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Regardless of the controversy surrounding the attribution of causes of the Asia crisis, there is no doubt that there is now more attention being given to accountability in business. ...And accountability has as it's base developing systems to ensure that decisions and financial flows are clearly defined in terms of responsibilities. Managerial auditing, the focus of half of the articles this week, is the process of auditing all the aspects of management in an organization, not only in a "controlling way" but also in a pro-active way that ensures that action results from the auditing process. Accounting refers more to financial reporting, but again the accounting profession has developed in recent years to be more proactive than re-active. Not only non-government international organizations but also management and many national governments in Asia are heeding the lessons by introducing checks and balances, increasing accountability, and reforming some of the accounting practices of old. This week's articles include some written both post and pre- crisis, and the change in the focus of the research and arguments is strikingly apparent. Several of the articles below address accounting specifically - and in various countries including the Philippines, China, Japan, Australia and Malaysia. They provide some very useful comparative case studies of the state of the art though Asia. Together all articles provide a snapshot of the move towards increasing accountability in business at this post-crisis stage. Just as a reminder, you should note the Volume and Issue Number of the articles you are interested in before entering the database, as there is no search facility for the Journals of the Week - only browse facilities issue by issue are provided for the free download. Building a balanced scorecard with SWOT analysis, and implementing "Sun Tzu's The Art of Business Management Strategies" on QFD methodology S.F. Lee, Andrew Sai On Ko Managerial Auditing Journal; 15: 1/2 2000; pp. 68-76 Conjoining the SWOT matrix with the balanced scorecard (BSC) makes a systematic and holistic strategic management system. The SWOT matrix clearly identifies the critical success factors that can be implemented into the identification of the different aspects toward the balanced scorecard. It is, therefore, a more structural approach in setting up the foundation of the balanced scorecard; instead of simply identifying the "key performance indicators" (KPI) via gut feeling or by brainstorming. The next step of the whole process is to make use of the quality function deployment (QFD) methodology with the balanced scorecard (BSC) attributes identified as the "Whats" on the vertical axis, and the major strategies of "The Art of Business Management" Sun Tzu's as the horizontal "Hows" axis. The relationships are then studied in the body of the QFD matrix. Consideration is then given as to how the model presented can be customised to allow companies using this approach to develop and implement their corporate business strategic plan.
Keywords: SWOT analysis, Balanced scorecard, Quality function deployment, Stategy, Strategic planning, Total quality management
Charting staff attitudes along the journey towards getting ISO
certification Researches staff attitudes during the introduction of an ISO certification quality programme. The company was a listed public property investment and development company. The technique employed was a self-completed anonymous questionnaire on a longitudinal basis. Explores the perceived benefits of ISO certification; the possible drawbacks; the difficulties in introduction; and the prerequisites for success. Finds that ISO certification is perceived to improve performance but that top management support and commitment had fallen. Significant improvements after certification were seen to exist in management ability; quality systems; servicing; training of employees; business reputation and personnel management.
Keywords: Employee attitudes, ISO 9000
The 5-S auditing It has been recognised that Japanese firms are clean and orderly. The same is true for high quality western firms. Over the last two decades, the Japanese have formalised the technique and named it 5-S practice. As the name is new to most western societies, the objective of this paper is to explain the intricacy of the 5-S so that it can be understood easily and adopted readily by those who may find the tool useful. Based on the Japanese experience, the author has developed the world's first 5-S audit checklist. Apparently, spearheaded by the ISO 9000 auditing, the 5-S auditing approach has been easily and readily accepted by businesses and industries. As a result of the success, the Hong Kong Government invited the author to commission a 5-S Practice Workbook with ten successful case studies from the manufacturing, services and public sectors. Further, a grant has been given to the author to train up 2,500 5-S lead auditors, the first of its kind in the world. The experience will also be shared in this article.
Keywords: Auditing, Japan, TQM, Japanese management styles
Harmonisation of government audits in the People's Republic of China The National Audit Office of the People's Republic of China issued 38 auditing standards and guidelines on 1 January 1997. This was the culmination of a variable historical development during which audit activity was either emphasised or downplayed altogether. With the open door policy and the socialist market economy, audit is again very much back on the agenda. Audit independence is a cornerstone of this great auditing leap forward, with CPA firms in a supporting role. There is a need to train up auditors to assume their role of responsibility in an economy which has huge growth potential, and which excites world-wide interest.
Keywords: Accounting, Auditing, Autonomy, China
New vistas in reducing the conflicts between tourism and the environment: an environmental audit approach Describes how there has been growing concern in recent years regarding environmental protection and conservation in the field of tourism, and how, within this context measures are being taken to reduce the conflicts between tourism and the environment through the environmental audit approach. Advocates that, in the changing global business environment, there is a need to assess the contributions of the tourism industry in providing a pollution-free environment. The social cost should be measured in terms of the cost of rectifying the damage done in the form of a polluted environment. There is need to change the parameters by which success in tourism is measured. Believes that many of the conflicts between tourism and environment can be resolved by an environmental audit approach.
Keywords: Environmental management strategy, Ethics, Multinationals, National accounts, Social
audit, Social responsibility
The Foreign Corrupt Practices Act: an international perspective The Foreign Corrupt Practices Act (FCPA) of 1977 and its amendment - the Trade and Competitive Act of 1988 - are unique not only in the history of the accounting and auditing profession, but also in international law. The Acts raised awareness of the need for efficient and adequate internal control systems to prevent illegal acts such as the bribery of foreign officials, political parties and governments to secure or maintain contracts overseas. Its uniqueness is also due to the fact that the USA is the first country to pioneer such a legislation that impacted foreign trade, international law and codes of ethics. The research traces the history of the FCPA before and after its enactment, the role played by the various branches of the United States Government - Congress, Department of Justice, Securities Exchange commission (SEC), Central Intelligence Agency (CIA) and the Internal Revenue Service (IRS); the contributions made by professional associations such as the American Institute of Certified Public Accountants (AICFA), the Institute of Internal Auditors (IIA), the American Bar Association (ABA); and, finally, the role played by various international organizations such as the United Nations (UN), the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) and the International Federation of Accountants (IFAC). A cultural, ethical and legalistic background will give a better understanding of the FCPA as wll as the rationale for its controversy.
Keywords: Corruption, Fraud, Internal control, Legislation, USA
Fraud auditing This paper examines the role of professional associations, governmental agencies, and international accounting and auditing bodies in promulgating standards to deter and detect fraud, domestically and abroad. Specifically, it focuses on the role played by the US Securities and Exchange Commission (SEC), the American Institute of Certified Public Accountants (AICPA), the Institute of Internal Auditors (IIA), the Institute of Management Accountants (IMA), the Association of Certified Fraud Examiners (ACFE), the US Government Accounting Office (GAO), and other national and foreign professional associations, in promulgating auditing standards and procedures to prevent fraud in financial statements and other white-collar crimes. It also examines several fraud cases and the impact of management and employee fraud on the various business sectors such as insurance, banking, health care, and manufacturing, as well as the role of management, the boards of directors, the audit committees, auditors, and fraud examiners and their liability in the fraud prevention and investigation.
Keywords: Auditing, Auditing guidelines, Ethics, Fraud, International accounting
The implications of intellectual property law for the auditing and protection of national and international brands: Part II. Brands in the grey market Provides a practical snapshot of the legal situation governing the protection and exploitation of brand power within the European "grey market". Predominantly, this occurs through the use and enforcement of intellectual property rights, namely the trade mark. However, legal events over the last year or so have fundamentally affected the antics of grey marketers and the subsequent powers granted to the owners of a range of branded marks, including famously lucrative names such as Levi's, Nike and Calvin Klein. The recent pronouncements from the European Court of Justice (ECJ) in Luxembourg together with national court decisions have created a degree of confusion. The landmark Silhouette Case has proved immensely controversial with regard to the operation of trade mark law throughout the European Union (EU). The decision seems to prohibit the importation into the EU of branded goods or services, unless such activity has been specifically consented to by the brand owner. At a glance, the culmination of these legal precedents seems to have dealt the grey market operators and traders a severe blow - with potentially adverse effects for the European consumer as well. Seeks to analyse recent events by providing the backdrop to the controversy and then putting the cases into perspective so as to offer sound and practical advice to all interested parties in the now modified grey market environment.
Keywords: Grey market, Brands, Trade marks, Europe, International law Achieving audit uniformity out of diversity: a case study of an international bank The rapid growth in the economy of the Asia Pacific region has attracted many banks to expand in this area. Rapid expansion has brought the need for an increased emphasis on internal controls. A more structured control over the internal audit function is needed to provide sufficient assurance to head office. Due to the varying cultures, business practices and government regulations, there are many difficulties in the establishment of a centralized internal audit approach for different audit units in the region. These have been resolved by the international bank in this case study through (1) developing and implementing a uniform audit planning model; (2) establishing centres of excellence to cultivate expert knowledge in specific systems to streamline the development efforts in audit programme formulation; (3) formulating an Internal Audit Manual with laid-down guidelines on the roles, objectives, standards of performance and work procedures for the audit units; (4) setting up a uniform reporting line; (5) standardizing the job descriptions of internal auditors to ensure that the audit units are staffed by qualified personnel with adequate skills and competence; (6) improving the communications and networking of the audit units to promote ideas and experience exchange; (7) enhancing cross-functional or even cross-border exposure through job rotation to other audit units.
Keywords: Banking, Internal audit, Pacific Rim
Corporate disclosure and the deregulation of international investment Drawing on evidence of major Western governments' concerns with the wider economic, social and environmental impact and performance of transnational firms, we argue that recent emphasis on deregulating industrial development, such as in the proposed Multilateral Agreement on Investment and ongoing discussions over a multilateral framework on investment, necessitates a fuller and regulated, rather than voluntaristic, corporate accountability, covering further details of the impact and performance of transnationals.
Keywords: Accountability, Deregulation, Disclosure, Foreign investment
Public discourse and decision making: Exploring possibilities for financial, social and environmental accounting Economic "development" involves processes that often jointly produce both goods and "bads" - economic, environmental and social. The bads, however, are often technologically invisible; not least in terms of the way decisions are informed and accounted for. This paper takes as its case study a major development proposal that had the potential to produce economic, environmental, and social goods and bads. The paper involves an exploration of official independent reports leading to the proposal, considering the various factors taken into the decision, how the processes were reported on and accounted for. In particular, the treatment of financial/economic factors is examined and compared and contrasted with the treatment of social/environmental factors. From this, the paper considers possibilities for financial, social and environmental accounting in public discourse and decision making. In particular, the use of accounting to create environmental and social visibilities, and to facilitate discourse and debate, is examined.
Keywords: Environmental audit, Social accounting, Public sector, Environmental impact assessment
Shareholder and stakeholder value in corporate downsizing - The case of United Technologies Corporation In recent years, many corporations have initiated downsizing programs to eliminate jobs, close facilities and withdraw from major lines of business. These initiatives have been justified in the name of creating "lean and efficient" organizations. In many cases, top management is rewarded with large bonus compensation packages. Such rewards are considered to be consistent with the goal of maximizing shareholder value. We compare stakeholder and shareholder value models of management accountability to gain insights into the broader economic and societal consequences of the current financial reporting model. Specifically, we examine downsizing at United Technologies Corporation to demonstrate how current financial reporting practices privilege shareholder/management interests over other stakeholders and favor actions that may result in detrimental effects to corporate stakeholders and society at large. This paper extends extant research by providing a concrete example of how "generally-accepted" financial reports may be used to analyze economic events (like corporate downsizing) through multiple perspectives.
Keywords: Corporate strategy, Downsizing, Stakeholders, Financial statements
Australian public sector financial reporting: a case of cooperative policy formulation In the past two decades, the public sector both in Australia and overseas has undergone a period of intense change. The focus has been on efficiency, effectiveness and value for money of public sector operations. The methods by which governments account and report on their operations has received scrutiny. While Treasuries and Departments of Finance in each Australian jurisdiction have traditionally formulated the reporting and accounting rules used in the public sector, since 1983, with the formation of the Public Sector Accounting Standards Board (PSASB), the accounting profession has become involved in the setting of accounting standards for the public sector. Several researchers have suggested that a "contest" exists between the accounting profession and the government regulators for control over the public sector accounting standards process. This paper explores the processes whereby the public sector in Australia formulates its financial reporting policies by examining the interactions between the PSASB and the government regulators in each of the Australian jurisdictions. Policy community and policy network theory are used to argue that policy is formulated by a "cooperative" grouping of accounting professionals from the central agencies of Treasuries and Departments of Finance and the PSASB. The paper concludes that this method of policy formulation has implications for the content of policy and for the access of stakeholders to the formulation of that policy.
Keywords: Australia, Public sector accounting, Public sector
The conceptual underwear of financial reporting The paper examines the role of metaphor in debates about "conceptual frameworks" for financial reporting and accounting standard setting. It takes the form of a dialogue between a standard setter and an academic. The paper demonstrates the power of metaphor by substituting a different, unfamiliar metaphor in place of the clichéd "framework" for describing a set of accounting principles. The effect of the replacement is examined in the context of UK Accounting Standards Board's (ASB's) draft Statement of Principles. Underlying the apparent engineering parsimony of the framework metaphor, a mutable and inconsistent set of principles is discovered. The substitution of metaphors suggest that conceptual frameworks serve multiple purposes, such as marketing standards to preparers and users. The use of metaphors inevitably entails the importation of "baggage" into analysis, so that metaphors need to be chosen with care and baggage needs to be examined.
Keywords: Accounting standards, Financial reporting, Metaphors
"Interests" and accounting standard setting in Malaysia This paper offers insights into the conflicts and tensions within the Malaysian accounting profession and the power struggle therein to dominate the accounting standard setting process, within the context of a rapidly developing country. It shows how interest groups and parochial interests, along with issues of self-protection, affected the process of standard setting, which was controlled by different interests over the period under study. At one time the profession dominated. But far from being a monolithic body, it was in turn split according to various interests: the Big Six behind the Malaysian Association of Certified Public Accountants (MACPA) and the smaller firms behind the Malaysian Institute of Accountants (MIA). At other times big business prevailed. These conflicts and power struggles are revealed through an analysis of the case of the Goodwill Accounting Standard.
Keywords: Accounting profession, Malaysia, Standards
The Japanese accounting profession in transition This study describes the history and present conditions of the accounting profession in Japan. In particular, the crises of the 1990s have highlighted the fact that Japanese CPAs operate under quite different institutional arrangements from their Anglo-American counterparts. In addition, there are no equivalent Japanese bodies to the British Chartered Public Finance Accountants and Chartered Management Accountants for public sector or management accountants. This paper identifies factors behind such differences. We discuss three points at issue: currently existing problems with auditing in the private sector, the long absence of external auditors in the public sector and the reason why the accounting profession has not been formed in a management accounting field. Finally, we point out issues involving the Japanese accounting profession that might be tackled in the future.
Keywords: Accounting profession, Auditing, History, Japan, Public sector
Regulation and organisation of accountants in China While there is a growing literature on the reform of accounting practices and standards in China, relatively little has been written about practitioners. But it is they who will be doing the work!This paper traces changes in the organisation and regulation of accountancy practitioners in China during the twentieth century, with particular focus on the post-1978 period. It highlights the changing balance, over time, between state, market and community as principles for organising practitioners. Nothwithstanding the significant trend towards a market economy, we are still in the midst of a period of transformation both in Chinese society as a whole and accountancy in particular. At present the state maintains quite a degree of influence over Chinese accountancy through its control of Chinese accountants.
Keywords: Accounting profession, China, Market economy
The "rational" and "traditional": the regulation of accounting in the
Philippines The efficacy of the "rational" corporatist regulatory framework of Philippine financial reporting and, in particular, accounting has generally been questioned. We will show that the regulation of accounting in the Philippines is not corporatist at all in its implementation. A "traditionalist"/familial culture mediates the "rationalist"/legalistic regulatory process of Philippine accounting regulation. Two cases of apparent ethical misconduct in the practice of public accounting are examined to illustrate the process of mediation.
Keywords: Accounting, Mediation, Philippines, Regulations
Professional accounting environment in Brunei Darussalam This paper analyses the professional accounting environment in Brunei Darussalam with particular reference to the organisation of practitioners. In terms of the wealth of the country, its stable economic, social and political structure, the formal regulatory structures in place and the ongoing British influence, one might expect to find a vigorous accountancy profession in place, actively pursuing a collective mobility project. However, such an expectation would be misplaced. Drawing upon the functionalist, interactionist and critical theories of the professions, as synthesised by Willmott, this paper explains the lack of a powerful accounting profession in Brunei and speculates as to whether such a profession might emerge, in particular one capable of adequately gauging and safeguarding the public interest. The paper argues the case for the negative given the prevailing market, institutional and power structures.
Keywords: Accounting profession, Brunei
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