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  Journal of Modern Accounting and Auditing

Volume 9, Number 12, December 2013

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Volume 9, Number 12, December 2013
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There are over 100 historically black colleges and universities (HBCUs) in the United States. The majority of these HBCUs are located in the southeast section of the United States. HBCUs are a major supplier of certified public accountants (CPAs) to the profession. Therefore, the performance of candidates from HBCUs should be of interest to various constituents including educators, employers, parents, students, and other stakeholders. The purpose of this paper is to provide statistical performance on the 2011 CPA examination for large, middle, and small HBCUs based upon the number of testing events taken. Taking a testing event is not the same as passing a testing event. This was the dichotomy between quantity and quality of HBCUs performances. For large HBCUs, Morehouse University, North Carolina Agricultural and Technical State University (NC A&T), and Tennessee State University (TSU) were cited. For middle HBCUs, Albany State University, Norfolk State University (NSU), and North Carolina Central University (NCCU) were cited. For small HBCUs, Alcorn State University, Fisk University, and University of Maryland Eastern Shore (UMES) were cited. The dichotomy between quantity and quality is real.


Keywords: historically black colleges and universities (HBCUs), certified public accountant (CPA) exam, testing events, pass rates


Audit Quality in Practice: A Critical Analysis of the Financial Reporting Council (FRC) Discussion Paper

Noor Adwa Sulaiman, Mazni Abdullah, Kamisah Ismail, Noor Sharoja Sapiei


The efforts by the Financial Reporting Council (FRC) in the United Kingdom (UK) to stimulate audit firms to improve audit quality manifest in its Discussion Paper: Promoting Audit Quality warrant further analysis. The discussion paper identified factors such as audit firm culture, the quality of people, the effectiveness of audit process, and outside factors such as management and audit committee (AC) which can affect level of audit quality in practice. Reporting upon the analysis of responses to the discussion paper, the objective of this study is to analyze views from the respondents about various issues related to audit quality. This study composes of how subject of audit quality is seen in practice, which contributes to our understanding of conditions, events, or processes that can affect audit quality in practice.


Keywords: audit quality, content analysis, regulation, United Kingdom (UK)


The authors examine a firms decision to begin issuing debt in public bond markets and find that it is a function of both life cycle influences and opportunistic timing. Defining life cycle factors to encompass both a firms age in years and its underlying characteristics, the authors confirm that bond market participation is generally restricted to large, mature firms. Summary statistics show that firms obtain their initial bond ratings on average 9.5 years after their equity initial public offering (IPO) and 11.8 years after initiating dividend payments. Growth rates, capital expenditures, and cash flow volatility all decline as the firm accesses public debt markets, consistent with entry into the mature phase of its life cycle. With respect to opportunistic timing, it is asked whether entry into public bond markets follows strong performance (or precedes weak performance) at both the firm and market levels. At the firm level, the authors find that the debt IPO occurs following periods of strong operating performance and high excess stock returns. At the market level, entry coincides with favorable interest rates and default spreads. The benefits of careful timing result in firms receiving initial bond ratings that are stronger than what would be predicted; however, there is no evidence of abnormal numbers of downgrades for these firms in subsequent years.


Keywords: debt rating, debt issuance, bond rating, firm life cycle, market timing


This paper will add to an evolving new paradigm for financial decision-making by exploring the important roles that intuition, heuristics, and impulses play as a bridge between how the conscious and unconscious can work together more effectively in making better decisions. Historically, the roles of financial/accounting theory and cognitive psychology have been extensively studied and documented in attempting to explain individual financial decision-making. More recently, neuroscience has made substantial contributions to learning how prospective financial decisions and outcomes affect brain activity and observed decision-making behavior. The evidence from neuroscience indicates that up to 90% of our decisions are initiated at the unconscious level, which is only beginning to be investigated in a systematic manner. Integrating these findings from multiple disciplines, including recent contributions from neuroscience, has many implications, not only with respect to personal and corporate financial decisions and how markets work, but also as an essential component in the tool box of the general decision maker.


Keywords: financial decision-making, heuristics, intuition, impulses, cognitive psychology, neuroscience


Neo-merchantalism is the use of national currency in international trade among countries to increase global trade. This is called as open currency in the study. Neo-merchantalism also includes open trade to facilitate trade among countries. Thirdly, neo-merchantalism covers International Monetary Fund (IMF). Because IMF regulates and controls money flow among countries in international trade, neo-merchantalism could be presented as follows: neo-merchantalism = open trade + open currency + IMF. Open trade and open currency exist in merchantalism theory. But today, there is also IMF control. Therefore, neo-merchantalism = merchantalism + IMF. Globalism started in 1990 in global markets. It increased the amount of global trade from 13 trillion dollars to 60 trillion dollars. Therefore, each country has 6%-7% economic growth in global markets in the 2000s. It is expected that neo-merchantalism theory doubles global trade up to 100 trillion dollars. Because each country uses its money to do international trade, IMFs restrictions are important in currency flow, as countries may overprint their money to do more trade that increases inflation rate in global economies. For example, emission of United States (US) dollars increased 50% after 2008 crises in American economy. Therefore, the Federal Reserve aims to stop quantitative enlargement policy in order to impede inflation in American economy. In neo-merchantalism, IMF can restrict money print and currency flow according to countrys gross domestic product (GDP), because quantity theory in economy requires that a country can issue its national currency according to its national GDP.


Keywords: neo-merchantalism, International Monetary Fund (IMF), international trade


The uncertainty about the future of firms must be modeled and incorporated in the valuation of enterprises outside the explicit period of analysis, i.e., in the continuing or terminal value (TV). There is a multiplicity of factors that influence the TV of firms which are not being considered within current evaluation models. This aspect leads to the incurring of unrecoverable errors, thus leading to values of goodwill or bad will far away from the substantial value of intrinsic assets. As a consequence, the evaluation results will be presented markedly different from market values. There is no consensus in the scientific community about the method of computation of the TV as a forecast in an infinite horizon. The size of the terminal, or non-explicit period, assumed as infinite, is never called into question by scientific literature, or the probability of business bankruptcy. This paper aims to promote a study of the existing literature on the TV, to highlight the fragility of the evaluation models of companies that have been used by the academic community and by financial analysts, and to point out lines for future research to minimize these errors.


Keywords: continuing value (CV), terminal value (TV), perpetuity, life expectancy


Corporate Reporting: An Integrated Approach to Legitimacy Claims

Marianne Grove Ditlevsen, Anne Ellerup Nielsen, Christa Thomsen


With the increasing pressure on companies to engage in corporate social responsibility (CSR), it is paramount for businesses and organizations to gain social legitimacy through building trust and credibility towards their stakeholders. Corporate reporting is a major tool whereby they can demonstrate their transparency and their will to contribute to society. However, reporting is often addressed as a narrow and restricted discipline based on specific areas of communication like financial and CSR communication, which potentially can lead to disconnected reporting. The aim of this paper is to address reporting within a framework of corporate communication, introducing the concept of corporate reporting as an issue of integration and to discuss the opportunities and challenges of corporate reporting as a driver for gaining social legitimacy. Recent research in corporate reporting and the development of standards by distinguished reporting agencies (e.g., Klynveld Peat Marwick Goerdeler (KPMG), A4S, PricewaterhouseCoopers (PwC)) seem to support this position, arguing that integrated reporting is the way forward. Accordingly, the authors conclude that there is a need to include a broader range of aspects in the corporate reporting literature applying a strategic integrated approach by which corporate reporting may more explicitly help businesses and organizations gain social legitimacy towards their internal and external stakeholders.


Keywords: integrated corporate reporting, social legitimacy, corporate communication


The article combines the background of Chinese system, theoretically derivates the relationship between corporate governance and their financial value, selects a sample of loss listed companies from 2003 to 2009, and studies how the level of corporate governance affects the value of listed company losses. Research results show that, among corporate governance factors, the largest shareholder and the market for corporate control have obvious positive effects on the financial value of loss listed companies; the proportion of state-owned shares, the type of audit opinion, and corporate governance factors have obvious negative effects on the financial value of loss listed companies; and managerial ownership, the proportion of independent directors, and the size of the board have no obvious driving effect on the financial value of loss listed companies.


Keywords: financial value, loss, corporate governance, driving


As an active trader in international crude oil and petroleum product markets, Australias human welfare is affected by oil crisis and contagion from the perspectives of economic growth, income inequality, and environmental sustainability. This paper investigates the impacts of oil price shocks upon Australias gross domestic product (GDP) growth, Gini coefficients, and carbon dioxide emissions per capita from 1970 to 2012 with yearly frequency. Hypotheses concerning whether Australias economic immunity against oil crisis is affected after the deregulation of oil market and whether endogenous oil price shocks account for more variations in human welfare than exogenous oil price shocks are tested. The methodologies include a theoretic model and a series of econometric tests. For the short-run dynamics, oil price is integrated into the model both linearly and non-linearly. Oil price shocks are categorized into exogenous and endogenous shocks. The conclusions are that inflated oil prices exert mainly non-linear negative impacts upon human welfare indicators and exogenous shocks induce endogenous shocks through labor price, Consumer Price Index (CPI), interest rate, and exchange rate. For the long-run equilibrium, non-linear shocks effects decay more slowly than linear shocks and the impacts of endogenous shocks last longer than that of exogenous shocks. Finally, oil market policies are evaluated and proposed.


Keywords: endogenous oil price shocks, exogenous oil price shocks, gross domestic product (GDP) growth, Gini coefficients, carbon dioxide emissions per capita, market reforms


Modern energy services are a necessary prerequisite for human well-being and the economic development of a country. Access to modern energy is essential for the supply of clean water, hygiene and health, and for the provision of reliable and efficient lighting, heating, cooking, and mechanical power. It seems clear, therefore, that the energy factor and its availability, the demand for which is growing, must be ensured over time. Moreover, considering that the world population will significantly increase in coming decades and, legitimately, all of these individuals want access to sources of energy for a better quality of life. The patterns of consumption most commonly used nowadays are expensive and highly polluting, but, most importantly, now they are almost completely exhausted. Therefore, research has to find sources of alternative and renewable energy in order to sustain the continuously growing global demand for energy. It is necessary, therefore, to develop and improve policies in order to change current consumption patterns, while strengthening approaches and strategies for sustainable models, applying incentives for good behavior and penalizing waste, and promoting the empowerment of producers. This paper concerns this sector and aims to highlight innovation in bioclimatic and eco-friendly buildings.


Keywords: energy factor, innovation, building sector, eco-friendly materials


The objectives of the present study are to put forth the concept of corporate social responsibility (CSR) in Turkey (Kayseri) and to examine research on this concept and the relationships between CSR and accounting information systems. Research data were gathered from 100 accounting managers who work in businesses with 250 or more employees in Kayseri. The dimensions of CSR were considered as business policies, environmental policies, market policies, and social policies, and the effects of these factors on accounting information systems were tested. Market policies and social policies dimensions of CSR had no significant impact on accounting information systems. Business policies and environmental policies dimensions of CSR had significant impacts on accounting information systems. Two basic conclusions were drawn from the current study: The business policy dimension of CSR had significant impacts on accounting information systems; the business policy and environmental policy dimensions of CSR together had significant impacts on accounting information systems.


Keywords: corporate social responsibility (CSR), level of social responsibility, information management, accounting information system


As environmental pollution increases, measures taken cannot follow increasing issues causing environmental pollution. Thus, important items required for human life such as air, water, and soil are polluted rapidly and threatened human health. Humanity produce and consume various goods and services in order to meet current requirements as well as pollute the environment required for maintaining life and source for these activities. Environmental taxes are adopted as one of the precautions for avoiding pollution of necessary components to sustain human life. This study aims to determine the sensitivities of 597 tax payers to environmental taxes, who contribute to environmental direct or indirect regulations with income, motor vehicle, special consumption, and sanitation taxes. The findings of the questionnaire suggest that corresponding taxpayers in Erzurum are sensitive to environmental taxes and that they tend to adopt any environmental tax being performed while this tax is intended to protect the environment.


Keywords: environmental tax, tax payer, environmental tax consciousness




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