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- Volume 10, Issue 1, 2002
Meditari : Research Journal of the School of Accounting Sciences - Volume 10, Issue 1, 2002
Volume 10, Issue 1, 2002
Competition and the performance of strategic business units - a study of the South African beverage industrySource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 1 –23 (2002)More Less
Historically, South Africa's apartheid policies had a negative effect on the financial performance of the South African beverage industry. This effect was characterised by the non-participation of South African companies in the global market and the presence of foreign enterprises in the domestic market. From 1994, South African industries have been increasingly exposed to new opportunities and forces. Globalisation, deregulation, changing manufacturing systems and the entry of foreign competitors in the 1990s exposed the local industry to competitive challenges in the domestic and the global market. This study examined the impact of changing levels of competition on the performance of strategic business units and the mediating role of management accounting in the South African beverage industry. The methodology employed to investigate this relationship comprised both a survey and a case study. The results indicate a positive correlation between the level of competition and the performance of business units. The results furthermore indicate that enterprises can utilise a management accounting system (MAS) as a strategic response to competition. The increased use of MAS will, in turn, improve the performance of an enterprise. Enterprises that do not respond positively to competition will not survive.
Source: Meditari : Research Journal of the School of Accounting Sciences 10, pp 25 –51 (2002)More Less
The mining sector represents a significant portion of the South African economy. The recent announcement of the proposed black empowerment bill for the mining sector caused share prices to plummet. This reaction, in turn, caused a marked devaluation of the rand against other major currencies. Anything that impacts negatively on the mining sector will therefore have an adverse effect on the South African economy.
This paper considers the affect that HIV / AIDS will have on the mining sector and, by implication, on the South African economy. Consideration is given to whether mining companies manage this risk properly and whether it is reasonably accounted for and disclosed in the financial statements. Conclusions are drawn and recommendations made regarding HIV / AIDS risk management and how HIV / AIDS issues can be disclosed fairly.
Although the management teams of mining companies have introduced a HIV / AIDS risk-management process and have commenced the disclosure of HIV / AIDS information, the disclosure is still far from adequate.
Author C.J. De VilliersSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 53 –70 (2002)More Less
Managers can influence the evaluation of their performance by advancing various reasons for or making attributions regarding their financial achievement or the financial achievement of their divisions. In this study, an experimental design is used to determine the effect that the advancing of controllable reasons versus uncontrollable reasons, of which evaluators are either aware or not aware, has on the evaluation of managers' performance in conditions in which they had recorded financial results that are lower or higher than the budgeted figures.
The experiment reveals that performance evaluations are higher when variances are explained by means of controllable reasons in the above-budget setting, whereas higher evaluations result in the below-budget setting when variances are explained by means of uncontrollable reasons. Furthermore, the evaluator's prior knowledge of these reasons results in a difference in the performance evaluation rating. Specifically, known reasons result in higher manager evaluation ratings. The experiment reveals that managers that record above-budget performance are given higher evaluation ratings than managers that record below-budget performance, even when variances are explained by means of reasons that the managers cannot control. This is known as the outcome effect. However, the findings indicate that the outcome effect is smaller when the evaluator has independent knowledge of the reason(s) advanced.
The conduct of the taxpayer - can the conduct of the taxpayer affect the level of the penalty or sanction imposed in income tax matters?Author G.K. GoldswainSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 71 –86 (2002)More Less
An offending taxpayer may plead "extenuating circumstances" in order to reduce the penalty or sanction that may be imposed in terms of section 76(1) of the Income Tax Act.
The objective of this article is to examine whether the conduct of the taxpayer before, during and after the commission of an offence (usually tax evasion), in terms of section 76(1) of the Act or of the common law, can affect the level of the penalty or sanction imposed.
The conclusion that can be reached is that, in appropriate circumstances, the conduct of the taxpayer can affect the level of a penalty imposed in terms of section 76(1).
Source: Meditari : Research Journal of the School of Accounting Sciences 10, pp 87 –108 (2002)More Less
Student failure in tertiary education costs taxpayers and donors large sums each year. The cost of quality can be substantial, but it can also be a source of significant savings. This study attempts to provide a framework in terms of which these costs can be quantified through the application of the principles of quality costing in tertiary education. An emphasis on quality increases profitability by increasing student throughput and by decreasing the cost of the provision of services. Significant savings are possible if the educational system could achieve greater success by focusing on adding value to those students that are more likely to succeed. If quality costing is made visible in the South African tertiary education system, it could have a profound impact on the products (students) that are delivered to society.
International accounting and the accounting curriculum : a survey of the perceptions of corporate chief accountants from BahrainSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 109 –129 (2002)More Less
This study examines the perceptions of 41 corporate chief accountants from Bahrain on the issues relating to the relative importance of international accounting topics in Bahrain. The study indicates a significant interest of the respondents in internationalizing the accounting curriculum. The topics which received importance rating of over 80% were: foreign investment and decision making, international accounting standards, financial reporting and disclosure, foreign currency transactions and translation, management information system (MIS) for multinational enterprises (MNEs), and consolidations. Results were also compared to a recent study from United States (US) and significant differences were found to exist in respect of several topics. The reasons for the major differences in the perceptions are explained in this paper, some of which may be attributed to cultural as well as environmental differences. The study also found that there is a strong support for adoption of the International Accounting Standards (IASs) because international markets are becoming increasingly important and there exists major differences in accounting principles among the Gulf Cooperation Council (GCC) countries themselves. Furthermore, the study also suggests that in view of the similarity in social, economic, and business practices in GCC countries, the highly ranked accounting topics reported in this study should perhaps be incorporated by the accounting departments of universities operating in the GCC region. This will facilitate the process of harmonization of the accounting curriculum in this region.
A review of the theory of and evidence on the use of the capital asset pricing model to estimate expected share returnsAuthor E.R. LaubscherSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 131 –146 (2002)More Less
The underlying principle of the Capital Asset Pricing Model (CAPM) is that there is a linear relationship between systematic risk, as measured by beta, and expected share returns.
The CAPM attempts to describe this relationship by using beta to explain the differences between the expected returns on various shares and share portfolios. The CAPM has been the subject of considerable theoretical investigation and empirical research. The aim of this article is to establish the current knowledge of the usefulness of the CAPM, i.e. whether it provides a reasonable description of reality and whether it is a useful tool for investment decision-making.
The main conclusion drawn from the study is that the CAPM is useful and that it does describe and explain the risk/return relationship. However, other risk factors (i.e. other than beta) may also be useful for explaining share returns. Investors should therefore be cautious when using the model to evaluate investment performance.
Source: Meditari : Research Journal of the School of Accounting Sciences 10, pp 147 –158 (2002)More Less
Almost all estate agencies that are involved in residential property sales recognise the commission income from a sale when the commission concerned is actually received. This practice is at variance with generally accepted accounting practice, which requires recognition of income to occur on the signing of the agreement or when the sales contract becomes firm (i.e. unconditional).
The South African Revenue Services (SARS) has required the few estate agencies that apply generally accepted accounting practice in their financial statements to align their income tax accounting with their financial accounting. This alignment results in tax being paid on the commission that is due from the sale of properties that have not yet been transferred.
This paper debates the issue of the recognition of income. It provides suggestions for the improvement of disclosure in estate agencies' financial statements. Furthermore, it suggests changes to estate agencies' standard sales contracts to the effect that income is deemed to have been earned upon the registration of the transfer of a property.
Author E. SadlerSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 159 –185 (2002)More Less
This study of black chartered accountants (CAs) in South Africa was undertaken to provide a profile of black chartered accountants and an overview of their work environment, including career barriers and expectations. The study identified a number of barriers experienced by black CAs in South Africa. These barriers include discrimination in respect of job assignments, racial bias, a lack of black mentors and the resistance of the clients of auditing firms. It is apparent that these barriers have changed the career expectations of many black CAs. The survey highlights the need for the profession to address the special career needs of black CAs.
Openbaarmaking van belastinginligting in die finansiële verslae van maatskappye : vereistes, riglyne en mate van voldoeningSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 187 –209 (2002)More Less
The purpose of this study was to determine the requirements and guidelines for the disclosure of taxation information in the financial reports of South African companies in order to determine the extent to which leading South African companies comply with these requirements and guidelines.
It was determined that there are comprehensive requirements and guidelines in respect of the disclosure of taxation information in the financial reports of South African companies. These requirements and guidelines are regulated by the Companies Act, No. 61 of 1973, as well as the statements of Generally Accepted Accounting Practice that are issued by the South African Institute of Chartered Accountants.
The analyses undertaken of the financial statements of the selected companies indicate that leading companies in South Africa comply to a large extent with the requirements and guidelines for the disclosure of taxation information in financial reports.
Author J.M.P. VenterSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 209 –225 (2002)More Less
The aim of the study being reported, was to determine the status of online reporting in South Africa. The history, advantages and disadvantages of web-based reporting were evaluated. A survey was undertaken among the top South African listed companies to determine the extent of their use of technology for online financial reporting and investor relations.
The results of the survey indicate that the use of the internet by top South African companies has increased tremendously over the past number of years. The increased importance of online reporting is demonstrated by the fact that several companies not only provide copies of their annual financial statements on their website, but have also progressed to the second and the third stage of online reporting. Communication with investors, which is a part of online reporting, is very important. The results of the survey indicate that companies take this matter into account when preparing a home page on their website.
From a comparison of some of the results of this survey with those of international surveys it can be concluded that South African companies are keeping abreast of international trends regarding the use of the Internet as a medium of communication with investors and shareholders.
Source: Meditari : Research Journal of the School of Accounting Sciences 10, pp 227 –241 (2002)More Less
Internal auditing assumes an increased responsibility for the evaluation of entity operations as a service to management and the board of directors. Quality assurance review is the process through which assurance is obtained that the internal auditing department's work is done in accordance with the Standards for the Professional Practice of Internal Auditing. This study examines the current practices of quality assurance review in South Africa. Although not all organisations surveyed do perform internal auditing quality assurance reviews, the organisations that do, benefit from them. Various methods are used in practice to perform internal and external quality assurance reviews. This study provides information on the processes and procedures used in quality assurance review programmes.
Die effek van die internet op die inwonerbeginsel, soos gedefinieer in Inkomstebelastingwet Nr. 58 van 1962Author N. WessonSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 243 –258 (2002)More Less
Over the past few years, electronic commerce has gradually grown into what has arguably become the most daunting challenge to date for tax-systems.
Income tax principles have traditionally been based on the existence of some form of physical presence (either residency, source of income or a permanent establishment) in an area of jurisdiction before tax may be levied. The fact that the Internet can provide substantial economic activity in an area of jurisdiction without having a physical presence, requires an interpretation of and/or amendment to international tax principles.
South Africa has adopted the residence principle of taxation with effect from 1 January 2001. The residence principle is more suited to dealing with Internet transactions than is the source principle. The residence principle does, however, require interpretation and/or amendment in the Internet environment. It is in particular the term "place of effective management" that requires interpretation.
Internet transactions are borderless and therefore subject to double-taxation agreements. The Fiscal Committee of the OECD plays a leading and co-ordinating role in the examination of the effect of electronic commerce on taxation. Therefore the challenge with which South Africa is faced, is to develop a taxation policy that is not isolated from its e-commerce partners.
Source: Meditari : Research Journal of the School of Accounting Sciences 10, pp 259 –294 (2002)More Less
This article comprises an attempt to find a practical method of applying the decision in the case of the Commissioner for the South African Revenue Service v Woulidge (63 SATC 483) ('Woulidge' ) to limit the application of section 7(3) of the Income Tax Act ('the Act'). It is proposed in this article that Woulidgewould also apply to the provisions of section 7(5) and paragraphs 69 and 70 of the Eighth Schedule to the Act. The approach proposed is illustrated by means of examples. The approach adopted by the Commissioner for the South African Revenue Service is also discussed. A conclusion is drawn regarding the practicality of applying Woulidgein the light of the examples.
Author A. WieseSource: Meditari : Research Journal of the School of Accounting Sciences 10, pp 295 –309 (2002)More Less
The treatment of the credit difference that arises from an acquisition took a step in a new direction in South Africa with the adoption of a new accounting standard, namely AC 131, which is based on the international standard IAS 22. It is now called negative goodwill. According to the rules contained in AC 131, it is to be classified as a negative asset and recognised as income.
The research on which this paper is based, was undertaken to examine the nature of negative goodwill against the background of the international accounting practices regarding the treatment of negative goodwill. At present these practices differ significantly and the differences represent obstacles to international harmonisation. The paper critically evaluates the various treatments and recommends a preferred accounting treatment.
Source: Meditari : Research Journal of the School of Accounting Sciences 10, pp 311 –325 (2002)More Less
Liability for capital gains tax is determined in terms of the Eighth Schedule to the Income Tax Act 58 of 1962. According to the Eighth Schedule, the disposal of an asset is the event that triggers the liability for capital gains tax. It is therefore imperative to know what constitutes a disposal, because it is fundamental to the entire capital gains tax regime. The purpose of this paper is to analyse the definition of a disposal in order to ascertain whether a disposal, as defined, is intended to mean a transfer of ownership in an asset or whether a disposal could take place upon the occurrence of events or causae other than the transfer of ownership.
A study of relevant literature was undertaken to analyse the definition of "disposal" in order to fully comprehend the intention and meaning of the term as it is contemplated in the Eighth Schedule. The current definition of a "disposal" could lead to uncertainty and anomalies. It is therefore recommended that the legislature should amend the definition of a disposal in the Eighth Schedule. The definition should refer to the disposal of an asset (other than a personal-use asset) as being the transfer of ownership of an asset from one person to another or the loss of the ownership of an asset. Because the common law has clear principles regarding how ownership of different classes of assets is transferred, no confusion would arise regarding whether or when a disposal has occurred.