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The typical unqualified audit report of publicly traded firms in the United States indicates the nature of the audit and an opinion that the firm’s financial statements fairly present the financial position and the results of operations of the audited company. Accordingly, some users of the financial statements, including investors, do not consider the unqualified opinion to be very useful in providing other informational value about the particular audit. In this paper, the authors examined the views of two stakeholders in the US financial reporting system, auditors in large public accounting firms and Chief Financial Officers (CFOs) in the Fortune 1000. The authors elicited their perceptions involving a Public Company Accounting Oversight Board (PCAOB) proposed auditing standard commonly referred to as “the other information standard.” This standard, if adopted, would require the auditor to evaluate information other than the audited financial statements and the related audit report for (1) a material inconsistency, (2) a material misstatement of fact, or (3) both, and if they exist, communicate them in the auditor’s report. The authors developed their research instrument based upon its perceived potential effects on the audit if adopted, some of which were referenced in the exposure draft of the proposed standard (PCAOB, 2013). They found that a majority of each groups believed, among other effects, that the proposed standard would increase audit costs, subject both the auditor and the reporting firm to increased litigation risk, and that its implementation costs by affected firms would exceed any benefits to financial statement users created by the standard.

In 1954, the American Institute of Certified Public Accountants (AICPA) Committee on Accounting Procedure released an auditing book, which listed under the heading “Material” certain items of which it cautioned “material errors” could occur (AICPA, 1954, p. 1). From this date until the present, the accounting profession has struggled in its endeavors to find both a suitable definition and associated guidance to determine the materiality of information provided to financial statement users. Accordingly, in September 2015, the Financial Accounting Standards Board (FASB) issued two exposure drafts that address the concept and interpretation (our emphasis) of materiality. The releases are Proposed Amendments to Statement of Financial Accounting Concepts, Conceptual Framework for Financial Reporting; Chapter 3: Qualitative Characteristics of Useful Financial Information (Financial Accounting Standards Board (FASB), 2015a) and Proposed Accounting Standards Update, Notes to Financial Statements (Topic 235) Assessing Whether Disclosures Are Material (FASB, 2015b). In this article, the authors focus on the Chapter 3 amendments (FASB, 2015a), which proposes a new definition whose genesis is based on the US Supreme Court definition of the concept. Accordingly, the authors examined the views of two stakeholders in the US financial reporting system, auditors in large public accounting firms, and Chief Financial Officers of the Fortune 1000 companies, regarding their perceptions of the proposed definition. The authors developed the research instrument to evaluate their perceptions of the proposed definition’s potential impact on various aspects of the audit and financial reports. The authors found that both populations have negative perceptions of the materiality definition in the exposure draft and an interpretation of the responses did not indicate an addition of any benefits from its adoption. Subsequent to our solicitation for our subjects’ opinions, the FASB voted unanimously in November 2017 to remove the reference to materiality as a legal concept (FASB, 2017) and in August 2018 (FASB, 2018) amended FASB Concept Statement No. 8 to replace the materiality definition with language similar to the previously superseded FASB Concept Statement No. 2. However, as the authors will explain in this article, the fact that three authoritative definitions exist, which continue to present problems for financial statement preparers and auditors. In this analysis, the authors find evidence that auditors and investors continue to see a significant difference between the terminology of “users” and “reasonable resource provider” within the various materiality definitions.

In 1998 and 1999, the Office of Student Financial Assistance of the Department of Education and the Patent and Trademark Office of the Department of Commerce, were designated as Performance-Based Organizations (PBOs), respectively. This paper examines the transformation progress of the agencies, as they attempt to convert to high-performing organizations by utilizing and establishing new and more flexible systems of performance-oriented business practices and processes.

The paper compares and contrasts the different approaches and tools used to improve management and organizational performance, as well as concentrate on human resources, procurement, budget, customer service, and internal controls. The document explores whether or not these agencies have improved their performance as a result of these flexibilities and examines the organizational and cultural challenges encountered as the agencies move from a restrictive and bureaucratic system, to a more liberal system of management and internal controls.

The Performance-Based Organizations (PBOs) concept is to have federal agencies focus on the customer, deliver high quality products, and devise more efficient operations. Therefore, the paper further examines whether or not the PBO legislation has been effective in changing the performance of federal organizations by granting administrative and managerial flexibilities aligned with corporate (agency) strategies, performance, and pay.

The chapter investigates three channels through which private benefits are hypothesized to be extracted in dual class companies: excess executive compensation, excess capital expenditures and excess cash holdings.

With a propensity score matched sample of S&P 1500 dual class and single class companies with concentrated control, the chapter analyzes the relationship between the valuation discount of dual class companies and measures of excess executive compensation, excess capital expenditure and excess cash holdings.

Executives in dual class firms earn greater compensation relative to their counterparts in single class firms. This excess compensation is more pronounced when the executive is a family member. The value of dual class shares is discounted most when cash holdings and executive compensation of dual class are excessive. Excess compensation is highest for executives who are family members of dual class companies. The dual class discount is not related to excess capital expenditures.

The research shows that the discount in the value of dual class shares in relation to the value of closely controlled single class company shares is directly related to the channels through which controlling shareholder-managers can extract private benefits.

The Dodd–Frank Wall Street Reform and Consumer Protection Act calls for substantially increased government regulation. Whether those regulations are, in some sense, appropriate is a function of whether the benefits of the increased regulation exceed the costs. Those costs and benefits, however, are probably impossible to measure, at least at this early stage of the implementation of the Dodd–Frank reforms. On the other hand, financial professionals who regularly deal with governmental regulations probably have a good sense of the costs and benefits based on their own experience with other similar regulations. This chapter reports the result of a survey of high-level auditors and CFOs regarding their perceptions of the costs and benefits of the main parts of the financial regulatory reform incorporated into the Dodd–Frank legislation. It concludes that there is support among these individuals for some aspects of Dodd–Frank, but no consensus.

Finance courses are major offerings in UK business schools, at various levels. Seldom do these courses move beyond theoretical modeling and textbook approaches. This is corroborated by the paltry literature on challenge-based learning (CBL) in the finance arena.

In this chapter, we describe the experience of implementing an investment fund designed by experienced members of staff and set up and run by students in one of the UK business schools in 2018. The seed capital of the Fund was donated by a variety of sources and has enabled students to use this as a jump start for their investment skills. The ethos of the Fund is not to teach students just how to invest but to put students in a real-life investment setting where they deal with the running of day-to-day activities of managing investments through a practical framework. In doing so they discover, adapt, and apply theoretical models to funds while preparing performance reports. Students have been successful in getting jobs by demonstrating their involvement, and the Fund has put them in touch with investment banks and future employers. The functioning of the Fund is analyzed in this chapter.

The chapter suggests the practical steps involved in setting up such a schema of CBL, which might aid other higher education institutions and promote entrepreneurial, creative, and team building activity.