Search results

Thinking and research in respect of accounting and finance over the past three decades have been dominated by a methodology that is primarily based on the predictability of accounting data and its relationship to certain phenomena. The magnitude of change in business makes the future unpredictable. Analysts and managers are confronting an entirely new business environment in which traditional approaches are no longer valid. A systems approach provides a new way of looking at financial analysis. The purpose of this study is to focus on the present, on the ability to cope and the capacity to change in a changing environment. The ability to create an own future is being seen as more important than the art of predicting the future. This paper describes an empirically tested dynamic balance model to establish whether entities are able to adapt, survive and prosper.

Empirical accounting research frequently makes use of data sets with a time‐series and a cross‐sectional dimension ‐ a panel of data. The literature review indicates that South African researchers infrequently allow for heterogeneity between firms when using panel data and the empirical example shows that regression results that allow for firm heterogeneity are materially different from regression results that assume homogeneity among firms. The econometric analysis of panel data has advanced significantly in recent years and accounting researchers should benefit from those improvements.

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.

Stakeholders are entitled to be properly informed about their interests in an enterprise, not only in terms of the cost of assets such as land and labour, but also in terms of the value of these assets. The value of land could be influenced by environmental pollution, damages and rehabilitation activities, which should be accounted for in financial and non‐financial terms. In contrast to the tendency to calculate and include only the cost of labour, the value of labour should also be determined to include aspects such as knowledge, skills, organising proficiency and customer relations.

E‐commerce has changed the way in which business is conducted. One instance of this is that it has made the digitisation of products possible. This shift has severe implications for traditional consumption taxes, which were developed under the premise of a physical presence in a tax jurisdiction. A large number of countries in the world that impose Value‐Added Tax (VAT) on the supply of goods and services, including South Africa, are affected by this shift. The Organisation for Economic Cooperation and Development (OECD) has suggested a number of principles that should apply to consumption taxes in e‐commerce. These principles are intended to provide fiscal climates in which e‐commerce can flourish and ensure taxation systems that secure individual countries’ tax bases. A comparison between the OECD principles and the rules pertaining to the imposition of VAT in South Africa on the supply of digitised products reveals several discrepancies and uncertainties. A baseline survey among VAT specialists in South Africa, conducted in order to substantiate these findings, confirmed these discrepancies and uncertainties in practice.