Working and Discussion Papers

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The New Zealand class structure : the demographies of class structure
(Sociology Dept., Massey University, 1985) Wilkes, Chris; Davis, Peter; Tait, David; Chrisp, Peter
Strategic accounting: revisiting the agenda
(2000) Nyamori, Robert Ochoki
Rapid changes in the external environment of organisations have been accompanied by calls for accountants to change the nature of information they provide, the skills they possess and the role they play in the organisation. The proposed changes, which are encapsulated under the phrase accounting for strategic positioning or strategic management accounting are two pronged. On one hand accountants are required to reposition themselves in the organisation hierarchy where they will be involved in the formulation, implementation and choice of strategies. Accountants are also being urged to adopt a range of techniques whose emphasis is futuristic and external to the firm especially emphasizing the importance of monitoring customers and competitors. A review of the literature has revealed that while considerable effort has been put into the development of rational techniques for proposed use less has gone into whether, how and with what effect the proposed techniques have been implemented in organisations and society. The literature has adopted an uncritical approach to the proposals for a strategic accounting, providing little insight into how the discourse of strategy has come to occupy such a position of centrality in organisations and society with other functions seeking to be branded “strategic”.
Resource consents - intangible fixed assets? Yes, but, too difficult by far!
(2000) Hawkes, L. C.; Tozer, L.
Recent international attempts to draft an accounting standard (IAS38) which establishes the most widely acceptable treatment for intangible assets have sparked debate among standard setters, practising accountants and media analysts. Contentious issues include differing treatment for internally and externally generated intangible fixed assets, and the requirement for the existence of a ready market for the exchange of intangible assets. A further question has been identified, that of whether the ‘right to do something’, as in permission to act, is in itself an intangible asset and if so how should it be treated. An example of this is resource consents issued under the Resource Management Act 1991. The aim of this research was to investigate the nature of resource consents as intangible assets according to ICANZ disclosure and recognition standards and to determine the level of disclosure practised by companies listed on the New Zealand Stock Exchange. Disclosure of resource consent details as non-financial information would provide a significant proportion of the benefits involved in disclosing this class of asset while limiting the costs involved in the production of the information. We conclude that the details of resource consents held should be disclosed in the annual report as additional non-financial information, or as a separate schedule of resource consents held in the notes to the financial statements as per FRS1. This view is not addressed by the requirements of IAS38 or ED87 as this 'class of intangible assets' is not discussed at all. However, it can be argued that the omission of resource consents and other similar intangibles is contrary to the spirit of the true and fair view requirement of the Financial Reporting Act and Generally Accepted Accounting Principles (GAAP).
One way forward: non-traditional accounting disclosures in the 21st century
(2000) Mathews, M. R.; Reynolds, M. A.
Recent empirical studies (Deegan and Rankin, 1999; Deegan et al., 2000) have indicated that although many corporations have begun to respond to perceived demand for environmental disclosures in published accounts, their perspective of organisational legitimacy is a narrow view, in which information is targeted towards specific stakeholders and not to the general public. This paper considers a range of models (variously called guidelines, standards and charters) which have been put forward by different organisations to aid the development of social and environmental disclosures. In all cases verification and attestation are part of the proposed regimen. The question which the papers attempts to answer is whether any one of the models would be capable of rapid adoption as part of an expanded GAAP, should the professional accounting bodies think that this is desirable. The outcome of our deliberations is cautious support for the use of EMAS and ISO 14000 as the basis for a modified GAAP plus the further development of the GRI 2000 guidelines into a set of standards covering both social and environmental reporting.
Potentially dysfunctional impacts of harmonising accounting standards: the case of intangible assets
(2000) Mathews, M. R.; Higson, A. W.
Intangible Assets as a category within accounting and reporting disclosures have become far more noticeable in recent years, including large amounts associated with brands, mastheads, franchises, and patents. Many of these items are not purchased but internally generated within the organisation, and may account for much of the difference in magnitude between book value and market capitalisation. The International Accounting Standards Committee has recently issued IAS 38 to regulate the reporting of intangible assets, and includes therein the prohibition of those intangible assets, which have been internally generated. This prohibition would cut across recently developed practices in Australia and New Zealand. The problem is compounded by an increasingly close relationship between IASs and the national standards of both Australia and New Zealand, making it very likely that the problem areas within IAS 38 will be transferred to the national standards. This paper examines the areas within IAS 38, which are likely to lead to undesirable consequences, both for internally generated intangible assets but also in terms of the reinforcement of somewhat conservative aspects of financial accounting including historical cost and the inhibiting effects on new developments generally. The possible compounding effects of an expectations gap between the traditional and expected role of financial statements is briefly examined as a possible explanation of the divergence of opinion between different groups involved in the development of accounting standards and reports.
The development of social and environmental accounting research 1995-2000
(2000) Mathews, M. R.
This paper reviews five years of social and environmental accounting literature (from 1995-2000) in an attempt to evaluate the current position. The methodology used follows that employed in Mathews (1997a) which covered a period of 25 years in three time periods: 1971-1980; 1981-1990; and 1991- 1995. The literature was classified into several sub-groups including empirical studies, normative statements, philosophical discussion, non-accounting literature, teaching programmes and text books, regulatory frameworks, and other reviews. In this review a number of new sub-categories have been employed as appropriate. The author is able to conclude on an optimistic note. The additions to the literature during the period 1995-2000 are encouraging. Researchers in this area are perhaps less naïve and more experienced than previously, and this, when added to their enthusiasm should lead to penetrating observations and commentaries over the next five years.
Externalities revisited: the use of an environmental equity account
(2000) Mathews, M. R.; Lockhart, J. A.
This exploratory paper attempts to restart a debate about the incorporation of environmental externalities into the cost structure of the organisation. A number approaches are considered; regulation together with all that would follow such as audit and policing; pollution permits, which probably can only be used with a sinking lid application; and other charging mechanisms such as making the private sector pay for public sector capital funding. The fourth alternative, the use of an environmental equity account, has not been widely considered in the literature. The paper proposes the use of an environmental equity account (after Boone and Rubenstein, 1997) with the express intent of generating a charge for environmental impact based on the cost of control. That is, the cost of implementing state of the art technology compared to that currently in use within the organisation, is used as a balance which may be either paid as a capital sum or carried as a balance sheet entry upon which dividend payments would have to be made. It is envisaged that both capital sums and dividend payments would go to an agency responsible for environmental remediation activity.
The development of a strategic control framework and its relationship with management accounting
(2001) Durden, C. H.
Management accounting systems have been criticised for being excessively focused on shortterm performance. As a result long-term strategic direction and goals may have been neglected. To help overcome this problem it has been suggested that organisations should adopt strategic management accounting techniques and management control systems which are orientated towards the achievement of strategic goals. This paper argues that integration with strategic control would significantly enhance the relevance of management accounting systems. In developing such an approach this paper first integrates the salient features of the extant strategic control models in a framework that recognises the needs of the current business environment. And second, it examines how strategic control could be used as the basis for developing management accounting systems that have a stronger strategic focus.
Commercialisation of the supply of organs for transplantation
(2001) Thomas, Cordelia
Internationally, there is a shortage of organs available for organ donation. Human tissue and cells are becoming increasingly valuable as part of commercially valuable biotechnological research. The developments have outstripped the existing legal controls and have led to concerns about the use of human tissue retained after post mortems in England and Australia and the growth of black markets dealing in human organs and tissue. There is a need for ethical discourse about the extent to which such developments should be recognised and controlled by the law. Further, if the supply of organs available for transplantation is to be increased, the systems of consent in many countries are unsuitable. Development of a system in which benefits are available to the donors or their families may increase the supply of organs. If financial benefits are available from biotechnological advances, the people providing the necessary materials in the form of human tissue or organs may believe they have a right to share in the resultant benefits. This paper considers the ethical issues arising from the various systems of consent to organ donation that have been adopted in different jurisdictions. Fundamental to any such debate is the issue of property rights- whether a living person has property rights over their own body and whether there exist property rights to a human body following death. The role of the State is fundamental to such a debate. This paper considers the potential for the commercialisation of the supply of organs and some approaches that might facilitate commercialisation. Aspects of the law contract that might arise are outlined. Overall, the conclusion is that these issues must be addressed by way of legislation. If commercialisation is permitted in some form, this must be carefully controlled to ensure that the vulnerable members of Society are not disadvantaged. It is suggested that any benefit should be provided by the State rather than by way of individual contracts between donor and recipient, to avoid the situation arising where only the financially advantaged could afford treatment.
Aspects of the motivation for voluntary disclosures: evidence from the publication of value added statements in an emerging economy
(2001) van Staden, C. J.
This paper investigates the motivation for the voluntary disclosure of financial information by companies in their annual financial statements, by examining aspects of the usefulness of the value added statement. The value added statement is published voluntarily with the annual financial statements and is currently experiencing high levels of publication in South Africa, which is evidently brought about by the high political costs and significant legitimacy threats that companies operating in South Africa are facing. It was found from the literature and from a survey among management that the value added statement was primarily aimed at the employees. Employees have also been regarded as users of financial information in the literature. However, a survey among trade unions in South Africa found that almost no use is made of the value added statement even though the unions make use of other financial information. This indicates that voluntary disclosures do not necessarily satisfy the information needs of their intended audience. The research also indicates that the trade unions might not use the value added statement because they suspect that the statement is being used to reduce political costs and legitimacy threats, and is therefore not reliable. This is a major shortcoming of voluntary disclosures.
The value added statement: bastion of social reporting or dinosaur of financial reporting?
(2001) van Staden, C. J.
South Africa is at present experiencing the highest incidence of publication of the value added statement reported anywhere in the world to date. In addition research investigating the predictive ability of value added information has been conducted in the USA since 1990, even though the value added statement has not been published there. The research reported in this paper sets out to establish whether the value added statement is a disclosure worth considering by companies around the world, by investigating the South African experience with the value added statement. The social accounting theories of organisational legitimacy and political costs were found to be best suited to explain why the value added statement is published. Surveys among the companies publishing the value added statement indicated that management had the employees in mind when they published this information. However, a survey among users has indicated that very little use has been made of the value added statement. The main reason for this seems to be that the unregulated nature of the value added statement allows for inconsistencies in disclosures, which eventually caused users to suspect bias in the reports. The USA evidence that the information has additional predictive power is not confirmed by a South African study, and is complicated by the limited additional information contained in the value added statement. The South African experience with the value added statement does not make a convincing case for publication. Rather, it highlights the need for unbiased and verified social disclosures that will be useful to all the stakeholders of the company. In addition, it has implications for other voluntary social and environmental disclosures.
'True and fair view' versus 'Present fairly in conformity with generally accepted accounting principles'
(2001) Kirk, N. E.
The ‘true and fair view’ concept is one of two competing but not mutually exclusive legal standards for financial reporting quality that have been subject to debate on their meaning, use and importance. The other is ‘present fairly in conformity with generally accepted accounting principles’ (GAAP). While the former is closely identified with judgement and is used in the United Kingdom, the European Union, Singapore, Australia, and New Zealand, the latter is the standard for United States financial reporting and tends to be more rule based. This paper presents the findings of an empirical investigation of the ‘true and fair view’ in New Zealand. It reports the results of a survey of financial directors, auditors and shareholders of New Zealand listed companies investigating their perceptions of, and preferences for, ‘true and fair view’ versus other standards for financial statement reporting including ‘present fairly in conformity with generally accepted accounting principles’ (GAAP), 'fairly reflects' and 'present fairly', and compares the findings with relevant international research. The purpose of the research was twofold; firstly to determine if ‘within-group’ and ‘betweengroup’ differences in perceptions and preferences for the terms existed, thus contributing to an expectations gap; and, secondly, to examine whether or not the New Zealand respondents shared the preference for ‘true and fair view’ versus ‘present fairly in conformity with GAAP’ found in previous international research. The results show that a clear majority of all three groups share similar perceptions of the meaning of the 'true and fair view’ concept, and support its use in financial reporting. All groups preferred ‘true and fair view’ to other terms including ‘fairly present in conformity with GAAP’, a result consistent with previous comparisons of United Kingdom, and United States investors’ opinions. This illustrates that the 'true and fair view' concept remains an important international overall standard for financial reporting quality.
Web assisted teaching: an undergraduate experience
(2002) van Staden, C. J.; Kirk, N. E.; Hawkes, L. C.
The emergence of the Internet has created a number of claims as to the future of education and the possibility of dramatically changing the way in which education is delivered. Much of the attention has focussed on the adoption of teaching methods that are solely web-based. We set out to incorporate web-based teaching as support for more traditional teaching methods to improve the learning outcomes for students. This first step into web-based teaching was developed to harness the benefits of web-based teaching tools without supplanting traditional teaching methods. The aim of this paper is to report our experience with web-assisted teaching in two undergraduate courses, Accounting Information Systems and Management Accounting Services, during 2000. The paper evaluates the approach taken and proposes a tentative framework for developing future web-assisted teaching applications. We believe that web-assisted and web-based teaching are inevitable outcomes of the telecommunications and computer revolution and that academics cannot afford to become isolated from the on-line world. A considered approach is needed to ensure the integration of web-based features into the overall structure of a course. The components of the course material and the learning experiences students are exposed to need to be structured and delivered in a way that ensures they support student learning rather than replacing one form of learning with another. Therefore a careful consideration of the structure, content, level of detail and time of delivery needs to be integrated to create a course structure that provides a range of student learning experiences that are complimentary rather than competing. The feedback was positive from both extramural (distance) and internal students, demonstrating to us that web sites can be used as an effective teaching tool in support of more traditional teaching methods as well as a tool for distance education. The ability to harness the positives of the web in conjunction with more traditional teaching modes is one that should not be overlooked in the move to adopt web based instruction methods. Web-based teaching need not be seen as an all or nothing divide but can be used as a useful way of improving the range and type of learning experiences open to students. The Web challenges traditional methods and thinking but it also provides tools to develop innovative solutions to both distance and on campus learning. Further research is needed to determine how we can best meet the needs of our students while maintaining high quality learning outcomes.
Claims for wrongful pregnancy and child rearing expenses
(2002) Thomas, C. M.
Wrongful birth claims relate to the birth of a child as a consequence of medical negligence. There has been general acceptance by courts in various jurisdictions that costs relating to the pregnancy and birth may be recovered. However the more contentious issue is whether there is liability for the costs of rearing such a child. The English courts have held there is no such liability with respect to a healthy child, while in Australia, the Queensland Court of Appeal has taken the opposite view2. In New Zealand the issue has yet to be decided. The Accident Compensation scheme has limited the development of the law relating to personal injury in general, but the High Court has found that the scheme does not prevent claims for wrongful birth. It is argued that the New Zealand courts should follow the Australian decisions, as the English approach is based on the views of ordinary people on this moral question as perceived by judges. This requires the individual judge’s sense of the moral answer to a question to prevail, albeit in light of the judge’s view of the opinions of ordinary people. It is argued that this is a subjective approach in that, in such a complex and emotionally difficult area of the law, there is unlikely to be uniformity of opinion among the public, or even among judges. As such, this is arguably a matter better resolved by legislation than by the courts.
Should the law allow sentiment to triumph over science? The retention of body parts
(2002) Thomas, C. M.
The use of human body material including tissue and organs has been controversial for many centuries. Concerns arose in the eighteenth century about practices used to obtain corpses for dissection. Scientific studies in biotechnology have placed increased value on the body as a source of research material. At the same time there is now a greater emphasis on individual autonomy. Disputes reflect the striking differences between scientific or utilitarian perspectives and the body’s social meaning. This paper considers issues that have arisen in several countries relating to the use of body parts and considers whether the law in New Zealand is sufficient to prevent such problems from arising in New Zealand. The conclusion is that present legal structures are insufficient to keep pace with technological advances. If biotechnology is to advance, it is essential to address the issues of consent while respecting cultural and religious views of the need for respect for the human body.
An exploratory investigation into the corporate social disclosure of selected New Zealand companies
(2002) Hall, J. A.
Corporate social disclosure, that is, the communication of an organisation’s social and environmental impact through the annual report or similar medium, is an increasingly important issue, and arguably has benefits for companies and society. This study investigates the corporate social disclosures of five companies over a five-year period, with the aim of investigating trends in corporate social disclosure in large New Zealand companies who operate in industries receiving public attention for their social and environmental impact. Corporate social disclosure was measured through number of sentences disclosed, and classified into theme (environment, energy, product, community, employee health and safety, employee other and general) and evidence (monetary quantitative, non-monetary quantitative and declarative). This study found no clear trend of increasing levels of corporate social disclosure; instead there was an increase in 1997 and a decrease in 1998. Legitimacy theory, political economy theory and economic conditions represented possible explanations for this trend, demonstrating the difficulty in using a single perspective to explain corporate social disclosure. Corporate social disclosure did not significantly increase from 1996 to 2000, and disclosure was primarily ‘quantitative’ and ‘employee other’, leading this research to posit that New Zealand companies are not responding to the increased worldwide importance of corporate social disclosure. In summary, this study provides valuable empirical evidence of corporate social disclosure in New Zealand, and also provides an example of the complexity of corporate social disclosure practice, and the difficulty in applying a single theoretical perspective to explain corporate social disclosure.
Devolved school-based financial management in New Zealand : observations on the conformity patterns of school organisations to change
(2003) Tooley, S.; Guthrie, J.
This paper examines the intent and consequences of ‘new’ financial management (the ‘New Public Financial Management’) (NPFM) procedures invoked to facilitate a macro-micro interface within the context of the significant administrative reform of the New Zealand (NZ) state education system. The 1989 administrative reform of the NZ education system was predicated on a particular view of public sector management, which was characterised by the umbrella heading of ‘New Public Management’ (NPM). It was claimed that NPFM provided a link between the sets of values highlighted through the NPM reform process and the internal workings of various public sector organisations. The study provides case studies of the organisational financial management practices of four schools, some ten years after the reform. The observed practices are analysed and interpreted within a theoretical framework comprising two competing theories of change – NPM which provides the ‘normative’ intent for public sector organisational change, and institutional theory that offers an explanation of the ‘operational’ consequences of public sector organisational (i.e. schools) response to change. The findings suggest that accounting and management technologies have served a useful, political purpose, although not in the way espoused by NPM proponents.
Management accounting education: is there a gap between academia and practitioner perceptions?
(2003) Hawkes, L. C.; Fowler, M.; Tan, L. M.
A mail survey was conducted of all Institute of Chartered Accountants of New Zealand accredited Tertiary Education Institutions and 300 randomly selected New Zealand companies to ascertain the views of management accounting academics and practitioners on the contents of management accounting courses and the skills and competencies of recent graduates. The results show that practitioners placed an emphasis on traditional management accounting techniques, while academics placed an emphasis on contemporary techniques. Both groups were in agreement on the skills and characteristics required of recent graduates. An interesting finding was the emergence of negative comments on the arrogance of new graduates and an increased need for graduates to be work ready. These two aspects were not a feature of previous studies. The implications of the results are that academics cannot ignore the teaching of traditional management accounting techniques and may need to increase the coverage of the issues involved in implementing contemporary management accounting techniques.
The impact of events on annual reporting disclosures
(2003) Hooks, J. J.
Burchell, Club and Hopwood (1985) considered that “little is known of how...wider social forces can impinge upon and change accounting” (p.382). This study identifies six political forces that may have instigated changes in accounting practice and annual reporting of a New Zealand electricity entity. Based on the literature (Hopwood, 1983, 1990; Napier, 1989; Gray and Haslam, 1990; Thomson, 1993) it is expected that significant changes in the environment in which the entity operates will effect changes in reporting. The study compares the annual report disclosures of an Electricity Supply Authority on a yearly basis from 1970 to 2001 - a 18 year period with little significant environmental impact in the electricity industry with a period of intense activity in the following 14 years. The study found considerable evidence that the change from a local body accountable to electors/consumers to a public company accountable to shareholders, led to a greater emphasis on profits and earnings per share as a means of measuring performance. It identifies specific changes in accounting practice that support this view as well as a period of “big bath” accounting, decreasing disclosure of commercially sensitive information, and the increasing use of dramatic presentation in the annual report.
The corporatisation of local body entities: A study of financial performance
(2003) Hooks, J. J.; van Staden, C. J.
The New Zealand electricity industry provides us with a unique opportunity to examine how entities responded to major restructuring of the industry. This research studies the financial performance of three entities, each with a different ownership structure, over a 15 year period from 1988 to 2002. The aim is to examine the possible influence of ownership type and corporatisation on the development and financial performance of the entities by examining the changes that took place from the pre-corporatisation period to the post-corporatisation period and comparing and contrasting the performance and funding of the three entities over that time. In this way an assessment is made of the possible influence of ownership type on financial performance. This research can be framed to some extent by agency theory aspects of positive accounting theory. In addition legitimacy theory has been used to explain the behaviour of managers and the process of organizations adapting to a changing environment. Both theories acknowledge the interaction of organizations and their environment. The comparison shows that at the end of the study period the council owned company was the smallest, in terms of total assets, of the three companies examined (although it was similar in size to the biggest one at the outset). The council owned company also returned most capital to its shareholders and is the most conservatively financed one of the three with only 10% debt at the end of 2002 compared to 28% for the trust-held company and 87% for the listed company. The listed company ended up being the biggest and the one with the highest gearing, the highest ROA and the highest profit margin. The study concludes that ownership structure did have an influence on financial performance and level of debt funding.

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