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Internal Auditor as Accounting Fraud Buster
--Gopal Krishna Agarwal and Yajulu Medury
Fraud is a major cause of poverty in various parts of the world. Economic resources are being swindled by powerful politicians, bureaucrats and industrialists in one form or the other, leaving the economies of countries poorer. The corporate sector is not far behind. World over, accounting fraud in corporate balance sheets is continuously increasing in numbers and magnitude. This has also brought great burden on public resources and on the economy of the world and ultimately on public at large. The government and regulatory authorities are continuously revisiting this area to modify and introduce new legislation to check this menace. This paper discusses the effectiveness of internal auditor to contain, detect and prevent the accounting frauds and thus fight this plague in the corporate sector. The paper introduces the concept of appointment of internal auditor by outside stakeholders to strengthen his independence and consequently his effectiveness to detect and prevent fraud.
© 2014 IUP. All Rights Reserved.
Joint Provision of Audit and Non-Audit Services in Nigeria:
An Empirical Study
--S C Okaro and G O Okafor
The purpose of this paper is to ascertain the perceptions of Nigerian professional accountants on the issue whether the joint provision of audit and Non-Audit Services (NAS) does in fact impair the independence of the Nigerian auditor and, if so, what regulatory option/s could safeguard his independence. A questionnaire survey was conducted on 120 professional accountants. Descriptive statistics were used to analyze the data, while t-test and ANOVA were used to determine whether there are any significant differences in the perception of the problem according to gender, job type and post-qualification experience. The findings suggest that professional accountants are of the opinion that provision of NAS to audit clients does impair the independence of the auditor. Beyond that, however, they prefer selective prohibition of NAS to audit clients on the basis of the nature of work. This study has practical implications for the Nigerian Security and Exchange Commission that is yet to legislate on joint provision of audit and NAS to audit clients of Nigerian listed companies. For the Central Bank of Nigeria, this study provides evidence that its barring of Nigerian auditors from providing some NAS to its bank clients was in the right direction. Going beyond merely ascertaining whether the joint provision of audit and NAS impairs the independence of the Nigerian auditors, the paper finds out some of the significant reasons for the respondents’ opinion and their preferred solution to the problem. Perhaps, this is the first time a Nigerian study has gone this far, thus making invaluable contribution to the scanty literature in this area in Nigeria.
© 2014 IUP. All Rights Reserved.
Do the Characteristics of Board of Directors Constrain Real Earnings
Management in Emerging Markets? – Evidence from the Tunisian Context
--Inaam Zgarni, Khmoussi Halioui and Fatma Zehri
This study examines the effects of the characteristics of board of directors (independence, size, frequency of meetings and CEO/Chair duality) on the reduction of the extent of Real Earnings Management (REM) before and after the adoption of the Financial Security Law No. 2005-96 in Tunisia by analyzing the financial data of 29 non-financial companies listed on the Tunis Stock Exchange during the period 2001-2009. The paper tests whether the characteristics of board of directors are significant determinants of REM. It estimates REM proxy using the model of Roychowdhury (2006). The results suggest that a board comprising majority of independent directors reduces the extent of REM. Furthermore, it is observed that there is a significant association between size of the board of directors and discretionary expenses and overproduction, but not sales manipulation. Further, board duality is found to be positively associated with the discretionary expenses in the post-law period, while a negative association is observed between the number of board meetings and sales manipulation and overproduction. Finally, the findings suggest that adoption of the Financial Security Law, 2005 has a negative and significant effect on REM. In addition, the discretionary accruals are positively associated with REM in both pre- and post-law periods.
© 2014 IUP. All Rights Reserved.
Curriculum for Environmental Accounting:
A Comparative Analysis of the Viewpoints of Manufacturing
and Financial Service-Rendering Organizations
--Balram Choubey and J K Pattanayak
In the prevalent scenario of environmental turmoil, the demand for managers acquainted with various environmental facets has started increasing in all types of organizations. Due to this rising demand, environmental management has become an integral part of management course curriculum across the globe. Of late, the industry practitioners and regulatory bodies in India have realized the importance of environmental management and its reporting to all stakeholders of the business, and thereby identified the requirement of managers who are well acquainted with the various aspects of environmental accounting for improving the corporate environmental reporting in India. This poses a challenge and opportunity to the management and accounting educators to design a course on environmental accounting to make the future managers conversant with various facets of environmental accounting and reporting. The present study assesses and compares the viewpoints of finance managers of 66 manufacturing and financial services-rendering organizations regarding the incorporation and importance of environmental accounting as a course in Indian management education and its benefits to the society at large. The findings support the incorporation of environmental accounting as a subject in Indian management education and provide a list of dimensions that can be relevant for structuring the course. The study also highlights the utility of environmental accounting to the business organizations, if it is incorporated as a course in Indian management education.
© 2014 IUP. All Rights Reserved.
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