Winter 2004





By Janek Ratnatunga, John Vaz and Gabriella Ramirez

Counting, Accounting, Eccounting – Can the Profession Make the Move?

The origins of Accounting were said to in “counting”; 4 hunters went out and 3 came back. The question, “Where is Fred?” – probably eaten by the sabre toothed tiger – denotes man’s earliest attempts at counting. As man moved from being a hunter-gather to being involved in agriculture and commerce, the origins of cost accounting emerged. The more formalised approaches of using double-entry accounting for record keeping was first noticed about 500 years ago by an Italian priest Luca di Pacioli (Pacioli, 1494) and later refined to keep pace with the industrial revolution (McMickle and Vangermeersch, 1987). The change of pace in the way organisations did commerce remained largely unchanged from the period of the industrial revolution to about a decade ago, and thus accounting also remained largely unchanged. E-commerce seems to have changed all this. The question posed, therefore, is this:  “Is E-Commerce ostensibly the same business done in different ways, or is it so different that fundamental changes will be required by accounting to keep pace?”


Effects of Management Control Systems on Manufacturing Performance: A Path Analytical Model

By Adam S. Maiga


This study uses linear structural relations (LISREL) model to investigate the influence of management control systems (i.e., quality-related goals, quality feedback and incentive-compensation) on conformance quality and the influence of conformance quality on customer satisfaction.  Overall, the results indicate support for the theoretical framework linking goals, feedback and incentives to conformance quality. The results also indicate that quality conformance has a significant impact on customer satisfaction and also mediates the relationship between management control systems and customer satisfaction.


Management Control Systems; Manufacturing Performance; Path Analytical Model

The Term Structure of Discount Rates and Capital Budgeting Practice

By Mark Wilson and Greg Shailer


Generally accepted expositions of NPV analysis for capital budgeting apply a constant discount rate across the life of a project. This fails to adequately reflect the temporal structure of risk for investments in real assets. We propose the use of time-varying discount rates that reflect, as a minimum modification, the term structure of interest rate risk. We propose additional adjustments for the estimated risk premia associated with idiosyncratic project risk (especially asset specificity) and information uncertainty. These adjustments are likely to result in a term structure of discount rates which is upward sloping with a decreasing gradient


Capital Budgeting, Transaction costs Economics, Interest Rate Risk

Some Reflections on the Archetypes in Cost Accounting: An Exploratory Study

By Reinaldo Guerreiro, Sérgio Rodrigues Bio and Tania Casado


This study establishes and verifies two cost-accounting propositions. The first proposition is derived from the premise that accounting concepts with low degrees of efficacy for management decision-making are part of the current conceptual framework of accounting. This proposition is that certain causes of natural behavior exist to explain why people accept concepts that have been proven to be ineffective for management purposes. The second proposition is derived from the premise that processes of reflection can lead individuals to change their perceptions and behavior. This second proposition is that a graduate course in accounting, through a process of encouraging personal reflection, can be an effective instrument for changing the views of students. Following a review of Jungian psychology, this paper proceeds to present empirical research of an exploratory character involving students of such a graduate program. The results of the research confirm the validity of the propositions.


Archetypes, Behavior, Management Accounting, Cost Accounting

The Future of Management Accounting: A South Australian Perspective

By Maria Xydias-Lobo, Carol Tilt and David Forsaith


In the last decade, there is has been a substantial degree of research interest in the changing function of management accounting and role of management accountants in commercial enterprises, indicating that management accounting may have lost some relevance to management and other information users.  Consequently, there has been a plethora of research suggesting changes to management accounting systems, techniques and practices.  This paper explores how current management accountants view their present and future role and from this, some ideas for future development of these issues are determined.


Management Accounting Tasks; Management Accounting Roles; Change in Management Accounting; Management Accounting Skills

Book Reviews

Financial Management for Hospitality Decision Makers, by Guilding, C.

Reviewed By: John Ortner

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