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- Volume 9, Issue 1, 2001
Meditari : Research Journal of the School of Accounting Sciences - Volume 9, Issue 1, 2001
Volume 9, Issue 1, 2001
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 1 –32 (2001)More Less
HIV / AIDS has implications of varying severity across a wide spectrum of businesses in South Africa. Financial accountability is therefore required to enable investors and other stakeholders to be advised regarding the effect of HIV / AIDS on company performance and to make informed decisions.
This paper explores financial accountability with regard to HIV / AIDS. It investigates top management's awareness, coping strategies and financial information (available and required) that is communicated internally and to stakeholders. Its empirical content concentrates on major public companies that operate in industries in which HIV / AIDS is known to be present. It reveals that companies are informed and pragmatic. However, many do not engage in legally permissible prevalence testing, and thereby frustrates attempts at a clear definition of the problem and at forecasting. Most companies are therefore unable to project what the effect of HIV / AIDS on future performance and profitability will be.
The paper concludes that, although HIV / AIDS receives attention in terms of corporate governance, there is an absence of financial accountability via annual reports and financial statements. Many companies have no information available, while others may elect not to disclose it.
Pre-qualification education of registered accountants and auditors in South Africa : perspectives on whether the education process is normatively justifiableAuthor W.J.J. BothaSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 33 –59 (2001)More Less
In order to ensure that registered accountants and auditors (RAAs) discharge their functions in the public interest, the RAA profession, through its governing bodies, should establish, maintain and ensure compliance with among other things an identified set of educational requirements. The research objective is twofold: Firstly, to provide a normative description of pre-qualification professional education and, secondly, to evaluate the extent to which the current pre-qualification education process applicable to RAAs in South Africa is normatively justifiable. A study of the literature on general professional education and on education in the field of accountancy facilitated the achievement of the first objective, while the second objective was addressed by means of a comparative analysis of the basic prequalification educational requirements applicable to prospective RAAs and the normative description of professional education presented. The current educational process permits latitude for factors and practices that are not wholly justifiable within a normative definition of professional education. The lack of normative justification for several aspects of the system will impede the achievement of sound educational objectives.
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 61 –79 (2001)More Less
The Institute of Internal Auditors is in the process of developing new standards for the internal auditing profession. The first set of these standards will be implemented with effect from 1 January 2002. The purpose of professional standards is to lay down the minimum requirements to be maintained for acceptable practice. In June 1999, a new formal definition of internal auditing was adopted to address relevant issues with which internal auditing is currently faced. Existing standards, when read in conjunction with the new definition, have deficiencies and these deficiencies have led to the development of new standards for the profession.
The purpose of this article is to discuss the limitations of the current standards, to identify the changes incorporated in the new standards, and to evaluate the changes. The article evaluates whether the new standards address the changes in the new definition and highlights the influence of the changes in the standards on the internal auditing profession. The findings are that the new standards are difficult to analyse, especially because the current standards must still be used in conjunction with the new standards, yet the changes successfully address the challenges facing the internal auditing profession.
Industry differences in respect of corporate environmental reporting in South Africa : a research noteSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 81 –91 (2001)More Less
Previous research has revealed industry differences in respect of environmental reporting in South Africa. However, these studies concentrated on particular types of environmental reporting and therefore precluded many other types of environmental reporting in the annual reports surveyed. Past surveys also awarded equal credit to any reference to a particular type of environmental information, whether it comprised a single sentence or several pages.
The annual reports of the top 100 companies, in terms of market capitalisation, were analysed and a sentence count of environmental disclosure was done with the use of the Hackston & Milne (1996) methodology. The group of energy companies was defined as comprising companies in energy-intensive industries or companies that are producers of energy carriers. The survey revealed that these companies disclosed significantly more environmental information than other companies, in total and in each category
These findings are consistent with the notion of legitimacy, which holds that companies cannot prosper if their aims and methods are not perceived to be in line with that of society. For this reason, companies that have the most obvious environmental impact tend to disclose more environmental information than other companies in an effort to legitimise their aims and methods in the eyes of society.
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 93 –108 (2001)More Less
In an educational environment in which global trends prompt educators to consider alternative approaches to teaching and learning, new ways should be found to educate more efficiently and effectively. In line with this learner/customer-centred approach, the first-year students in Financial Accounting at the University of Pretoria were requested to complete a questionnaire in order to identify weaknesses in the current approach, highlight possible areas to be developed or make suggestions regarding the improvement of the course. The results yielded several clear indications of the changes that could be made and new ideas that could be considered. Some of these suggestions have been implemented. The results, which are being monitored continuously, are reported in this article.
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 109 –122 (2001)More Less
Economic events and key economic variables affect stock markets on a daily basis. Inflation is one such economic variable that influences share prices to some extent. This article focuses on two SADC countries, South Africa and Namibia, and measures the impact of inflation on share market prices in these countries. It can be concluded from the study that neither South African nor Namibian companies can offer investors a perfect hedge against inflation.
The general meaning of "extenuating circumstances" for the purposes of section 76(2)(a) of the Income Tax ActSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 123 –135 (2001)More Less
The additional tax (referred to as a "penalty" by the judiciary), which may be imposed in terms of section 76(1) of the Income Tax Act ("the Act") when a taxpayer is in default, can be very harsh (Up to 200% of the tax correctly chargeable). The Commissioner may remit any penalty imposed as he sees fit. However, when there was intent on the part of the taxpayer to evade the payment of tax, the Commissioner may not remit the 200% penalty, unless he is of the opinion that there are "extenuating circumstances".
This article examines the general meaning, as interpreted by the courts, of the "extenuating circumstances" that may be taken into account for the purposes of remission of penalties in terms of section 76(2)(a) of the Act.
Reliance on professional and non-professional advisors or staff as a defence to the imposition of penalties in income tax mattersSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 137 –154 (2001)More Less
Many taxpayers rely on their advisors to look after their tax affairs. In spite of this reliance, taxpayers still find themselves in default for the purposes of section 76(1) of the Income Tax Act and additional tax (referred to as a "penalty" by the judiciary) is imposed.
This article examines whether the reliance by a taxpayer on his advisor, be it his accountant, bookkeeper or even a member of staff, can constitute a complete or partial defence to the imposition of additional tax in terms of section 76(1) or be regarded as an "extenuating circumstance" for the purposes of remission of additional tax in terms of section 76(2)(a).
The influence of full compliance with the Companies Act on the knowledge-creating potential of the directors' reportSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 155 –173 (2001)More Less
Accounting is a complex system, comprising numerous items and transactions that are interrelated in various ways. Management's decisions are reflected in accounting information. The user of accounting information has a real need to comprehend such information in order to make informed decisions. The research reported in this article reveals that when the directors' report fully complies with the letter and context of the Companies Act, it should be used as: a communication tool to enhance comprehensibility; as a mechanism to explain the economic reality of the company; and as a vehicle to reduce the gap between accounting information and the user. It should therefore be used as a knowledge-creating statement, which the various stakeholders of the company can tap into.
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 175 –197 (2001)More Less
In this paper, grounded theory is investigated and applied to research on electronic commerce in order to demonstrate its use and potential limitations in accounting research. Grounded theory enables relevant theoretical concepts to emerge from the data and, in this way, leads to discovery. In treating 'all as data', grounded theory uses a pragmatic approach, combining qualitative and quantitative data and data-gathering methods to encourage a rich understanding of the situation. This enables the generation of theory rather than the confirmation of existing theory. To illustrate this process, this paper demonstrates the emergence, with the use of grounded theory, of a definition for electronic commerce.
The informativeness of voluntary disclosure in the annual reports of listed industrial companies in South AfricaAuthor J.E. MyburghSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 199 –216 (2001)More Less
Users of annual reports require an extensive range of financial and non-financial information, whether mandatory or voluntary, in order to assess the fair value of an investment. The extent and quality of voluntary information is dependent on company policy, and companies need to make decisions in favour of or against the disclosure of certain informative items. A survey was conducted to examine the perceptions of the compilers and the users of annual reports on the price-informative value of voluntary disclosures in annual and interim reports. The rankings awarded by compilers and users to the various voluntarily disclosed items were compared in order to determine the significance of the differences between the perception of the two groups. Significant differences were identified and suggestions are made for the improvement of corporations' voluntary disclosure strategies.
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 217 –229 (2001)More Less
The purpose of this research is to determine whether the trading of equity index futures contracts on the South African Futures Exchange (SAFEX) results in an increase in the volatility of the underlying spot indices.
Since equity index futures contracts were first listed in the USA in 1975, various studies have been undertaken to determine whether the volatility of shares in the underlying indices increases as a result of the trading of such futures contracts. These studies have lead to the development of two schools of thought:
- Trading activity in equity index futures contracts leads to an increase in the volatility of index shares.
- Trading activity in equity index futures contracts does not lead to an increase in the volatility of the index shares and could in fact lead to greater stability in equity markets.
Problems in respect of adherence to disclosure requirements regarding interim financial reporting in South Africa - an overview and recommendations to solve these problemsSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 231 –255 (2001)More Less
For years, interim financial reports in South Africa were regulated by the South African Companies Act No. 61 of 1973 (as amended) (i.e. statutory requirements) and by the Johannesburg Stock Exchange (JSE) Listing Requirements (i.e. regulatory requirements) only. However, on the international front, major progress was being made in respect of improving the quality of interim financial reporting. South Africa soon followed suit and issued its own accounting statement, AC 127, which is based on the international standard (IAS 34).
The School of Accountancy at the University of Pretoria commenced a research project on interim financial reporting in 1997 to investigate compliance with related reporting requirements. This paper is a product of the project. The purpose of the study reported in this paper was to:
- Compare the requirements stated in IAS 34 and AC 127 with the local regulatory and statutory requirements, to determine whether these requirements are duplicated and to establish in which respect the accounting standards require additional disclosure requirements.
- Provide an overview of the extent to which companies listed on the JSE adhered to IAS 34 and AC 127 and complied with regulatory and statutory requirements in their interim financial reports in the period 1997 to 1999.
- Make recommendations regarding the improvement of local statutory and regulatory disclosure requirements.
Is management accounting theory breaking free from the shackles of neo-classical economics? A South African perspectiveAuthor M. ShotterSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 257 –284 (2001)More Less
To the extent that management accounting is based on neo-classical economics, all decision-making is assumed to be rational, aimed at utility or profit maximisation and all circumstances influencing decisions are accepted as stationary. The approach excludes all social, cultural or historical considerations and is based on perfect information that is freely available. Neo-classical economics further assumes that minimum government intervention, which is regulated by competition, will result in maximum benefit for society as a whole. This paper aims to determine the extent to which management accounting theory has been based on these limiting assumptions and finds that emerging management accounting theory is increasingly based on alternative, more liberating foundations. This situation is in contrast to management accounting education in South Africa, which remains almost entirely based on neo-classical economics.
Author L. Van SchalkwykSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 285 –299 (2001)More Less
Years ago, the Katz Commission questioned the constitutionality of certain provisions of the Income Tax Act, 1962. The purpose of this article is to investigate the general principles of human rights litigation and the progress made to date in respect of rectifying the unconstitutional provisions of the Income Tax Act that were identified by the Katz Commission. It has been established that, although some unconstitutional provisions have been amended, others still prevail, and that, in the light of the factors identified, they will probably not be challenged successfully by taxpayers.
The balanced scorecard as a potential instrument for supporting the planning and improvement of accounting education in South AfricaSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 301 –312 (2001)More Less
This paper illustrates the potential of the balanced scorecard as an instrument for accounting educators to guide, stimulate and sustain efforts in respect of planning and improvement in the accounting education environment. The results of the reported survey among the heads of eleven accounting departments at South African universities support the potential applicability of the balanced scorecard in this regard.
Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 313 –332 (2001)More Less
The problem investigated is whether there is a positive relationship between the environmental responsibility and the financial performance of South African listed companies. The financial performance measures ROE, ROA, ROC and EVA were individually correlated with the environmental reporting percentages (i.e. the measure for environmental responsibility) for all the companies. Based on the results of the correlation analyses, it is concluded that there is a positive relationship between the environmental responsibility and the financial performance of South African listed companies; i.e. the higher the level of environmental responsibility of a company, the better its financial performance.
Postgraduate education in taxation by means of a flexible learning model : a new educational paradigmSource: Meditari : Research Journal of the School of Accounting Sciences 9, pp 333 –349 (2001)More Less
The Internet is becoming increasingly important in our daily lives. So, too, is the ease of communication by means of television. The power of these two technological tools in education has been combined in so-called 'flexible learning'. This study investigates the experience of students in a master's degree programme in taxation, which is presented by means of flexible learning. In general, students experience this mode of learning very positively and would advise others to enrol for the same course. They acknowledge that the benefits of flexible learning far exceed any possible drawbacks.
Investment management education : is there a gap between the perceptions of academics and of practitioners?Source: Meditari : Research Journal of the School of Accounting Sciences 9, pp 351 –366 (2001)More Less
In recent years, investment management education has become increasingly relevant. As a result of this development, it is essential that various role players should be consulted to ensure that investment management is taught in line with practitioners' requirements. The South African Qualifications Authority also specifies that educators and practitioners should collaborate to maintain relevance in all fields of education. The importance of various areas in investment management was investigated. This article compares the ranking of these areas in terms of their importance as perceived by academics and practitioners. The study being reported also aimed to determine whether gaps exist between the areas that academics regard to be important and the areas that practitioners regard as such.
Areas that are generally regarded to be most important include asset allocation, fundamental analysis and the measurement of risk and return. Areas that are regarded to be least important include arts, antiques and other hard assets; rights and capitalisation issues; and real estate. Areas in need of research include the measurement of risk and return; asset allocation; derivatives; and global markets and instruments. The findings of this study could have a significant impact on the provision of relevant training for South African investment specialists.