Articulation in Cash Flow Statements: A Resource for Financial Accounting Courses

Recent accounting research (Bahnson, P., Miller, P., & Budge, B. (1996). Nonarticulation in cash flow statements and implications for education, research and practice. Accounting Horizons, 10, 1–15 has shown that firms implementing the indirect method for reporting cash flows under SFAS 95 rarely produce financial statements that articulate cleanly. The purposes of this paper are (1) to provide financial accounting educators with a list of companies for which articulation does exist, (2) to describe the process by which educators can update the list in the future, or modify it to suit their own preferences, and (3) to present an analysis of firms’ reporting practices on the cash flow statement, which may be of interest to more advanced students studying the complexities of the statement of cash flows. This analysis of reporting practices involves an assessment of the articulation of individual COMPUSTAT line items (e.g. inventory) and subsets of line items (e.g. inventory, receivables, deferred taxes, and depreciation) for the 1998 data year. The findings indicate that relatively few firms report consistent values for single line items and that very few firms report consistent values across subsets of line items. Although the rate of articulation decreases as firm size, and hence reporting complexity, increases, 74 large, publicly-traded firms for which clean articulation does exist were identified. This list of firms should prove useful to introductory accounting educators who use real-world examples for classroom purposes

In Search of Authentic Peer Leaders: Finding, Nurturing, and Affirming

Luthans and Avolio (2003) have posited that we need methods to develop authentic leaders. One method is to form learning communities on college campuses. Within these communities, peer leaders influence the development of newly admitted peers. The question is: why do some students become peer leaders and others do not? We believe that the answer lies somewhere in their core values. By the time people enter college, they are predisposed to value certain end-states and modes of conduct. Therefore, it is important to determine these predispositions so that leadership development opportunities such as peer leadership can be made available to those who are ready for this type of development. However, at this point we do not know which core values make a difference. This gap in the knowledge is what led to this study. The findings identify the core values of both peer leaders and non-peer leaders. In most cases, these values are the same for both groups. However, the core value of a sense of accomplishment stands out as being significant in determining who will select this type of leadership development opportunity. The paper expands on how to find, nurture, and affirm these select students

An Australian response to recent developments in the market for audit services

Where the quality - both competence and independence - of an audit is tested, often in the circumstance of a corporate failure, auditors frequently have good defenses as to their competency but rarely do they have equally convincing defenses for the objectivity of their decision-making or the independence of their audit. It is recommended that large audit firms establish an independence board with the authority to define, review and decide upon all threats and potential threats to independence. It would also have responsibility for quality-control and educational programs in respect of audit firm\u27s independence decision-making. Firms would make transparent the processes of the boards, their membership and quality-control procedures. Firms would compete on their independence control processes and not just competence and price. Additionally, firms need to encourage a culture that rewards personnel for seeking counsel on issues pertinent to independence.<br /

The Determinants and Value Relevance of the Choice of Accounting for Research and Development Expenditures in the United Kingdom

This paper investigates the determinants and value relevance implications of the accounting method choice for development expenditures for firms with research and development (R&D) programs in the United Kingdom (UK). Using a sample of 3,229 UK firm-year observations over the period 1996-2004, I find that the decision to expense versus capitalize development expenditures is influenced by earnings variability, earnings sign, firm size, R&D intensity, leverage, steady-state status of the firm's R&D program, and R&D program success. Additional results indicate that there is little difference in value relevance between reported and adjusted numbers for both the Expensers and the Capitalizers. The evidence in this paper suggests that managers choose the 'correct' method for accounting for R&D in order to best communicate the private information which they hold. Copyright 2007 The Author Journal compilation (c) 2007 Blackwell Publishing Ltd.