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At the end of this session, learners should be able to:

• Understand why interpretation of financial statements is necessary.

• Calculate accounting ratios for profitability, liquidity, efficiency, capital structure and investors.

• Utilise ratio analysis to critically appraise an organisation’s published financial statements.

• Explain the limitations of ratio analysis.

Understand why interpretation of financial statements is necessary.

Calculate accounting ratios for profitability, liquidity, efficiency, capital structure and investors.

Utilise ratio analysis to critically appraise an organisation’s published financial statements.

Explain the limitations of ratio analysis.

This paper analyses the performance criteria and learning objectives contained in the first 22 QAA subject benchmark statements to be published and considers the implications for assessment. There is much variation in the amount of detail in the statements and there are also implicit performance criteria in the intended learning outcomes listed at the beginning of each. Statements are broad in character so their relationship with standards is loosely‐coupled and open to interpretation. It is argued that attempts to achieve a high degree of precision in specification are likely to prove counter‐productive. There is evidence of some lack of coherence within the benchmark statements and between the statements and the more recently published Level H descriptor in the National Qualifications Framework. Further, the relationship between assessment practice and the statements appears to be problematic. The value of benchmarking statements as an aid to professional conversation about standards would be greatly enhanced if subject communities, perhaps facilitated by Learning and Teaching Support Network subject centres and subject associations, can elaborate for themselves the meanings of words used in the statements of learning outcomes and performance criteria. This elaboration would be aided by the appraisal of exemplars of outcomes at various levels of performance.

South African companies have, in the past, not recognised an asset for unused Secondary Tax on Companies (“STC”) credits. AC 501, Accounting for “Secondary Tax on Companies (STC)”, which is effective for annual periods beginning on or after 1 January 2004, now requires South African companies to recognise a deferred tax asset for unused STC credits, to the extent that it is probable that an entity will declare dividends of its own, against which the unused STC credits can be utilised. In terms of AC 501 and IAS 12 (AC 102), Income Taxes (the local and international accounting standard on income taxes), the recognition of a liability to pay STC has to be postponed until the declaration of a dividend. Some accounting commentators have indicated that they find it anomalous to recognise a deferred tax asset in respect of unused STC credits, while no liability is recognised for the STC that would be payable on the future distribution of retained earnings. The objective of the study is to consider whether it is conceptually anomalous to recognise a deferred tax asset for unused STC credits while no liability is raised for the STC that would become payable on future dividend declarations on profits already recognised in the financial statements. The study concludes that it is conceptually anomalous to recognise a deferred tax asset for unused STC credits when no corresponding liability is raised.

The purpose of this study is to investigate how the process of becoming an entrepreneur in the cooperation and poverty contexts takes place.

This study adopted a phenomenological approach for data collection purposes. Autoscopy, which is a methodological device of reflective nature, was herein applied to a group of interlocutors comprising seven representatives of waste pickers’ cooperatives (RC). Data analysis focused on defining the meaning of participants’ speech was conducted in compliance with Interpretative Phenomenological Analysis guidelines.

The current findings have shown that becoming a representative of cooperatives involves mobilization toward empowerment and a sense of collectively doing on behalf of community interests. Moreover, these RCs become entrepreneurs in the poverty context, as they perceive opportunities, are persistent and take risks pursuing alternatives for both the survival and improvement of theirs own living conditions, and of others.

Adopting a reflective approach associated with an ontology of becoming could have led to deeper results if the current research was a longitudinal study, rather than a cross-sectional one.

Training programs provided for waste pickers should take into consideration that their learning process is mainly based on practice.

Behaviors disclosed by participants toward fostering collective and entrepreneurial actions in the poverty context may be an inspiration for future changes.

The methodological option for adopting a reflective approach resulted in a contribution device that is barely applied to research in the management field; thus, the current investigation can introduce a new pathway for further research.

The paper investigates the successful establishment of a strong corporate brand with a particular emphasis on analysing the corporate branding literature’s assumptions about coherency. Successful corporate branding is claimed to imply a shared set of coherent statements about the company’s values towards its external and internal stakeholders over time. An empirical test is applied to the coherency assumption. First, the coherency of a corporate brand over time is investigated as it develops in the media. Secondly, the coherency between two stakeholders’ perceptions of the corporate brand, organisational members and the media is investigated. This research suggests there are three distinct types of coherencies in corporate branding strategies over time: statement coherency, interpretation coherency and uniqueness coherency. On the one hand, a strong corporate brand is characterised by tight coherency, as top management’s statements about values remain the same over time and towards different stakeholders, ie statement coherency. On the other hand, a strong corporate brand is simultaneously characterised by a loose, or even absent, coherency between stakeholders’ interpretations of top management’s statements as well as a lack of coherency in stakeholders’ interpretations of the corporate brand over time, ie interpretation coherency. Finally, a third coherency phenomenon is observed, ie stakeholders’ emphasis on changing topics over time, which they relate to the corporate brand. Stakeholders agree that these themes are unique features and hence the company is considered unique, ie the uniqueness coherency. The implications of multiple interpretations are discussed as well as changing interpretations in corporate branding. It is argued that statement coherency is a necessary element in successful corporate branding, and the viability of the ambition to develop interpretation coherency over time and across stakeholders in corporate branding is discussed from the point of view of allowing room for interpretation incoherency. Finally, the question of maintaining uniqueness coherency is discussed: for how long can a company represent “newness” in the eyes of its stakeholders – including itself? Implications for management are discussed.

This paper provides a new approach for the preparation and interpretation of GPLA statements. Unlike the conventional approach to GPLA statements, the proposed approach is based on disaggregating the effect of inflation overall into the effect on the beginning balance, of either the monetary or the nonmonetary items, and the effect on operations during the year. The proposed approach explains the relationship between historical cost statements and GPLA statements and the relationship between the nonmonetary items approach (Ijiri, 1976) and the monetary items approach to the same statements. More importantly, the proposed approach provides for a better evaluation of management performance for, as explained in the paper, the effect of inflation on operations may provide a partial measure of how well management planned for the impact of inflation during the year.

Examines the role of professional associations, governmental agencies, and international accounting and auditing bodies in promulgating standards to foster auditor independence domestically and abroad. Focuses specifically on the role played by the American Institute of Certified Public Accountants, the Institute of Internal Auditors (IIA), the Securities and Exchange Commission and the US Government Accounting Office. Also looks at other professional associations in banking, industry, and manufacturing sectors dealing with sensitive issues of auditors′ involvement in such matters as management advisory services, operating responsibilities, outsourcing, opinion shopping, auditor rotation, and other conflicts of interest which may impair auditor independence.

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.

Chapter 1 is entitled “Normative Scripture – Christian and American.” Here Pelikan considers the normative status of the two documents. Though their texts were “originally composed under very specific circumstances,” illumined by later scholarship, they have been “adopted by a community as its normative Great Code…occupying a position that in some profound sense stands beyond its own history” (pp. 4–5).That normative status is based on the assumption that it can be applied to any and all of the radically changed situations of later times, many of which the writers who originally framed it could not themselves conceivable have foreseen…. Therefore its words and phrases have for centuries called forth meticulous and sophisticated – and sometimes painfully convoluted – interpretation, as well as continual reinterpretation.…a massive corpus of authoritative, if often controversial, commentary. (p. 5)