Showing papers in "Australian Accounting Review in 1995"
TL;DR: This article showed that it is not technically proper to recognise cultural, heritage and scientific collections as assets for financial reporting purposes, and that museums in the US, European Union (including the UK) and Canada do not report their collections to the International Accounting Standards Board.
Abstract: That museum and like collections have cultural, heritage, scientific and educational values is widely appreciated. However, accounting standard setters in Australia and New Zealand have recently advocated that public arts institutions bring their collections to account as assets for financial reporting purposes. There are no similar requirements in the US, European Union (including the UK) and Canada; nor has the International Accounting Standards Board made such a recommendation. From surveys of current accounting practices, it is apparent that, by and large, arts institutions in the English-speaking world do not report their collections for financial reporting purposes. This paper demonstrates that it is not technically proper to recognise cultural, heritage and scientific collections as assets for financial reporting purposes.
137 citations
TL;DR: In this paper, the authors test the relation between five firm-specific variables drawn from agency theory and the general level of financial information voluntarily disclosed by companies listed on the Australian Stock Exchange.
Abstract: As Australia becomes an increasingly important equity market, the level of information disclosed by Australian listed companies is likely to be of interest to a growing audience of prospective investors. This study tests the relation between five firm-specific variables drawn from agency theory and the general level of financial information voluntarily disclosed by companies listed on the Australian Stock Exchange. The five variables are foreign listing status, firm size; leverage, assets-in-place and type of audit firm. The empirical evidence suggests that foreign listing status, firm size, and type of audit firm are significantly related to the level of information voluntarily disclosed by listed companies.
57 citations
TL;DR: In this article, the authors provide a review of capital markets research relevant to the goodwill accounting debate and conclude that the reported goodwill asset under United States GAAP is associated with share values, but there is no clear evidence of a similar association for goodwill amortisation.
Abstract: This paper provides a review of capital markets research relevant to the goodwill accounting debate. Results indicate that the reported goodwill asset under United States GAAP is associated with share values, but there is no clear evidence of a similar association for goodwill amortisation. Similarly, there is no clear evidence of a competitive disadvantage associated with the requirement to amortise goodwill.
26 citations
TL;DR: The time-bomb of goodwill accounting exploded in 1994 as the Australian Securities Commission sought to enforce compliance with Accounting Standard AASB 1013, which was attacked for its prescriptive interpretation of the amortisation requirement in the standard.
Abstract: The time-bomb of goodwill accounting exploded in 1994 as the Australian Securities Commission sought to enforce compliance with Accounting Standard AASB 1013. The commission was attacked for its prescriptive interpretation of the amortisation requirement in the standard. Further, a campaign was waged to have the Australian Accounting Standards Board re-examine the wider question of mandatory amortisation, which was alleged to be a nonsensical rule damaging to the international competitiveness of Australian business. However, the campaign clashed with a growing Australian commitment to the internationalisation ofaccounting standards, because the Australian goodwill standard is harmonised to its international counterpart, IAS 22. Those of some major countries are not.
19 citations
TL;DR: In this article, the authors consider the connection between the old NCSC Class Order Deed of Indemnity and the newer AS C DEED of Cross Guarantee and provide preliminary evidence on the incidence of the new DEG relative to its predecessor.
Abstract: Deregulation of Australia's commercial trading environment during the 1980s spawned two major financial instruments for company groups: negative pledge and class order deed of cross guarantee. Both instruments were premised on the pari passu or creditor equality principle. If is informative for the future analysis of those financial instruments to consider their background, their commercial features and interconnections. Also, it is crucial to consider the connection between the old NCSC Class Order Deed of Indemnity and the newer AS C Deed of Cross Guarantee. This article provides preliminary evidence on the incidence of the new deed relative to its predecessor. It also considers the costs and benefits of the Deed of Cross Guarantee, including the illusory nature of the quid pro quo protections provided to creditors in return for allowing “closed-group” companies to gain accounting and auditing relief from statutory reporting requirements.
11 citations
TL;DR: In this paper, the authors address the question of whether the reverse sum-of-the-years-digits (ISOYD) method is an acceptable basis for goodwill amortisation.
Abstract: Recently there has been controversy surrounding accounting for goodwill. One question has been whether the inverse (or reverse) sum-of-the-years'-digits (ISOYD) method is an acceptable basis for goodwill amortisation. This note addresses that question.
9 citations
TL;DR: In Australia a system of co-regulation has evolved, based on collaboration between the federal government and its agencies and the accounting profession as mentioned in this paper, which has unique as well as derivative features.
Abstract: Credible financial reporting is hard to achieve without an accounting regulatory system. In Australia a system of co-regulation has evolved, based on collaboration between the federal government and its agencies and the accounting profession. Compared with overseas systems, the Australian approach to regulation has unique as well as derivative features. Is the system working effectively for the delivery of dependable, internationally comparable financial reports that make reporting entities transparent and enhance investor confidence?
9 citations
TL;DR: In this paper, an analysis of write-down practices of 75 Australian companies before and after the AASB 1010 amendments were operative suggests that the commentators' judgment could have been hasty.
Abstract: Commentators in the financial press claimed that the amendments to AASB 1010, Accounting for the Revaluation of Non-Current Assets, issued in September 1991, would have “disastrous” implications for the accounts of companies. This paper is concerned with whether the amendments did indeed affect asset write-down activities. An analysis of write-down practices of 75 Australian companies before and after the amendments were operative suggests that the commentators' judgment could have been hasty.
8 citations
TL;DR: In this article, the authors examined the incidence of going-concern audit qualifications and corporate failure for Australian publicly listed companies over the period 1980-90 and examined the differences between the indicators noted for failed companies that had their last accounts qualified on the basis of going concern, and those of failed companies not qualified.
Abstract: This study examines the incidence of going-concern audit qualifications and of corporate failure for Australian publicly listed companies over the period 1980-90. The analysis includes a review of annual reports for companies that attracted going-concern qualifications but did not subsequently fail, in order to identify potential indicators of survival. The differences between the indicators noted for failed companies that had their last accounts qualified on the basis of going concern, and those of failed companies not qualified, was also examined. Other issues of interest include a comparison of going-concern qualifications by Big Eight (Six) and other audit firms, and the extent and location of disclosure of going-concern problems in the annual report.
5 citations
TL;DR: The teaching of management accounting at tertiary institutions drew criticism in the mid-to-late 1980s on the grounds that course content and teaching methods were not keeping pace with changes in manufacturing technologies and the business environment as discussed by the authors.
Abstract: The teaching of management accounting at tertiary institutions drew criticism in the mid-to-late 1980s on the grounds that course content and teaching methods were not keeping pace with changes in manufacturing technologies and the business environment. A study of management accounting programs in 30 Australian universities shows that the criticisms are largely being addressed, with most programs being well up-to-date in their coverage of many of the new topics and practices that have emerged in management accounting in recent years. Nonetheless, management accounting educators continue to see a number of constraints on effective teaching in this area.
4 citations
TL;DR: The evolution of the accounting standard-setting process in Australia will bring further significant changes as we move to introduce major features of the structures existing in the United States and the United Kingdom as mentioned in this paper.
Abstract: The evolution of the accounting standard-setting process in Australia will bring further significant changes as we move to introduce major features of the structures existing in the United States and the United Kingdom. Those features include an independent standard-setting body, full-time board members and broad-based funding of the process. Similar structural changes can be expected in other countries which have well developed standard-setting activities, and ultimately at the level of the International Accounting Standards Committee. These changes will result from the increasing demands on the standard-setting process and the increasing accountability required by those affected by the output of the process.
TL;DR: In this article, the authors provided the Australian evidence on two issues: the statistical relationship between half-yearly accounting income numbers such as earnings per share, net profit and sales; and the ability of statistical models to predict these numbers.
Abstract: Prediction of half-yearly accounting income numbers has an important role in investment analysis, credit ratings, budgeting, auditing and other areas of the accounting and finance profession. This study provides the Australian evidence on two issues: the statistical relationship between half-yearly accounting income numbers such as earnings per share, net profit and sales; and the ability of statistical models to predict these numbers. The study finds that the best way to predict the next period's half-yearly accounting income numbers is to use the immediately preceding half-yearly income number, and for inflation-adjusted sales the corresponding previous half-yearly figures, or to use a statistical model based on the immediately preceding half-yearly figure adjusted by a statistically based “smoothing constant”.
TL;DR: The AUP 24 audit risk model defines audit risk implicitly as the joint probability of three independent events: a material error occurring in an account balance; the error not being corrected by internal controls; and the uncorrected balance being accepted by the auditor.
Abstract: The AUP 24 audit risk model defines audit risk implicitly as the joint probability of three independent events: a material error occurring in an account balance; the error not being corrected by internal controls; and the uncorrected balance being accepted by the auditor. A more apposite risk measure, relating to these same possible events, is the conditional probability of a material error, given that the stated balance has been subject to internal control procedures and accepted by the auditor. Calculation of the conditional risk measure requires consideration of both the type I (alpha) and type II (beta) error probabilities of the auditor's substantive test procedure. Unless both are taken into account, it is not possible to interpret a test result in terms of the probability of the stated account balance being materially correct.