To increase transparency in the conduct of businesses and present a true picture thereof to the stakeholders at large, the regulators frame guidelines from time to time. Internal audit is one such practice that the regulators have prescribed for minimizing the scope of the fraudulent practices in the conduct of the businesses or in reporting the performance. The paper, “Internal Auditor as Accounting Fraud Buster”, by Gopal Krishna Agarwal and Yajulu Medury, discusses the factors that affect the independence of internal auditor, which in turn, enables him to detect and prevent fraudulent practices and protect public money. The authors construe that the best solution to protect the public capital enjoyed by the corporate is to strengthen the internal audit function by ensuring the independence of the internal auditor, which is possible only when his appointment is done by some outsider who is also a stakeholder in the entity.

The independence of the auditor can be lost if the auditor extends non-audit services to the client. The paper, “Joint Provision of Audit and Non-Audit Services in Nigeria: An Empirical Study”, by S C Okaro and G O Okafor, attempts to address as to whether the joint provision of audit and non-audit services weakens the independence of the auditor and, if so, what regulatory option(s) could safeguard his independence through a primary study conducted using a questionnaire. The authors observe that there is no significant difference in the perception of the professional accountants with regard to the problem according to their gender, job type and experience. However, the accountants would prefer selective exclusion of non-audit services instead of complete disallowance.
The paper, “Do the Characteristics of Board of Directors Constrain Real Earnings Management in Emerging Markets? – Evidence from the Tunisian Context”, by Inaam Zgarni, Khmoussi Halioui and Fatma Zehri, analyzes the features of board of directors such as independence, size, frequency of meetings and CEO/Chair duality, which significantly influence the real earnings management practices measured using decrease in sales, discretionary expenses and abnormal production costs. The authors find that a board with majority of independent directors decreases the extent of real earnings management. They also observe that there is a significant relationship between board size and overproduction and discretionary expenses, whereas no relationship exists with sales manipulation.

Education is one of the means used to bring about awareness and change. The corporate too lay much emphasis on awareness among the employees about the environment for sustainable development. The paper, “Curriculum for Environmental Accounting: A Comparative Analysis of the Viewpoints of Manufacturing and Financial Service-Rendering Organizations”, by Balram Choubey and J K Pattanayak, makes an attempt to assess the perceptions of finance managers of manufacturing and service-rendering organizations relating to the importance of inclusion of environmental accounting as a course in the Indian business management education. The authors also discuss the similarities and disparities in the viewpoints of both manufacturing and financial service-rendering organizations relating to the prominence and progress of the syllabus on environmental accounting in business management education.

-- Vunyale Narender
Consulting Editor