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- Meditari : Research Journal of the School of Accounting Sciences
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- Volume 12, Issue 1, 2004
Meditari : Research Journal of the School of Accounting Sciences - Volume 12, Issue 1, 2004
Volume 12, Issue 1, 2004
Author K. BaracSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 1 –20 (2004)More Less
The inherent nature of the Internet affects financial reporting in the sensethat information on a website is available to anyone, anywhere and at anytime. Financial reporting on the Internet reduces the cost of financial reporting,makes instantaneous reporting a reality, adds breadth and depth tobusiness reporting, allows analytical tools to be used on underlying businessdata and makes it easier to disseminate reports to any place in theworld where there is a computer.
A cursory exploration of financial reporting on the websites of SouthAfrican companies reveals great variations in terms of the amount of content(e.g. summary financial statements vs detailed financial statements),the style of presentation (e.g. similar to paper-based reports vs inclusion ofmulti-media) and the manner in which companies incorporate navigationaids (e.g. hyperlinks, search boxes and others). The advantages of theInternet as a new mode of information dissemination are clear, but Internetfinancial reporting creates a number of challenges for companies and theirauditors as well as for regulatory and standard-setting organisations. Thispaper assesses Internet reporting in South Africa. It explores the manner inwhich financial and certain non-financial information is presented on companies'websites and determine whether reporting practices on the websites ofSouth African companies differ from those of their international counterparts.
The study revealed that although Internet usage in South Africa has expandedas a medium for presentation of financial information via companies'websites, top South African companies use their websites as a bulletinboard with limited real-time financial information and note disclaimers.
Author C.J. De VilliersSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 21 –38 (2004)More Less
The environment is an important business issue and it will be even more soin future. Environmental reporting nowadays features increasingly in annualreports and elsewhere. It is however not compulsory and corporatedecision makers must therefore make a decision for or against such reporting.Ethics is at stake in any decision involving right or wrong. Ethicaltheory is therefore examined in an effort to establish whether environmentalreporting should be done.
It is concluded that corporate environmental reporting constitutes theethical high road.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 39 –59 (2004)More Less
It is generally believed that in order to maximise value for shareholders,companies should strive towards maximising MVA (and not necessarilytheir total market value). The best way to do so is to maximise the EVA,which reflects an organisation's ability to earn returns above the cost ofcapital. The leverage available to companies that incur fixed costs and useborrowed capital with a fixed interest charge has been known and quantifiedby financial managers for some time. The popularisation of EVA andMVA has opened up new possibilities for investigating the leverage effectof fixed costs (operational leverage) and interest (financial leverage) inconjunction with EVA and MVA, and for determining what effect changesin sales would have through leverage, not only on profits, but also on EVAand MVA. Combining a variable costing approach with leverage analysisand value analysis opens up new opportunities to investigate the effect ofcertain decisions on the MVA and the share price of a company. A spreadsheetmodel is used to illustrate how financial managers can use the leverageeffects of fixed costs and the (fixed) cost of capital to maximise profitsand also to determine what impact changes in any variable like sales orcosts will have on the wealth of shareholders.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 61 –75 (2004)More Less
The recommendations of the King II Report on corporate governance regardingemployee-related disclosures by listed companies were identified.The annual reports of the Top 100 industrial companies as well as of themining companies listed on the Johannesburg Securities Exchange werefurthermore analysed to establish the percentage of companies that complywith the King II recommendations. It transpired that few of them complyfully with these recommendations.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 77 –99 (2004)More Less
Accountants are looking for innovative solutions to challenges and problemsthat seem to become increasingly numerous and complicated. Researchersdebate whether the emergence of these challenges is due to a general dissatisfactionwith the existing accounting paradigm. This article therefore presentsa transdisciplinary approach aimed at creating a new accounting paradigm.
The discipline of accounting is challenged by blending the limitationswithin the present paradigm with the discoveries in physics and quantum mechanics.This study shifts the attention to those aspects of reality that characterisetoday's accelerated social change, disorder, instability, diversity,disequilibrium and non-linear relationships - all with a heightened sensitivityto the flow of time. By interpreting financial accounting and reporting fromthis perspective, new perspectives are offered from a holistic paradigm oftranscendence in relation to the arrow of time and information capacity.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 101 –117 (2004)More Less
We know more about the past than about the future. Accounting informationand knowledge of the past come from the fact that the methods we useto arrive at beliefs about the past are generally more reliable than thosegenerating predictions of the future.
Because future uncertainty is linked to the arrow of time, its increasecoincides with the flow of time from the past and present to the future. Tofacilitate and decrease uncertainty, accountants produce an ever-increasingamount of future-oriented information through the use of inter alia bookentries. The integrity issues of this method of information creation are investigatedin this article. It is found that the integrity of information maybe affected when book entries are used.
Value-added tax on new residential properties : a comparative study regarding developers registered for VAT purposesAuthor L. JulyanSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 119 –136 (2004)More Less
This paper reports on a research study of value-added tax (VAT) that appliesto new residential properties developed by developers who are registered forVAT purposes. The objective of the research was to compare the currentVAT provisions relating to new housing in South Africa with those of theUnited Kingdom, Canada and Australia. Similarities and differences weredetermined and discussed. It was ascertained that the selected countries allhave special rebates or concessions regarding new housing, whereas SouthAfrica has none.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 137 –163 (2004)More Less
In the light of the acceleration in the international and local information andknowledge revolution, the University of Stellenbosch (US) has introducedan e-learning strategy to gain maximum benefit from the developments ininformation technology. In support of this strategy, the US has implementedWebCT as an electronic course management system. Subsequent consultationshave revealed doubt among accounting lecturers and students about theeffectiveness of WebCT assessment of tests in Financial Accounting. Thepurpose of the study was therefore to investigate this perception on the basisof the available literature, our own experience, categories of student learningand feedback from students. The WebCT assessment function was also contrastedwith traditional assessment methods. It was concluded that althoughWebCT is not a quick fix, it could be implemented successfully in biggerclasses, provided that innovative lecturers are responsible for these classes.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 165 –178 (2004)More Less
When bank managers are asked to comment on the bank's performanceover the past year, most would quote either their bank's return on equityor return on assets. If these measures were higher than those of their peers,the bank is referred to as a high-performance bank. The ratios involved arefinancial ratios and the main problem with this approach is its reliance oncomparable ratios. To find suitable comparable standards (norms) is quitedifficult, and when the standard (norm) is not appropriate, the comparisonmay mislead the analyst. A measurement tool that can compensate for theweaknesses in financial ratios is therefore needed. One such tool that can beused to measure bank performance is Data Envelopment Analysis (DEA).
The objective of this article is to draw a comparison between the resultsof financial ratios (as a conventional performance measurement) and theresults obtained by means of DEA with regard to the performance evaluationof the ten regional offices of one of South Africa's larger banks.
Source: Meditari : Research Journal of the School of Accounting Sciences 12, pp 179 –193 (2004)More Less
Cost behaviour classification and cost behaviour structures of manufacturingcompanies
The purpose of this paper is to determine the cost structures of companiesthat formed part of an empirical investigation. Further aspects wereinvestigated to determine why manufacturing companies classify cost behaviourinto fixed and variable components and to determine how thesecompanies classify specific cost items. It was found that there is a significantnegative relationship between the fixed cost of a company and its degreeof technological development. This means that labour intensivecompanies have more fixed cost as part of total costs and therefore ahigher operating risk than technologically developed companies. It wasalso found that manufacturing companies classify cost items differentlyand this study provides some guidelines how to manage cost behaviour.
Author S.P.J. Von WiellighSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 195 –217 (2004)More Less
The objective of this research is to identify those industry-specific elements of the financial statements of listed South African long-term insurers that are potentially exposed to the highest level of inherent risk. Auditors of these companies should focus on these elements to ensure effective and efficient audits.
An exploratory literature study was conducted. A questionnaire was subsequently used to identify significant accounts potentially exposed to the highest level of inherent risk. Relative levels of inherent risk were measured using a "Relative Inherent Risk Index" that had been specifically developed as part of this research.
The research indicates that policy liabilities and operating profit from long-term insurance activities are potentially exposed to a significantly higher level of inherent risk than the other industry-specific elements of the financial statements of long-term insurers.
Author P.L. WesselsSource: Meditari : Research Journal of the School of Accounting Sciences 12, pp 219 –234 (2004)More Less
One of the objectives of accounting education at South African universitiesis to prepare students for positions as professional accountants. Thebulk of current education at South African universities focuses on the acquisitionof technical knowledge through courses or modules focused onfinancial accounting. The South African Institute of Chartered Accountants,which is the dominant professional accounting body in South Africa,is mainly responsible for prescribing the body of knowledge that is taught.However, current accounting education is challenged by major changes inthe environment in which professional accountants are operating. One ofthe major factors that affect this environment is the impact of informationtechnology on the accounting profession. The purpose of this article istwofold: firstly, to investigate the extent of the changing environment inwhich professional accountants will need to operate in future, focusingspecifically on information technology; and secondly, to determine theneed for future research that will identify strategies for closing the gapbetween the current education of accountants at South African universitiesand what will be expected from them in their profession in future.