Business Commons^™

Impact Of Assurance Level And Tax Status On The Tendency Of Relatively Small Manufacturers To Manage Production And Earnings, Benjamin P. Foster, John M. Mueller, Trimbak Shastri

Faculty Scholarship

The number and importance of private companies in the United States indicates that reliable quality of financial accounting reports (QFAR) of private companies that are useful for decision making is likely to be important for economic growth. Most previous research examining QFAR addressed earnings management among publicly-traded companies. This study extends prior literature by examining whether abnormal production of public and private companies is impacted by (i) assurance type (PCAOB-audit, GAAS-audit, and SSARS-Review), (ii) tax status (separately taxed versus pass-through entity) of private companies, and (iii) relative size. An audit of financial statements provides a high degree of assurance, whereas …

Impact Of Non-Audit Assurance Level (Compilation Versus Review) On Production Management Of Private Manufacturing Companies, Benjamin P. Foster

Faculty Scholarship

Private small companies have been the subject of much interest by accounting regulators recently. The AICPA issued SSARS 19 and the Financial Reporting Framework for Small- and Medium-Sized Entities in 2009 and 2013, respectively. The Financial Accounting Foundation issued the Blue Ribbon Panel Report on Standard Setting for Private Companies in 2011. This is apparently the first study to compare reporting practices of small private companies whose financial statements are compiled or reviewed.

Overall results indicate that reviewed companies tend to exhibit positive abnormal production while compiled companies tend to exhibit negative abnormal production. However, for the companies most likely …

The Auditor’S Report On Internal Control & Fraud Detection Responsibility: A Comparison Of French And U.S. Users’ Perceptions, Benjamin P. Foster, Guy M. Mcclain, Trimbak Shastri

Faculty Scholarship

The AICPA recently finished a harmonization project to converge U.S. audit standards with those of the International Audit and Assurance Standards Board. The assumption implicit in this project is that users of financial statements will benefit from a converged, or consistent set of audit standards. Additionally, the AICPA’s clarified auditing standard AU-C700, Audit Conclusions and Reporting, now requires explicit acknowledgement of the auditor’s responsibility for fraud procedures in the auditor’s report, which is the focus of advisory committees in both the U.S. Department of Treasury and the European Commission. Therefore, the purpose of this study is to investigate how users …

Tackling "Arithmophobia": Teaching How To Read, Understand, And Analyze Financial Statements, Paula J. Williams, Kris Anne Tobin, Eric Franklin, Robert J. Rhee

Faculty Scholarship

This discussion presents different ideas on how to teach accounting and practical finance to law students.

Material Internal Control Weaknesses And Earnings Management In The Post-Sox Environment, Benjamin P. Foster, Trimbak Shastri

Faculty Scholarship

Prior studies found that companies with internal control deficiencies incorporate abnormal accounting accruals into their financial statements. However, these studies did not consider the materiality of abnormal accruals. Abnormal accruals should be within materiality when financial statements receive clean audit opinions. When material internal control weaknesses (MICW) exist, to compensate for additional risk, auditors should apply more audit effort to gain the quantity and quality of evidence necessary to obtain a reasonable degree of assurance to support their audit reports. We find evidence of this because audit fees are significantly higher for MICW companies than those for effective internal controls …

Are Auditors' Going-Concern Evaluations More Useful After Sox?, Benjamin P. Foster, Terry J. Ward

Faculty Scholarship

Bankruptcy risk is a crucial factor in auditors’ decisions whether or not to modify their audit opinion based on the going-concern assumption. SOX required more extensive audit procedures than those required before its passage. More extensive audit procedures should result in more meaningful audit reports. This study examines whether the auditors’ going-concern opinion provides more useful incremental information after SOX than before SOX in distinguishing between distressed companies that become bankrupt in the next year and those that do not. We find that an audit opinion variable adds more useful information to bankruptcy prediction models after SOX than before SOX. …

Mentoring, Career Plateau Tendencies, Turnover Intentions And Implications For Narrowing Pay And Position Gaps Due To Gender Structural Equations Modeling, Benjamin P. Foster, Subhash Lonial, Trimbak Shastri

Faculty Scholarship

This study analyzed responses to career-related questions from a survey of experienced Canadian Certified Management Accountants (CMAs), relative experts in the field of management accounting, to address how mentoring affects turnover intentions and career plateau tendency of male and female accounting professionals in industry. In this regard, we used structural equations modeling to build and test a framework illustrating the impact of mentoring and career-related factors. Results indicate that fostering a mentoring environment within an organization can strengthen CMAs perceptions of their careers and employers. Mentoring has also been suggested to enhance womens opportunities to advance in organizations and help …

Could Decision Trees Help Improve Farm Service Agency Lending Decisions?, Benjamin P. Foster, Jozef Zurada, Douglas K. Barney

Faculty Scholarship

This study examines whether a statistically derived decision tree could serve as a means to improve U.S.A. Farm Service Agency lending decisions. The study is a substantial extension and reanalysis of an earlier work by Barney, Graves and Johnson, (1999). Results indicate that a decision tree could be a valuable tool for Farm Service Agency employees in their lending decisions. The decision tree provides as good or better predictive accuracy than neural networks and logistic regression models at reasonable cutoff levels of Type II to Type I costs of lending. The decision tree also meets the transparency criteria for Farm …

A Research Note On The Issue Of Non-Articulation And The Method Used To Calculate Net Operating Cash Flow, Terry J. Ward, Jon Woodruff, Benjamin P. Foster

Faculty Scholarship

Using a proxy for nonarticulation, prior researchers found evidence that many companies using the indirect method of reporting net cash flow from operations have a significant level of nonarticulation. The purpose of this study is to determine if companies using the direct method of reporting net cash flow from operations experience significantly lower levels of nonarticulation than companies that use the indirect method of reporting net cash flow from operations. Results show that companies using the direct method have significantly less nonarticulation than companies using the indirect method. This finding suggests that the Financial Accounting Standards Board (FASB) should consider …

Reassessing Accounting Faculty Scholarly Expectations: Journal Classification By Author Affiliation, Alan N. Attaway, Sidney J. Baxendale, Benjamin P. Foster, Julia N. Karcher

Faculty Scholarship

An extensive literature exists that determines accounting journal rankings and top research producers both individually and by program. While this research stream provides valuable insights to the Association to Advance Collegiate Schools of Business International (AACSB) accredited programs and to programs working to achieve such accreditation, it frequently is based on quality perceptions or considers top-rated programs only. This study extends previous research by reviewing authorship by faculty at a wider range of institutions. The results of this study suggest that lists based on the “top” journals may be unrealistic for many institutions. The information provided in this manuscript should …

Introduction, Joseph R. Grodin

Faculty Scholarship

No abstract provided.