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- Meditari : Research Journal of the School of Accounting Sciences
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- Volume 16, Issue 2, 2008
Meditari : Research Journal of the School of Accounting Sciences - Volume 16, Issue 2, 2008
Volume 16, Issue 2, 2008
Five recent developments' impact on the traditional academic culture of Departments of Accounting at South African universitiesAuthor D.B. Van der SchyfSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 1 –12 (2008)More Less
The fact that Departments of Accounting at South African universities, whose academic programmes are accredited by the South African Institute of Chartered Accountants (SAICA), have for many years focused primarily only on the academic training of prospective chartered accountants, has established a culture that is removed from research, and this is in contrast to the nature of a university. The aim of this paper is to evaluate some recent developments in the South African academic environment that may promote a research culture and to point out the coercive role these developments may play in changing the existing culture of a Department of Accounting. The study concludes that in view of a list of specific recent developments in the national academic environment, Departments of Accounting will be forced to change course toward becoming more research oriented. A number of recommendations are made to expedite the process.
An analysis of service-oriented architecture (SOA) to determine the impact on the activities performed by the external auditor of a SOA service consumerAuthor R. ButlerSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 13 –30 (2008)More Less
Various forms of IT sourcing used by audit clients create issues of concern for external auditors. This article investigates the nature and basic characteristics of service-oriented architecture (SOA), a modern information system architecture strategy, to ascertain whether the use of SOA by a service consumer audit client would have an impact on the activities typically performed by the external auditor.
It was found that SOA presents a complete shift in the way IT application functionality is constructed and integrated and inevitably effects changes in the accounting system and the related internal controls of the SOA service consumer. As a result SOA has a significant impact on the activities performed during the audit process and introduces various SOA-related aspects that need to be considered by the external auditor of a SOA service consumer.
An analysis of cost of capital, capital structure and capital budgeting practices : a survey of South African listed companiesSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 31 –52 (2008)More Less
This study employs a sample survey to determine and analyse the corporate finance practices of South African listed companies in relation to cost of capital, capital structure and capital budgeting decisions.
The results of the survey are mostly in line with financial theory and are generally consistent with a number of other studies. This study finds that companies always or almost always employ DCF methods such as NPV and IRR to evaluate projects. Companies almost always use CAPM to determine the cost of equity and most companies employ either a strict or flexible target debt-equity ratio. Furthermore, most practices of the South African corporate sector are in line with practices employed by US companies. This reflects the relatively highly developed state of the South African economy which belies its status as an emerging market. However, the survey has also brought to the fore a number of puzzling results which may indicate some gaps in the application of finance theory. There is limited use of relatively new developments such as real options, APV, EVA and Monte Carlo simulation. Furthermore, the low target debt-equity ratios reflected the exceptionally low use of debt by South African companies.
Author P. De JagerSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 53 –68 (2008)More Less
Empirical accounting research frequently makes use of data sets with a time-series and a cross-sectional dimension - a panel of data. The literature review indicates that South African researchers infrequently allow for heterogeneity between firms when using panel data and the empirical example shows that regression results that allow for firm heterogeneity are materially different from regression results that assume homogeneity among firms. The econometric analysis of panel data has advanced significantly in recent years and accounting researchers should benefit from those improvements.
Evaluating the information content of nominal and inflation-adjusted versions of the measure Economic Value Added (EVA)Author P.D. ErasmusSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 69 –87 (2008)More Less
This study implements inflation adjustments, as proposed by International Accounting Standard 15 (IAS15), to determine an inflation-adjusted version of Economic Value Added (EVA). The relationships between the nominal (EVAnom) and inflation-adjusted (EVAreal) versions of EVA, and market-adjusted share returns are investigated, and compared with those of residual income, earnings and operating cash flow. Relative information content tests suggest that earnings have the strongest relationship with share returns, while the results of the incremental tests indicate that the EVAnom and EVAreal components do not provide statistically significant information content beyond that provided by residual income.
Author I. FerreiraSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 89 –106 (2008)More Less
This article attempts to examine audit committee composition and structure affecting and leading to enhanced audit committee performance, with due regard for the principles of good governance and international best practices. The article recommends the ideal composition and structure of the audit committee to assist committees to meet their requirements, to ensure optimal performance and to improve the effectiveness of their oversight of financial reporting and corporate governance. The framework developed could also be used as a guideline in the selection and recruitment process for audit committees. The requirements are based on the regulatory requirements of the King II Report on Corporate Governance in South Africa (2002), the Companies Amendment Act 20 of 2004, the Corporate Laws Amendment Bill (2006), the Public Finance Management Act (PFMA), the JSE Limited requirements, the Blue Ribbon Committee Report (1999) and the Sarbanes-Oxley Act of 2002 in the USA.
Author G.K. GoldswainSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 107 –121 (2008)More Less
This study examines the way in which our judiciary approach the interpretation of fiscal legislation. It traces the roots of the historical approach (the strict and literal approach), its shortcomings and the modifications to such an approach when it leads to an absurdity. It then analyses whether the advent of the Constitution (Constitution of the Republic of South Africa Act 108 of 1996) has been a catalyst for a change from the strict and literal approach. The conclusion reached is that the Constitution has been a catalyst for a change in approach - to a purposive approach. One of the results of the change in approach means that the taxpayer now has a realistic opportunity to question and even have unjust and unfair interpretation decisions of the past reversed in the appropriate circumstances.
Source: Meditari : Research Journal of the School of Accounting Sciences 16, pp 123 –138 (2008)More Less
This article deals with internal auditors' use of and compliance with the Standards for the Professional Practice of Internal Auditing, as well as the Practice Advisories, issued by the Institute of Internal Auditors (IIA). The results reported here form part of a global research project, the 2006 Common Body of Knowledge in Internal Auditing (CBOK) study.
The research shows that internal auditors worldwide believe that overall, their organisations comply with the Standards. Reasons for not using the Standards relate to organisational attributes such as management's perceptions that these do not add value and are too time-consuming to comply with.
Involving the accounting profession in the development of financial management skills of micro-enterprise owners in South AfricaAuthor C.L. SchwarzeSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 139 –151 (2008)More Less
In order to be successful, micro-enterprise owners in South Africa face several management challenges. To overcome these challenges it is crucial that they possess sufficient financial management skills to ensure business survival and growth. This article focuses on determining the extent to which the critical financial management skills that micro-enterprise owners in South Africa require differ from those they possess, in order to identify specific interventions to develop the skills that are lacking. It was found that most micro-enterprise owners do not possess the critical financial management skills required. Recommendations are made on how members of the accounting profession could become involved in developing these skills.
Source: Meditari : Research Journal of the School of Accounting Sciences 16, pp 153 –173 (2008)More Less
Investigations into professional accountancy education gathered impetus with the publication of The impact of globalisation on accountancy education by Karreman in 2002. This publication provided a comparative analysis of professional accountancy education in 25 countries worldwide, using a model developed for the classification of accountancy education systems. The rationale behind such an exercise is to promote educational exchange and facilitate educational development. The Karreman study only covered two countries in Africa, namely South Africa and Kenya. This study expands the Karreman study by comparing and benchmarking the professional accountancy education programmes in six member countries of the Eastern, Central and Southern African Federation of Accountants (ECSAFA) using the Karreman methodology.
This study reports the results of a questionnaire survey to which seven accountancy bodies located in six countries responded. The results of this study revealed mostly agreement with the Karreman model. All the countries could be categorised as developing countries with common law / Roman-Dutch legal systems and with a strong British influence. Thus similarities in regulation, education and practical experience are expected. The professional bodies tend towards professional self-regulation with low to medium membership regulation. All countries require practical experience before qualifying, and a theoretical approach to the final examination predominates. The study also shows that there is co-operation in the region.
Author D.P. Van der NestSource: Meditari : Research Journal of the School of Accounting Sciences 16, pp 175 –188 (2008)More Less
Audit committees have increasingly been recognised as an integral part of modern control structures and governance practices in both the private sector and public service. The audit committee is an integral element of public accountability and governance processes. It plays a key role in underwriting the integrity of corporate governance of a government department.
The broad aim of this study is to investigate the status and function of audit committees in South African national government departments. The research question investigated in this paper is to determine whether audit committees in the public service are perceived to be effective in assisting accounting officers of government departments to discharge their responsibilities. The study concludes that the majority of audit committees in the South African public service are not perceived as ineffective in the performance of the required functions of committees. Audit committees can still improve their effectiveness in their performance of certain key functions in the areas of oversight over risk management, governance, financial reporting, internal control and support for the external audit function.
Source: Meditari : Research Journal of the School of Accounting Sciences 16, pp 189 –211 (2008)More Less
South African motor manufacturers should find ways to improve their performance management systems to ensure survival in the face of strong competition in the market. The main objective of this study is to evaluate the industry's approach to performance management and to make recommendations about a framework for performance management that can be implemented to obtain a competitive advantage. A well-known instrument that proves to be highly effective in performance management is the balanced scorecard. This instrument manages performance on four distinct levels, namely from the financial perspective, the customer perspective, internal business processes and learning and growth. It is apparent from the results of this study that performance management is still very much a one-way process, and that a lack of communication is the primary reason for unsatisfactory workforce performance. Furthermore, the majority of motor manufacturers consider the customer perspective as the most important of the four above-mentioned perspectives. Motor manufacturers also disagree about the number of performance measures that need to be included in the performance management system, and the majority feel that both controllable and non-controllable fixed costs must be included in the measurement of management performance. Shareholder value measures are also largely neglected in practice.