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Article
Publication date: 6 August 2020

Amy K. Lysak

This study aims to evaluate whether the Big-4’s commenting efforts influence the characteristics of Financial Accounting Standards Board’s (FASB’s) Final_Standards using…

Abstract

Purpose

This study aims to evaluate whether the Big-4’s commenting efforts influence the characteristics of Financial Accounting Standards Board’s (FASB’s) Final_Standards using the content of their comment letters. Whether auditors lobby standard-setters to help their clients or to help themselves and whether they are successful are questions highly relevant to issues of auditor independence and audit effectiveness.

Design/methodology/approach

Based on components of Mergenthaler (2009), this study develops a rules-based continuum change score to measure how much more (less) rules-based a Final_Standard is compared to its exposure draft to evaluate the influence of the Big-4 on the FASB’s standard-setting for 63 accounting standards.

Findings

The findings show that extensive comment letters and increased uncertainty language are associated with increases in the rules-based attributes included in Final_Standards. These results suggest the Big-4 prioritize a reduction in their own litigation risk over the possible preferences of their clients for less rigid standards. Moreover, the results are consistent with their comment letters influencing the FASB’s decision to include more rules-based attributes in Final_Standards.

Originality/value

This study develops a potential proxy for audit risk by assessing the changes in the rules-based characteristics of proposed accounting standards and using the content of the comment letters to evaluate whether the Big-4 accounting firms may influence the FASB’s Final_Standards. Overall, this study provides a unique perspective on the influence of constituents on the FASB’s standard-setting.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 4
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 6 December 2018

Shaomin Li, Seung Ho Park and Rosey Shuji Bao

The purpose of this paper is to use the framework of rule-based and relation-based governance to examine the evolution of governance environment in the East Asian region…

Abstract

Purpose

The purpose of this paper is to use the framework of rule-based and relation-based governance to examine the evolution of governance environment in the East Asian region including China, South Korea and Taiwan.

Design/methodology/approach

Both qualitative and quantitative evidences are presented to demonstrate the paths these East Asian countries take in their transitions from relation-based governance to rule-based governance. Based on the framework, this analysis sheds light on the debate on whether East Asian economies will eventually move away from relation-based governance to rule-based societies.

Findings

The authors find that relation-based governance has helped East Asian countries achieve rapid economic growth in the early stages of their development. However, as the scale and scope of East Asian economies expand, continuing to rely on it may hinder their further development and therefore these countries should adopt a rule-based governance system in order to be efficient and competitive in the world market. While South Korea and Taiwan have made substantial progress in this transition, China has just embarked on the process.

Originality/value

This paper is among the first to systematically review the theories and evidence of the transition and the challenges East Asian countries face during the process.

Details

International Journal of Emerging Markets, vol. 14 no. 1
Type: Research Article
ISSN: 1746-8809

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Book part
Publication date: 10 February 2020

Mahmut Sami Öztürk and Hayrettin Usul

The change of production methods, the industrial revolutions, technological developments, and digital transformation have affected almost all functions in the enterprises…

Abstract

The change of production methods, the industrial revolutions, technological developments, and digital transformation have affected almost all functions in the enterprises. Accounting and auditing areas are also quite affected by this transformation. Another important result of technology and digitalization is the rapid increase in errors, frauds, and irregularities. Enterprises are looking for new solutions and investigations against irregularities and frauds. Audits for errors, frauds, or irregularities are among the interests of forensic accounting. Many methods are used to identify errors and frauds in the forensic accounting. However, it is inevitable that digital technologies should be utilized in forensic accounting applications as a result of the rapid spread of automation and computer programs in enterprises within the framework of digitalized business activities. Hence, enterprises will be able to get more effective results through computer programs and artificial intelligence in terms of fraud audit in forensic accounting. Expert system applications use artificial intelligence to enable computer programs to behave just like people. One of the most widely used, most easily applicable, and most understandable types of expert system is rule-based expert system. The aim of this study is to determine the accounting fraud that may occur in enterprises within the framework of forensic accounting through rule-based expert systems. For this purpose, various applications have been implemented in a large-scale production enterprise through the use of rule-based expert systems for the determination of accounting fraud. Benford’s Law, risk levels, and various other criteria were used in the creation of expert systems. According to the results obtained from the study, it has been seen that by means of rule-based expert system applications, enterprises can better detect existing frauds and prevent further irregularities in the future. The study is important and it is expected that the study will contribute to the literature because it is shown in the study that the rule-based expert systems, applied in many fields under the title of social sciences, can also be applied in the field of forensic accounting and auditing.

Details

Contemporary Issues in Audit Management and Forensic Accounting
Type: Book
ISBN: 978-1-83867-636-0

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Book part
Publication date: 10 June 2009

Joann Segovia, Vicky Arnold and Steve G. Sutton

Multiple stakeholders in the financial reporting process have articulated concerns over the rules-based orientation that U.S. accounting standards have adopted. Many argue…

Abstract

Multiple stakeholders in the financial reporting process have articulated concerns over the rules-based orientation that U.S. accounting standards have adopted. Many argue that a more principles-based approach to standards setting, typified by international accounting standards, would improve the quality of financial reporting and strengthen the auditor's position when dealing with client pressure, thereby enabling a focus on transparency and fairness of financial reports. In early 2009, the U.S. appeared poised to transition U.S. accounting standards to international accounting standards. The transition decision was made after the recommendations of the SEC Advisory Committee on Improvements to Financial Reporting (i.e., SEC Pozen Committee) publicly expressed strong support in its final report (SEC, 2008a). The SEC in turn issued its “Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers on November 14, 2008” (SEC, 2008b) outlining the transition procedures. However, with Shapiro taking over as chairperson of the SEC, this move now appears less likely pending a stronger review of how principles-based international standards may impact the strength of financial regulatory oversight – a potential delay met with disdain by the pro principles-based European regulatory community (Doran, 2009). While transition to international standards continues to progress, little research examining whether principles-based standards affect auditor decision-making has been conducted. The purpose of this study is to explore the impact of principles- vs. rules-based standards on auditors' willingness to allow preparers leeway in reporting practices and to consider how auditors' decision behavior is influenced by potential client pressure and/or opposing pressure from the SEC. Based on a sample of 114 experienced auditors, the results show that auditors are more willing to allow clients to manage earnings under rules-based standards; and, these results are persistent even under external pressure. Results also indicate that more experienced auditors are less willing to allow clients who exert high pressure to report earnings aggressively, while SEC pressure has more affect on less experienced auditors. These results provide important insights to the FASB, SEC, and IASB as they weigh arguments underlying the principles- vs. rules-based debate.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84855-739-0

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Article
Publication date: 4 May 2012

Lishan Ai

This paper attempts to examine the practical condition of implementing risk‐based approach (RBA) in Chinese financial sectors.

Abstract

Purpose

This paper attempts to examine the practical condition of implementing risk‐based approach (RBA) in Chinese financial sectors.

Design/methodology/approach

This paper compares the differences between rule‐based approach and risk‐based approach (RBA), and provides different options to financial institutions considering their own circumstances.

Findings

This paper finds that capacity constraint is an issue for directly transplanting the RBA performed by developed countries to Chinese financial institutions.

Originality/value

This paper creatively proposes a rule‐based but risk‐oriented AML approach or partial RBA that fits Chinese financial institutions' reality underpinned by Chinese culture, and correspondingly, different assessment methods are presented as well.

Details

Journal of Money Laundering Control, vol. 15 no. 2
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 12 October 2015

S. P. Sarmah and U. C. Moharana

The purpose of this paper is to present a fuzzy-rule-based model to classify spare parts inventories considering multiple criteria for better management of maintenance…

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Abstract

Purpose

The purpose of this paper is to present a fuzzy-rule-based model to classify spare parts inventories considering multiple criteria for better management of maintenance activities to overcome production down situation.

Design/methodology/approach

Fuzzy-rule-based approach for multi-criteria decision making is used to classify the spare parts inventories. Total cost is computed for each group considering suitable inventory policies and compared with other existing models.

Findings

Fuzzy-rule-based multi-criteria classification model provides better results as compared to aggregate scoring and traditional ABC classification. This model offers the flexibility for inventory management experts to provide their subjective inputs.

Practical implications

The web-based model developed in this paper can be implemented in various industries such as manufacturing, chemical plants, and mining, etc., which deal with large number of spares. This method classifies the spares into three categories A, B and C considering multiple criteria and relationships among those criteria. The framework is flexible enough to add additional criteria and to modify fuzzy-rule-base at any point of time by the decision makers. This model can be easily integrated to any customized Enterprise Resource Planning applications.

Originality/value

The value of this paper is in applying Fuzzy-rule-based approach for Multi-criteria Inventory Classification of spare parts. This rule-based approach considering multiple criteria is not very common in classification of spare parts inventories. Total cost comparison is made to compare the performance of proposed model with the traditional classifications and the result shows that proposed fuzzy-rule-based classification approach performs better than the traditional ABC and gives almost the same cost as aggregate scoring model. Hence, this method is valid and adds a new value to spare parts classification for better management decisions.

Details

Journal of Quality in Maintenance Engineering, vol. 21 no. 4
Type: Research Article
ISSN: 1355-2511

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Article
Publication date: 7 November 2016

Katerina Ksystra and Petros Stefaneas

Reactive rules are used for programming rule-based Web agents, which have the ability to detect events and respond to them automatically and can have complex structure and…

Abstract

Purpose

Reactive rules are used for programming rule-based Web agents, which have the ability to detect events and respond to them automatically and can have complex structure and unpredictable behavior. The aim of this paper is to provide an appropriate formal framework for analyzing such rules.

Design/methodology/approach

To achieve this goal, the authors give two alternative semantics for the basic reactive rules’ families which allow us to specify reactive rule-based agents and verify their intended behavior. The first approach expresses the functionality of production and event condition action rules in terms of equations, whereas the second methodology is based in the formalism of rewriting logic. Both semantics can be expressed within the framework of CafeOBJ algebraic specification language, which then offers the verification support and have their advantages and downsides.

Findings

The authors report on experiences gained by applying those methodologies in a reactive rule-based system and compare the two methodologies.

Originality/value

Finally, the authors demonstrate a tool that translates a set of reactive rules into CafeOBJ rewrite rules, thus making the verification of reactive rules possible for inexperienced users.

Details

International Journal of Web Information Systems, vol. 12 no. 4
Type: Research Article
ISSN: 1744-0084

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Article
Publication date: 4 August 2021

Fei Song and Jianan Zhou

This paper addresses the role of principles-based accounting standards as a potential mechanism for reducing firms' time delay of annual reporting disclosure while…

Abstract

Purpose

This paper addresses the role of principles-based accounting standards as a potential mechanism for reducing firms' time delay of annual reporting disclosure while improving the timeliness of accounting information. The paper also contributes to the existing literature by addressing the mediating effects of the financial reporting complexity and the audit workload on the link between principles-based accounting standards and the time delay of annual reporting disclosure.

Design/methodology/approach

The focus is placed on an unbalanced panel of 20,943 samples over the period of 2007–2017.

Findings

The results show that the more principles-based the accounting standards are, the lower the time delay of annual reporting disclosure is, and the timelier the disclosure of accounting information is. The relationship between the two is more significant especially in the first two months after the end of the fiscal year. The findings are all robust after controlling for a series of sensitivity checks and endogenous concerns. From the mediating effect results, the authors find that principles-based accounting standards decrease the financial reporting complexity and the audit workload which in turn can help lower time delay of annual reporting disclosure. In addition, the negative effect of principles-based accounting standards on the time delay of annual reporting disclosure is more significant in the case that the company has “good news” including with no losses and receiving the standard auditing opinions. The results confirm the law of “good news announces early, bad news announces late.” Furthermore, the moderating effect results show that the higher the economic policy uncertainty index and the legal environment index, the lower the benefit of principles-based accounting standards to the timeliness of annual reports. The results of the economic consequences of timeliness suggest that the timely disclosure of accounting reporting will bring greater market reaction and contain more information, and the information of companies that disclose annual reports timely are more transparent.

Originality/value

This paper studies the impact of accounting standards on the timeliness of annual report disclosure, which enriches the literature in the field of macro policies and micro-enterprise behaviors.

Details

Asian Review of Accounting, vol. 29 no. 3
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 18 January 2021

Yiran Liu and Srikanth Beldona

The examination of revisit intentions in hospitality is integral to relationship marketing and customer loyalty. Its measurement and determination have largely been done…

Abstract

Purpose

The examination of revisit intentions in hospitality is integral to relationship marketing and customer loyalty. Its measurement and determination have largely been done through closed-ended measures in surveys of customers. However, vast troves of consumer-generated media in the form of open-ended text reviews can also serve as sources for the determination of revisit intentions. The purpose of this paper is to develop and test a rule-based classification model from big data to extract revisit intentions.

Design/methodology/approach

Data for this came from 116,241 reviews scraped from Tripadvisor.com using a stratified sampling technique comprising hotels in major cities in the USA. A sample comprising 1,800 reviews was randomly drawn from this larger pool of reviews and manually annotated. A manual-set rule-based model, supervised machine learning (ML) models and hybrid models were developed to extract revisit intention.

Findings

The hybrid model of the MSRB method complemented by the gradient boosting ML method performed the best to classify revisit intentions in reviews.

Practical implications

This study’s rule-based classification model can be used by hotels to evaluate revisit intentions from the ever-growing pool of consumer-generated reviews. This can enable hotels to identify drivers of re-patronage and enhance relationship marketing initiatives.

Originality/value

This study is the first to propose an analytical model that taps big data to extracting revisit intentions. In the past, revisit intentions have been assessed using closed-ended questions using traditional survey-based methods.

Details

International Journal of Contemporary Hospitality Management, vol. 33 no. 6
Type: Research Article
ISSN: 0959-6119

Keywords

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Article
Publication date: 14 August 2020

Paramita Ray and Amlan Chakrabarti

Social networks have changed the communication patterns significantly. Information available from different social networking sites can be well utilized for the analysis…

Abstract

Social networks have changed the communication patterns significantly. Information available from different social networking sites can be well utilized for the analysis of users opinion. Hence, the organizations would benefit through the development of a platform, which can analyze public sentiments in the social media about their products and services to provide a value addition in their business process. Over the last few years, deep learning is very popular in the areas of image classification, speech recognition, etc. However, research on the use of deep learning method in sentiment analysis is limited. It has been observed that in some cases the existing machine learning methods for sentiment analysis fail to extract some implicit aspects and might not be very useful. Therefore, we propose a deep learning approach for aspect extraction from text and analysis of users sentiment corresponding to the aspect. A seven layer deep convolutional neural network (CNN) is used to tag each aspect in the opinionated sentences. We have combined deep learning approach with a set of rule-based approach to improve the performance of aspect extraction method as well as sentiment scoring method. We have also tried to improve the existing rule-based approach of aspect extraction by aspect categorization with a predefined set of aspect categories using clustering method and compared our proposed method with some of the state-of-the-art methods. It has been observed that the overall accuracy of our proposed method is 0.87 while that of the other state-of-the-art methods like modified rule-based method and CNN are 0.75 and 0.80 respectively. The overall accuracy of our proposed method shows an increment of 7–12% from that of the state-of-the-art methods.

Details

Applied Computing and Informatics, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2634-1964

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