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IJAISL - International Journal of Accounting Information Science and Leadership

Volume: 1, Issue: 2

Authors can view an Abstract, order a Full Article or order an Electronic Copy of a Journal by sending an email request to chief-editor@intellectbase.org.

• A NOTE ON THE COINTEGRATION OF MONEY AND CREDIT IN THE U.S.
  Author(s): Harrison C. Hartman
  

A NOTE ON THE COINTEGRATION OF MONEY AND CREDIT IN THE U.S.

Author(s): Harrison C. Hartman

This study finds cointegration between money and credit (or debt) in the United States as measured by M1 and DNFD, respectively. Further, it specifies a Vector Error Correction (VEC) model and presents impulse-response functions from that VEC. Information on the cointegration between M1 and DNFD presented could help policymakers better reach targets for price levels and real GDP. Because the impulse-response functions suggest that the impact of shocks lasts years, policymakers should proceed with caution when applying cointegration analysis. The author views this article as a preliminary investigation.



• SETUP TIME REDUCTION AND LEAN SHOP FLOOR CONTROL: ACCOUNTING FOR REDEFINING SETUP COST IN THE ECONOMIC PRODUCTION QUANTITY MODEL.
  Author(s): Nesa L'abbe Wu
  

SETUP TIME REDUCTION AND LEAN SHOP FLOOR CONTROL: ACCOUNTING FOR REDEFINING SETUP COST IN THE ECONOMIC PRODUCTION QUANTITY MODEL.

Author(s): Nesa L'abbe Wu

The economic production quantity, as defined by the EPQ model, states that a setup cost reduction reduces the production batch size. A setup cost reduction, through setup time reduction efforts accommodates for lean inventory control. The four major advantages of lean inventory control are: 1) a just-in-time production pull system, with a decreased production throughput time and increased customer satisfaction; 2) a decrease in in-process and obsolete inventory and its associated cost; 3) an increase in productive time on bottleneck processes with its associated increase in company profits; and 4) a quicker response of the productive system and its inventory to changes in demand, driving down safety stock. These four basic inventory advantages must become the drives for redefining "setup cost", as used in the EPQ model. When setup time is significantly reduced, this setup cost is not merely the cost of setting up a piece of equipment or process, but must be reduced by the value of the above mentioned advantages of lean inventory control. In its conclusion this author challenges industry to engage in a process for defining the appropriate cost effective small batch size.

Keywords: EPQ Model, Lean Inventory Management, Setup Cost Reduction Time, Setup Cost Redefined.



• THE EVOLUTION OF THE CHINESE AND THE US ACCOUNTING SYSTEMS: A PERSPECTIVE.
  Author(s): Farhad Simyar and Bijesh Tolia
  

THE EVOLUTION OF THE CHINESE AND THE US ACCOUNTING SYSTEMS: A PERSPECTIVE.

Author(s): Farhad Simyar and Bijesh Tolia

The purpose of this paper is to describe the process of Chinese accounting standard setting, implementation and enforcement of these standards since China adopted its "Open Door" economic policy in 1979. The paper also explains the history of the evolution of Chinese accounting system since its inception. The paper specifically discusses impending changes in the Chinese Accounting System to bring it in line with the International Accounting norms. The first part of the paper introduces the sources of Chinese accounting norms and standards. The National People's Congress is the legislature of the accounting laws. The China Securities Regulatory Commission is the enforcement body that enforces and rules over the information presentation and disclosure of the publicly listed compares. In the second section of this paper, we discuss the Chinese accounting standard-setting process and system. These systems are design to match the Chinese special social, cultural and business environments. We describe the special and complicated framework of Chinese accounting norms in the third part of the paper. The framework of Chinese accounting norms consists of the accounting laws, accounting standards, accounting system and the regulations on the information disclosure of publicly listed companies. In the fourth section of this paper, we review the evolution of Chinese accounting reform since 1979. We divide the Chinese accounting reform into three periods of significance and summarize the main features of the Chinese accounting reforms and their effects on business environment and foreign investments in China. Also discussed in this section are the most recent changes in the Chinese Accounting system. The paper concludes with a brief description of the US Accounting System for comparison purposes.



• GROWTH AND DEVELOPMENT STRATEGIES FOR MNC SUBSIDIARIES IN CHINA
  Author(s): Linda Hayes, Jifu Wang, Jinghua Zhao and Peng Yu
  

GROWTH AND DEVELOPMENT STRATEGIES FOR MNC SUBSIDIARIES IN CHINA

Author(s): Linda Hayes, Jifu Wang, Jinghua Zhao and Peng Yu

Since 1995 China has attracted the largest amount of foreign investment, and the large-scale and systematic venture is the engine for such a growth. Up to now, nearly 400 of the world famous 500 largest multinational corporations (MNCs) have invested in China and most of the MNCs have at least one subsidiary in China (Nathalie, Ihsen & Alain, 2007). Therefore, study and research on the global strategies of MNCs and the development of their subsidiaries in China have more evident and important effects on global venture capital (Birkinshaw & Hood, 1998: 773). This paper studied the global strategies of MNCs, the strategic evolution and the categories of their subsidiaries in China based on 150 MNCs? subsidiaries in China, the first large-scale study of this nature in China. Thus this study has significant bearing on strategic planning for both firms that have set up, are setting up or are planning to establish subsidiaries in China and firms that try to compete in global arena since one good turn deserves another.



• STUDENT PERFORMANCE IN ACCOUNTING INFORMATION SYSTEMS: CORRELATION WITH COURSES TAKEN IN COMPUTER SCIENCE STUDENT PERFORMANCE IN ACCOUNTING INFORMATION SYSTEMS: CORRELATION WITH COURSES TAKEN IN COMPUTER SCIENCE
  Author(s): Da-Hsien Bao, George C. Romeo and Robert E. Pritchard
  

STUDENT PERFORMANCE IN ACCOUNTING INFORMATION SYSTEMS: CORRELATION WITH COURSES TAKEN IN COMPUTER SCIENCE STUDENT PERFORMANCE IN ACCOUNTING INFORMATION SYSTEMS: CORRELATION WITH COURSES TAKEN IN COMPUTER SCIENCE

Author(s): Da-Hsien Bao, George C. Romeo and Robert E. Pritchard

This paper examines the influence of several variables on student performance in undergraduate courses in AIS. The primary relationship examined is the number of computer science courses (beyond the required prerequisite courses) taken prior to taking the first AIS course. The study results indicated that the following variables were significant in determining students? grades in AIS: grade in Intermediate Accounting I, class level (junior versus senior), SAT score in mathematics, and gender. The number of computer science courses (beyond the required prerequisite courses) was not significant. The mean AIS grade obtained by those students who received higher grades in computer science course(s) were significantly higher than for those students who performed poorly in theses courses.



• GLOBAL GREEN CORPORATION
  Author(s): Janet Forney
  

GLOBAL GREEN CORPORATION

Author(s): Janet Forney

The Global Green case is a comprehensive example of the application of FAS52 criteria in the multinational environment. This standard provides guidance for identifying the functional currency for foreign subsidiaries and the resulting mandated translation method. Details in this case allow students an opportunity to evaluate subsidiary characteristic and designate the appropriate translation method. The multinational corporation in this instance owns two South American subsidiaries, one in Brazil and another in Venezuela. A review of details reveals that the Brazilian subsidiary qualifies for translation under the current rate method. While the three year inflation rate approaches 100%, the subsidiary would not be classified as hyperinflationary. There is also evidence of a local sales market, with both revenue and expenses denominated in local currency. These facts mandate the BZ currency as functional and support application of the current rate method. Conversely, the Venezuelan subsidiary, while experiencing moderate inflation, exhibits other characteristics indicating the US dollar is the functional currency. Sales are both denominated and collected in US dollars. Sales prices are established in US dollars. Debt is also denominated in this currency. Records also indicate a high volume of inter-company activity. These facts suggest the US dollar as the functional currency and mandate the application of the temporal method of translation. A complete solution is provided both under the current rate method and the temporal. Students are encouraged to discuss the theoretical aspects of the two methods, as well as the impact on earnings when the temporal method is utilized. A discussion of the history of FAS52 would also be appropriate. This case would be appropriate for advanced or international accounting courses. The requirements can be adjusted for use at both the undergraduate or graduate levels.



• THE IMPACT OF SARBANES-OXLEY: A COMPARISON OF AUDIT FEES FOR SMALL AND LARGE COMPANIES
  Author(s): Philip H. Siegel and John O'Shaughnessy
  

THE IMPACT OF SARBANES-OXLEY: A COMPARISON OF AUDIT FEES FOR SMALL AND LARGE COMPANIES

Author(s): Philip H. Siegel and John O'Shaughnessy

The purpose of this paper is to investigate if the Sarbanes-Oxley Act (SOX) has had a differential effect on small capitalized companies as opposed to large capitalized companies with respect to audit fees disclosed. Prior research (cf. Pomeroy (2006); D?Aquila (2004); Koehn and Del Vecchio (2004)) has suggested that smaller companies will find it more costly to comply with Sarbanes-Oxley due to relatively higher audit fees. In this paper, we examine the association between audit fees and operating income for both small and large companies to examine whether smaller companies incur higher relative compliance costs with respect to audit fees than larger companies. Our sample includes all companies listed in the NYSE that satisfy certain criteria. Our sample period includes data from the year 2001 through 2006, four years after the enactment of SOX. Our study found that auditing fees for small-cap companies as a percentage of operating income increased faster than for large cap companies.

Keywords: Sarbanes-Oxley Act, SOX, Audit Fees.



• COST SAVINGS IN CONTRACTING OUT WHEN A CONTRACT FAILS: SOME AUSTRALIAN EVIDENCE
  Author(s): Rafiuddin Ahmed
  

COST SAVINGS IN CONTRACTING OUT WHEN A CONTRACT FAILS: SOME AUSTRALIAN EVIDENCE

Author(s): Rafiuddin Ahmed

Literature on contracting out in public sector contexts reports cost savings as the main driver behind contracting-out decisions. Few studies have examined the post contract realised cost savings. This study reports the findings of a case study of a public sector organisation which experienced an insourcing-outsourcing-insourcing loop in a contracting-out situation. Comparisons of pre-contract cost savings estimates and post contract realised cost savings are made to appraise the impact of the cost savings argument behind a contracting-out decision. The study finds that failure to achieve estimated cost savings due to contract failure may impose huge penalty on an organisation; realised cost savings are different from estimated savings, the difference between the realised and estimated cost savings is even greater if an organisation falls within the vicious circle of an insourcing-outsourcing-insourcing loop. The findings provide an insight into capturing the cost of non-financial information, cost of contract failure, used in contracting- out decisions.

Keywords: Cost Savings, Post Audit, Contract Failure, Options Value, Single Cost Stream, Non-Financial Information.



• INTER-GLOBAL TEXT CORPORATION
  Author(s): Janet Forney
  

INTER-GLOBAL TEXT CORPORATION

Author(s): Janet Forney

The Inter-Global Text Corporation case provides an overview of the complexities encountered in establishing transfer prices in the international environment. The parent company in this case is a U.S. multinational with operations in China and India. Text-China produces computer components which are then shipped to India for final assembly. Transfer prices are currently established using the ?cost plus method?, but is resulting in higher than desired tax payments. Management is reviewing other transfer pricing methods in an effort to minimize the corporate tax burden. Case details reveal the array of transfer pricing methods. At least five different approaches are available for use and result in varying amounts of tax paid globally. Unique country laws addressing transfer pricing further complicate this decision. A major consideration in this case is the differential tax rate. While China posts a corporate tax rate of 25%, Indian rates range from 30% to 40%, averaging at a burden of 35%. In the international environment, the objective is to use the transfer pricing methodology to move profits from a higher tax region to a lower tax region. In this instance, that means moving profits form India to China. The case solution illustrates that by changing the transfer price from a cost plus method to a resale price method, the corporation can save $82,000 annually in total taxes paid. The case is appropriate for use at both the undergraduate and graduate levels. Transfer pricing is covered in advanced accounting at the undergraduate level and in international accounting at the graduate level. The case could also be used for discussion purposes in lower level courses.