Working Papers
WP 2009-2: The Environmental Bottom Line - A measurement model for organizations in Australia
The purpose of this article is to discuss a case on carbon footprint measurement done for a large organization in Australia, which will be called OzTech. The major value added from this article is: 1) how to develop a robust measurement tool that is inexpensive and useful to any organization (large or small); 2) a picture of the measurement methods used in Australia, and their effectiveness; 3) a look at a few examples of a real life organization, and the methodology behind how the measurement tool was created, initially for the organization, but eventually useable for any organization in Australia. The content of the article includes a literature review on ecological footprint, natural capitalism, triple bottom line, energy intensity, carbon footprint & emission factors, the input-output method for calculations, the actual measurement tool and its formulae. The measurement tool created for this paper was quite robust in calculating the carbon footprint for the organization, and provided a clear picture of their carbon emissions. In addition, another major finding was actually a weakness in the measurement tool, in that it did not factor into account the concept of energy intensity in the calculations. The value added from this paper/ exercise is the ability to create a cost effective, but powerful measurement tool to measure an organization’s carbon footprint (Australian organization).
Kaushik Sridhar & Grant Jones
This paper examines the profit quality of a goodwill-intensive firm, Transpacific Industries Group Limited (ASX.TPI), by specifically focusing on critical judgements and disclosures relating to goodwill impairment. The term “profit quality” is synonymous with terms such as “creative accounting” and “earnings management” and refers to the degree of aggressiveness or conservatism in the underlying estimates of a firms accounting disclosure. By examining the impairment disclosures made in accordance with AASB 136 – Impairment of Assets, an assessment is made of the reasonableness of a variety of critical assumptions, such as CGU growth rates and discount rates. This assessment is useful in judging the robustness of the firm’s impairment testing methodology and its ability to promptly recognise an impairment charge, should an impairment event occur. The paper catalogues ten issues relating to critical accounting judgements that ultimately undermine the profit quality of TPI, and the paper concludes with the view that TPIs methodology and approach to impairment testing is disingenuous, suggesting that TPI is applying a degree of aggressiveness to profit recognition.
Tyrone Carlin, Nigel Finch and Guy Ford
While the adoption of IFRS did not visit radical change upon all aspects of the financial accounting and reporting apparatus, this was not in the case of goodwill accounting and reporting, where almost every facet of prior practice was rendered redundant. Accordingly, careful scrutiny of the manner in which firms responded to new reporting requirements as they shift from one goodwill reporting regime to another provides an avenue through which evidence on how organisations cope with the rigours of complex material reporting change may be gathered. This is a question with potentially significant implications for a range of stakeholders including auditors, financial analysts, regulators and report users. This paper reports the results of a study of the goodwill reporting practices adopted by a sample of 50 large Australian listed firms which disclosed the existence of goodwill in each of the first two years in which they produced financial statements pursuant to IFRS. The quality and technical accuracy of the goodwill disclosures produced by these organisations together with an assessment of evidence of variation in these over time provides an evidentiary basis for analysis. The focal question pondered in light of this evidentiary base pertains to the nature of organisational responses to changes such as those brought about by continued development and reform of financial reporting standards.
Tyrone Carlin and Nigel Finch
After many years of debating the appropriate treatment for goodwill, Malaysia finally has an enforceable accounting standard on this topic. Applicable for business combinations with reporting dates commencing on or after 1 January 2006, FRS 136 - Impairment of Assets requires that goodwill acquired in a business combination is allocated to cash generating units and tested for impairment at least annually.
Tyrone Carlin, Nigel Finch and Nur Hidayah Laili
WP 2008-11: Discount Rates in Disarray: Evidence on Flawed Goodwill Impairment Testing
Discount rate selection represents a centrally material factor impacting valuation models. Given the strong reliance on discounted cash flow modelling as a basis for determining an assets recoverable amount, the judgement exercised by reporting entities regarding rate selection is of paramount importance in influencing the outcomes of the impairment testing process conducted under IFRS. The discretion surrounding rate selection could be used opportunistically to avoid impairment losses at the detriment of transparency, comparability and decision usefulness. The objective of the study is to compare the discount rates disclosed by a sample of large Australian firms with independently generated discount rates.
Tyrone Carlin and Nigel Finch
WP 2008-9: Questioning the Big 4 Audit Quality Assumption: New Evidence from Malaysia
Audit quality can be defined as relating to the probability that financial statements contain no material omissions or misstatements. Previous research on the subject of audit quality relies on the assumption that large audit firms (Big 4) are homogenous in providing higher audit quality than small audit firms (non-Big 4). However, there is little evidence in extant literature supportive of quality differentials between Big 4 firms, except that the collapse of Arthur Anderson certainly undermines this assertion that large auditors are associated with higher audit quality.
Tyrone Carlin, Nigel Finch and Nur Hidayah Laili
WP 2008-8: Improving Employee Engagement and Performance: A Self-Efficacy Based Intervention
Self-efficacy is a social psychological construct that is conceptualized from an agentic perspective. It refers to people’s beliefs about their capabilities to perform designated tasks. Numerous studies have shown a strong positive relationship between an individual’s self-efficacy and their performance. However, there is a paucity of studies examining the longitudinal effect of self-efficacy-based interventions, their impact on self-efficacy and subsequent individual and organizational performance. This paper reports on the results of a field experiment conducted within an Australasian financial services organization that assessed the effect of an intervention on participants’ self-efficacy and customer service skills. Two sets of workshops were designed and delivered using Forum Theatre, a technique traditionally used as a catalyst for political action amongst oppressed groups, as the principle vehicle to increase employee self efficacy. A specifically-designed measure of employee self-efficacy and a range of workplace customer service measures were used for evaluation purposes. Preliminary results indicate a positive change in customer service, in part due to enhanced self-efficacy.
Richard Carter
WP 2008-7: Self-Efficacy, Motivation and Employee Engagement: Empowering Workers Using Forum Theatre
Self-efficacy is a social psychological construct that is conceptualized from an agentic perspective and refers to the motivation to perceive oneself as a causal agent. A recent work place intervention within a division of a large Australian retail organization was designed to empower workers through the 4 sources of self-efficacy information: enactive attainment, vicarious experience, verbal persuasion and emotional arousal. This information was delivered via a Forum Theatre setting, a technique traditionally used as a catalyst for political action amongst oppressed groups. Preliminary results suggest the intervention’s format has lead to an increase in employee self-efficacy, empowerment and engagement as well as improved organizational performance. This paper describes the theoretical nexus between self-efficacy, work motivation and employee engagement and outlines a research program utilizing Forum Theatre as a vehicle to shift power to workers while concurrently meeting organizational objectives. The use of Forum Theatre suggests that another world is indeed possible for disengaged and alienated workers, a world where they are empowered.
Richard Carter
Self-efficacy is a social psychological construct that is conceptualized from an agentic perspective and refers to the motivation to perceive oneself as a causal agent. Numerous studies have shown a strong positive relationship between self-efficacy and organization performance. A recent work place intervention within a division of a large Australian retail organization was designed to improve customer service on a sustainable basis using the 4 sources of self-efficacy information: enactive attainment, vicarious experience, verbal persuasion and emotional arousal. This information was delivered via a Forum Theatre setting, a technique traditionally used as a catalyst for political action amongst oppressed groups. Preliminary results suggest the intervention’s format has lead to an increase in employee self-efficacy as well as improved organizational performance, demonstrating that concern for the improvement and well being of employees leads to better organizational results – doing well by doing good. This paper describes a proposed field experiment to formally investigate whether this intervention approach to improved customer service performance can be generalized to other organizations.
Richard Carter
WP 2008-5: Audit Quality Differences Among Big 4 Auditor: Cases from Malaysia
Audit quality can be defined as relates to the level of assurances or probability that financial statements contain no material omissions or misstatements. Previous research on audit quality relies on the assumption that big audit firms provided high audit quality. There is evidence that large audit firms provide higher quality audits and offer greater credibility to clients’ financial statements than small auditors. However, the collapse of Arthur Anderson has undermined the assertion that large auditors are associated with high audit quality. Recent study had an attempt to distinguish audit quality services among big audit firm as to question the assumption that the quality of audit services provided by big audit firms has been assumed to be treated as homogenous. Thus, this paper examined the audit quality pertaining to the disclosure requirement under the new FRS 136 in the transition period. The data were from the 2006 annual report for 34 large Malaysian listed corporations and all companies were clients of “Big 4” auditors. The result found that the audit firm identity appear to be a substantial proportion of observed cross sectional variation. Which, the quality of disclose pertaining to impairment testing process were significantly varies among Big 4 audit firms.
Tyrone Carlin, Nigel Finch and Nur Hidayah Laili
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