Mirrors and Prisms Interrogating Accounting: Volume 9

The purpose of this paper is to examine factors associated with promotions to manager of certified public accountants in auditing with special emphasis on ethnicity and gender. A survey was sent to 2,427 Certified Public Accountants (CPAs) in Santa Clara County, California. We conducted a logistic regression using the survey responses and found that CPAs who were managers had more years of experience and exhibited greater job proficiency in terms of discovering material irregularities and financial statement fraud. They also tended to be predominantly male. Conversely, CPAs who have not succeeded to the position of audit manager tended to have lesser years of experience than those who had, and lower frequencies of detecting material irregularities. They also tended to be predominantly female. While gender appeared to be a significant variable that correlated negatively with promotions, there did not appear to be a significant negative correlation with ethnicity. While there appeared to be a weak association between ethnicity and managerial promotions, this association was not statistically significant. Other factors such as level of college education including holding Master's degrees and possession of additional accounting certifications did not appear to influence the likelihood of becoming an audit manager.

Nonprofit organizations have feminine goals. Yet policy and regulation are requiring inappropriate masculine accountability that emphatically entrenches measurement. Trust is an appropriate feminine substitute for the masculine measurement embedded in traditional accounting. The question is how this trust can be assessed and communicated to funding bodies and other constituents? Qualitative methods for assessment and communication are advocated to attain this trust-accountability.

Prior studies examined the effects of rater and ratee on performance-related evaluations (PREs) either individually or in conjunction with one other variable. This study extended the literature by adopting a more complete approach. It examined the interaction effect between rater, ratee and environmental (such as level of performance) variables on PREs. A three-way interaction effect between rater age, ratee sex and level of managerial performance on PREs was predicted. An experiment using two cases — one where the ratee performed successfully and the other where the ratee performed unsuccessfully — was carried out. Fifty-seven participants took part in the experiment. As predicted, when the ratee performed successfully, younger raters demonstrated a sex bias against the female ratee whereas older raters did not. However, when the ratee performed unsuccessfully, neither younger nor older raters exhibited significant female sex bias. Implications of the findings were discussed.

This paper presents narrative data collected from seniors and managers/senior managers of five international professional services firms. Participants voluntarily wrote comments on the face of a survey instrument that collected objective format data. Comments discuss a variety of aspects of the work environment. This study provides a view of the accounting workplace that focuses on individual perceptions and experiences. The narrative data is organized into categories addressing the nature of the job, compensation, organizational culture and personal sacrifice. Overall, the environment portrayed by the individual comments is one perceived by the respondents to be difficult and challenging: too much work, insufficient rewards, lack of appreciation, limited control by the individual, and poor-quality management. The paper discusses the comments and relates them to contemporary events, theory and research.

The Financial Accounting Standards Board has issued an Exposure Draft (ED) that would eliminate the use of the pooling method of accounting for business combinations (FASB 1999a, 2001). The Exposure Draft provides several rationales for the proposed changes to the accounting treatment of business combinations. This paper examines these rationales from two perspectives, namely, decision-usefulness and accountability. Decision-usefulness is currently the basis for standard setting under the FASB's Conceptual Framework. The concept of accountability, as defined in Ijiri (1983) and Williams (1987), forms an alternative basis for providing direction for financial reporting.The paper provides an empirical evaluation of the two methods used to account for business combinations (pooling-of-interests and purchase) from the decision-usefulness perspective. The results of this study suggest that the purchase method provides information that may be more useful to the investor in determining firm value. The analysis from the accountability perspective provides important insights because it considers the viewpoint of the variety of constituents that may be impacted by the accounting standard, and illustrates how this perspective may enable standard setters to gain insights that may not be evident from the decision-usefulness perspective.

We investigate whether CEO cash compensation is shielded from the significant negative earnings effect of the adoption of FAS 106, Employers' Accounting for Postretirement Benefits other than Pensions and whether CEO compensation is adjusted to reflect reductions in post retirement benefits taken from employees. The intervention hypothesis posits that compensation committees actively make adjustments to executive compensation for specific earnings components to reward CEOs for their contribution to firm value. Using within firm, longitudinal analyses, we find that the effects of FAS 106 on CEO cash compensation depend on whether post retirement benefits are reduced. Firms that cut post retirement benefits reward the CEO for value-increasing benefit cuts despite the earnings reduction caused by adoption of FAS 106, while firms that do not cut benefits ignore the earnings reduction caused by FAS 106.

A decade ago, we conducted a study (reported inMartens McEnroe, 1992) with the result that auditors neglected substance over form and perceived little exposure to litigation in doing so. The theoretical basis of the previous paper was implicit contract theory. We have had occasion to change our analysis since the previous work; in this paper we focus on the commodification of audits, and trace the neglect of substance over form to that commodification. We present evidence that recent actions by the SEC have altered the perception of auditors that the letter of GAAP (Generally Accepted Accounting Principles) is an aegis against litigation, and that audits which do not opine on substance over form are perfectly marketable commodities. We find, however, that audits which do not opine on substance vs. form are extant, and we cannot conclude that a change in the conditions of production of the audit commodity has occurred or is imminent.

Studies show that, in practice, employers and auditors are not complying with the Immigration Reform and Control Act of 1986. Consequently, this practice resulted in a 19% increase in citizenship and national origin discrimination in 1990. In addition, not complying with the act imposes significant financial burden on employers because the Immigration and Naturalization Services' fines may result in small businesses declaring bankruptcy. This paper explores how and why employers, auditors, and the government need to cooperatively work toward complying with the act. In short, the study advocates that employers must comply with the act to avoid monetary liabilities. External auditors should attest in their payroll audit that the firms comply with Generally Accepted Auditing Standards. Government should incorporate the act's requirements into Single Audit Act together with all Yellow Book audits. Finally, immigration policies must address economic, humanitarian, and ethical issues to protect the basic human rights of all United States residents, legal or not.