 |
|
Of the many factors posited as causes of the Asia crisis, lack of accountability and poor, if not mischievous, auditing standards emerged as one of the most controversial. Like much Asian infrastructure during ten years of spiraling growth, it is certainly understandable that auditing and accounting practices struggled to keep up. In some countries it wasn't that is was bad so much, but that some auditing practices were not as objective as they should be. In fact some accountants were so clever, that through various mechanisms, paper assets as well as cash were often funneled off to curious and un-accountable financial entities. When the Indonesian élite were forced to start opening up their books, a can of worms were exposed. Things were much worse than the books on top of the table seemed to suggest. When those under the table were opened, we saw the beginning of exposure of a mass of financial mis-management, and new scandals such as Bank Bali. Korea faced the same problems, and in Thailand, an auditor from an international Big 4/5/6 firm was shot and murdered as he arrived in Northern Thailand to carry out an audit, allegedly by company offices trying to cover up past sins. The saga of the Krung Thai bank continues, where the audit carried out by an international company was rejected by the Minister, who ordered another internal audit instead. Really only Singapore business has remained relatively unscathed during the focus on auditing and accountability post-crisis. The articles featured this week, take a broad definition of auditing. We often refer to accounting and finance in the same breath, but not only finance can be audited, but also other areas of management and management as a whole, the environment, and even social systems. Auditing focuses on the "Control" element of the ever-popular four-pronged definition of management, though again, the trend in recent years has been to integrate audits with the more pro-active elements. "Creative" accounting and auditing became popular in-words and rather than checking and inspecting, auditing could also facilitate change and influence strategy. Two articles stand out this week. The first, though of limited practical value to managers, is nevertheless an outstanding critique of decision making in the UN, and how developed nations interests were able to over-ride the interests of the more numerous developing nations. It should be one-nation one vote in the UN, but things are not as they seem...
International accounting regulation by the United Nations: a power perspective
This paper presents the results of a complex but challenging investigation into the global power play at the United Nations (UN) over the issue of international accounting regulation. It specifically attempts to explain why the host developing nations of most transnational corporations (TNCs), despite controlling a significant majority vote at the UN and thus possessing the necessary "political" power, conspicuously failed to impose their accounting disclosure agenda on the TNCs and on the (minority) developed nations. The political concept of power is used in examining the accounting standard setting process at the UN, in the context of regulatory reforms of the TNCs. While alternative models of power are considered, Robert Dahl's decision-oriented pluralistic model was adopted in the study because it proved to be the most consistent with the events, objectives and the empirical data presented. The research findings indicate that organized pressures from the TNCs, co-ordinated under the joint forum of the International Chamber of Commerce (ICC) and the International Organisation of Employers (IOE), coupled with the economic and diplomatic manoeuvring of the developed market economy nations, had succeeded in overriding the rule of "one-nation-one-vote" and securing a de facto veto over the majority view at the UN. The pioneering efforts of the UN in setting international reporting standards had been curbed and frustrated through the construction and use of such "veto" by the minority representation.Keywords: Accounting standards, International accounting, United Nations Article Type: Theoretical with application in practice Content Indicators: Research Implication- ***, Practice Implication- *, Originality- ***, Readability- ** The second stand-out article, not only because of it's topicality after last week's Malaysian elections, focuses on power-plays within the accounting profession in Malaysia, and how accepted professional standards are put at risk by the very profession that is expected to maintain them. A very timely wake-up call to not only Malaysia but their neighbours as well.
"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 Article Type: Case study Content Indicators: Research Implication- ***, Practice Implication- *, Originality- ***, Readability- ** Just a few other selections:
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 Article Type: Case study Content Indicators: Research Implication- *, Practice Implication- **, Originality- **, Readability- ** 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 well as the rationale for its controversy.Keywords: Corruption, Fraud, Internal control, Legislation, USA Article Type: Comparative/evaluators Content Indicators: Research Implication- **, Practice Implication- **, Originality- **, Readability- **
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 Article Type: Technical Content Indicators: Research Implication- **, Practice Implication- *, Originality- **, Readability- **
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 Article Type: Comparative/evaluators Content Indicators: Research Implication- ***, Practice Implication- **, Originality- **, Readability- *** 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 Article Type: Case study Content Indicators: Research Implication- *, Practice Implication- **, Originality- *, Readability- ** Fraud auditing
Rocco R. Vanasco
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 Article Type: Technical Content Indicators: Research Implication- *, Practice Implication- **, Originality- *, Readability- *
Inherent risk and indicative factors: senior auditors' perceptions
This paper examines the perceptions of senior auditors in large firms in Sydney, Kuala Lumpur and Auckland concerning the nature and assessment of the inherent risk in risk based auditing. The geographic dispersion of participants from internationally linked firms does not appear to result in any cultural and geographic effects. Assessment of inherent risk appears predominantly qualitative and is not necessarily linked to the comprehensive aggregation of risks typically presented in audit risk models. There is some blurring of control risk factors with inherent risk and one-third of participants assess inherent and control risk jointly. Risk factors appear to be grouped in importance in a manner that suggests different attitudes to management, system-oriented, environmental and oversight risks. The identification of four possible factors (internal risk, external risk, system risk and oversight threats) may provide a basis for further investigation of how auditors assess inherent risk. There is an apparent division between "internally" and "externally" sourced risk.Keywords: Assessment, Auditing profession, Auditors, Employee attitudes, Perception, Risk management Article Type: Survey, Literature review Content Indicators: Research Implication- ***, Practice Implication- **, Originality- **, Readability- ** Benchmarking - a comparison of internal audit in Australia, Malaysia and Hong Kong
Benchmarking is a continuous process of comparing and measuring an organization's business processes against those of business leaders anywhere in the world. Attempts to benchmark internal auditing in Australia, Malaysia and Hong Kong. Bases the analysis on surveys undertaken in all three countries. The surveys of both chief executives and internal audit managers establish benchmarks for international comparisons of internal audit practice. A number of issues were addressed by the surveys including attitudes and recognition, professionalism, role and scope, career opportunities, education and training and the future role of internal audit. The comparison provides useful insights into the internal audit profession in Australia, Malaysia and Hong Kong.Keywords: Australia, Benchmarking, Hong Kong, Internal audit, Malaysia Article Type: Survey Content Indicators: Research Implication- **, Practice Implication- *, Originality- **, Readability- * An overview of the experiences of Chinese industrialization strategies and development
Analyses China's experience in import substituting industrialization (ISI), the trend towards export-oriented industrialization (EOI) through expounding its economic performance and its policies from 1949 to 1995. Focuses on analysing the nature of two different development models: Mao's closed economy and Deng Xiao Ping's open-door economy during this period. Discusses whether it is ISI or EOI that leads to development and economic growth in China.Keywords: China, Economic growth, Foreign investment, International trade, Newly industrializing economies, Social market economy Article Type: Comparative/evaluators Content Indicators: Research Implication- *, Practice Implication- **, Originality- **, Readability- *** Management accounting in Singapore - well in place?
Reports the findings of a survey on management accounting practices in Singapore. Taking the form of a longitudinal study, finds in general that improvements have been made. However, Singapore's own companies continue to lag behind multinational companies.Keywords: Activity-based costing, Management accounting, Multinationals, Singapore, Small firms, Transfer pricing Article Type: Survey Content Indicators: Research Implication- **, Practice Implication- ***, Originality- ***, Readability- *** Internal auditing education: a comparison across countries
Society's recognition of the importance of internal auditing has increased in recent years. This has resulted in an increased recognition of the need for improving and formalizing the manner in which internal auditors are educated. Suggests some of the forces that have led to this increased awareness of the value of internal auditing and discusses historical changes in internal auditing education. Explores recent literature on the programmes of internal auditing education in several countries and how these programmes differ from institution to institution and from country to country.Keywords: Education, Internal control, Operational audit, Reports, Standards, Students Article Type: Comparative/evaluators Content Indicators: Research Implication- *, Practice Implication- *, Originality- *, Readability- * Due professional care of certified public accountants in the People's Republic of China
Believes that the rapid development of the market system in the People's Republic of China should encourage Chinese certified public accountants (CPAs) to examine themselves and recognize the importance of exercising due professional care, in order to develop in an international and healthy manner. Because the time of reconstructing the CPAs system in China is short, most attention is paid to how the CPAs profession can develop rapidly and to general professional management. However, the lack of consciousness of what "due care" is and what comprises the legal standards of due care contributes to confusion about its role. Feels that in order to promote the consciousness of audit liability, the law needs perfecting, and technical standards, audit theory, and court procedures need improvement before resolution of the auditors' liability issue can be achieved.Keywords: Accountants, Due diligence, Internal audit, Liability, People's Republic of China, Professionalism Article Type: Comparative/evaluators Content Indicators: Research Implication- *, Practice Implication- **, Originality- *, Readability- **
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 Article Type: Technical Content Indicators: Research Implication- **, Practice Implication- **, Originality- ***, Readability- ** 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 Article Type: Case study Content Indicators: Research Implication- **, Practice Implication- **, Originality- ***, Readability- ** 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 Article Type: Technical Content Indicators: Research Implication- **, Practice Implication- *, Originality- ***, Readability- ** A longitudinal study of corporate social reporting in Singapore: The case of the banking, food and beverages and hotel industries
This paper presents a longitudinal study of corporate social disclosures by publicly-listed Singapore-based companies in the banking, food and beverages, and hotel industries from 1986 to 1995. Annual reports of all the 33 companies in the three industries were examined and it was found that 16 of them did not have any social responsibility disclosures throughout the ten-year period. Sentence-by-sentence content analysis of the annual reports of the remaining 17 companies was then conducted. The companies mainly disclosed information on human resources and community involvement. Starting from a low level, there was a steady increase in the amount of social information presented in annual reports during the late 1980s. The amount of disclosures, however, has remained steady since 1993. The two tobacco companies in the sample did have significantly larger amounts of social information disclosed. This last result supports the arguments of legitimacy theory.Keywords: Annual reports, Company reports, Environmental audit, Social audit Article Type: Survey Content Indicators: Research Implication- ***, Practice Implication- *, Originality- **, Readability- *** Some determinants of social and environmental disclosures in New Zealand companies
Reports the results of a study on the social and environmental disclosure practices of New Zealand companies. In addition to providing an up-to-date description of such practices, and placing them in an international context, examines some potential determinants of these practices. Replicates and extends a recent US study (Patten, 1991). Makes improvements on Patten's study by measuring the amount of disclosure as a continuous variable using both page amount and the number of sentences. The results indicate both measures are highly correlated. Consistent with Patten (1991) and other studies, reports that both company size and industry are significantly associated with social and environmental disclosures, and that profitability (both current and lagged) is not. In addition to these variables, provides some tentative evidence that New Zealand companies with dual (overseas) stock exchange listings are greater disclosers of social and environmental information.Keywords: Disclosure, Environment, New Zealand, Profitability, Responsibility, Shareholders Article Type: Survey Content Indicators: Research Implication- ***, Practice Implication- *, Originality- **, Readability- *** As always we have only skimmed the surface of relevant articles this week and only those that are particularly relevant for Asia-Pacific managers. Many other articles are available as well including those focusing on other countries and international perspectives
|
|
| email updates | email this page | discuss | search | today's asian business strategy news | advertise | about |
| daily asian news, research & commentary for the international business strategy, market research & strategic management professional |