Jari Huikku

Explaining the Non-Adoption of Post-Completion Auditing

ABSTRACT This field study examines reasons for the non-adoption of post-completion auditing (PCA) of capital investments. The empirical evidence is based primarily on interviews conducted in the 30 largest Finnish manufacturing companies. PCA can be briefly described as a formal process that checks the outcomes of individual investment projects after the initial investment is completed and the project is operational. Management Control Systems and PCA literatures suggest that different control systems can act as alternatives for each other. This paper specifically analyzes and maps alternate capital investment controls (ACICs) that enable the achievement of benefits suggested for PCA and draws upon the equifinality concept to discuss the role of ACICs in discouraging PCA adoption. The findings suggest that ACICs do exist, and, therefore, PCA non-adopters do not necessarily jeopardize successful capital investments. The ACICs identified in this study included formal and informal systems and procedures for performance measurement (e.g. following up production key figures, sales and profit centers) and organizational learning (e.g. utilizing central expertise and experienced internal resources). Furthermore, the empirical evidence from this study suggests that smaller companies with fewer major strategic, complex and repetitive capital investments can perceive ACICs to be sufficient, and discourage the adoption of formal PCA.

Theorising Strategic Investment Decision-Making using Strong Structuration Theory

Purpose In the field of strategic investment decision making (SIDM) a body of research has grown up via international case studies and organisation-based fieldwork. However, there has been little systematic theorisation around SIDM processes and practices. The purpose of this paper is to show how strong structuration theory (SST) can be employed to guide how future SIDM studies are conducted and theorised. Design/methodology/approach The authors draw upon the concepts from SST to reanalyse prior empirically based work. The authors apply SST-informed analysis to four SIDM case studies selected from the total of 18 published over the period 1970-2016 to explore the utility of SST compared with other approaches. Findings The analysis highlights the role of agents’ knowledgeability and position-practice relations in SIDM, which has largely been neglected by prior studies. The authors demonstrate the potential of SST to inform meso-level theorising by applying it to four published case studies. Whilst the authors argue for the adoption of SST, the authors also identify key methodological and conceptual issues in using SST in SIDM research. Research limitations/implications The examples and recommendations could assist management accounting researchers, particularly those engaged in case studies and organisational fieldwork, to build knowledge via the improved comparison, integration and theorisation of cases undertaken by different researchers in different contexts. Originality/value The authors offer a bridge between SST concepts and case study evidence for theorising, carrying out and analysing case study and field research on SIDM.

The construction of persuasiveness of self-assessment-based post-completion auditing reports

In this study, we investigate how persuasiveness of self-assessment-based post-completion auditing (PCA) reports on capital investment is constructed. We examine what makes companies consider that information in these reports rises to an acceptable quality level. The investigation was motivated by extant agency theory (AT) informed literature suggesting that self-auditing will entail obvious risks for the quality of PCA reports in terms of data manipulation. We employed actor-network theory as our method theory. The empirical evidence of our case study came from 24 semi-structured interviews and the analysis of the construction of 22 PCA reports of strategic investments in one of the major European forest companies. We add to the capital budgeting literature by identifying and discussing the role of various conditions affecting the construction of persuasiveness of PCA reports. We maintain that the existence of three conditions (i.e. an appropriate collective process, alignment with relevant external/internal reference points, and following of formal guidance) can play a major role in facilitating the production of a persuasive PCA report. Additionally, the paper is able to make sense of the complex process of fabricating the persuasiveness of PCA reports, which would remain a black box when examined from the AT viewpoint only.

The role of a predictive analytics project initiator in the integration of financial and operational forecasts

Purpose The purpose of this paper is to investigate the initiation of accounting information system projects. Specifically, it examines the role of the predictive analytics (PA) project initiator in the integration of financial and operational sales forecasts. Design/methodology/approach The study uses a field study method to address the studied phenomenon in eight Finnish companies that have recently adopted PA systems. The data are primarily based on 19 interviews in the companies and five interviews with the PA consultants. Findings The authors found that initiators appear to play a major role regarding the degree of integration of financial and operational sales forecasts. The initiators from an accounting function have a tendency to pay more attention to the integration than the representatives from other functions, such as operations and sales. Practical implications The study also makes a practical contribution to companies in showing and discussing the important role of the accounting department as an initiator of a project if the target is to achieve a tight coupling of financial and operational forecast figures, i.e., “one set of numbers”. Originality/value Even though companies have increasingly adopted PA systems in recent years, we still know little about how the initiation affects the design of accounting information systems overall. The central contribution of the paper, therefore, is to show that if a PA project is initiated by the accounting department, data integration becomes more likely. It contributes also to the discussion related to the appropriateness of data integration in the context of forecasting.