Matching Items (10)
Description
The International Accounting Standards Board (IASB) is interested in a cost versus benefit analysis of the direct method of cash flow statements. IASB proposed, in the most recent Staff Draft of an Exposure Draft on Financial Statement Presentation in July of 2010, requiring the direct method to be presented, opposed to the current standard which lets companies choose between the direct or indirect method. There is constant controversy between these two presentation styles. Those who report with the indirect method claim the direct method is too costly and has no great benefit. In the United States only approximately two percent of companies report using the direct method, whereas the other ninety-eight percent use the indirect method. However, many preparers, researchers, and other financial statement users see great benefit in the direct method. Multiple research studies have been conducted in this field, and conclude the direct method has substantial and material benefits. There is strong support for the direct method in Australia, where the companies voluntarily report using the direct method. Because firms in Australia voluntarily use the direct method, I conducted a survey for Australian analysts in order to find the benefits (if any) they perceive. I have found that all of the analysts that participated in our survey state the direct method has benefits, is the more beneficial cash flow method to use for their forecasts, and should be required. With this new knowledge of the opinions and experiences of those actually using the direct method reports every day, a more accurate conclusion can be draw about the many benefits the direct method can bestow. These findings ultimately lead to the conclusion that there are added benefits in reporting the direct method, which likely outweigh the costs if Australian companies are continuing to voluntarily present the direct method each year. My major recommendations for the IASB are to require the direct method to be presented, and to require an indirect reconciliation in the notes along with the direct method. The indirect method can be useful when used with the direct method, but the direct method offers greater benefits to those who use them, and therefore should be the required cash flow statement to present. Key Words: Direct method, Cash flow statements
ContributorsArmstrong, Kate Denise (Author) / Orpurt, Steven (Thesis director) / Hillegeist, Stephen (Committee member) / Barrett, The Honors College (Contributor) / Department of Supply Chain Management (Contributor) / School of Accountancy (Contributor)
Created2013-12
Description
The main goal of this study was to understand the awareness of small business owners regarding occupational fraud, meaning fraud committed from within an organization. A survey/questionnaire was used to gather insight into the knowledge and perceptions of small business owners, while also obtaining information about the history of fraud and the internal controls within their business. Twenty-four owners of businesses with less than 100 employees participated in the study. The results suggest that small business owners overestimate their knowledge regarding internal controls and occupational fraud, while also underestimating the risk of fraud within their own business. In fact, 92% of participants were not at all familiar with the popular Internal Control \u2014 Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission. The results also show that small business owners tend to overestimate the protection provided by their currently implemented controls in regard to their risk of fraud. Overall, through continued knowledge of internal controls and occupational fraud, business owners can better protect their businesses from the risk of occupational fraud by increasing their awareness of fraud.
ContributorsDennis, Lauren Nicole (Author) / Orpurt, Steven (Thesis director) / Munshi, Perseus (Committee member) / Barrett, The Honors College (Contributor) / Department of Information Systems (Contributor) / School of Accountancy (Contributor)
Created2014-05
Description
The Internet has brought along countless benefits to society and for the case of this thesis, especially educational benefits. Students can now have endless resources to whatever they wish to learn. This is especially beneficial in a time where a clear majority of studies show that the U.S.'s financial literacy is in a concerning state. However, even though there may be a bounty of websites and programs available non-exclusively, they do not all effectively teach accounting and finance. In fact, many websites aimed at teaching accounting or finance simply replicate textbooks and glossaries, even though there are ways to make them more effective learning tools. Since the scope of this empirical observation is too large to confront, this thesis is mainly concerned with students currently learning accounting and finance who wish to have more supplemental learning information. Accordingly, the overarching argument of this thesis, is that college students aiming to learn accounting do not have enough resources to fully understand the classroom formulas and concepts. The creative solution for this problem is a website, name FIN-WIT aimed at providing financial content in plain language and with real-world examples.
ContributorsDitore, Heather Beatrice (Author) / Orpurt, Steven (Thesis director) / Sopha, Matthew (Committee member) / Department of Information Systems (Contributor) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
Financial distress and restructuring is a core component of the corporate finance advisor's arsenal and is needed in nearly all market conditions, whether recessionary or expansionary. Financial distress means that a company is in present or future danger of not being able to pay its financial obligations. There are many market indicators of distress which may include: debt trading significantly below face value, stock price trading at or below $1 per share, and implied negative shareholders' equity on the balance sheet. In order to remedy financial distress, the debtor and its creditors seek to hire investment banks specializing in financial restructuring to help fix the debtors's capital structure and possibly navigate through a bankruptcy process. Stephen Moyer describes financial restructuring as "the process of transforming a firm's capital structure to better fit the current and/or future circumstances of the firm" (53). The way that this is accomplished is reducing the debtor's liabilities in order to accurately reflect asset value. Liabilities may be adjusted in out-of-court restructuring agreements or in-court bankruptcy restructurings. The former is often quite difficult considering the hostile nature of the situation and competing interests but is preferred if possible. The latter is most common but also usually both lengthy and expensive. In most cases, the liabilities will be exchanged for new liabilities or equity, providing the creditors with some form of recovery, and leaving the debtor in a healthier position post-emergence. In order to put myself into the shoes of a financial restructuring advisor, I conducted a technical case study on Eastman-Kodak by recreating a financial model depicting possible returns to creditors and emergence from bankruptcy. This model is depicted within the thesis.
ContributorsEghlimi, Sean Cameron (Author) / Licon, Lawrence (Thesis director) / Orpurt, Steven (Committee member) / School of International Letters and Cultures (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2018-12
Description
Revenue recognition and disclosure in the U.S. has a stark contrast to the reporting standards used by the UK. The U.S. Generally Accepted Accounting Principles (GAAP) follows a more prescriptive approach to determine when revenue should be booked, and how it should be disclosed to investors. Conversely, the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), is more principle based and open to interpretation. This disparity has created valuation discrepancies for local corporations and individuals seeking to invest abroad, and vice versa. Following the events of Hewlett-Packard Company's (HP) acquisition of Autonomy PLC (Autonomy), the issues that stem from the differences between U.S. GAAP and IFRS reporting standards were magnified. In 2011, HP acquired Autonomy for $11.1 billion. Subsequently, HP declared an $8.8 billion dollar impairment in the following year due to the alleged fraudulent accounting practices of Autonomy's former executives. After 2 years, the investigation on Autonomy's purported accounting improprieties led by the UK's Serious Fraud Office (SFO) was inconclusive. All Big Four CPA firms involved in the acquisition found both HP and Autonomy to be compliant with GAAP and IFRS, respectively. This led to the conclusion that the ostensible fraudulent accounting policies that Autonomy's former executives deployed were in fact legal practices within the confinements of IFRS. The case also unravels greater issues that originate from the disparate accounting standards, as I probe into the reasons behind HP's colossal write-down of their acquired reporting unit, HP Autonomy.
ContributorsLee, Jun Yi (Author) / Orpurt, Steven (Thesis director) / Hillegeist, Stephen (Committee member) / Department of Finance (Contributor) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2015-12
Description
The goal of this study is to assess differences that still exist in International Financial Reporting Standards based financial statements between otherwise similar firms. We undertake this study because one primary goal of IFRS is to enhance comparability of financial statements world-wide, but it is unclear to what extent that has happened. First, we assess whether different countries adopt different versions of IFRS. We find, adopting countries fully adopt IFRS with only minor alterations to IFRS as promulgated by the International Accounting Standards Board. We then test whether otherwise similar firms, but from different countries, interpret IFRS differently. IFRS is a principles-based set of accounting standards, and thus offers a wide array of options for companies to choose from in their reporting. The latitude of options in reporting inherently creates room for differences when firms interpret IFRS for their own financial statements. Building on prior studies (e.g., Ball (2016), Nobes (2011)), we find that historical country GAAP is influential, and in documented instances constrains comparability of otherwise similar firms located in different IFRS adopting countries. Based on our findings, we then offer suggestions to preparers and users of these financial statements, and the IASB, to address financial statement comparability issues (see appendix C).
ContributorsWalker, Brooke (Co-author) / Espinosa Jenkins, Lucas (Co-author) / Orpurt, Steven (Thesis director) / Rykaczewski, Maria (Committee member) / School of Accountancy (Contributor) / Department of Economics (Contributor) / Barrett, The Honors College (Contributor)
Created2020-05
Description
Inclusion of diverse talent in the field of public accounting has been highly prioritized by the profession since the late 1960s. In seeking to acquire racially/ethnically diverse talent in addition to an expanding set of identities (e.g. veterans, people with disabilities, LGTBQ+, and various backgrounds contributing to “diversity of thought”), Big Four Public Accounting firms have taken on more operational ownership of their Diversity and Inclusion programming. We conducted interviews with D&I program facilitators and surveyed Accounting and Finance students at Arizona State University to assess whether these programs align with students’ outlooks and are being properly presented to enhance awareness. The uniformity across the Big Four’s D&I program structures, the persistence in competition among them in relation to talent acquisition and retention, and students’ lack of awareness relating to program timing and existence lead us to conclude that efforts in improving diversity and inclusion in Big Four Public Accounting are most effective when the Big Four act collectively
ContributorsAlaniz, Leslie M (Co-author) / Quintana, Jacob (Co-author) / Samuels, Janet (Thesis director) / Dawson, Gregory (Committee member) / School of International Letters and Cultures (Contributor) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2020-05
Description
The purpose of this thesis was to create a valuation of Spotify (Ticker: SPOT) and estimate a share price for the company. Spotify is one of the largest music streaming services in the world, currently operating in 79 markets globally with a subscriber base of over 100 million people. Spotify initially offered April 3, 2018 at $132 per share and sees a huge amount of financial assets on their balance sheet due to continued investment. As a newly established high-growth company, Spotify has enjoyed a 30% average revenue growth year over year from 2014 to 2019. Although Spotify’s reach is quite large, the company is dwarfed by competitors such as Apple, Google, and Amazon in the extremely competitive music streaming industry. Within this paper, we first analyze the competitive landscape that makes up the music streaming industry. Once a baseline understanding of the music streaming industry has been reached, we turn the focus more directly onto Spotify through examining Spotify’s position within the market as well as the company’s current strategic goals and objectives. We then forecasted Spotify’s financial statements forward and created a residual income model (RIM) based on Spotify’s financial statements. As was previously stated, the purpose of this model was to arrive at a share price for Spotify that we believe accurately reflects its value and compare that with its current market trading price. After successfully accomplishing this goal, we conducted a comprehensive final analysis and offered Spotify recommendations based on the model as well and its output.
ContributorsRice, Ian (Co-author) / Nagele, Benjamin (Co-author) / Samuels, Janet (Thesis director) / Orpurt, Steven (Committee member) / School of Accountancy (Contributor) / WPC Graduate Programs (Contributor) / Barrett, The Honors College (Contributor)
Created2020-05
Description
The goal of this study was to explore the relationship between locus of control and the influence of an unethical authority figure. This research is a preliminary, exploratory study given research design limits. It was hypothesized that subjects oriented towards internal locus of control are better able to resist pressure from an unethical authority figure. Subjects oriented towards the powerful others and chance orientations were hypothesized to be less able to resist pressure from an unethical authority figure. The results found that the presence of an unethical authority figure had little to no influence on self-perceived unethical decision-making; the difference in unethical behavior between cases with an authority figure present and without one present was not statistically significant. Further, no support was found for the hypotheses as no statistically significant relationship between locus of control orientations and the difference between the control case and test case was found (R2 = 0.02, model P-value > 0.05). Further analysis confirmed the results of Detert et al. (2008), finding no relationship between survey subjects’ locus of control orientations and unethical decision-making. Additional analysis indicates a relationship between unethical decision-making and gender (B = -5.14, P = 0.03, P < 0.05), providing some interesting avenues for future research.
ContributorsAmorosi, Kaitlin (Author) / Samuelson, Melissa (Thesis director) / Orpurt, Steven (Committee member) / Department of Finance (Contributor) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2020-05
Description
This study explores whether finance students at Arizona State University learn important technical business concepts at a textbook level and, if they do, do they recognize when to use them in real-world scenarios. These questions are important because the ability to learn and adapt knowledge to different situations is a desirable skill for a business professional. I chose NPV as the concept to test because it is arguably the central concept to learn in business school. Additionally, NPV is specifically taught in at least two courses by the time students graduate and it is frequently applied in business. The main hypothesis the study intends to explore is: students that have taken finance 300 will be able to identify the NPV problem. Survey results indicated that only 47% of students could identify the NPV problem. Further results indicated that only 27% of the original 100% (8 out of 30) participants could further apply NPV knowledge. Additional analyses based on grade earned and personal confidence level showed that having higher of either of the attributes generally showed the ability to identify NPV. Based on the results, I propose teaching more application-based learning to enhance career-readiness. Further research, expanding on these results, could be made to formulate a function to predict a student’s ability to identify NPV before being surveyed. This function could then be used to predict the outcome of the next student tested and allow for change to be made in teaching techniques.
ContributorsGomez, Andrew (Author) / Orpurt, Steven (Thesis director) / Hillegeist, Stephen (Committee member) / School of Accountancy (Contributor) / Department of Information Systems (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2019-05