ABSTRACT: The Conceptual Framework issued by the IASB and the FASB in 2010 excludes the concept of transparency on the grounds that it adds nothing to the existing corpus of qualitative characteris...
{"title":"Who Is Afraid of Transparency","authors":"Benzion Barlev, D. Citron, Joshua Rene Haddad","doi":"10.2308/APIN-51758","DOIUrl":"https://doi.org/10.2308/APIN-51758","url":null,"abstract":"ABSTRACT: The Conceptual Framework issued by the IASB and the FASB in 2010 excludes the concept of transparency on the grounds that it adds nothing to the existing corpus of qualitative characteris...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"17 1","pages":"60-83"},"PeriodicalIF":0.0,"publicationDate":"2017-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44801369","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: This paper examines regulatory reporting by large urban hospitals in response to financial incentives designed to increase the provision of health care services to certain underserved individuals. We find strong evidence that hospitals have used aggressive reporting to extract substantial unwarranted funding from Medicare's Disproportionate Share Hospital (DSH) program—a program designed to ease the burden on hospitals treating low income populations. Our evidence suggests that the accuracy of basic performance metrics (in this case, the number of low income patients served) can be unreliable when threshold-driven incentives based on such metrics benefit the reporting party (in this case, large urban hospitals). Similarities between the DSH program and current payment reforms, along with policy implications, are discussed. JEL Classifications: H51; I18.
{"title":"Threshold-based Medicare Incentives and Aggressive Patient Reporting in U.S. Hospitals","authors":"B. Barnes, Steve Buchheit, Linda M. Parsons","doi":"10.2308/APIN-51793","DOIUrl":"https://doi.org/10.2308/APIN-51793","url":null,"abstract":"ABSTRACT: This paper examines regulatory reporting by large urban hospitals in response to financial incentives designed to increase the provision of health care services to certain underserved individuals. We find strong evidence that hospitals have used aggressive reporting to extract substantial unwarranted funding from Medicare's Disproportionate Share Hospital (DSH) program—a program designed to ease the burden on hospitals treating low income populations. Our evidence suggests that the accuracy of basic performance metrics (in this case, the number of low income patients served) can be unreliable when threshold-driven incentives based on such metrics benefit the reporting party (in this case, large urban hospitals). Similarities between the DSH program and current payment reforms, along with policy implications, are discussed. JEL Classifications: H51; I18.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"17 1","pages":"84-106"},"PeriodicalIF":0.0,"publicationDate":"2017-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43209733","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: The passage of the Sarbanes-Oxley (SOX) and Dodd-Frank Acts created a unique environment for whistleblowing at public companies. SOX requires public companies to establish anonymous repor...
{"title":"The Public Company Whistleblowing Environment: Perceptions of a Wrongful Act and Monetary Attitude","authors":"Alisa G. Brink, D. Lowe, Lisa M. Victoravich","doi":"10.2308/APIN-51681","DOIUrl":"https://doi.org/10.2308/APIN-51681","url":null,"abstract":"ABSTRACT: The passage of the Sarbanes-Oxley (SOX) and Dodd-Frank Acts created a unique environment for whistleblowing at public companies. SOX requires public companies to establish anonymous repor...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"17 1","pages":"1-30"},"PeriodicalIF":0.0,"publicationDate":"2017-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43199132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Michelle A. Draeger, Don Herrmann, Bradley P. Lawson
ABSTRACT: We examine the impact of Auditing Standard No. 5 (AS5) on audit quality. Prior research suggests a reallocation of resources toward higher-risk clients with no overall change in audit quality associated with the adoption of AS5. However, using financial restatements as our proxy for audit quality, we find the likelihood that financial statements are subsequently restated decreases in the AS5 period. These results are robust to several additional analyses. In addition to testing the occurrence of a restatement event, our results indicate that the duration of the restated period decreases during the AS5 period. Consistent with the objectives of AS5, we also find that the improvements in audit quality associated with AS5 are greater for complex firms than non-complex firms. Overall, using financial restatements as our proxy for audit quality, our results suggest that audit quality improves following the issuance of AS5. JEL Classifications: M41 Data Availability: The data used in this paper are pub...
{"title":"Changes in Audit Quality under Auditing Standard No. 5","authors":"Michelle A. Draeger, Don Herrmann, Bradley P. Lawson","doi":"10.2308/APIN-51676","DOIUrl":"https://doi.org/10.2308/APIN-51676","url":null,"abstract":"ABSTRACT: We examine the impact of Auditing Standard No. 5 (AS5) on audit quality. Prior research suggests a reallocation of resources toward higher-risk clients with no overall change in audit quality associated with the adoption of AS5. However, using financial restatements as our proxy for audit quality, we find the likelihood that financial statements are subsequently restated decreases in the AS5 period. These results are robust to several additional analyses. In addition to testing the occurrence of a restatement event, our results indicate that the duration of the restated period decreases during the AS5 period. Consistent with the objectives of AS5, we also find that the improvements in audit quality associated with AS5 are greater for complex firms than non-complex firms. Overall, using financial restatements as our proxy for audit quality, our results suggest that audit quality improves following the issuance of AS5. JEL Classifications: M41 Data Availability: The data used in this paper are pub...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"16 1","pages":"57-83"},"PeriodicalIF":0.0,"publicationDate":"2016-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: Accounting fraud represents a severe threat to the public interest, and whistleblowing remains the most effective fraud discovery mechanism. In this research, we integrate the theory of planned behavior with the fraud triangle to organize prior whistleblowing literature and model the intention of professional accountants to blow the whistle on a material accounting fraud. The results, based on responses from 284 professional organizational accountants, support our theory development and indicate that attitudes and perceptions of control over whistleblowing are positively related to whistleblowing intention. In supplemental analyses, we also find that gender and management level are significantly associated with whistleblowing intent. Our results provide evidence for using our integrated theoretical model to explain and predict the reporting intention of corporate accountants. Findings should aid organizations and regulators seeking to improve corporate ethical culture and aid governance research...
{"title":"Modeling Accountant Whistleblowing Intentions: Applying the Theory of Planned Behavior and the Fraud Triangle","authors":"J. O. Brown, J. Hays, Martin T. Stuebs","doi":"10.2308/APIN-51675","DOIUrl":"https://doi.org/10.2308/APIN-51675","url":null,"abstract":"ABSTRACT: Accounting fraud represents a severe threat to the public interest, and whistleblowing remains the most effective fraud discovery mechanism. In this research, we integrate the theory of planned behavior with the fraud triangle to organize prior whistleblowing literature and model the intention of professional accountants to blow the whistle on a material accounting fraud. The results, based on responses from 284 professional organizational accountants, support our theory development and indicate that attitudes and perceptions of control over whistleblowing are positively related to whistleblowing intention. In supplemental analyses, we also find that gender and management level are significantly associated with whistleblowing intent. Our results provide evidence for using our integrated theoretical model to explain and predict the reporting intention of corporate accountants. Findings should aid organizations and regulators seeking to improve corporate ethical culture and aid governance research...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"16 1","pages":"28-56"},"PeriodicalIF":0.0,"publicationDate":"2016-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: This study examined the 775 disciplinary actions taken against individual CPAs by the boards of accountancy in the four states with the largest number of CPAs between 2008 and 2014. It was determined that monetary penalties were imposed in 68 percent of individual CPA disciplinary cases, with a median penalty of less than $5,000. Non-monetary sanctions were imposed in nearly all the cases. The most severe penalty—permanent revocation or surrender of the professional license—was less likely in actions involving attest issues than for most other causes, but was invoked in a large percent of disciplinary actions based on felonies and misdemeanors including “social” crimes such as DUI. Disciplinary actions against CPA firms in the same states during the same time period were analyzed, and it was determined that only 13 of those cases were separable from the actions against individual CPAs, suggesting that firms are not disciplined in lieu of taking action against individuals. Questions are raised ab...
{"title":"Disciplinary Actions by State Boards of Accountancy 2008–2014: Causes and Outcomes","authors":"Cynthia L. Krom","doi":"10.2308/APIN-51609","DOIUrl":"https://doi.org/10.2308/APIN-51609","url":null,"abstract":"ABSTRACT: This study examined the 775 disciplinary actions taken against individual CPAs by the boards of accountancy in the four states with the largest number of CPAs between 2008 and 2014. It was determined that monetary penalties were imposed in 68 percent of individual CPA disciplinary cases, with a median penalty of less than $5,000. Non-monetary sanctions were imposed in nearly all the cases. The most severe penalty—permanent revocation or surrender of the professional license—was less likely in actions involving attest issues than for most other causes, but was invoked in a large percent of disciplinary actions based on felonies and misdemeanors including “social” crimes such as DUI. Disciplinary actions against CPA firms in the same states during the same time period were analyzed, and it was determined that only 13 of those cases were separable from the actions against individual CPAs, suggesting that firms are not disciplined in lieu of taking action against individuals. Questions are raised ab...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"16 1","pages":"1-27"},"PeriodicalIF":0.0,"publicationDate":"2016-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: In this paper, we examine the investor response to the issuance of Transparency International's (TI) 2012 and 2014 Transparency in Corporate Reporting: Assessing the World's Largest Companies reports. Building on prior studies of political cost-inducing events in the environmental domain, we anticipate a negative market reaction, although we argue that the adjustment will be less severe for firms rated as having better anti-corruption disclosure. Focusing on a sample of U.S. companies to control for country-level effects and to allow for comparison with the prior environmental-themed studies, we document a significantly negative market reaction to the first TI report issuance. Although also negative, the market reaction to the 2014 report was not statistically significant. However, we also document that, as expected, market adjustments differ significantly across subgroups based on anti-corruption disclosure in both time periods. These results hold controlling for other factors potentially influ...
{"title":"Market Reactions to Transparency International Reports on Corporate Anti- Corruption","authors":"Renata Blanc, Dennis M. Patten, M. C. Branco","doi":"10.2308/APIN-51680","DOIUrl":"https://doi.org/10.2308/APIN-51680","url":null,"abstract":"ABSTRACT: In this paper, we examine the investor response to the issuance of Transparency International's (TI) 2012 and 2014 Transparency in Corporate Reporting: Assessing the World's Largest Companies reports. Building on prior studies of political cost-inducing events in the environmental domain, we anticipate a negative market reaction, although we argue that the adjustment will be less severe for firms rated as having better anti-corruption disclosure. Focusing on a sample of U.S. companies to control for country-level effects and to allow for comparison with the prior environmental-themed studies, we document a significantly negative market reaction to the first TI report issuance. Although also negative, the market reaction to the 2014 report was not statistically significant. However, we also document that, as expected, market adjustments differ significantly across subgroups based on anti-corruption disclosure in both time periods. These results hold controlling for other factors potentially influ...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"16 1","pages":"84-99"},"PeriodicalIF":0.0,"publicationDate":"2016-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954581","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: Transparency is a fundamental principle of good corporate governance. A disclosure is an important mechanism that enhances corporate governance through increased transparency and better i...
{"title":"Investigating the Need for Transparent Disclosures of Political Campaign Contributions and Lobbying Expenditures by U.S. Private Prison Corporations","authors":"Winifred D. Scott","doi":"10.2308/APIN-51401","DOIUrl":"https://doi.org/10.2308/APIN-51401","url":null,"abstract":"ABSTRACT: Transparency is a fundamental principle of good corporate governance. A disclosure is an important mechanism that enhances corporate governance through increased transparency and better i...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"15 1","pages":"27-52"},"PeriodicalIF":0.0,"publicationDate":"2015-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954357","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: A longstanding view inside and outside the auditing profession is that the public accounting profession rests on the foundation of independence (Previts and Merino 1998), with regulatory bodies requiring auditors to be independent both in appearance and in fact. For many decades, regulators and stakeholders alike have held the view that auditor independence is the auditor's endgame. We review recent research on the Reliability Framework, which recasts auditor independence with other professional constructs, including integrity, competence, and objectivity, as co-antecedents of auditor reliability and audit quality. On that basis, this commentary advocates that a public interest view of auditor independence must account for the auditor's real reason for existence based on what stakeholders want and need: reliable audit services that facilitate financial reporting quality and protect the public interest. Recent initiatives by the Center for Audit Quality and its member firms, as well as the profes...
{"title":"COMMENTARY––A Public Interest View of Auditor Independence: Moving Toward Auditor Reliability When Considering and Promoting Audit Quality","authors":"F. DeZoort, Mark H. Taylor","doi":"10.2308/APIN-10498","DOIUrl":"https://doi.org/10.2308/APIN-10498","url":null,"abstract":"ABSTRACT: A longstanding view inside and outside the auditing profession is that the public accounting profession rests on the foundation of independence (Previts and Merino 1998), with regulatory bodies requiring auditors to be independent both in appearance and in fact. For many decades, regulators and stakeholders alike have held the view that auditor independence is the auditor's endgame. We review recent research on the Reliability Framework, which recasts auditor independence with other professional constructs, including integrity, competence, and objectivity, as co-antecedents of auditor reliability and audit quality. On that basis, this commentary advocates that a public interest view of auditor independence must account for the auditor's real reason for existence based on what stakeholders want and need: reliable audit services that facilitate financial reporting quality and protect the public interest. Recent initiatives by the Center for Audit Quality and its member firms, as well as the profes...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"15 1","pages":"53-63"},"PeriodicalIF":0.0,"publicationDate":"2015-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954097","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: Tax returns of both public and private corporations are protected from IRS disclosure by Internal Revenue Code §6103. Historically, most arguments against public disclosure of tax information were aimed at personal returns. This article evaluates arguments both opposing and favoring company-specific public disclosure of corporate tax returns, focusing on public companies and federal government contractors. Among reasons against disclosure are the fear that (1) it will add to, rather than reduce, confusion about corporate accounting and tax practices, (2) compliance will be reduced as companies seek to hide details of their revenue and expenses, and (3) proprietary information, including trade secrets, will be disclosed. Among reasons favoring disclosure are the (1) results of a national survey, (2) improvement of tax compliance, (3) limited value of privacy given that it does not cover disagreements with the IRS that wind up in court, (4) fiduciary responsibility corporations owe to the public, ...
{"title":"A Case for Company-Specific Public Disclosure of Corporate Tax Returns","authors":"D. Morris","doi":"10.2308/APIN-51400","DOIUrl":"https://doi.org/10.2308/APIN-51400","url":null,"abstract":"ABSTRACT: Tax returns of both public and private corporations are protected from IRS disclosure by Internal Revenue Code §6103. Historically, most arguments against public disclosure of tax information were aimed at personal returns. This article evaluates arguments both opposing and favoring company-specific public disclosure of corporate tax returns, focusing on public companies and federal government contractors. Among reasons against disclosure are the fear that (1) it will add to, rather than reduce, confusion about corporate accounting and tax practices, (2) compliance will be reduced as companies seek to hide details of their revenue and expenses, and (3) proprietary information, including trade secrets, will be disclosed. Among reasons favoring disclosure are the (1) results of a national survey, (2) improvement of tax compliance, (3) limited value of privacy given that it does not cover disagreements with the IRS that wind up in court, (4) fiduciary responsibility corporations owe to the public, ...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"15 1","pages":"1-21"},"PeriodicalIF":0.0,"publicationDate":"2015-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68954779","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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