Accounting Commons^™

Pro Forma Earnings: Distinguishing The Good From The Bad, Samuel Mautz, Dr. Ted Christensen

Journal of Undergraduate Research

The financial press has reported considerable disagreement during the past several years about the proliferation of non-standard profitability measures, generally known as ‘pro forma’ earnings. Pro forma earnings are normally defined as standard earnings adjusted for items that managers deem to be ‘one-time’ in nature or non-representative of future earnings (Weil, 2001) and are reported in the same earnings press release with the audited income number calculated according to generally accepted accounting principles (GAAP).

Comparison Of Earnings Adjustments Made By Management And Financial Analysts, Dirk Black, Dr. Ted Christensen

Journal of Undergraduate Research

Pro forma reporting has received significant attention from managers, regulators, and researchers in recent years. Pro forma reporting occurs when managers adjust earnings for certain “one-time” items allegedly to present earnings that are more representative of the “core” operations of their firms. In addition, analysts make adjustments to reported earnings to arrive at earnings per share estimates. Prior research has examined various aspects of pro forma reporting. Bhattacharya, et al., 2006 and Frederickson and Miller, 2004 find that investment decisions of ordinary, retail investors are affected by pro forma earnings while those of professional investors are not. Different proxies exist …

Proposed Definition Of Those Charged With Governance, September 10, 2013, Comments Are Requested By November 10, 2013; Exposure Draft (American Institute Of Certified Public Accountants), 2013 September 10, American Institute Of Certified Public Accountants. Professional Ethics Executive Committee

Exposure Drafts, Comment Letters, and Statements of Position

No abstract provided.

Predicting Managers’ Propensity To Issue Earnings Forecasts, Bryan Garden, Dr. Ted Christensen

Journal of Undergraduate Research

In addition to mandatory disclosures such as SEC filings, managers have the option of disclosing information voluntarily to the public. Press releases and conference calls are two ways managers often reveal information to the market, and one of the most important disclosures made through these venues is the forecast of future earnings. Prior research has found that investors rely on information received from management earnings forecasts (MEFs). Since managers are involved in the day-to-day activities of their companies, they have access to important “insider information.” As a result, investors rely heavily on this information in forming expectations about the company. …

Letter From Jeffrey A. Porter, Cpa, Chair, Aicpa Tax Executive Committee, To Tom Udall, Chairman, And Mike Johanns, Ranking Member, Senate Appropriations Subcommittee On Financial Services And General Government; Ander Crenshaw, Chairman, And Jose Serrano, Ranking Member, House Appropriations Subcommittee On Financial Services And General Government, Re: Irs Fiscal Year 2014 Budget., Jeffrey A. Porter, American Institute Of Certified Public Accountants. Tax Executive Committee

Association Sections, Divisions, Boards, Teams

No abstract provided.

Comparison Of Companies Issuing Pro-Forma Earnings And Restatements, Robert Jenson, Dr. Ted Christensen

Journal of Undergraduate Research

In recent years, companies have increasingly released financial performance numbers in addition to those required under generally accepted accounting principles (“GAAP”). These adjusted, or pro-forma earnings, have been a way for management to report earnings without extraordinary, one-time, or other items. Previous research suggests that management may use these pro-forma numbers to meet benchmarks such as analysts’ expectations when GAAP measurements fall short of these expectations.1 In addition, there are companies which – due to misstatements resulting from accounting errors or even fraud – are required to restate their earnings. These companies may have reported inflated earnings to reach benchmarks, …

What Makes An Accountant? A Longitudinal Study Of Students Entering The Profession, Kari Joseph Olsen, Dr. Monte Swain

Journal of Undergraduate Research

The goal of our project is to improve accounting education and career advisement for students. Our project has its roots in the growing demand in the accounting profession for people with dynamic analytical and interpersonal skills. We believe that through improved accounting courses and career advisement, BYU students in particular, will be better prepared to be successful in their chosen careers.

Should Religious Organizations Worry About Irs Audits?, Sarah J. Webber, Janet S. Greenlee

Accounting Faculty Publications

A great deal of media attention has focused on recent perceived financial abuses of churches and religious organizations. Cases of fraud within religious organizations have fueled the public perception that churches require some form of monitoring to prevent financial abuse. However, the IRS has limited authority to audit religious organizations under section 7611, and the results of such audits are generally unavailable to the public.

Through a Freedom of Information Act request, we obtained the outcomes of all section 7611 IRS audits of religious organizations conducted between 2001 and 2010. We found that although the number of both churches and …

Education Par Excellence: Developing Personal Competencies And Character Through Philanthropy-Based Education, Shirine L. Mafi, Marsha Huber

Business, Accounting and Economics Faculty Scholarship

This teaching note presents an innovation in accounting education called the Philanthropy Project. The Philanthropy Project emphasizes experiential learning and is designed to promote the learning of discipline-specific concepts while simultaneously addressing the social needs of the surrounding community. In the Philanthropy Project, students receive money to distribute to not-for-profit organizations (NFPs) based on a competitive proposal process they help to develop and administer. A distinguishing characteristic of this project is that it is not a simulation. Students make real decisions that have immediate consequences to certain groups of people in their own communities. They have to make …

Family Ownership And Ceo Turnovers, Xia Chen, Qiang Cheng, Zhonglan Dai

Research Collection School Of Accountancy

This paper investigates the impact of the founding family’s presence on CEO turnover decisions. We find that family firms managed by CEOs outside the founding family (i.e., professional CEO family firms) have higher CEO turnover-performance sensitivity than family firms managed by family members (i.e., family CEO firms) or non-family firms. These results are robust to alternative performance measures and CEO turnover definitions. Additional analyses indicate that higher family ownership leads to even higher (lower) turnover-performance sensitivity in professional CEO family firms (family CEO firms). These results indicate that, with regard to CEO turnover decisions, better monitoring of CEOs by family …

60% Cash Payout Or 400% Pic Claim? Which Is Better? (Part 1), Clement Kai Guan Tan, Teng Aun Khoo

Research Collection School Of Accountancy

How to decide whether to choose cash payout or PIC 400% claim

Health Care Entities, September 1, 2013; Audit & Accounting Guide, American Institute Of Certified Public Accountants (Aicpa)

Industry Guides (AAGs), Risk Alerts, and Checklists

No abstract provided.

Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue

Research Collection School Of Accountancy

Managers have great discretion in determining forecast characteristics, butlittle is known about how managerial incentives affect these characteristics. This paperexamines whether managers strategically choose forecast precision for self-servingpurposes. Building on the prior finding that the market reaction to vague forecasts isweaker than its reaction to precise forecasts, we find that for management forecastsdisclosed before insider sales, more positive (negative) news forecasts are more (less)precise than other management forecasts. The opposite applies to managementforecasts disclosed before insider purchases. These results are consistent withmanagers strategically choosing forecast precision to increase stock prices beforeinsider sales and to decrease stock prices before insider purchases. …

A Survey Of Executive Compensation Contracts In China’S Listed Companies, Yubo Li, Fang Lou, Jiwei Wang, Hongqi Yuan

Research Collection School Of Accountancy

We analyze 228 executive compensation contracts voluntarily disclosed by Chinese listed firms and find that central-government-controlled companies disclose more information in executive compensation contracts than local-government-controlled and non-government-controlled companies. Cash-based payments are the main form of executive compensation, whereas equity-based payments are seldom used by Chinese listed companies. On average, there are no significant differences in the value of basic salaries and performance-based compensation in executive compensation contracts. But, compared with their counterparts in non-government-controlled companies, executives in government-controlled companies are given more incentive compensation. Accounting earnings are typically used in executive compensation contracts, with few firms using stock returns …

Ias 39 Reclassification Choice And Analyst Earnings Forecast Properties, Chee Yeow Lim, Chu Yeong Lim, Gerald J. Lobo

Research Collection School Of Accountancy

In October 2008, the International Accounting Standards Board amended IAS 39 to allow banks to retroactively reclassify financial assets that previously were measured at fair value to amortized cost. By reclassifying financial assets, a bank can potentially avoid recognizing the unrealized fair value losses and thereby increase its income and regulatory capital during a market downturn. We examine the implications of the reclassification decision by banks for the properties of financial analyst earnings forecasts during 2008–2009, when economic conditions were highly volatile. We find that the reclassification choice during the financial crisis reduced analyst forecast accuracy and increased forecast dispersion. …

Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue

Research Collection School Of Accountancy

Managers have great discretion in determining forecast characteristics, but little is known about how managerial incentives affect these characteristics. This paper examines whether managers strategically choose forecast precision for self-serving purposes. Building on the prior finding that the market reaction to vague forecasts is weaker than its reaction to precise forecasts, we find that for management forecasts disclosed before insider sales, more positive (negative) news forecasts are more (less) precise than other management forecasts. The opposite applies to management forecasts disclosed before insider purchases. These results are consistent with managers strategically choosing forecast precision to increase stock prices before insider …

The Impact Of Ineffective Internal Control On The Value Relevance Of Accounting Information, Nan Hu, Baolei Qi, Gaoliang Tian, Lee Yao, Zhen Zeng

Research Collection School Of Computing and Information Systems

This paper investigates the value relevance of accounting information in the presence of ineffective internal control (IIC). Based on Ohlson's valuation model, this paper first documents that IIC can directly affect a firm's market value after control cost of capital, corporate governance, and other, value-relevant variables. Second, this paper finds that the value relevance of earnings and book value in determining a firm's market value are significantly reduced. Collectively, the results of this paper indicate that the effectiveness of internal controls can directly affect a firm's market value and the value relevance of accounting information.

Performing Agreed-Upon Procedures Engagements That Address The Completeness, Mapping, Consistency, Or Structure Of Xbrl-Formatted Information; Statement Of Position, 13-2, American Institute Of Certified Public Accountants. Xbrl Assurance Task Force

Exposure Drafts, Comment Letters, and Statements of Position

No abstract provided.

Checklists And Illustrative Financial Statements For Corporations, September 30, 2013, American Institute Of Certified Public Accountants (Aicpa)

Industry Guides (AAGs), Risk Alerts, and Checklists

No abstract provided.

Family Histories And Genealogies Over The Internet: What Is Now Available, Thomas O. Meservy, Dr. Rayman D. Meservy

Journal of Undergraduate Research

The objective of my research is to determine how to effectively organize and distribute family histories and genealogies over the Internet. I am interfacing the genealogical files using the PAF standard, which was produced by the LDS church, onto the Internet. The information and standards which are available on the Internet are being combined with the most effective method of producing a user-friendly front end to provide an ideal system for genealogical exchange, distribution, and collaboration.

Family Histories And Genealogies Over The Internet: What Is Now Available, Thomas O. Meservy, Dr. Rayman D. Meservy

Journal of Undergraduate Research

The objective of my research is to determine how to effectively organize and distribute family histories and genealogies over the Internet. I am interfacing the genealogical files using the PAF standard, which was produced by the LDS church, onto the Internet. The information and standards which are available on the Internet are being combined with the most effective method of producing a user-friendly front end to provide an ideal system for genealogical exchange, distribution, and collaboration.

Proposed Statement On Standards For Attestation Engagements, Attestation Standards: Clarification And Recodification, July 24, 2013,Comments Are Requested By October 24, 2013; Exposure Draft (American Institute Of Certified Public Accountants), 2013 July 24, American Institute Of Certified Public Accountants. Auditing Standards Board

Exposure Drafts, Comment Letters, and Statements of Position

No abstract provided.

An Osa Model For The Optometry Field, Conan C. Albrecht, Dr. Stephen W. Liddle

Journal of Undergraduate Research

Many health fields have progressed slowly in the area of computer systems. My research focused on these systems specifically on the optometry health field. Many problems exist with the current systems available to optometrists. This fact is evident by their current use; a survey of ten optometry offices revealed the following distribution:

An Osa Model For The Optometry Field, Conan C. Albrecht, Dr. Stephen W. Liddle

Journal of Undergraduate Research

Many health fields have progressed slowly in the area of computer systems. My research focused on these systems specifically on the optometry health field. Many problems exist with the current systems available to optometrists. This fact is evident by their current use; a survey of ten optometry offices revealed the following distribution:

The Market For High-Tech Skills And The Business Student, Milen E. Marinov, Dr. J. Owen Cherrington

Journal of Undergraduate Research

Being granted the ORCA scholarship I started researching information technology (IT) skills that will make a business student more marketable. I began my research at the end of November 1999. Gradually, along with demanded IT skills my research activity included the gathering and systematizing of information pertaining to the nature, existence, operation, and goals of centers for electronic business. The gatherings and conclusions I have made will be reflected in the mission and day-to-day activities of the Kevin and Debra Rollins Center for eBusiness @BYU. The eBusiness Center was established April 12, 2000. It is a product of extensive research …

The Market For High-Tech Skills And The Business Student, Milen E. Marinov, Dr. J. Owen Cherrington

Journal of Undergraduate Research

Being granted the ORCA scholarship I started researching information technology (IT) skills that will make a business student more marketable. I began my research at the end of November 1999. Gradually, along with demanded IT skills my research activity included the gathering and systematizing of information pertaining to the nature, existence, operation, and goals of centers for electronic business. The gatherings and conclusions I have made will be reflected in the mission and day-to-day activities of the Kevin and Debra Rollins Center for eBusiness @BYU. The eBusiness Center was established April 12, 2000. It is a product of extensive research …

Establishing A Foundation For The Testing And Evaluation Of Effective Scenario Elicitation Tools, Benjamin Dunford, Dr. Douglas Dean

Journal of Undergraduate Research

In system development, no other phase is as fraught with difficulties as determining what exactly the system “should do” for a proposed project. These difficulties arise through a divergence in how the end user envisions the system should operate and how the analyst or developer perceives the user would like the system to operate. The search for a common language that both analyst and end user could use to effectively communicate what a system “should do”, or the system requirements, gave rise to the use of scenarios. Scenarios are textual narratives of how the system should operate in a given …

Software Development In Monterrey, Mexico, J. Edgar Gómez, Dr. Robert Jackson

Journal of Undergraduate Research

As Mexican companies enter the global market they discover how important it is to integrate advances in technology into their everyday business transactions. Software development is one of the areas of technological advances where great effort has been made. According to the Wall Street Journal (1), changes in technological development in Mexico are due in large part to the North American Free Trade Agreement (NAFTA) with the United States and Canada, that has attracted large amounts of foreign direct investment (FDI).

Establishing A Foundation For The Testing And Evaluation Of Effective Scenario Elicitation Tools, Benjamin Dunford, Dr. Douglas Dean

Journal of Undergraduate Research

In system development, no other phase is as fraught with difficulties as determining what exactly the system “should do” for a proposed project. These difficulties arise through a divergence in how the end user envisions the system should operate and how the analyst or developer perceives the user would like the system to operate. The search for a common language that both analyst and end user could use to effectively communicate what a system “should do”, or the system requirements, gave rise to the use of scenarios. Scenarios are textual narratives of how the system should operate in a given …

Stock Price Reactions To Announcements Of U.S. Gaap/Ifrs Convergence, Lorien Stice, Dr. Ted Christensen

Journal of Undergraduate Research

This research investigates investors’ perceptions of the expected impact of adopting international accounting standards on U.S. companies. Since these rules differ from current U.S. standards, some speculate that the costs to convert companies’ reporting systems to conform to international standards will have significantly negative effects on their profitability. My project explores stock price reactions to SEC announcements which indicate an increased or decreased probability that U.S. firms will soon be required to switch to International Financial Reporting Standards (IFRS). I hypothesize that expected conversion costs will be higher for companies that are not already operating in foreign countries because more …