Business Commons^™

User Information Risk: How It Improves Audit Quality, Jack R. Ethridge, Treba Marsh

Faculty Publications

Audited financial statements are the basis for the communication of essential financial information. Accordingly, the reliability of the financial statements is of extreme importance to all parties involved in the process. This paper identifies the three primary parties as the organization, the auditor, and the user and recommends the user play an increased role in this process. The user should be allowed to analyze the quality of the auditor and audit process based upon five critical factors that should be required to be disclosed by the auditor. This paper discusses the five factors and how each one could benefit the …

Survey Responses: Mail Versus Email Solicitations, Rodger G. Holland, Aileen Smith, James R. Hasselback, Bryson Payne

Faculty Publications

Surveys, particularly electronic surveys, are becoming popular methods of eliciting consumer responses. For example, many businesses now have survey sites printed on the bottom of receipts with some future discount as an enticement to participate. Clearly, the intent of such incentives is to stimulate participation. Surveys have also become popular in academia, but rarely are incentives offered. Clearly, those in academia also prefer a high participation rate, but without financial incentives what can be done to encourage participation? This research attempts to address that question.

Gasb Statement No. 31: Why No Controversy?, George L. Hunt

Faculty Publications

Fair value reporting of investments in the financial statements of commercial enterprises is required under FASB Statement No. 115. The standard created much controversy when issued due to provisions that changes in fair values of certain investments were recognized in the operating statement. A major concern to many organizations was the volatility these recognized, but unrealized, changes in fair value would create in reported earnings. When the GASB issued Statement No. 31 requiring fair value reporting of investments there was little controversy concerning volatility to reported earnings of governmental entities, even though the standard required much broader application of fair …

An Examination Of Accounting Majors' Ethical Decisions Before And After An Ethics Course Requirement, Violet Rogers, Aileen Smith

Faculty Publications

The increased focus on ethical decision making in the accounting profession has resulted in greater attention being paid to the education of future accountants. Texas is one of the states that requires a State Board approved university course in Accounting Ethics to be on the transcript of prospective CPA candidates. This study reports on research using senior/graduate level accounting majors at a Texas state university before the university course requirement and after the requirement. The survey presented four vignettes for the students to consider (i.e., 2 describe an ethical decision and 2 describe an unethical decision). Students were requested to …

Student Cheating Habits: A Predictor Of Workplace Deviance, Sharron M. Graves

Faculty Publications

Unethical behavior seems to be increasing exponentially in every facet of today's business environment. Property and production deviance are just two of the unethical behaviors exhibited by employees. According to a study conducted by S. Nonis and C. Swift (2001), students who engage in dishonest acts in college classes are more likely to engage in dishonest acts in the workplace. Research conducted during the three year period 2002 - 2005 by Don McCabe in conjunction with The Center for Academic Integrity at Duke University reveals that 70 percent of the 50,000 undergraduate students surveyed admit to some cheating (McCabe 2005). …

When Management Override Negates Common Sense, Kelly Noe, Violet Rogers

Faculty Publications

Write OK per big boss across the invoice and everything is fine! Or is it? This paper analyzes the human factor link related to the Debra Valice Case. The human factor is the weakest link of any internal control system. Understanding the human factors that cause people to not follow the rules, is key to strengthening this link. This research will utilize the human factors adapted from the Independence Education Program to analyze the DebraValice Case. Valice was responsible for ensuring a secure internal control system. The Chief Executive Officer was able to manipulate this system and unauthorized payments were …

Engagement Risk: Perceptions And Strategies From Audit Partners, Jack R. Ethridge, Treba Marsh, Bonnie Revelt

Faculty Publications

The audit function creates several important relationships among the various parties. One of the significant and potentially problematic relationships is between the audit firm and the audit client. The decision by the audit firm to accept or retain a client is crucial because of the potential risk of being associated with certain clients. The potential damage can range from financial loss and/or loss of prestige to the ultimate demise of the audit firm. Engagement risk is considered to be composed of three components: entity’s business risk, audit risk, and auditor’s business risk. This research questioned whether audit firms have significantly …

The Global Significance Of Locus Of Control In Ethical Decision Making: A Multi-Country Examination Of University Students, Aileen Smith, Evelyn C. Hume, Ray Zimmermann, Alan Davis

Faculty Publications

Locus of control (LOC) is a personality variable shown to possess potential explanatory power in the study of ethical decision making. There have been, however, diverse results reported in the literature. Whenever differences on this variable are indicated by the research, individuals with an Internal LOC report the more ethical responses. This study extends the examination of the global relevance of the LOC variable to ethical decision making of university students in thirteen universities from eight countries. Using an instrument designed to elicit responses to questionable academic behaviors, this research analyzes ethical responses of university students (n=2,420) to look for …

An Analysis Of The Readability Of The Md&As Of Small, Medium, & Large Revenue Generating Cities, Shannon Lutz, Treba Marsh, Lucille Montondon

Faculty Publications

Studies assessing the annual reports of publicly held corporations have shown mixed results in regard to the readability levels of those reports. Recently, the Governmental Accounting Standards Board adopted GASB 33, 34, and 35 in which specific guidelines are outlined for the reporting of governmental entities. Are the Comprehensive Annual Financial Reports (annual reports) of the governmental entities understandable to the average user?

This study argues that the Managements Discussion and Analysis, the summary portion of the governmental annual report, is not understandable to the average reader. The sample was equally divided among small, medium, and large revenue-generating cities that …

Present Net Worth And Internal Rate Of Return: A Note On Equivalence In Use, K. A. Blatner, Steven H. Bullard

Faculty Publications

Present net worth and internal rate of return are frequently used for ranking investment alternatives. The relative merits and limitations of the two criteria are discussed at length in numerous journal articles and texts. For analysts wishing to present consistent project comparisons, the issue is not which criterion is superior, but when are they equivalent. In this article, conditions for equivalence in use are outlined under alternative assumptions. Although the conditions appear complex, they are not unduly restrictive.