From the Paper
"Introduction
Companies which are busy making sales often assume that they are also making a profit. Yet this is not always the case, particularly with new businesses whose owners are technically competent and perhaps even excellent sales people but who are not familiar with the basic accounting methods used to determine whether a profit is being generated by the organization. If a company's cost structure is too high, the organization will be unlikely to generate a profit because any increase in volume also generates a high increase in costs.

Understanding the relationship among costs, volume and profit is critical if a company is going to be able to generate strategies which can promote long-term growth. This research examines the cost-volume-profit analysis technique and considers how costs are allocated to the three.."

Abstract
The paper identifies and evaluates the key components of ethical accounting practices in the modern world, where there is a strong tendency to succumb to external influences in favor of personal gain. The paper explains that it is no longer that GAAP is the supreme code for accounting practices, rather there must be strong moral and ethical foundations that should be created at the academic level.

From the Paper
"In today's society, the accounting profession has experienced numerous challenges in an attempt to act in ethical ways with regards to accounting principles and business records. Generally Accepted Accounting Principles (GAAP) serve as a key reminder that businesses must act responsibly in their accounting activities at all stages, regardless of the potential that exists for personal gain and success. The following discussion will evaluate the importance of GAAP and accounting ethics in the context of modern organizations, where the temptation to act in a selfish manner is greater than ever. GAAP were designed to encourage a truthful representation of financial statements, based upon all business transactions conducted within specific periods (Shafer, Ketchand, & Morris, 2004)."

Tags:accounting, principles, ethics

Abstract
Following the collapse of Enron and WorldCom and the flow on effects to Arthur Anderson, legislatures world wide are recognizing the need to reform the exposure of auditors and their firms to claims of negligence. This paper examines the merits of limiting the legal liability of auditors. The paper considers the measures recommended in Corporate Law Economic Reform Program (CLERP 9) and explores other practices adopted around the world.

From the Paper
"Many of the principles setting out the legal liability of auditors are found in the common law. In the case Re: London & General Bank Ltd (No. 2) , the court held that an auditor must exercise reasonable care and skill, the level of which was dependant on the circumstances. These findings were confirmed in Re: Kingston Cotton Mill Company (No. 2) , where Lopes stated that the auditor was "...a watch-dog, but not a bloodhound" and that he was only required to investigate matters which aroused suspicion. These standards of reasonable care and skill are not static, they change with time, per the findings of Pennycuick J in Re: Thomas Gerrard & Son Ltd."

Tags:clerp9, incorporation, proportionate

Abstract
In the case of Frantek, Inc., a manufacturer of microcomputer parts, and Conte Technologies, a buy of same, the issue is how to measure and recognize valuation of assets and liabilities in order to provide a proper accounting at year's end for Frantek, relevant to an amended agreement between Frantek and Conte for parts supplied by Frantek to Conte. This paper first lays out the basic facts of this case and discusses general accounting principles which will impact the path that Frantek takes and then presents a general recommendation concerning how Frantek ought to recognize revenues, valuate inventories, and valuate and classify liabilities. Issues of the Case Frantek agreed to provide 100,000 boards over a 12-month period to Conte at a stipulated price per board, with provision for penalties for failure to perform.

From the Paper
In the case of Frantek, Inc., a manufacturer of microcomputer parts, and Conte Technologies, a buy of same, the issue is how to measure and recognize valuation of assets and liabilities in order to provide a proper accounting at year's end for Frantek, relevant to an amended agreement between Frantek and Conte for parts supplied by Frantek to Conte. After laying out the basic facts of the case and discussing general accounting principles which impact the path taken, a general recommendation will be made concerning how Frantek ought to recognize revenues, valuate inventories, and valuate and classify liabilities. Issues of the Case Frantek agreed to provide 100,000 boards over a 12-month period to Conte at a stipulated price per board, with provision for penalties for failure to perform.

Tags:accounting, valuation, recognition

Abstract
This paper provides a basic introduction to ABC (Activity Based Costing) methods as a managerial accounting technique, a comparison to traditional based methods, benefits and disadvantages of ABC. The paper also includes an analysis of ABC methods as a TQM (Total Quality Management) component and provides a summary analysis of the system.

Table of Contents
Abstract
Introduction to Activity Based Accounting
Uses for ABC
Implementing ABC
Advantages of ABC Costing
Disadvantages of ABC Costing
ABC versus Traditional Accounting
The Concerns of Activity Based Management
Summary Analysis
References

From the Paper
"Activity-Based Costing (ABC) arose in the 1980s from the increasing lack of relevance of traditional cost accounting methods. The traditional cost accounting methods were designed around 1870 - 1920 and in those days industry was labor intensive, there was no automation, the product variety was small and the overhead costs in companies were generally very low compared to today. However, from the 1960s - particularly 1980s - this changed rapidly. Activity Based Costing is based on a simple principle: activities consume resources and customers consume activities. Associating the labor and overhead expenses of the business with the activities that consume those resources provides valuable facts. ABC defines categories of activity in overhead departments, which on the one hand are recognizable to overhead department managers but, on the other hand, are driven by factors (cost drivers) which are characteristic of products and other cost objects. This allows a much higher proportion of total company cost to be allocated to products according to causation. Ultimately, ABC provides accounting data points that can be used to improve decision-making and identify cost improvement opportunities. The basic building blocks for ABC are activity accounting spreadsheets for each element of a business. The workload of each activity is measured resulting in a cost per output. "

Tags:comparison, flaws, component, cost, data, labor, y

Abstract
This paper provides some research into "Positive Accounting Theory" and how it impacts on the economy. The paper begins with an explanation of the theory itself and then offers some statistics and findings regarding the consequences of its use by management.

Contents:
Introduction
Explaining the Theory
Economic Consequences
The Development of Positive Accounting Theory
How Positive Accounting Theory Operates
Management Decisions
Watts and Zimmerman
Research and Findings
An Example of a PAT study
Conclusion

From the Paper
"Positive Accounting Theory and the doctrine of economic consequences helps us to understand why different firms choose different accounting policies, why some managers may object to changes in these policies and why investors may react to the potential impact of an accounting policy change. Accounting policy choices have economic consequences for the various constituencies of financial statement users and though complicating the setting of accounting standards, the source of the pressures driving the process can be explained by the development of a positive theory of the determination of accounting standards."

Tags:choice, policy, management, business

Abstract
This paper provides an analysis of the strong movement towards global harmonization of accounting standards despite various national general accepted accounting practices (GAAP), particularly German, being substantially different. The paper explains that great successes have already been achieved, such as IAS adoption in EU and Australia; however, there is still considerable work to be done in order to not only impose international standards but also achieve better compliance and interpretation. With regard to Germany, the paper notes that reasonable attempts have been made to adopt IAS; however, there are many transition difficulties due to great discrepancies between IAS and HGB that must be addressed in order to achieve successful transition. This paper contains an illustrative figure.

Outline:
Introduction
Issues Behind EU's Decision To Adopt IAS
Transition Process in Germany
German National Accounting System
Main Areas of Transition Difficulty
Evaluation of Transition Success
Conclusion
References

From the Paper
"Figure 1 serves to illustrate the amount of examinations, carried out from 2006 till 209 as well as error rate. The primary errors relate to the insufficient management report and the application of IAS/IFRS. It can be observed that the error rates are higher for the companies that are not attached to any index which implies that for larger companies the transition process is easier to accomplish. However, the index-linked companies (include DAX, MDAX, SDAX and TecDAX)
are showing tendency of increasing errors. In 2009, for the first time, there was one DAX company with a high error rate. According to DPR-FREP, the underlying reasons for this increasing rate were the financial and economic crises, which led to errors in reports on risks and forecasts (DPR-FREP, 2010, p6). It should be also noted that the amount of average individual errors per company has been reducing steadily from five individual errors in 2007 to an average three individual errors in 2009."

Tags:IAS, IFRS, GAAP, DAX, TecDAX, SDAX, MDAX, DPR-FREP

Abstract
This paper analyses the issue of the audit expectation gap and deals with a wide range of issues including the expectations of auditors on the behalf of companies and shareholders. The paper also addresses the evolving role of auditors and the problems associated with transparency and self regulation. A majority of the paper's content is set against the backdrop of many high profile scandals and accounting failures such as the Enron scandal. In the conclusion, the writer addresses the concept of an auditor in challenging a business model to represent the conflict of interest between independence and auditing duties and responsibilities.

Outline:
The Basics of Auditing
The Role of the Auditor
The Evolving Role of the Audit Firm
Independence as Brand
Transparency and Self-Regulation
Duty of Care and Industry Problems
Business Risk
Enron and Other High-profile Scandals
Conclusions

From the Paper
"As with all corporate legal entities there is a principal agent relationship, the principal being the owner of the business who is in absence and the agent who acts as the manager. As such the principal provides capital and provides a contingent reward to the agent. In return the agent is accountable to the principal for maximising long term profitability. Specifically from the financial auditing perspective, the principal has a responsibility to provide fair and accurate financial report to the principal. Eilidsen et al (2010) argues that information asymmetry and a conflict of interests leads to the possibility of a risk of misinformation being transmitted between agent and principal.
"In order to ensure that such misinformation does not ensue, an auditor is hired on the behalf of the agent who undertakes to assess the financial statements of a company and report on the validity of such statements with regard to the quality of information provided and to consider whether or not such statements have been prepared in accordance with the relevant laws and accounting standards. Despite the face that the auditor may be thus seen as working for the principal, the fact remains that in reality whilst the principal has the right to reject the choice of auditor the auditor or audit company will be chosen by the agent. As thus this may be seen as creating the first conflict of interest and the creation of the first key expectation which is that despite bringing hired by the agent, the auditor will work in an independent fashion which is free from bias and gives a report which is in the best interest of reducing the informational risk of the principal and others who wish to use the companies financial statements."

Tags:accounting, auditing, expectation, gap

Abstract
This paper summarizes and reviews "The Goal" by Goldratt and Cox. The paper discusses "Theory of Constraints", a philosophy for improving production throughput presented in "The Goal", and looks at the concept of throughput accounting, a concept embraced by Goldratt and Cox in "The Goal".

From the Paper
"In The Goal, (Goldratt and Cox, 1986) Alex Rogo manages a troubled manufacturing plant. When his district manager informs Alex that profits must increase or the plant will be shut down, he turns to Jonah, a former professor. With Jonah's help, Alex turns the plant around while at the same time abandoning traditional management principles in favor of Jonah's Theory of Constraints and Throughput Accounting practices."

Tags:bottleneck, capacity, demand, equal, less, flow, maximize, profits, inventory, operational, expense

Abstract
This paper explains that some firms, especially in third world economies, will attempt to increase their profits by improving their worker productivity by paying a wage that is above the wage paid by other competing firms because, at the market level wage, workers may not get the necessary nutrients they require in order to carry out the working day's hard labor and to maintain a healthy lifestyle. The author points out that the ability of a firm to increase profits by setting these wages may not necessarily apply in other more industrialized labor markets where there is not a strong correlation between worker productivity and their nutritional intake. The paper relates that the efficiency wage model indicates that the behavior of a firm seeking to increase its profits is no longer limited to just decisions on how many workers to hire.

From the Paper
"It has been mentioned once before in this essay that efficiency wages may not necessarily hold true in today's modern, industrialized economies. However, there is empirical evidence that efficiency can hold true in an industrialized setting and not just in a subsistence one. If this is the case, then the economic rationale behind firm's setting wages above the market clearing wage, is a sound rationale. There is evidence that shirking-related employee problems are reduced when companies pay higher salaries. A study of large manufacturing companies in the United States shows that fewer workers are dismissed for disciplinary reasons when a firm pays a high rate of wage. In particular, a 10 percent increase in the wage reduced the rate at which workers were dismissed for disciplinary reasons . Hence, the economic rationale behind firms setting an efficiency wage is very plausible indeed, as back by empirical research such as this."

Tags:marginal, model, straight-line, productivity, industrialized