This issue consists of four papers focusing on topics ranging from firms’ practice of reporting and disclosing the environmental issues through the annual reports and designing a suitable course in the management curriculum in India, to the impact of adopting IFRS in India, the issues and challenges of financial accounting practices in the small enterprises in India, and the use of digital frequency testing and Benford screening window for creating audit alerts.

The side effects of industrialization have the potential to bring about major natural disasters. In the process of economic development and industrialization, ignorance about the importance of social cost-benefit analysis can cause risk to the society. The authors, Balram Choubey and J K Pattanayak, in the paper, “Designing a Course Curriculum on Environmental Accounting: Viewpoint of Indian Stakeholders”, make an attempt to understand the perception of different stakeholders regarding the significance of designing a course on environmental accounting in the curriculum of management education in India. The authors observe that the threats from the environment are viewed seriously as a risk factor to the society. Therefore, governments across the world have established regulatory bodies and are actively framing rules required to protect the environment. Due to the steps initiated by the governments on the one hand and recognition by the corporate on the other, education in this area has become prominent and subjects like environmental accounting, environmental economics, environmental marketing, environmental law, corporate social responsibility and green marketing have evolved. However, the findings of the study suggest that much needs to be done still and that there is a need to increase awareness in this regard among the management graduates.

International Financial Reporting Standards (IFRS) are the result of the investment community’s demand for a single set of accounting standards of financial reporting for the companies across the world. Adoption of IFRS is believed to lead to an increase in transparency, comparability and quality of financial reporting, thereby benefitting investors. The authors, Rahul Kamath and Ruchir Desai, in the paper, “The Impact of IFRS Adoption on the Financial Activities of Companies in India: An Empirical Study”, analyze the impact of IFRS adoption on the financial activities—financial risks, investment activities, operating activities and debt covenants—of eight Indian companies for a period of three years, from 2010-11 to 2012-13.

Across the country, there are many small and medium enterprises involved in business, generating employment and contributing to export earnings and GDP on the one hand, and demanding funds from the banks and financial institutions, on the other hand, to sustain themselves and grow. The banks and financial institutions in turn demand, in the process of appraising them, proper record of business performance to analyze and understand their ability to repay the loans. The authors, Kawalpreet Singh Chhabra and J K Pattanayak, in the paper, “Financial Accounting Practices Among Small Enterprises: Issues and Challenges”, make an attempt to understand the record keeping and accounting processes of the small enterprises operating in Dhanbad and Bokaro districts of Jharkhand, India. The authors observe that these units lack proper knowledge of bookkeeping, understanding the costs and recording of the same, and time management in maintaining financial records. The authors also observe that these enterprises record simple cash receipts and payments and view keeping of books of accounts as a waste of time.

Y V Reddy and A Sebastin (2012), in their study “Entropic Analysis in Financial Forensics” have offered an excellent treatment of Digital Frequency Testing (DFT) which is a trouble-free and potentially useful tool that can be used economically in certification audit as well as in the service of forensic investigations to rationalize the use of extended audit procedures at the substantive phase of the audit. The authors, Edward J Lusk and Michael Halperin, in the paper, “Using the Benford Datasets and the Reddy and Sebastin Results to Form an Audit Alert Screening Heuristic: An Appraisal”, have derived a practical screening window from corrections made to the Benford dataset that can be used to create possible audit alert information to aid in the decision regarding the use of extended audit procedures at the substantive testing phase. The authors have programmed using Excel and Visual Basic a Decision Support System (DSS) to help in the creation of audit alerts.

-- Vunyale Narender
Consulting Editor