Arline Savage

Accounting for the Development Costs of Internal‐Use Software

In this paper, we evaluate accounting practices for internal‐use software expenditures. Statement of Position No. 98‐1 (SOP No. 98‐1) requires expensing certain costs and capitalizing others. We argue that current accounting practice does not allow enough capitalization, since costs incurred during the systems analysis stage of model‐based systems development are expensed regardless of whether they create future benefits. The quest for uniformity in accounting treatment in the form of a single rule for multiple economic phenomena (i.e., treating all systems acquisition and development methods the same) results in reduced ability to reflect economic differences between systems acquisition and development methods. To illustrate, we provide an example of the differential effects of adopting SOP No. 98‐1 for firms using different development approaches. Under the SOP, “Analysis” costs are expensed. Under model‐based approaches, especially those with downstream effects, these Analysis costs are assets, since t...

Augmenting XBRL Using UML: Improving Financial Analysis

eXtensible Business Reporting Language (XBRL), a financial accounting application of XML, provides a taxonomy for facilitating the analysis of financial statement information. This taxonomy promises to enhance the financial analyst’s ability to process financial information both crosssectionally and temporally. However, limitations exist in the taxonomy that inhibit the analyst, intelligent agent or application to process information in the most effective way. In particular, financial statement element analysis can only be properly conducted when the additional semantics provided by additional disclosures are incorporated into the process. UML provides a conceptual framework to capture more meaningful semantics, particularly among related, collaborating objects. The purpose of this paper is to develop a framework that will couple the strengths of both technologies in order to develop better systems for financial statement analysis.

Equational zero vector databases, non-equational databases, and inherent internal control

Equational zero vector accounting systems, based on duality principles and the double-entry model, were designed as ontological control systems to help prevent and detect fraud and errors inherent in non-equational, single-entry systems. Non-equational systems lend themselves to fraud and errors to a larger degree because the internal control inherent in an equational zero vector system has no substitute. We use an analytical analysis methodology to show that an equational zero vector system provides superior inherent internal control over data completeness and data reliability. In the accounting information systems area, the most popular modern non-equational system, the resource-event-agent model, is increasingly being promoted as a replacement for the equational zero vector accounting system. We contend that, although non-equational accounting system frameworks can be modelled with controls, they do not achieve the degree of control inherent in an equational zero vector accounting system without becoming an equational zero vector accounting system.

RETHINKING AIS: AN INNOVATIVE FINANCIAL INFORMATION SYSTEMS CURRICULUM

ABSTRACT This paper describes a new Financial Information Systems curriculum that integrates information technology and financial information in the development of business information systems, and discusses the problems we experienced in establishing the new program. Our intention is to provide accounting graduates with the knowledge they need to leverage the latest information technologies to support the use of financial information in management decision-making, and to integrate financial information and internal controls into business information systems. Our cross-disciplinary approach expands the horizons of our students, from one of viewing accounting as a stand-alone, untimely, inflexible information system, capturing only “accounting transactions” and their limited characteristics, to one of a more realistic real-time, enterprise-wide, activity-driven information system, used by a variety of users with a variety of needs. We also shift the focus from implementing costly controls to that of embedding controls within information systems during systems development, and of continuous systems monitoring.

A re-balanced scorecard: a strategic approach to enhance managerial performance in complex environments

This paper is a proposal to develop conceptual and practical frameworks for evolving corporations seeking to improve their managerial performance in complex environments with actionable strategies for dealing with social, environmental and corporate governance issues. These frameworks are coalesced by social contract theory that extends the traditional view of the firm as a nexus of contracts to a broader view of the firm as a nexus of social contracts. A re-balanced scorecard is proposed to induce and evaluate management performance that captures important dimensions and aspects of the frameworks established for firms strategically choosing to change their long term objectives to include those related to meeting their social contract obligations.

Ethical concerns about the online sale of instructor-only textbook resources

Yes, your test bank and solutions manual are for sale and it is very easy for students to acquire them. Using a stakeholder framework, we analyze the ethical issues involved in acquiring, using, and distributing these instructional resources by individuals besides the professors for whom they are intended. We also discuss countermeasures that stakeholders might use to deal with this latest development.

The sustainable corporation: lessons from Avatar

This article uses the fictitious company RDA from the movie Avatar as a textbook case of corporate non-sustainability. We provide a list of mistakes RDA made and provide parallel corporate examples in our own society in the areas of stakeholder analysis, corporate governance and systems thinking using the triple bottom line. For each area we present a framework that companies could use to operate in a more sustainable manner.