Accountancy Faculty Publications and Presentations Copyright (c) 2013 Boise State University All rights reserved. http://scholarworks.boisestate.edu/account_facpubs Recent documents in Accountancy Faculty Publications and Presentations en-us Wed, 19 Jun 2013 01:50:21 PDT 3600 A GAAP Critic's Guide to Corporate Income Taxes http://scholarworks.boisestate.edu/account_facpubs/26 http://scholarworks.boisestate.edu/account_facpubs/26 Mon, 17 Jun 2013 09:49:13 PDT The basic framework for accounting for income taxes under generally accepted accounting principles (GAAP) has been in place for nearly 20 years. Influential GAAP commentators have recently called for a thorough review of the GAAP tax accounting rules in light of normative accounting theory. Before such a review can take place, GAAP reformers must be armed with an overview of the legal, economic, and practical realities of the corporate income tax in today's business environment. Nothing in the extant literature provides such an overview. This Article provides that overview, drawing on classic and contemporary authorities from a variety of perspectives. Among other topics, this Article reviews the legal definition of a tax, demonstrates how taxes are noncontractual in nature, discusses issues of economic incidence, reviews the reality of tax planning in today's business environment, reviews the legal literature that describes the government as a "shareholder" in all firms, and shows the interconnected relationship among GAAP, corporate tax planning, and government enforcement efforts. This Article helps bridge the GAAP and tax law worlds by laying the groundwork for GAAP critics to thoroughly examine and critique the current GAAP rules for income taxes.

]]> Mark J. Cowan Boise State on Business: These Tools Can Help Make the Most of Profit and Loss Data http://scholarworks.boisestate.edu/account_facpubs/25 http://scholarworks.boisestate.edu/account_facpubs/25 Wed, 29 May 2013 13:07:03 PDT Companies invest heavily in creating the traditional profit and loss statement because it is a periodic requirement that measures business performance. The problem is that management is framed into thinking about summarized information, routine reporting and often irrelevant historical performance. Rather than treat it like a mandatory reporting necessity, a periodic photograph of the past that reminds them of what once was, we suggest that companies exploit this versatile tool by adding our three applications that will provide insights into what can be.

]]> Michael Lee et al. Lean Processes without Compromising Controls http://scholarworks.boisestate.edu/account_facpubs/24 http://scholarworks.boisestate.edu/account_facpubs/24 Thu, 16 May 2013 13:46:26 PDT In today’s economic environment, governments feel the pressure to operate more efficiently, and many are therefore considering the gradual and continuous process improvement that Lean provides. Lean begins by examining a process from beginning to end, without departmental barriers; identifying the parts of the process that are inefficient; making a case for Lean improvements; and improving the process by reducing activities and waste that don’t add value to the consumer of the process.

]]> Robyn L. Raschke et al. Boise State on Business: Old Accounting Tools Can Perk Up Mature Company http://scholarworks.boisestate.edu/account_facpubs/23 http://scholarworks.boisestate.edu/account_facpubs/23 Fri, 03 May 2013 11:00:50 PDT In recent weeks, Apple has taken a valuation hit on the back of its quarterly earnings release. Apple's financial reports show that average revenue per unit is declining, production costs are increasing, and sales growth is slowing down. Competition from the likes of Blackberry and Samsung (phones), and Google (Android operating system) is fierce. Blackberry has been on a downward valuation slide since 2011. We can add to this list: Dell (heading for privatization to regain its mojo) and Hewlett Packard.

It seems these companies have entered a "maturity" crisis, unable to keep pace with shortening product life cycles and the pace of innovation that established them. They seem to be moving into a common and not-always-successful high-volume, low-cost strategy. To stay in the game, these mature companies must re-ignite their focus on balancing innovation, market share and product/service margins.

]]> Michael Lee et al. Culture and Management Control Systems in Today’s High-Performing Firms http://scholarworks.boisestate.edu/account_facpubs/22 http://scholarworks.boisestate.edu/account_facpubs/22 Mon, 29 Apr 2013 13:38:20 PDT You might think that firms with bureaucratic cultures would emphasize their use of management control systems. Contrary to expectations, firms with bureaucratic cultures are not users of management control systems!

]]> Michael T. Lee et al. The Effects of Time Budget Pressure and Intentionality on Audit Supervisors' Response to Audit Staff False Sign-Off http://scholarworks.boisestate.edu/account_facpubs/21 http://scholarworks.boisestate.edu/account_facpubs/21 Mon, 11 Feb 2013 14:45:45 PST Based on theory from the psychology literature and results from prior false sign-off research, we develop hypotheses and then conduct an experiment to assess the reporting intentions of audit supervisors who discover that a staff member under their supervision has committed false sign-off. The experiment manipulated the level of time budget pressure on the audit engagement and the staff member's intentionality. Results indicate that audit supervisors are more likely to report the false sign-off when (1) the audit staff member was working under conditions of low time budget pressure versus high time budget pressure and (2) the staff member committed the false sign-off intentionally versus unintentionally as a result of confusion over what was expected. The paper concludes with a discussion of its limitations, suggestions for future research, as well as implications for practice.

]]> Troy Hyatt et al. A New Day for Business Combinations http://scholarworks.boisestate.edu/account_facpubs/20 http://scholarworks.boisestate.edu/account_facpubs/20 Tue, 06 Nov 2012 13:56:38 PST After 25 years of work on business combination standards, FASB rolled out a major overhaul of GAAP related to mergers and acquisitions when it issued Statement no. 141(R), Business Combinations, in December 2007.

]]> Paul B. W. Miller et al. Quality Financial Reporting: Why You Need It and How to Implement It http://scholarworks.boisestate.edu/account_facpubs/19 http://scholarworks.boisestate.edu/account_facpubs/19 Mon, 05 Nov 2012 13:58:58 PST Many of today's corporate managers use a financial reporting strategy that is irrational, charge the authors of this article. Instead, they offer a new strategy—along with a useful evaluation checklist, and advice for implementation.

]]> Paul B. W. Miller et al. Fast Track to Direct Cash Flow Reporting http://scholarworks.boisestate.edu/account_facpubs/18 http://scholarworks.boisestate.edu/account_facpubs/18 Mon, 05 Nov 2012 13:47:50 PST Even though good reasons abound for using the direct method of reporting operating cash flow, almost all managers choose the indirect method. We, and others whose opinions we respect, consider the direct method to be far superior to the indirect because it generates information that's more useful to the capital markets for assessing the amounts, timing, and uncertainty of a company's future cash flows. Contrary to today's conventional wisdom, the direct method isn't hard to apply. In fact, with the system modifications described in this article, it will be easy to provide the information financial statement users want. After applying these techniques, your financial statements will go beyond merely complying with minimum GAAP to satisfy recommendations offered by the Financial Accounting Standards Board (FASB) and the Association for Investment Management and Research (AIMR) for the cash flow statement. The result will be better-informed investors, creditors, and managers — with the ultimate consequence of lower capital costs and higher stock prices.

]]> Paul B. W. Miller et al. It's Time to Get Rid of LIFO Conformity http://scholarworks.boisestate.edu/account_facpubs/17 http://scholarworks.boisestate.edu/account_facpubs/17 Mon, 05 Nov 2012 13:39:01 PST Now that we're in the 21st Century, shouldn't we be uncomfortable with a significant tax provision that originated before World War II? You might think so, but the last-in, first-out (LIFO) conformity rule has been at work for so long that almost no one even notices it. We certainly have noticed, and we find that the conformity rule forces managers to shortchange stockholders in either the financial statements or the tax return. Without it, financial reporting would provide more useful information, and the economy would be more productive and prosperous.

]]> Paul R. Bahnson et al. The Top 10 Reasons to Fix the FASB’s Conceptual Framework http://scholarworks.boisestate.edu/account_facpubs/16 http://scholarworks.boisestate.edu/account_facpubs/16 Mon, 05 Nov 2012 13:24:46 PST The Financial Accounting Standards Board (FASB) produced most of its Conceptual Framework (CFW) more than 20 years ago in a project that began in the 1970s. It achieved notable positive results, yet it isn't without flaws. These blemishes originate from several sources, including political pressures. But time has yielded a new environment that enables the FASB to fix the shortcomings.

]]> Paul B. W. Miller et al. Perfect Storm Prompts Changes in Pension Accounting http://scholarworks.boisestate.edu/account_facpubs/15 http://scholarworks.boisestate.edu/account_facpubs/15 Fri, 02 Nov 2012 15:46:18 PDT Over the first half of the decade, pension and other postretirement benefit plans were hit hard by a perfect storm of economic forces. Investment returns were irregular and often less than expected. Falling interest rates caused employers' obligations to soar. And many old-line industries experienced a cash crunch that encouraged management to offer increased pension benefits in lieu of higher wages. A shift in demographics has resulted in far fewer younger workers and many more who have retired or are about to do so.

]]> Paul B. W. Miller et al. Refining Fair Value Measurement http://scholarworks.boisestate.edu/account_facpubs/14 http://scholarworks.boisestate.edu/account_facpubs/14 Fri, 02 Nov 2012 15:38:30 PDT Financial Accounting Standards Board (FASB) issued a standard in fall 2006 with the understated title Fair Value Measurements. On one hand, FASB Statement no. 157 appears to shake the foundation of historical cost measurement. On the other, it appears innocuous because it does not compel greater use of fair values. CPA's should quickly acquaint themselves with the new rule, since it becomes effective for annual statements for fiscal years beginning after Nov 15, 2007, and for interim reports prepared in that initial fiscal year.

]]> Paul B. W. Miller et al. Noncontrolling Interest: Much More Than a Name Change http://scholarworks.boisestate.edu/account_facpubs/13 http://scholarworks.boisestate.edu/account_facpubs/13 Fri, 02 Nov 2012 15:29:03 PDT In December 2007, FASB adopted two new business combination standards: Statement no. 141(R), Business Combinations, and Statement no. 160, Noncontrolling Interests in Consolidated Financial Statements. Both culminated years of work directed at improving reporting for consolidated entities. This article summarizes the most important changes created by Statement no. 160, which is effective for fiscal years beginning after Dec 15, 2008. The most visible innovation in Statement no. 160 is the name change from "minority interest" to "noncontrolling interest." A major change affecting income reporting concerns the treatment of the earnings related to midyear acquisitions. Statement no. 160 will require new supplemental disclosures about the controlling and noncontrolling interests to help users understand how they affect the overall reporting entity and the future cash flow potential for the parent's shareholders. Statement no. 141(R) and Statement no. 160 are integrally linked to work together to apply the new acquisition method to consolidated financial statements and reports and thus bring more useful information to the capital markets.

]]> Paul R. Bahnson et al. When "Aha Moments" Make All the Difference http://scholarworks.boisestate.edu/account_facpubs/12 http://scholarworks.boisestate.edu/account_facpubs/12 Fri, 02 Nov 2012 15:22:04 PDT What makes a seasoned group of faculty members sit up straight and learn something remarkable? It happens when the members go through a process to develop a new product and realize that what (should) happen is not what does happen and that the difference comes from the "aha moments" along the way. In this article, the authors track the development of a new venture start up—of a young entrepreneurial business school, lacking regional or national image, and the process faculty members experienced in creating a highly differentiated potentially brand-creating new executive MBA program. Specifically, they reflect on the design and development phase of "what happened" and "what really happened," which emerged through a series of "aha moments." Along the way, the program's designers and deliverers offer insights and lessons relating to the process itself and examine the application of management theories to a new academic venture.

]]> Nancy K. Napier et al. How Management Accounting Can Help Environmental Firms http://scholarworks.boisestate.edu/account_facpubs/11 http://scholarworks.boisestate.edu/account_facpubs/11 Tue, 21 Aug 2012 12:50:21 PDT Our recent study of management accounting systems for startups demonstrated that properly designed and implemented tools are linked with greater chances of business success. These systems can help environmental startups overcome failure.

]]> Michael T. Lee et al. Accounting Systems Must Grow with Your Company http://scholarworks.boisestate.edu/account_facpubs/10 http://scholarworks.boisestate.edu/account_facpubs/10 Tue, 21 Aug 2012 12:45:01 PDT Atlas is a niche company that resells used medical equipment via the Internet. The business has experienced enormous growth each year to date.

]]> Michael Lee et al. Business Culture Affects a Company's Strategic Success http://scholarworks.boisestate.edu/account_facpubs/9 http://scholarworks.boisestate.edu/account_facpubs/9 Tue, 21 Aug 2012 12:14:19 PDT At Boise State, we surveyed managers, general and operation managers, business analysts and accountants in more than 350 companies to find more about business culture and how these companies manage their cultures in pursuit of success.

]]> Michael Lee A Penny for Your Thoughts: Sizing Up Manipulative EPS Rounding http://scholarworks.boisestate.edu/account_facpubs/8 http://scholarworks.boisestate.edu/account_facpubs/8 Fri, 10 Aug 2012 15:08:19 PDT For as long as public companies have been required to report earnings per share (EPS), there probably have been misguided managers who try to nudge it higher.

We’ve written this article to unveil a method of manipulating EPS that, near as we can tell, hasn’t yet been described in print. Because any attempt to manipulate EPS creates uncertainty and uncomfortable risk for investors—which, in turn, could create capital market inefficiencies and produce discounted stock prices—we want to expose this inappropriate and unproductive gamesmanship and then help eliminate it.

Our specific concern is that a troubling number of managers, and perhaps their auditors, have grown comfortable with manipulating EPS despite the questionable ethics of this practice. The most obvious method massages reported net income, the numerator of EPS. More subtle, but equally objectionable, is buying back stock to decrease the denominator.

Our focus falls on the even more stealthy manipulation of the quotient through biased rounding of EPS to the higher penny. Even if it had been suspected, no one until now has assessed its prevalence and proposed policies to stop it.

In the coming pages, we prove that abusive rounding is indeed going on and show when it’s most likely to happen. We then explain how anyone can determine whether a specific company’s management has decided to commit it over and over again. We also show that management’s choice of auditors makes these manipulations less (or more) likely. As a practical contribution, we recommend a very simple rule change that will totally eliminate the temptation to pick up a penny through rounding.We then tackle the much bigger issue of how to make income statements and EPS more useful.

]]> Paul A. Miller et al. How Firms Learn From the Uses of Different Types of Management Control Systems http://scholarworks.boisestate.edu/account_facpubs/7 http://scholarworks.boisestate.edu/account_facpubs/7 Thu, 23 Feb 2012 12:33:37 PST Many users of management control systems claim that a system’s effectiveness in creating business performance resides in its ability to facilitate learning and decision making. Yet this does not explain why users of management control systems have varying levels of success in terms of business performance with these tools. Our IMA-sponsored research project1 examines the following questions that relate management control system use, learning, and performance:

• How are management control systems used?

• How do organizations learn from management control systems?

• What uses of management control systems and styles of learning characterize high performing firms?

To answer these questions, we examine a set of management control systems that are in existence today: business intelligence systems. Business intelligence systems are computerized systems that identify, extract, and analyze business data (e.g., sales revenue by product and/or department and/or location). They facilitate learning and support decision making through the provision of various types of information. We examine three popular types of business intelligence systems and how they are used to facilitate learning in firms. The three types are: (1) dashboards and visualization, (2) query, analysis, and reporting, and (3) data management and data quality. We developed a survey to collect data that would help answer our questions.

]]> Michael T. Lee et al.