Positive Accounting Theory

Positive Accounting Theory INTRODUCTION Purpose The purpose of this report is to analyse the effect of adopting AASB 2 Share-based Payments. Besides, this report will also provide discussions about the reaction of some parties related to this adoption. Background In July 2004, there is a significant change in the accounting requirements for share-based payments. The previous standard that governs share-based payment was AASB 1046 Director and Executive Disclosures by Disclosing Entities, which then supersede by AASB 2 Share-based Payments. Under AASB 1046, share-based payments only required to be disclosed. However, AASB 2 requires an entity to reflect on its profit or loss and balance sheet the effects of share-based payment transactions at fair value (Accounting Handbook 2008). Scope This analysis is done by applying Positive Accounting Theory (PAT). The report covers three main areas, impact of adoption on companies, on managers, and motivation of regulators in developing standards Limitations Since AASB 2 is still new, research papers used in this reports may not Positive Accounting Theory (PAT) that popularized by Watts and Zimmerman is one of positive theory accounting. PAT is concerned with explaining accounting practices. It is designed to explain and predict which firms will not use a particular method. It does not say something as to which method a firm should use. This is what differentiates positive and normative theories. Normative theories prescribe how a particular practice should be undertaken and this prescription might be a significant departure from existing practice. PAT focuses on the relationship between the various individuals involved in providing resources to an organisation and how accounting is used to assist in functioning of these relationships. PAT is based on the central economics-based assumption that all individuals actions are driven by self-interest and that individuals will always act in an opportunistic manner to the extent that the actions will increase their wealth. From an efficiency perspective, why could the introduction of new rules on share option accounting be costly for an organization? Share-based payments have been widely used by many organizations as an incentive tool attracting and retaining employees, and compensate senior executives. Because there was a significant change in the accounting requirements on share-based payments, this will then affect quite numbers of organizations. The effect on organization can be explained by an efficiency perspective. Efficiency perspective, which also known as ex-ante perspective, is one of perspective under the PAT umbrella. It considers up-front mechanisms in order to minimize future agency and contracting costs (TB p. 274). Theorists of efficiency perspective argued that companies adopt particular accounting methods which best reflect their underlying economic performance. By choosing the best methods, it is being argued that investors and other parties will need not to gather as much additional information from other sources. This will consequently lead to cost saving and reducing the risks of investors, which will then increase the value of the company (TB p. 274). Another effect on the implementation of AASB 2 is that it will reduce the profit of the company, thus the performance of the company will seems to be not so attractive to the potential investors. Unattractive performance of the company may cause the investors to assume that the company has higher risks of default. Thus investors become reluctant to invest in the company or, the investors will require higher return. In other words, the company will be facing a hard time to gain investors confidence or the company will be facing a high cost of capital (TB p. 275). Since PAT theorists believe that companies will choose the methods best reflect the companies performance, this means that there will be no need for regulations to be in place anti regulation perspective. PAT theorists argued that regulation of financial accounting imposes unwarranted costs on reporting entities (TB p. 275). In the case of share-based payments, by superseding AASB 1046 with AASB 2, this provides restrictions to the company as to limited methods available to choose from. This will create inefficiencies the companies may not able to choose the method that best reflect their performance. Besides, by expensing share-based payments, this would harm start-up companies and decrease the entrepreneurial activity of growing companies (Sacho Wingard 2004). The reason behind this is that both new and growing companies usually do not always have enough cash to be used as incentive tool attract and retain skillful employees. Thus, in order to attract and retain talented employees, such companies use share options instead of giving cash incentives. Under the previous standard, whereby share options do not need to be recorded as an expense in the profit and loss statement, this will result in higher profitability which may be assumed as a good performance by investors. Besides, this will result in higher returns from investment (ROI). Thus, this makes the financial position statement of those companies look better (stronger) which then allow them to access greater capital than they would had if they have to expensed share option. Debt covenants, which also known as banking or financial covenants, are agreements between a company and its lenders that the company should operate within certain limits (Pietersz 2009). The limits set by the lenders are usually expressed in accounting numbers (i.e. level of gearing ratios). Besides set the limits, lenders will also impose obligations if the company breaches the agreement. Thus, if the company has to expense-off the share-based payments transactions, this will affect the bottom line of its financial statement which then will affect some accounting ratios. This will create difficulties for the company to operate within the limit written in the debt covenant. Company will need to re-examine the debt covenants and need to consider how to communicate this adverse impact on reported profits and key performance ratios to the market. In a worse case, company may wants to renegotiate the terms and conditions of the agreements (Chalmers Godfrey 2005). Both re-examine and re negotiate are not easy tasks, it takes a lot of efforts, considerable amount of time, and it is costly. Since AASB 2 requires companies to record share-based payments transactions as an expense, which then leads to lower profit, this will discourage companies to use share options as a compensation tool. This may cause managers to lose their motivation to improve the performance of the company, because share option is a method that widely used and most benefiting to the managers. Sacho and Wingard (2004) argued that expensing share-based payments would hurt companies like Apple, Intel and Microsoft (information technology companies) due to earnings pressures caused by share-based payments. Expensing share options will also distort earning per share (EPS). Distortion may occur due to inclusion of expense for employee stock options in the profit and loss statement will result in an inaccurate double charge in the financial statement (BIO 2004). When the employees exercise their options, it will be recorded as an expense and increase in the number of share issued. Thus, EPS will be diluted. In compliance to AASB 2, companies have to determine the fair value of the stock options. However, it is complicated to determine the fair value of stock options at grant date, due to difficulties in predicting future movement of share prices. Thus, mathematical models, such as lattice model are often used to predict the future movement in the share price and therefore to derive the value of the stock options. However, to apply this model, expertise is required. Thus, companies have to hire external experts. Besides, additional internal compliance costs, costs of external audit will also increases (BIO 2004). Why could the introduction of new rules on share option accounting be costly for manager A new set of regulation regime in the share option accounting will lead to a different treatment of accounting method to adopt in the company. The complex changes in the new treatments will increase administration and reporting requirements. According to Miles, manager will need to employ accounting industry specialist to assist them in order to comply with the latest regulatory changes. The additional administration requirement will burden the managers with extra costs. This is because managers will have to put in a lot of effort, allocate more time and money in order to familiarize and adopt the new set of the regulation which is generally called as bonding cost (Deegan). These extra allocations will go into training the existing staffs to get used to the new regulations. In addition to that, in certain cases, managers will have to employ new staff; specialists will cost even more money, to deal with the new accounting method which will ultimately result in an increase in the opera tional cost of the company. Besides time consuming and increase in operational cost, the new set of share option accounting rules will limit the managers option in applying different accounting methods. The new set of rule forces managers to be more transparent in preparing the financial report. Managers will lose the opportunity to construct a financial report that best indicate the companys performance. This is because, AASB 2 requires manager to recognize expenses that are related to services or goods received or acquired in the share based payment transaction. As a result, by expensing the items mentioned will significantly reduce the profit in the income statement. In the case of companies relying on profit based performance, managers are directly affected by the diminished profit. Low profit indicates low bonuses for the managers. On the other hand, for companies relying on share-price based performance, manager has to bear indirect impact of the huge deduction in the profit. This is because investors are the ones who are influential in regards to the movement of share prices. Investors are acting based on the information provided in the financial statement. Unexpected decline in the profit will lead to a negative sentiment; as a consequence, the investors are not convinced in either purchasing or retaining the companys share (Deegan pg. 262). Instead of increase in the share price, it will drop the share price. Ultimately the value of share options will drop in line with the drop in share prices. What would motivate the regulators to develop the new rules? Big organizations represent large visible blocks of wealth and the government possesses the ultimate authority; through legislation and through court decisions. Politicians, bureaucrats, and special interest groups are interested in expanding their welfare, supporting rules that would work to their own benefit (Jensen, 1976). Generally, the regulators are controlled; if not, influenced by the government in power. Regulators might be motivated in developing new rules; in the scope of self-interest, that would benefit the government. For example, the majority of the public demands the government to solve discrimination and poverty or to be stricter with issues in regards to the environment. In order for the government to stay as the popular choice of the public, the regulators can develop rules that will have these big organizations to serve as a vehicle for social reform (social responsibility); by mitigation of discrimination and poverty, and the establishment of training and polluti on prevention programs (Jensen, 1976). This will work in favor of the governments self-interest by addressing the publics interest. Likewise, the regulators can also develop rules that would benefit big organizations; ultimately the government in ways of getting sponsorship The inefficiency of the ESOs would be a reason for regulators to develop the new rules; because inefficiency of ESOs can lead to abuses and frauds. Frauds that are related to ESOs may crop up from the managerial power doctrine, negotiation and execution of ESO agreements, award and implementation of ESO plans, re-pricing, and disclosure of ESOs; as exampled in the recent corporate crimes at Enron, Tyco and Arthur Anderson (Nwogugu, 2006 pg 9). What happened with the big three companies showed that there was over-reliance on companys internal governance mechanisms for prevention of corporate crime. In order to prevent abuses on ESOs, it is paramount for the regulators to develop new rules; i.e. to enhance transparency and corporate governance, criminalize the misconduct which was formerly regulated by corporate governance mechanisms. Often ESOs in large organizations can result in over-compensation which is substantial to opportunity costs. The costs to cover over-compensation will directly impinge on other areas of a business (opportunity costs) such as capital expenditures and limiting expansion. Establishing proper compensation is difficult; according to Nwogugu (2006 pg 11) the business judgement rule cannot eliminate over-compensation because of the difficulty in determining and applying the reasonableness standard. This is when the regulators come in. There is a potential for regulators to develop an optimal compensation structure to avoid companies from practicing over-compensation, thus encouraging regulators to lay down new rules. Other inefficiencies and abuses of the ESOs that might encourage the regulators to develop new rules include the potential usage of ESOs as a device for taxation avoidance and as device to prevent a takeover (Lenne, Mitchell, and Ramsay, 2004 pg 10). Taxation concessions related to ESO schemes are introduced with the objective of promoting the practice of ESO. But there are concerns of abuse of the concessions given in the form of tax relief for private equity ownership (Lenne, Mitchell, and Ramsay, 2004 pg 19). This will result in people who are not qualified, able to take advantage of the tax incentives. In the scope of takeover prevention, companies might extend their ESO. By doing so, the company is able to redistribute control among its own management which makes a takeover seem unappealing. There is also an issue of companies making trade-offs with their employee by offering ESOs in exchange with wages. It is suggested that ESOs should be a supplement to the employees income rather than being a substitute for wages instead (Lenne, Mitchell, and Ramsay, 2004 pg 10). New regulations are needed in order to monitor and prevent these issues from taking place in the future. Another factor that should prompt the regulators into developing new rules in regards to ESOs is to achieve consistency and comparability. According to a research by Lenne, Mitchell, and Ramsay (2004 pg 14), 513 annual reports of ASX-listed public companies for the financial year ending 2001 was conducted in regards to ESO disclosures. In the research, theyve identified that the disclosure practices varied significantly between companies. Some annual reports disclosed noteworthy detail on the companys various ESO schemes while some, basic information such as the scope of the scheme of their ESOs are not even provided (Lenne, Mitchell, and Ramsay, 2004 pg 14), making comparability impossible because of the inconsistency of the disclosures. Last and most important factor that will motivate regulators to develop new rules is related to ESOs being expensed. ESO plans did not require any expense recognition in terms of the prevailing accounting standards (Sacho and Wingard, 2004 pg 155). This resulted in investors forecasting the value of companies with misleading information as exampled in the 2001 share market bubble burst. Investors get a false impression in regards to the reality of the value of the related transactions which ended up in billions of dollars lost due to the fall of share prices. Markets can only allocate resources efficiently when prices accurately reflect underlying values; which can only be achieved by expensing ESOs (Sacho and Wingard, 2004 pg 155). By expensing ESOs, investors are able to obtain the true input costs of generating corporate revenues, enabling them to efficiently allocate capital and undertake the best possible investment decisions. In addition to that, expensing ESOs will lead to imp rovements in corporate performance and reduction in abuses of the ESOs (Sacho and Wingard, 2004 pg 158). CONCLUSION REFERENCE LIST http://www.sciencedirect.com.ezlibproxy.unisa.edu.au/science?_ob=MImg_imagekey=B6W58-4H68T8F-2-1_cdi=6564_user=170565_orig=browse_coverDate=12%2F31%2F2005_sk=999859997view=cwchp=dGLzVtz-zSkWzmd5=72a8e05e8f6a0ee2f4bea25809e2b586ie=/sdarticle.pdf Shying, M Ngiam, J (eds) 2008, CPA Australia: Accounting Handbook, 2008 edition, Pearson Australia Group Pty Limited, Australia.

Huck Finn :: essays research papers

The Adventures of Huckleberry Finn Modern American (1885) 1. The Author and His Times Mark Twain, the pen name of Samuel Clemens, was born in Florida, Missouri in 1835. When he was four, his family moved to Hannibal, Missouri, the setting for many of his books. His father died when he was 12. After his father died, he went to work as a printer ¹s apprentice and eventually as a printer in Missouri, St. Louis, and New York often writing a few works himself for periodicals. He worked as a printer and a reporter selling much of his work to newspapers. He continually moved from town to town. In 1857, he decided to move to South America to make a fortune there. He boarded a riverboat and headed for New Orleans where he would arrange the rest of his trip. However, he never made it past New Orleans and never into South America. He begged the riverboat to teach him how to pilot the riverboat. The riverboat pilot agreed to teach him for $500. Mark Twain went west during the civil war and established himself as a writer during this time. He wrote humorous stories about his experiences which lead to a job as a newspaper reporter in 1862. The following year he began signing his work  ³Mark Twain, ² a riverboat term meaning two fathoms deep. Mark Twain went to Hawaii in 1866. This trip was the beginning of his career as a travel correspondent. The next year he went to Europe and wrote a successful book there titled, The Innocent Abroad. In 1876, he published The Adventures of Tom Sawyer. This book was such a success that he decided immediately to write a sequel. The sequel, which became much more complex than the original was published seven years later in 1883 and titled, The Adventures of Huckleberry Finn. After Huckleberry Finn, Twain wrote nearly a dozen more books but none were as successful. By 1939, Twain had lost all of his money investing in various schemes and inventions, almost all of which were failures. After this, he went on a world lecture tour and was able to pay his debts by 1896. While on the tour, one of his daughters died. His wife later in 1904. In 1909 his daughter died leaving him unhappy. 2. Form, Structure, and Plot The Adventures of Huckleberry Finn consists of 43 chapters and is told in the first person with

NASW code of ethics Essay

I believe that the NASW code of ethics is an adequate starter guide for new social workers. It covers all of the basic ethical dilemmas that happen more often in the field of human services. I feel that a great deal of the code is common sense and it is helpful to see what is expected of you and you colleagues while on the job. The dilemma is a disagreement with a co-worker over how to approach one of my own client’s dilemma. Let’s say I went to the co-worker and asked their advice on how to handle a problem with a foster family. I felt the child was mistreated in their current foster home and needed to be placed somewhere else. My co-worker feels they should stay put for the time being and I feel they should be moved. There are not many options for this child because of the huge need for foster parents in the area and the child has already been moved around four times. According to Susan Schilssler Manning Ethical Leadership in Human Services: A Multi-Dimensional Appro ach (2003), it is the primary responsibility of a social worker to promote the well-being of clients and to make their interest primary, however the social services workers’ responsibility can be limited due to larger society or specific legal obligations. In this case the child is in danger and according to the code of ethics it is my job to protect the client and remove them from the home. There is a helpful list of questions on the NASW website that provides tips for resolving ethical dilemmas. In this circumstance there could be more guidance concerning children and those under the age of eighteen. Reference: NASW National Association of Social Workers. (2001). Retrieved from http://www.naswma.org/displaycommon.cfm?an=1&subarticlenbr=120 Susan Schilssler Manning. (2003). Ethical Leadership in Human Services: A Multi-Dimensional Approach. Retrieved from Susan Schilssler Manning, HSM 220 website

Word Families - a Quick Reference for Teachers

Word Families - a Quick Reference for Teachers Word Families are sometimes referred to as groups, chunks or rimes. A word family has something in common with each other, have it be the prefix, suffix or root word. For example, green, grass, grow all have the gr sound in the beginning of the word. What are the Benefits? Word families are important because they help young children recognize and analyze word patterns when they are learning to read. When teaching analytic phonics, teachers use word families to help children understand these patterns and that certain words have the same letter combinations and sounds. Most Common Word Families According to researchers Wylie and Durrel, there are 37 common word families: ack, ain, ake, ale, all, ame, an, ank, ap, ash, at, ate, aw, ay, eat, ell, est, ice, ick, ide, ight, ill, in, ine, ing, ink, ip, it, ock, oke, op, ore, ot, uck ,ug, ump, unk. ack- back, hack, pack, rackain - brain, chain, main, plainake - awake, bake, cake, fakeale - ale, bale, sale, taleall - all, ball, call, hallame - blame, came, game, samean - an, ban, can, panank - bank, drank, sank, tankap - cap, map, rap, tapash - bash, dash, rash, sashat - bat, cat, fat, matate - fate, gate, late, rateaw - claw, draw, paw, saway - day, hay, may, sayeat - beat, feat, meat, seatell - bell, fell, tell, wellest - best, rest, vest, westice - dice, mice, nice, riceick - brick, kick, pick, sickide - bride, hide, ride, sideight - bright, fight, light, nightill - bill, hill, pill, stillin - bin, chin, grin, tinine - dine, fine, mine, vineing - bring, king, sing, wingink - drink, link, pink, sinkip - chip, dip, lip, sipit - bit, fit, hit, sitock - block, clock, rock, sockop - cop, hop, mop, topore - bore, more, sore, toreot - got, hot, not, rotuck - buck, duck luck, tuckug - bug, hug, mug, rugump - bump, dump, jump, pumpunk - bunk, dunk, junk,sunk Source: Richard E. Wylie and Donald D. Durrell, 1970. Teaching Vowels Through Phonograms. Elementary English 47, 787-791.

Does Blended Learning Accelerate Student Growth Essays

Does Blended Learning Accelerate Student Growth Essays Does Blended Learning Accelerate Student Growth Essay Does Blended Learning Accelerate Student Growth Essay Does Blended Learning Accelerate Student Growth? How effective is the blended learning at Rocky Mount Prep in accelerating student learning? Since Rocky Mount Prep needed to increase the student learning, they devised an innovative process in school setup so that some improvement can be achieved. The school has used NWEA MAP data as assessment tool data model, which helped the teachers to make an informed decision while addressing needs for the learners. Results revealed that blended learning contributed to overall growth at every grade level, a factor believed to be as a result of improved learning experienced among student. According to a survey performed at Rocky Mount Prep, it was clear that teachers were averagely satisfied hence acceleration of learning could not be achieved fully. Furthermore, a study indicated that teachers were not even fully prepared to be actively involved in the implementation of blended learning and less acceleration of learning. Besides, according to information collected from respondents, as a strategy to evaluate the effectiveness of learning, it was noted that a positive feedback was achieved. English and history, science, and business communication were mostly associated with improved learning when blended learning was applied. Evaluating the scale of satisfaction with blended learning in accelerating student education, it was clear that approximately 82% was satisfied while 18% held a neutral level of satisfaction. On the other hand, it was found out that blended learning was a reliable resource for learning, hence, an assurance of improvised learning processes. This is because it enhances better memory for already learned materials. Besides, blending learning is a good example of regular practice while executing activities such as solving equations and multiplication of facts. Lastly, blended learning leads to student-led learning, which is appropriate for them to learn at their convenience. This leads to proper learning activities such as project-based learning. What are staff perceptions of blended learning program at Rocky Mount Prep and its effects on accelerating student learning? Staff, especially teachers stated that they were not well-prepared to fully implement blended learning. They believed that blended learning could only achieve better results if students are ready to acquire skills and cooperate fully. For example, according to responses, when teachers were asked if they would like to teach in a blended format, 55% were probable while 45% were definitely. For the teachers who were for blended learning, they believed that high chances of interaction were realized due to the availability of more knowledge in websites. Also, they advocated for blended learning because students utilized online programs, which helped them to be active participants in the class. On the other hand, teachers who stated that the experience somewhat increased believed that interaction between them and learners was decreased. The biggest cause of interruption was disruption from outside environment. Other teachers never like this type of learning since a level of participation fell leading to poor learning amongst students. According to a survey about interaction, 40% recorded better results, 10% about the same and 50% worse. All in all, blended learning is virtually important since immediate feedback, proper record keeping and quality face to face interaction can be achieved. Besides, there is active participation of learners and overall development of learners. Hence for such reasons, this type of learning should be encouraged and practiced in schools.Lastly, the staff should be encouraged to cooperate so that student growth and improvement of learning can be realized.

Event Management (Event strategy plan) Essay Example | Topics and Well Written Essays - 1750 words

Event Management (Event strategy plan) - Essay Example People were not happy. This caused severe unrest and people began to revolt. All over the Arab world, including Syria. This revolution has done more damage than good, causing a lot of pain and suffering on the women and children of the country. (Jamoul 2012) This section of society hasn’t even had that much of a role in the uprising. But they have been tortured, abused physically, mentally and sexually, till all hope has been lost. Over 500 children have been killed in a year of the uprising. (United Press International 2012). Women and even young girls have been raped and killed, at the hands of authority – like policemen. (Women under siege Syria 2012) The rest are all miserable and scared, and it is time to do something for them. In an effort to make the lives of the victims of the uprising – especially the women and children, we shall organise a fundraiser on an international scale. An event that will show people just how much the uprising has affected this s ection of society and how badly they are affected. (Peralta 2012) The event will not only be a call for attention but also a cry for action to the privileged so that they can do something for those that have suffered. ... It will have different elements to it such as an auction by international celebrities of their favourite items, followed by live performances. There will be dances, songs, stand up and so on. But the focus of the night will be on the woman and children of Syria who have had to suffer so much. The night will not just be one of fun. It will be emotional. A rollercoaster of a night that will allow people to enjoy their surroundings and a jarring reminder that they have it easy, by showing them what the women and children are going through. We will show them videos and let them see what is happening. These people will be constantly reminded of the sad plight of thousands of innocent women and children who are suffering at the hands of authority. Strategic Aim The whole point of this event is to create awareness among the people of the world, of the plight of the women and children of Syria. That done, we feel it is our duty to aid them in any way we can. They have suffered enough at the hands of authority, and they need to be rescued. By this event, our objectives are threefold. One, to create an international awareness about the plight of the women and children in Syria. Two, to generate funds to aid these victims. And three, to set up trusts that will ensure that the victims are taken care of. All donations will be anonymous. The framework of objectives would need to be broad enough to include the large variety of event genres, but still be lean enough to work with. (Damm 2011). Research Management Events such as these happen all the time. Celebrities and the ‘big shots’ get together to support a cause, have a good time and donate what they wish to a charity of sorts.

Transformational Leadership Essay Example | Topics and Well Written Essays - 4250 words - 1

Transformational Leadership - Essay Example Based at Fort George, the Black Watch is the 3rd Battalion of the Royal Regiment of Scotland (3 SCOTS) (Arm 2011). Serving the Black Watch as a Company Sergeant Major, I handle a total of 120 soldiers under my command. To become successful in each of the military mission, the Army as a group needs good leadership. Considering my role and responsibilities as Company Sergeant Major, this report will focus on applying leadership theories, principles and techniques in my chosen profession. Prior to the conclusion, factors that make a good leader will be thoroughly discussed. Unlike the role of managers who are managing business organizations, leadership in the military is not about organizational hierarchy, top-down management, or even the use of positional or authoritative power in terms of controlling a group of soldiers. Likewise, it is a myth that military officers within the army are all about following the chain of command since soldiers who are in the military service treat one another as members of a large family. Even though effective commanders are expected to possess command skills and practice good leadership, the true concept of leadership is not about commanding a group of soldiers who are under the control of the commanders Yukl (2002, p. 2) defined leadership as â€Å"a process whereby intentional influence is exerted by one person over other people to guide, structure, and facilitate activities and relationships in a group or organization†. On the other hand, McNamara (2008) defined leadership as â€Å"a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent†. In relation to these definitions, Taylor, Rosenbach, and Rosenbach (2009, p. 1) explained that effective leadership â€Å"is all about getting people to work together to make things happen that might not otherwise occur or to prevent things from happening that would ordinarily take place†. It simply means that effective military leaders include those individuals who are capable not only in influencing other soldiers to strictly follow what is being commanded to them but also motivate, inspire and empower a group of soldiers as uniq ue individuals under my guidance.