Australian Accounting Review最新文献

This issue of Australian Accounting Review updates readers on six of the key areas in which the world of accounting is changing: artificial intelligence (AI); the impact of reporting key audit matters; measuring inventories at fair value; the importance of staffing for audit quality; barriers to the usefulness of not-for-profit reporting; and setting an agenda for research into corporate human rights. In all of these areas it is interesting to note that, while the context and the language are changing, many of the fundamentals of accounting will continue to be relevant into the future.

Our lead article is the address delivered at the 2022 Australian Accounting Hall of Fame Awards held in March 2023. Weber (2023) gives us the author's view of the future of AI: what it can and cannot do, what humans will still be needed to do, and how the world of accounting will adopt and adapt but not be dominated.

Two articles discuss different aspects of auditing in our changing world: the readability and informativeness of reported key audit matters (Gambetta et al. 2023), and – perhaps not so much a new aspect of auditing as a timely recognition of what has always mattered – the importance of appropriate staffing of audits, and matching the staff to the client (Wu et al. 2023).

This issue continues to address topical questions for today, with an article that questions whether fair value measurement for inventories is value-relevant (Badenhorst and von Well 2023). Readers may be interested to know that while the fair value component of the balance sheet value is not found to be value-relevant, changes in both the historical cost and fair value measures are.

Gilchrist et al. (2023) show the diversity of the changing world of accounting, asking directors, preparers and auditors about factors that undermine the usefulness of not-for-profit financial statements.

Our final update on the changing world of accounting will break new ground for many readers. Accounting for human rights is an area of corporate social responsibility that has not received much attention to date, but will become increasingly important in the future. ElKelish (2023) identifies particular aspects of human rights that will require rigorous and practical research in the future.

This issue highlights that skilled accounting practitioners with an ability to apply traditional accounting tools to new situations will continue to be relevant in the changing world of accounting. It also highlights the need for careful research to better understand that changing world, and the value of conversations between practitioners and research on these topics. We hope that this issue of Australian Accounting Review will encourage such conversations.

This paper systematically reviews the body of literature on accounting firms that serve small and medium-sized enterprises. It seeks to present the status quo, reflect on inconsistent views, uncover gaps and suggest avenues for future research. Following a database search and referral scan, 54 empirical studies published in peer-reviewed journals are identified and used for the analysis. We group the sample studies into three clusters according to commonalities in the topics addressed. A further analysis of individual clusters enables us to conclude that the role of accounting firms as business advisors is yet to be substantiated due to the absence of high-quality research in international settings. It also becomes evident that although organisational and institutional factors affect the demand for services from accounting firms, individual factors act as conditions that activate the demand. Our review also reveals deficiencies in the majority of previous studies to incorporate potential moderating variables and mediating mechanisms while examining the relationship between service acquisition and expected outcomes. This paper contributes to the ongoing knowledge debates regarding the changing nature of accounting firms, client–accountant relationships and service acquisition outcomes by specifically focusing on accounting firms at the lower end of the professional field.

Recent years have seen developments in distributed ledger technologies, such as blockchain, that have led to significant growth in the number and type of digital assets available. In this article we review the current practice of the small number of firms globally reporting digital assets on their financial statements. We then assess potential treatments under current GAAP, namely as intangibles, inventory or financial instruments. Finally, we provide policy advice to standard setters, with a call to either develop a new stand-alone standard or to amend the definition of financial instruments to include cryptocurrencies, to allow greater comparability and understandability in firms’ reporting.

Recent years have seen significant growth in the number and type of digital assets available. We review the current practices of firms reporting digital assets. We then assess potential treatments under current GAAP. Finally, we provide policy advice to standard setters, with a call to either develop a new stand-alone standard or to amend the definition of financial instruments.

The extent to which financial reports are useful is of central importance in relation to the accounting standards that underpin them. This is as true of non-profit financial reporting as it is of financial reporting in the commercial and public sectors. In this paper we report on our findings related to a research project focused on examining the usefulness of Australian accounting standards from the point of view of non-profit directors, preparers of non-profit financial statements and their auditors. Undertaking a series of round tables specific to each cohort, we examine the question of who is responsible, for what and to whom in the context of financial reporting. Our research reinforces a number of issues negatively impacting the usefulness of General Purpose Financial Reports (GPFRs) in the non-profit sector. We draw particular attention to concerns around the financial literacy of non-profit directors, potential misunderstandings in relation to financial profitability, and complexity across a range of issues, including revenue recognition. Overall, the project finds that there are manifest specific issues and aspects particular to the sector and that simply adopting the same approach with regard to accounting standards as taken in the for-profit sector is insufficient to ensure the utility of non-profit GPFRs.

Undertaking round tables for non-profit directors, preparers of non-profit financial statements and auditors, we examine the issues negatively impacting the utility of General Purpose Financial Reports in the non-profit sector. We draw attention to concerns around the financial literacy of non-profit directors, misunderstandings in relation to financial profitability, and complexity across a range of issues, including revenue recognition.

Given the important role of individual auditors in the audit process, appropriate staffing is an essential issue in audit firms. Using unique audit data for both listed and private companies in China, we define the downward mismatch between auditors and clients as an inappropriate assignment of the engagement auditors who are supposed to serve only private companies, but sign the audit reports of public companies. We find that the downward mismatch leads to poor audit quality. The results are robust to various tests, including using alternative proxies, adopting the Propensity Score Matching (PSM) procedure, and controlling for auditor–client fixed effects and audit firm-level mismatch. Additional analyses reveal that the negative effect of downward mismatch on audit quality is less pronounced for audit firms with more education and training expenditures, with more informatisation expenditures, and with more partners available. Moreover, this negative effect is more pronounced when clients’ business is more complex. Our findings shed light on the importance of staffing assignment decisions within the audit firm.

Many companies present their selected auditor to shareholders for ratification. In this study, we use auditor ratification voting results to examine whether shareholders view the type of auditor and the timing of the engagement as indicative of audit quality. The auditor ratification literature has yet to explicitly examine these research questions. Our study is unique in that we focus on the auditor switch setting and test how shareholders view a newly hired auditor. We find that shareholders are less likely to approve a non-Big N auditor than a Big N auditor. We also document that shareholders view late auditor engagements (i.e., during or after the fourth quarter) more negatively, consistent with the argument that late appointment of new auditors should be viewed with caution. The timing effect is particularly acute for non-Big N firms; however, shareholders do not seem to mind late engagements of Big N auditors.

I provide empirical evidence that labour market frictions have an adverse effect on the quality of analyst research. Using the staggered, voluntary adoption of the Protocol for Broker Recruiting (Protocol) since 2004, I show that, without non-compete agreements, financial analysts produce more accurate forecasts and exert greater efforts in updating their research more frequently. Consistent with the notion that information asymmetry in the capital market are lower in the post-Protocol period, I provide empirical evidence and argue that the research coverage by Protocol members enables managers to access capital and extend their investment opportunities. My findings suggest that analyst coverage by Protocol members has a favourable effect on investment in innovative projects, production capacity and acquisitions.

This paper examines whether the readability (and hence informative value) of key audit matters (KAM) varies according to the audit firm and the KAM type disclosed, a question of vital importance for stakeholders, whose effective decision-making depends on the quality of information received. Our analysis shows that the informative value of KAM matter and KAM audit procedures varies according to the audit firm responsible. This informative value also depends on whether the KAM is related to entity- or accounting-level risks. This study contributes to the KAM and audit quality literature by showing how these factors impact on the informative value of the expanded audit report. Furthermore, in the context of the agency, institutional and self-presentation theories and the real effects hypothesis, we discuss auditors’ incentives to increase or decrease the informative value of the expanded audit report.

Building on the Bayesian Theorem, we propose a multi-period market microstructure model to understand how Bayesian investors underact new information and the duration of market underreaction. Applying the model to post-earnings-announcement drifts, our simulation and regression analyses show that the duration of the post-announcement price adjustment process and the post-announcement drifts can be explained by the new measure of belief updating speed that quantifies the uncertainties faced by Bayesian investors when incorporating new information into prices. Our study highlights the importance of incorporating the belief uncertainties of uninformed investors in explaining market underreaction in the Bayesian framework.