Accounting Commons^™

The Ethics Of Managing Short-Term Earnings: Business Managers And Business Students Rate Earnings Management Practices – Implications For Academia, Don E. Giacomino, Jodi L. Gissel, Michael D. Akers

Accounting Faculty Research and Publications

In 1990, Bruns and Merchant surveyed the readership of the Harvard Business Review (HBR). Their survey asked HBR readers to rate the acceptability of earnings management practices. Prior to that study, researchers and accounting practitioners paid little attention to the morality of short-term earnings management. However, in the wake of highly publicized financial frauds and failures, the profession and academic journals have emphasized the importance of the concepts of earnings quality and earnings management. The Bruns and Merchant survey provided 13 earnings management situations and asked the HBR readers to rate the acceptability of those practices. In this study, we …

What Is Fraud And Who Is Responsible?, Michael D. Akers, Jodi L. Gissel

Accounting Faculty Research and Publications

Research shows that fraudulent activity affecting the financial statements is more prevalent than ever despite the increased attention devoted to the prevention and detection of fraud by companies and professional accountants. Fraud is a critical issue for preparers and users of financial statements, as well as auditors. Each group’s association and involvement with the financial statements is from a slightly different perspective. Even though all individuals in the financial reporting process share the responsibility for the integrity of the financial statements, different perspectives of fraud can and do affect each group’s interpretation of fraudulent activity and responsibility for the prevention …

Real World Classroom, Michael D. Akers

Accounting Faculty Research and Publications

No abstract provided.

Fraud Requirements In Ssars 10, Michael D. Akers, Jodi L. Gissel

Accounting Faculty Research and Publications

With the issuance of Statement on Standards for Accounting and Review Services (SSARS) 10, Performance of Review Engagements, which is effective for review engagements for periods ending on or after Dec 15, 2004, the AICPA Accounting and Review Services Committee requires accountants performing review engagements to make inquiries regarding fraud. Furthermore, the management representation letter must address fraud. The authors reviewed the comment letters that the AICPA received in response to the exposure draft for SSARS 10 and conducted a survey of practitioners after the statement was issued. SSARS 10 amends SSARS 1, Compilation and Review of Financial Statements, primarily …

Weighing The Public Interest, Jodi L. Gissel, Don E. Giacomino, Michael D. Akers

Accounting Faculty Research and Publications

In 1981, the AICPA addressed the issue of going concern status through SAS 34, The Auditor's Considerations When a Question Arises About an Entity's Continued Existence. In 1988, the AICPA issued SAS 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern, which remains the authoritative guidance. To determine if additional guidance on the topic of going concern is provided by accounting organizations, the authors contacted the AICPA and the state CPA societies. The authors found that none of these organizations provide additional literature or guidance in this area. Several individuals have criticized the current literature …

Earnings Quality: It's Time To Measure And Report, Jodi L. Gissel, Don E. Giacomino, Michael D. Akers

Accounting Faculty Research and Publications

Earning's quality is an important aspect of evaluating an entity's financial health, yet investors, creditors, and other financial statement users often overlook it. Earnings quality refers to the ability of reported earnings to reflect the company's true earnings, as well as the usefulness of reported earnings to predict future earnings. The SEC and the investing public are demanding greater assurance about the quality of earnings. There is significant need for the development of a uniform definition and a consistent model to measure earnings quality. An Earnings Quality Assessment (EQA) is a proposed model that is consistent with this definition. The …

Cpas' Perceptions Of The Impact Of Sas 99, Donald C. Marczewski, Michael D. Akers

Accounting Faculty Research and Publications

In November 2002, the Auditing Standards Board (ASB) issued Statement on Auditing Standard 99, Consideration of Fraud in a Financial Statement Audit. Although SAS 99 was developed before the recent accounting scandals, its release came in their wake. The ASB crafted SAS 99 in response to perceived inadequacies in its predecessor, SAS 82. A questionnaire was sent to a random sample of 300 Wisconsin CPAs selected from the membership of the Wisconsin Institute of CPAs, which included 150 partners and 150 managers from Wisconsin public accounting firms. The response rate was 35%, with an almost equal balance of partners and …

Seek Ways To Minimize The Mushrooming Alternative Minimum Tax, James Trebby, George Kutner

Accounting Faculty Research and Publications

The alternative minimum tax (AMT) is reaching a broader segment of individuals. Yet, many of these taxpayers are not aware of the implications of this tax. Even worse, some of their tax advisors are not as informed as they should be. By identifying items that trigger the individual AMT, taxpayers and their advisors have greater opportunities to develop strategies to avoid the special tax. The AMT is essentially a parallel tax system that involves a separate tax calculation from the regular income tax. The AMT calculation is then compared to the income tax figured under the normal manner. The taxpayer …

Internal Audit, Sarbanes-Oxley And Athletic Departments: An Examination And Recommendations For Reform, Michael D. Akers, Gregory Naples

Accounting Faculty Research and Publications

During the past fifteen to twenty years the integrity of intercollegiate athletics has been seriously questioned as a result of an increased awareness of problems associated with institutional controls over athletic departments. Limited empirical evidence has been used in the debate regarding institutional controls pertaining to the athletic department. This paper provides empirical evidence regarding the use of the internal audit function as an institutional control. Our findings indicate that while the internal audits of athletic departments are adequate, the communication of these audit results is inadequate. We also discuss the applicability of recent legislation, Sarbanes-Oxley Act of 2002, to …

Career Rebound, Michael D. Akers

Accounting Faculty Research and Publications

No abstract provided.

Interviewing The Client, Michael D. Akers, Robert Yahr

Accounting Faculty Research and Publications

This paper examines an assignment where students taking either an introductory auditing students or an accounting communications course interview a client to gain an understanding of internal control and the interview process. Students document the results of the interview in a memorandum. The paper provides detailed information regarding the design and implementation of a portion of the internal control system. The three main objectives of the assignment are 1) to provide students with the opportunity to demonstrate, develop, and enhance their communication skills; 2) to convey a realistic picture of the accounting environment; and 3) to familiarize students with a …

Graduate Student Audit Project, Michael D. Akers, Jodi L. Gissel

Accounting Faculty Research and Publications

This paper discusses Marquette University’s graduate student audit project, designed to enhance student learning and retention of auditing procedures and concepts learned in the classroom.

The Application Of Sarbanes-Oxley To Intercollegiate Athletics, Gregory Naples, Michael D. Akers

Accounting Faculty Research and Publications

No abstract provided.

Local Government Reporting Under Gasb 34, Robert Yahr, Don Rahn

Accounting Faculty Research and Publications

No abstract provided.

Measuring And Changing The Values Of Accounting Students, Michael D. Akers, Tim V. Eaton, Don E. Giacomino

Accounting Faculty Research and Publications

Although prior research has consistently shown that personal values influence behavior, limited research and curricular activity have been conducted with respect to the role of personal values in accounting. This purpose of this paper is to propose a methodology that accounting programs can use to measure the personal values of students. Specifically, we examine the Muser and Orke Typology for measuring personal values. Using students from a comprehensive, private university in the Midwest, we discuss the administration of the instrument and the evaluation of the results. The paper concludes with a detailed description of how accounting programs can apply this …

Boards Of Advisors In Small Businesses: An Empirical Profile Of Their Composition And Use, Michael D. Akers, Don E. Giacomino

Accounting Faculty Research and Publications

This article discusses the literature coverage on Boards of Advisors to date and provides the results of a study designed to determine the formation and composition of Boards of Advisors and the ways in which small businesses use such boards. Our study surveyed the Chief Executive Officers or Presidents of a large sample of small businesses. We found that there is very limited use of Boards of Advisors in small businesses and that many small business managers are not aware of the concept of a Board of Advisors. However, those small business managers (97%) that use a Board of Advisors …

Going-Concern Opinions: Broadening The Expectations Gap, Michael D. Akers, Meredith A. Maher, Don E. Giacomino

Accounting Faculty Research and Publications

A rash of high-profile bankruptcies has led to a search for answers. Many hold auditors responsible for not detecting the potential for bankruptcy during the most recent audit. The Weiss Report, a study of several dozen bankrupt companies submitted to the U.S. Senate during its deliberations on the Sarbanes-Oxley Act, found a "broad and massive failure" on the part of auditors to raise "yellow flags" that indicate potential bankruptcy. The authors examined Weiss' methodology and found that, applied to a broader group of companies, Weiss' criteria would have incorrectly predicted bankruptcy for nearly half of the non-bankrupt companies studied. This …

Internal Auditor Participation In Systems Development Projects, Meredith Maher, Michael D. Akers

Accounting Faculty Research and Publications

There are differing viewpoints in the internal auditing literature regarding the role of internal audit in systems development projects. One argument is that internal audit should act as consultants for such projects. A counter argument is that if internal auditors act as consultants this could impair in dependence. This study surveyed chief audit executives to determine their perceptions of the role of internal audit in systems development projects as well as the actual involvement of their departments in such projects. The findings show that chief audit executives place more importance on internal audit acting as consultants and less importance on …

Underreporting Of Chargeable Time: The Impact Of Gender And Characteristics Of Underreporters, Michael D. Akers, Tim V. Eaton

Accounting Faculty Research and Publications

No abstract provided.

Your Eq Skills: Got What It Takes?, Michael D. Akers, Grover L. Porter

Accounting Faculty Research and Publications

Your EQ skills: got what it takes? So you thought the CPA exam was your last test? Read on.

Question: Is success in life and career determined primarily by rational intelligence (the IQ or intelligence quotient) or emotional intelligence (the EQ or emotional quotient)? In other words, what's more important: intelligence or intuition? Historically the professional accounting literature has placed little emphasis on behavioral issues such as EQ, although human behavior underlies most of what is written and taught about professional accounting. Now managers place increased value on behavioral skills that help people in the workplace. Look at this statistic: …

An Empirical Examination Of The Usefulness Of The Motley Fool's "Flow Ratio", Don E. Giacomino, Michael D. Akers

Accounting Faculty Research and Publications

An item in the Motley Fool recently caught our attention. The article “Cisco vs. Lucent: The Flow Ratio Tells All” (by Matt Richey, June 6, 2000, in The Motley Fool.fool.com), introduced a new ratio that Richey claimed to be useful for measuring the investment worthiness of a company. Since our Financial Statement Analysis course covers traditional ratio analysis and since we were exploring some research ideas on measuring liquidity, the Fool Ratio seemed worthy of investigation

Using Benford's Law To Detect Fraud In The Insurance Industry, Meredith Maher, Michael D. Akers

Accounting Faculty Research and Publications

Benford's Law is the mathematical phenomena that states that the first digits or left most digits in a list of numbers will occur with an expected logarithmic frequency. While this method has been used in industries such as oil and gas and manufacturing to identify fraudulent activity, it has not been applied to the health insurance industry. Since health insurance companies process a large number of claims each year and these claims are susceptible to fraud, the use of this method in this industry is appropriate. This paper examines the application of Benford's Law to four health insurance companies located …

Investment Performance Comparison Between Roth And Traditional Individual Retirement Accounts, George Kutner, Lloyd Doney, James Trebby

Accounting Faculty Research and Publications

With the recent introduction of the Roth Individual Retirement Account (IRA) along with a significantly improved Traditional IRA, there has been considerable interest in comparing the performance of these investment vehicles. Some confusion regarding these comparisons has evolved. In this paper we show that this confusion may be attributed to scale and tax differences between the two investment vehicles. We adjust for these differences by focusing on the after-tax rate-of-return on investment for each IRA vehicle. We find that performance depends crucially on the relationship between an individual's tax rates at the time of investment and at the time of …

Ethics And The Accountants’ Code Of Conduct, Michael D. Akers, Don E. Giacomino

Accounting Faculty Research and Publications

Although the AICPA has established the Professional Code of Conduct to deal with the behavior of CPAs, research has also shown that an individual's behavior is affected by his or her personal values. While there has been considerable research of the ethical behavior of business professionals and business students, there has been limited research of the personal values of public accountants. This study was designed to examine the values and value types underlie the ethics of Big Six public accountants. A survey instrument, consisting of 56 values, developed and validated by Schwartz was administered to audit and tax professionals at …

Personal Values Of Japanese Business Managers, Don E. Giacomino, Michael D. Akers, Atsushi Fujita

Accounting Faculty Research and Publications

Researchers have spent many years examining the Japanese business culture, but there is limited empirical evidence about the personal values of Japanese business managers. The research of these authors confirms some previous conclusions, but also might detect new attitudes in Japan at the dawn of the 21st century.

An Examination Of Management Accountants’ Use And Perception Of Expert Systems, Michael D. Akers, Robert E. Jordan, Grover L. Porter

Accounting Faculty Research and Publications

Although there has been a number of articles written about the possible use of expert systems by management accountants, there has been limited research to support such predictions. The primary purposes of this paper are to examine management accoun-tants’ use and perceptions of expert systems. A survey instrument was designed to eli-cit responses (Likert scale and open-ended) about management accountants' perceptions of the current and future use of expert systems and to determine their knowledge, interest and involvement with such systems. The findings of this study indicate that although respondents are moderately interested and involved with expert systems, they have …

Underreporting Chargeable Time: A Continuing Problem For Public Accounting Firms, Michael D. Akers, Charles T. Horngren, Tim V. Eaton

Accounting Faculty Research and Publications

Prior research shows that underreporting chargeable time has been a concern for public accounting firms even though many of these firms have policies and procedures that prohibit "eating" time. The purpose of this study is to examine the current state of this problem and to provide recommendations to manage the problem more effectively. Practicing public accountants at all professional levels were surveyed to determine the extent, opportunity, ethical perception and perceived benefits of underreporting time. The results show that although the majority of the respondents believe underreporting time is unethical, the majority of them did not report all of their …

A Comparison Of Information Systems Coverage In The Cpa, Cia And Cma Examinations For The Period 1987-1991, Michael D. Akers, Lloyd D. Doney

Accounting Faculty Research and Publications

In recent years, three major accounting professional organizations, the American Institute of Certified Public Accountants (AICPA), Institute of Management Accountants (IMA) and Internal Auditors Institute (IIA) have considered and issued statements on the body of knowledge deemed necessary for practice as a Certified Public Accountant, Certified Management Accountant and Certified Internal Auditor. In each instance, knowledge and skills in information systems technology were included. This is not surprising, in view of the fact that changes in technology have dramatically altered the way in which accounting data is gathered, processed, stored, accessed and reported.

Each of these professional organizations also requires …

Information Systems Content In The Cma Examination, Michael D. Akers, Lloyd Doney

Accounting Faculty Research and Publications

This study examines 12 recent CMA exams administered from June 1987 through December 1992 to determine the extent of information systems (IS) coverage. We evaluated each exam using a definition of IS knowledge and skills from the common body of knowledge developed by the Institute of Management Accountants (IMA). The results of the study indicate that the IMA has recognized the importance of IS knowledge, as evidenced by the extent of exam coverage and the relevance of the items tested. Because information systems courses are included in a model curriculum recommended by the IMA, the results of this study may …

Strategic Planning At Five World-Class Companies, Michael D. Akers, Grover L. Porter

Accounting Faculty Research and Publications

Most successful executives know that strategic planning offers the best way to deal with their changing world. Information is central to successful strategic planning. A field study of 5 world-class companies revealed details regarding information used for strategic planning and the role of management accountants in this process. Key executives were interviewed at: 1. Johnson Controls, 2. Coors Brewing Co., 3. Schering-Plough, 4. Xerox, and 5. 3M Company. The executives were interviewed to find out how their companies did strategic planning. Issues addressed included the distinction between strategic and long-range planning, the strategic planning process, information used for strategic planning, …