with political power seek advice from professionals with relevant skill and expertise (Potter, 2005). This paper explores the way in which professionals diffuse accounting ‘problems’ and the associated accounting solutions ‘across time and space’ (Potter, 2005, p. 277). The DLG’s fair value accounting policy emanated from a ‘regulatory space’ (Hancher and Moran, 1989)6 as a result of negotiations between many parties, including accounting and finance professionals. Operating within the local government sector, these professionals were identified by the DLG as being capable of providing helpful input. They were also responsible for the implementation of the new olicy within local councils. Accordingly they have been dentified as an pistemic community with the ability to ranslate regulatory power by changing he domain of ccounting (Potter, 2005, p. 278).7 The paper is organised as follows. The background to the LG’s decision to require the introduction of fair value accounting for infrastructure assets is explored. Following this, the method of the study is described, and the epistemic community framework outlined. In the next sections, evidence of the influencing and implementing roles of epistemic groups is provided. Finally, conclusions are drawn about the significance of these groups both within regulatory space in developing accounting regulation, and in embedding change within the domain of accounting.

Consumer guarantees and the supply of educational services by higher education providers

The higher education sector is undergoing a number of significant changes, the implications of which have yet to emerge. One such change is the increasing reliance by higher education providers on the revenue generated by full fee paying international students to fund their operating expenses. The report by the Victorian Ombudsman, Investigation into how Universities Deal with International Students ('Victorian Ombudsman's Report') tabled in the Victorian Parliament on 27 October 2011, provides evidence that Australian higher education providers may be failing to meet their legal obligations to international students. The Victorian Ombudsman's Report is the result of an investigation into four Victorian universities teaching international students with a focus on accounting and nursing schools. The report contains evidence that the universities were admitting students with scores below, or at the lower end of, the International English Language Testing System ('IELTS') score considered acceptable. Alternatively, they were relying upon their own language testing admission standards and not on an independent test like the IELTS test. While the universities provided English language support services for their international students after they had been admitted, the Ombudsman was concerned that the universities 'have not dedicated sufficient resources to meet the level of need amongst international students'.

Do Big-Four affilitates earn audit fee premiums in emerging markets?

The paper investigates whether Big-Four affiliated (B4A) firms earn audit premiums in an emerging economy context, using Bangladesh as a case. The joint determination of audit and non-audit service fees is also examined using a sample of 122 companies listed in the Dhaka Stock Exchange. Our findings reveal that although the B4A firms do not generally earn a fee premiumin Bangladesh, they charge higher audit fees for clients not purchasing non-audit services. This suggests that the B4A firms may actually lower audit fees to attract non-audit services, and cross subsidizes audit fees through non-audit-services fees. The lack of a B4A premium implies that there is lack of quality audit in emerging markets. We also document that audit and non-audit service fees are jointly determined in Bangladesh. Thus, we provide evidence of joint determination of audit and non-audit service fees in an emerging economy context.

Company taxation and tax spillovers: Separate accounting versus formula apportionment

It is observed in the real world that taxes matter for location decisions and that multinationals shift profits by transfer pricing. The US and Canada use so-called formula apportionment (FA) to tax corporate income, and the EU is debating a switch from separate accounting (SA) to FA. This paper develops a theoretical model that compares basic properties of FA to SA. The focal point of the analysis is how changes in tax rates affect capital formation, input choice, and transfer pricing, as well as on spillovers on tax revenue in other countries. The analysis shows that a move from SA to FA will not eliminate such spillovers and will, in cases identified in the paper, actually aggravate them.

Teaching and learning accounting with overseas students

This paper is a reflective review of the study habits of international students in postgraduate accounting studies, and how these study habits have changed over recent years as a consequence of increased enrolments of full-fee international students. It is based on the author's experience coordinating and teaching accounting at the postgraduate masters level over the past five years.

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.