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- Volume 11, Issue 1, 2003
Meditari : Research Journal of the School of Accounting Sciences - Volume 11, Issue 1, 2003
Volume 11, Issue 1, 2003
Source: Meditari : Research Journal of the School of Accounting Sciences 11, pp 1 –10 (2003)More Less
The contents of the annual reports of listed mining companies as well as of the Top 100 industrial companies in South Africa were analysed to determine how the disclosure of environmental information has changed over time. Disclosure of general environmental information increased until 1999 and then stabilised at that level. The initial increase in the disclosure of specific environmental information, such as measurable objectives and environmental performance, was followed by a decrease from 1998 onwards. A possible explanation could be that the lack of legal requirements with regard to the reporting of environmental information enables companies to decide what to report and what the extent of the reporting should be. They can therefore elect not to report specific and sometimes sensitive information, because stakeholders could perceive such information to be negative and it could therefore have a negative impact on the corporate image.
Why do South African companies not report more environmental information when managers are so positive about this kind of reporting?Author C.J. De VilliersSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 11 –23 (2003)More Less
Previous research has highlighted a contradiction in regard to environmental reporting in South Africa. Managers, who can influence decisions regarding disclosure, express the view that more environmental reporting is needed, yet very little such reporting is done. A questionnaire was sent to every company listed on the Johannesburg Stock Exchange (JSE) with the request that the financial director should complete it. The questionnaire set out to establish whether managers are still as positive about environmental reporting as reported in previous research findings and, furthermore, to determine the reasons for the dearth of environmental reporting. Managers are still as positive as before about environmental reporting. The reasons for not reporting range from the contention that data is not available, that there are no legal requirements and that there is no demand for the data to the contention that it is not applicable to the particular industry and that costs exceed benefits. Most respondents do not regard the fear of liability to be a very important reason for non-disclosure. The most important reason for non-disclosure is that there is no legal requirement in respect of disclosure. This reason, together with the positive attitude of directors towards environmental reporting in general and towards reporting on a compulsory basis in particular, makes a strong case for the introduction of legislation in this regard. The introduction of legislation could be achieved by amending the Fourth Schedule of the Companies' Act or the introduction by The South African Institute of Chartered Accountants (SAICA) of a statement of Generally Accepted Accounting Practice (GAAP) on environmental disclosure.
Testing the relationship between intellectual capital and a company's performance : evidence from South AfricaSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 25 –44 (2003)More Less
The aim of this study was to investigate whether the performance of a company's intellectual capital can explain organisational performance. The dimensions of a company's performance are (1) profitability, (2) productivity and (3) market valuation. Data were obtained from a sample of 65 companies that are listed on the JSE Securities Exchange (high knowledge-base sectors). Findings from the empirical analysis indicate that the relationships between the performance of a company's intellectual capital and (1) profitability, (2) productivity and (3) market valuation are informative but varied. The empirical findings suggest that the performance of a company's intellectual capital can explain profitability and productivity, but not market valuation.
Special or unusual defences or "extenuating circumstances" that may be pleaded for the purposes of remission of penalties in income tax mattersSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 45 –66 (2003)More Less
The general meaning of "extenuating circumstances" for the purposes of section 76(2)(a) of the Income Tax Act, No. 58 of 1962, (the "Act"), was discussed by the current author in a previous article in this research journal. Certain defences or pleas and their effect on the level of penalties imposed by the judiciary were also analysed in previous articles in this research journal. These defences and pleas include reliance on a tax advisor, bookkeeper, accountant or member of staff and the conduct of the taxpayer before, during and after committing an offence.
This article specifically examines those special or unusual defences or "extenuating circumstances" that may influence the level of a penalty that is imposed in terms of section 76 of the Act for offences that are committed in terms of that section.
The personal circumstances of the taxpayer as a defence or as a plea of "extenuating circumstances" for the purposes of remission of penalties in income tax mattersSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 67 –79 (2003)More Less
Heavy penalties may be imposed on a defaulting taxpayer in terms of section 76(1) of the Income Tax Act, 58 of 1962 (the "Act"), unless "extenuating circumstances" are found to prevail, in which case any penalty imposed may be remitted partly or even in toto.
This article examines the defence or plea of adverse personal circumstances, such as education, intelligence, financial means, hardship, age, influence of others, provocation and the death, insolvency or liquidation of a taxpayer, and whether such adverse personal circumstances could be considered to be "extenuating" for the purposes of section 76(2)(a) of the Act and lead to a remission of the penalties imposed.
Author L. LoxtonSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 81 –93 (2003)More Less
This study investigated the investor relations activities on the Internet of companies that are listed on the Johannesburg Securities Exchange (JSE). For this purpose, the home pages of the JSE Top 40 companies were searched and screened for investor relations items. A three-stage model was used. The results of the study indicate that companies use more advanced features of the Internet for investor relations in comparison with previous studies undertaken in other countries. Most companies in SA appear to be in the second stage of Internet investor relations. The leading companies in SA are ready to enter the third stage of Internet investor relations.
Contemporary management accounting for the sustainable competitiveness of the South African motor manufacturing industrySource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 95 –112 (2003)More Less
Since the implementation of the Motor Industry Development Programme in 1995, South African motor manufacturers have had to face pressures and challenges to which they had not been accustomed in a very protected environment. These pressures include ever-intensifying competition, which necessitates increased competitiveness with regard to quality and price. As locally built cars can compete with the best in terms of quality, the primary area of concern for survival has shifted to international competitiveness with regard to price.
This research project comprised a literature study and an empirical survey of the developments in the management accounting used by the seven major local motor manufacturers, which together have a 90, 8% share of the local market. Conclusions are drawn and recommendations made regarding the implementation and improvement of the contemporary management accounting techniques that are used in the South African motor manufacturing industry. The aim of the project was to contribute towards target pricing, which could result in the increased profitability and competitiveness of the local industry in a highly competitive global market and at a market-based price.
Source: Meditari : Research Journal of the School of Accounting Sciences 11, pp 113 –128 (2003)More Less
Entrepreneurs choose a particular way of life with the dual aim of maximising profit and gaining a sense of self-satisfaction. In these endeavours, entrepreneurs typically live with the threat of competition and the risk of business failure, while attempting to do their best within the limitations of their resources. This qualitative study first examines existing theories of ethics and ways of applying business ethics and thereafter investigates entrepreneurs' actual experiences by means of in-depth interviews and the use of phenomenology. It finds that entrepreneurs are not guided by any specific code of conduct, and must decide for themselves what is right. It describes the entrepreneurial business ethic, some of the types of dilemmas that they experience and the methods that they have developed to deal with the dilemmas.
Views of black trainee accountants in South Africa on matters related to a career as a chartered accountantSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 129 –149 (2003)More Less
Against a backdrop of only 337 black chartered accountants in a total of approximately 20 000 in South Africa in 2003, the South African Institute of Chartered Accountants (SAICA) is reviewing its current transformation targets for 2005. Information was required to review the obstacles that black trainees in general and accountants in particular experience en route to qualifying. <br>Accounting as a career was investigated from a theoretical point of view. A questionnaire was designed, which focused mainly on problems and barriers in respect of career guidance; funding and bursaries; role models in the profession; knowledge of the profession; and exposure to business. The questionnaire was distributed to all 755 black trainee accountants that were registered with SAICA. A total of 313 questionnaires were returned, representing a response rate of 41, 45%.
A lack of knowledge about the chartered accountancy profession and careers related to the profession was identified as one of the main reasons for the small number of blacks in the profession. Career guidance at school was stated as the main contributing factor in this regard. A lack of funding and of bursaries was stated as the second most important reason why students do not choose a career in accounting. Other important barriers identified include the limited nature of the work given to trainee accountants to do and the resulting limited work experience that they gain; a lack of black mentors in firms; racial bias on the part of supervisors; and a lack of recognition of and respect for the work completed.
Black trainee accountants suggest that academic support programmes should be introduced to assist them to prepare for examinations, a forum should be established for students of Accounting in which they can interact with accounting professionals through workshops; a network group of professional black mentors in the business sector should be formed; and the advancement and retention of black members within the profession should be encouraged. Awareness programmes should be accorded a high priority in the short term.
Author L. StainbankSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 151 –166 (2003)More Less
Recent accounting literature (PAAB 2001; SAICA 2000) indicates an increasing emphasis on the need for individuals, studying chartered accountancy, to acquire appropriate professional skills such as personal, interpersonal, communication and intellectual skills. The University of Natal uses an annual report project in the third year of the Financial Accounting course to develop these skills in its students.
This questionnaire-based study reports on students' perceptions of the project and indicates what changes have been made for future projects. The findings of the study are useful for accounting lecturers as it highlights some of the issues that are involved in the use of an annual report as part of an Accounting course.
Source: Meditari : Research Journal of the School of Accounting Sciences 11, pp 167 –180 (2003)More Less
This article assesses the state of cash flow reporting by listed South African industrial companies in order to evaluate whether the users of financial statements can accept them as being reliable and use them as a tool to compare the operating performance of various companies.
As the cash flow statement has been in use since 1989, it was envisaged that compliance would be high. However, it was found that there are several companies that deviate from some of the requirements of AC 118 regarding cash flow statements.
Source: Meditari : Research Journal of the School of Accounting Sciences 11, pp 181 –198 (2003)More Less
In this article, modifications are suggested for the current format of the cash flow statement, which is prescribed by AC 118, in order to address ambiguities and improve comparability. This redefinition of activities, together with the alteration of the layout, leads to a better explanation of the cash-generating function of an enterprise. The authors argue that the separation of the cash flow for the maintenance of the existing resource base and the cash flow for the expansion thereof, is essential information in a model for the prediction of the future cash flow generation of a company. The resultant increase in the accessibility, reliability and utility of cash flow reporting should enhance users' economic decision making and liberalise financial information. The modifications proposed in the article can therefore assist standard setters to improve financial reporting.
Source: Meditari : Research Journal of the School of Accounting Sciences 11, pp 199 –220 (2003)More Less
A debt defeasance arrangement is an arrangement whereby a debtor's obligation to pay a creditor is nullified. The debtor and other parties perform a variety of legal and other actions in order to effect a valid debt defeasance arrangement. One of the actions that should be taken by the debtor is to pay an amount to a third party who takes over the obligation to pay the debt. The money received by the third party is referred to as a debt defeasance receipt.
Debt defeasance arrangements are used in countries such as the United States of America and Australia. The financial community in South Africa is becoming increasingly interested in the debt defeasance arrangement. As South Africa is becoming part of the global community, more foreign companies are doing business in South Africa. Because it is a relatively unfamiliar arrangement, that has not yet been addressed by the South African taxation authorities, there are probably a number of unanswered tax questions regarding the arrangement. One issue that is not yet clear is what the source of a debt defeasance receipt would be if it were to be received by a non-resident in South Africa.
A survey was done among South African banks, auditing firms and taxation senior counsel to determine the majority opinion of South African respondents regarding the source of a debt defeasance receipt. Although a variety of alternatives are identified as possible sources, the majority view is that the source is the debt defeasance business activities that are conducted by the recipient. It therefore follows that if the recipient of a debt defeasance receipt conducted his or her debt defeasance business activities in South Africa, the receipt will be of a South African source.
Source: Meditari : Research Journal of the School of Accounting Sciences 11, pp 221 –242 (2003)More Less
Paragraphs 68 to 72 of the Eighth Schedule to the Income Tax Act No. 58 of 1962 ('the Act') were inserted to perform the same function as that of section 7, namely to attribute income in cases in which the taxpayer has disposed of that source of income by means of donation, settlement or other disposition. Paragraph 73 of the Eighth Schedule to the Act was inserted to limit the total amount that is attributed to the donor in a year in which both income (in terms of section 7) and a capital gain (in terms of the attribution paragraphs 68 to 72) are to be attributed.
The unclear construction of the section and, it is submitted, the inaccurate interpretation of this paragraph by the South African Revenue Services ('SARS') has made it difficult to interpret this paragraph. This article attempts to evaluate prevailing legal precedent and to apply such precedent to the paragraphs on attribution in order to arrive at an appropriate interpretation of paragraph 73. The approach adopted by SARS is also examined in the light of the above interpretation and application of prevailing legal precedent. Lastly, amendments to the legislation are proposed to clarify the legislation and to provide a structured approach in the consideration of the intention of the legislature.
Author H.P. WolmaransSource: Meditari : Research Journal of the School of Accounting Sciences 11, pp 243 –254 (2003)More Less
It is generally accepted that the payment of dividends is the most important and most widely used instrument for the distribution of value to shareholders. Shareholders also prefer to receive regular dividends rather than irregular cash payments. A well-known model that attempts to explain dividend policy is that of Lintner (1956). This study investigates whether Lintner's model can be used to explain South African dividend payments and compares this model with another, less sophisticated, model, namely the "percentage model". Lintner's model does not have a very good fit, probably as a result of the small sample used. Nearly half of the 200 largest companies that are listed on the Johannesburg Securities Exchange were excluded from the study as they were not listed for a sufficiently long period. Other companies were excluded on the grounds of having maintained their dividends on the same level for at least two consecutive years.