JAMAR Summer 2016

THE JOURNAL OF APPLIED MANAGEMENT ACCOUNTING RESEARCH

JAMAR Information

Table of Contents

EDITORIAL

Applying Disruptive Technologies to Audited Financial Statements

By Janek Ratnatunga

In today’s economy, both large shareholder investment groups and ordinary (retail) shareholders depend of the information provided in the audited financial statements for managing their portfolios. The problem is that Audited Financial Reports, that have not changed in their presentation format, or in their method of delivery, since the dawn of the industrial era or the age of the corporation (about 1850) when tangible assets such as land and machinery were the engines of growth. As a result, the Balance Sheet still shows that it is mainly these tangible ‘non-current’ assets’ that drive business value.

This paper discusses an innovative approach to the presentation of financial statements that would be truly disruptive to the traditional account preparation and the audit functions, using the power of the technologies we have at our disposal today to show the true value of today’s companies.


Organisational Ambidexterity and the Management Accountant: A Review

By Leon Duval

Dynamic external environments and the inexorable advances in computerisation have significantly curtailed the lifecycles of many products and services. The criteria applied for supporting and controlling innovation and development are diametrically opposite to those required for managing a mature capability focused on extracting maximum residual value out of a waning product.

For this reason, specialised architectures evolved to facilitate the nurture and support of both exploration and exploitation activities within one organisation. Organisations that successfully integrate the dual strategies and structures required are referred to as ambidextrous. Understanding the antecedent factors giving rise to organisational ambidexterity, becoming familiar with its various designs, and being aware of the conflicts the structures are designed to resolve, assists the management accounting practitioner to design appropriate systems for controlling these specialised architectures.

This review of the ambidextrous organisation literature explains the antecedents giving rise to organisational ambidexterity, discusses the models that have evolved and how they resolve the structural conflicts arising out of competing agendas.


Implementation of the Activity-Based Costing Model for a Farm: An Australian Case

By Cedric Lu; V.G. Sridharan and Michael S. C. Tse

Due to the unique nature of agricultural production, costing of agricultural products presents a major challenge to the management of farms and other organisations that involved in agricultural production. Activity-Based Costing (ABC), with its ability to apply non-volume driven cost drivers and disentangle resource costs and cost objects through two-stage allocation process, has the potential to address issues in costing of agricultural products. This paper presents a case study of ABC implementation in a family-owned Australian farm.

The objectives of the study are to develop an understanding on how the ABC model can be implemented in farms and to examine issues associated with the implementation of the ABC model in farms. Findings from the case show that implementing the ABC model in farms is possible with the use of heuristics. Technical factors are found to be dominant over behavioural factors in the development of the ABC-based costing model for the farm.


CEO-Family vs. CEO-Nonfamily: Who is a Better Value Creator in Family Business?

By Santi Yopie and Iskandar Itan

This study aimed to determine the effect of corporate governance on firm value of family companies listed in the Indonesia Stock Exchange (IDX). Family business Independent variables used in this study are CEO-family, audit committee, board size, independent commissioners, managerial ownership, and the control variables which used in this study are financial leverage, firm size, and return on assets.

The results of this study indicate that CEO-family has negative significant impact on firm value. The family firm which is managed by a nonfamily member can contribute higher firm value than a family firm which is managed by family members. The audit committee and board size have a significant positive impact on firm value in the family firm. These results also indicate that independent commissioners and managerial ownership have no significant effect on firm value in the family firm.


PRACTICE NOTE Maturity of Cost Management Systems in Organisation

By Rajendra Patil and Anil Kshatriya

Cost accounting is generally viewed as a manufacturing industry specific function. The service industry gives lesser emphasis on the adoption of mature cost management systems. Business managers across industries tend to assume that since the price is decided by the market, there is little need for investing time and resources in creating and maintaining elaborate costing systems.

Irrespective of whether there is a statutory requirement for statutory reporting of costs (as in the case of India, Pakistan and Bangladesh), very few organisations undertake the study of maturity of their prevailing cost management systems.

This study shows that Activity Based Costing (ABC) and Activity Based Management (ABM) are of greater significance for organisations who aspire to remain relevant and profitable in today’s hyper competitive business environment.


RESEARCH NOTE A Framework for Auditing Management Control Systems and its Application in a Public Organisation

By Mohammad Moshtari and Ali A. Ghaemi

The goal of applying a Management control system (MCS) is to help an organisation in implementing its objectives and strategies efficiently and effectively. A MCS ensures the congruence between organisational units’ and managers’ goals and explains deviation between them.

The main intent of this paper is to provide an auditing framework for evaluating formal management control systems in organisations, or measuring improvement in implementing a management control system in organisations.

The study relies on an explorative study; and represents 50 questions based on the approach developed by Robert Anthony and his colleagues. The result of its application in one public organisation is presented in the final section of this paper.