Summer 2006
THE JOURNAL OF APPLIED MANAGEMENT ACCOUNTING RESEARCH
TABLE OF CONTENTS
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EDITORIAL
Corporate Responsibility Reports Assurance Trends and the Role of Management Accountants
By Nava Subramaniam, Kristy Hodge and Janek Ratnatunga
Abstract
Over the past decade, corporate responsibility (CR) has moved from the fringes of the business world to being a significant boardroom agenda. What began largely as an extension of public relations reporting where organisations disclosed basic health and safety monitoring, and environmental impact results has now grown to a wider set of governance practices premised on the philosophy of sustainability.
This paper discusses some of the developing trends in the area of assurance of CR reports, and the emerging challenges faced by the assurance providers and managers alike. The paper also explores the role of management accountants in enhancing CR reporting and its assurance practices.
Keywords
Corporate Responsibility; Corporate Reporting; Corporate Governance; Assurance; Role of Management Accountants
ARTICLES
By Al Bhimani , Mthuli Ncube and Kazbi Soonawalla
Abstract
Whilst modern enterprises have well established accounting information systems reporting on discounted cash flow based information, few organisations are known to prepare and report on real options related accounting information for strategic decisions. This study investigates the potential desirability by financial executives for a real options-based approach to investment appraisal and the provision of associated accounting information. The intent of this study is threefold. It first considers how far managerial flexibility decisions that can be assessed formally via real options analysis are evaluated qualitatively and quantitatively by financial executives in a number of developed countries. The investigation then explores the extent to which these financial executives perceive value in real options-based calculative and accounting information. Finally, the study considers whether corporate strategic orientation is linked to managers’ perceptions of the value of qualitative, quantitative, and accounting real options based information. The results show that qualitative assessment remains the primary form of strategic investment appraisal. However, when managers use quantitative methods, they consistently place value on numerical analysis, and desire accounting information reflecting this. In relation to the strategic orientation of organisations and managers’ attitude to real options-based information, no association was found to exist empirically.
Keywords
Real Options; Investment Appraisal; DCF Techniques; Cross-Country Analysis; Managerial Decision Making; Qualitative Evaluations
Managing Intangible Assets: Are Presently Available Measures Useful?
By Antti Lönnqvist
Abstract
This paper examines the usefulness of performance measures presently available for managing intangible assets. The usefulness of performance measures is assessed based on a case research in three organisations. In the empirical examination the experienced usefulness of measures and the quality of the measures used were evaluated. The results show that some performance measures seem very effective and useful while some do not. The practical usefulness depends on situation specific issues. Objective measures describe the factors being measured narrowly and could thus be invalid and irrelevant. Subjective measures capture the different aspects of intangible assets but interpreting their results could be problematic. Based on the results of this study, organisations should be encouraged to utilise the performance measures presently available in the literature for managing their intangible assets. In specific situations the measures are considered useful and effective. Even if the measures are considered to be functioning poorly, they may still be useful in guiding activities and that they can likely be improved based on the experiences in using the measures.
Keywords
Intangible Assets; Intangible Success Factors; Intellectual Capital; Measurement; Performance Measures; Usefulness of Measures
Reasons for Adopting Different Capacity Levels in the Denominator of Overhead Rates: A Research Note
By John A. Brierley , Christopher J. Cowton and Colin Drury
Abstract
There has been criticism of the use of budgeted capacity as the denominator of overhead rates. Prior questionnaire-based research has analysed which type of capacity is used in the denominator of overhead rates, but it has not assessed why these capacity levels are used. This paper uses grounded theory techniques to analyse 50 interviews with British management accountants about why a particular capacity level is used to determine the denominator of overhead rates. The results reveal that budgeted capacity is used because the calculation of the denominator is regarded as part of the budgeting process. Practical capacity and normal capacity are used to ensure that products are not under or overcosted.
Keywords
Product Cost; Overhead Rate; Denominator Capacity; Budgeted Capacity; Practical Capacity; Normal Capacity
The Object and the Subject of Accounting Budgets: Evidence of Early Use by British Colonial Houses
By Ratnam Alagiah
Abstract
Foucault’s name is synonymous with the human sciences. The human sciences are active in the creation of knowledge that is used for the purposes of power and control.
This study draws a link between ownership and control to management accounting in the rubber industry in Malaya, since its acquisition by the British.
With the publication of Zorn and Leigh-Hunt’s Manual of Rubber Companies 1969, it is now possible to assess the importance of agency houses and the interlocking directorships of the various rubber companies they managed and the management accounting tools that were used in maintaining power and control over the rubber plantation industry in Malaya, during this time.
It provides evidence that it is management accounting, unlike financial accounting which is seen as a passive practice, which provides a neutral or unbiased representation of the underlying economic facts, and plays an active part in maintaining people in power and in control. The paper further provides evidence of the exploitative management accounting tools that were used for exploiting labour.
Keywords
Knowledge and Power; Budgetary Power and Control; Colonial Plantation Houses; Accounting and Exploitation
BOOK REVIEWS
Management Accounting: A Business Planning ApproachBy Noah P. Barsky and Anthony H. Catanach
Reviewed By:Greg Van Mourik
Reviewed By:Greg Van Mourik
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