Morina Rennie

DEREGULATION OF THE PRIVATE CORPORATION AUDIT IN CANADA: JUSTIFICATION, LOBBYING, AND OUTCOMES

Abstract We examine the deregulation of an audit requirement for a group of private Canadian companies. In particular, we study the circumstances surrounding this deregulation and the impact of the change in legislation on the subsequent purchase of audit services. The study was done through the examination of archival documents relating to the change to the legislation, together with a survey of Chief Financial Officers of companies that were affected by this change in legislation. We found that the federal government justified the change as a response to a perceived threat to the viability of the federal incorporation legislation, and that the government pursued this course in spite of the lobbying efforts of representatives from the accounting profession. Approximately one-quarter of the companies whose audit requirement was deregulated, purchased lesser levels of assurance services or no assurance services after the change in legislation.

Accounting for a nation’s beginnings: Challenges arising from the formation of the Dominion of Canada

This article presents an historical study of the accounting issues and challenges arising from the creation of a new nation, the Dominion of Canada. We document the issues associated with combining the accounting of three separate pre-confederation political entities and describe how the first accounting system for Canada was put in place. The study identifies significant challenges resulting from a lack of formal accounting policies, the settling of accounts between the provinces and the new dominion, accounting for the division of responsibilities between the federal and provincial governments, and the poor quality of accounts from the former provinces. This study reveals that Canada’s first accounting system was not developed specifically for the new nation despite the creation of a new political entity, but was inherited from one of the former pre-confederation provinces.

An institutional perspective on the development of Canada’s first public accounts:

This study examines the Dominion of Canada’s first accounting system from the perspective of institutional theory. We find that Canada’s first accounting system was a continuation of an institution-building process begun earlier in the former Province of Canada. We argue that the political upheaval associated with the dissolution of one political jurisdiction and the creation of a new country created conditions conducive to institutional persistence rather than change, and that persistence was supported by continuity of the legislation and important agents that bridged the organizational discontinuity created by the confederation event.

A public sector accounting technology and its association with a transition to responsible government

ABSTRACT This study examines the introduction of an accounting technology in the Province of Canada, namely the collection and reporting of all revenues and expenditures from departments and customs offices. Drawing on insights from Foucault’s discontinuities in systems of thought, governmentality, and discipline, we argue that while this technology was not an incontrovertibly superior approach, it was consistent with a new rhetoric associated with the transition from colonial sovereign rule to responsible government.

The creation and acceptance of public sector accounting standards in Canada

This study explores the events leading up to the origination of public sector accounting standards in Canada by the Canadian Institute of Chartered Accountants (CICA) and their adoption by the Government of Canada. We interpret these events from the perspective of institutional theory. We find that a long-standing institutionalized practice of self-developed government accounting policies was disrupted by a series of challenges. An influential actor in this process was the Office of the Auditor General of Canada which first pushed for the creation of independent government accounting standards and then pushed the government toward the implementation of the accounting policies developed by the CICA’s public sector accounting standard-setting body. Two CICA studies served to further disrupt the status quo. We also find evidence of the role played by an inter-organization professional network in defining and labeling problems that ultimately resulted in the change.

Auditor-Client Disagreements and Independence: An Exploratory Field Study

Abstract Independence is the cornerstone of the auditing profession. Even so, it is often assumed that acquiescing to the audit client when a disagreement occurs is more beneficial to the auditor-client relationship than asserting one’s independence (e.g., see Wang & Tuttle, 2009). We look more closely at the issue in the context of auditor-client management disagreements as recalled by experienced auditors. We find that for most disagreements in which the auditor did not make any concession at all, the auditor-client relationship was either unaffected or strengthened. We find that a client’s use of pressure tactics did not appear to influence whether or not the auditor made a concession, but that a client’s use of pressure tactics, was associated with damage to the auditor-client relationship. The importance of the issue causing a disagreement was positively associated with the likelihood of the auditor staying with his/her initial position.

The Social Dimension of Boards’ Role in Better Corporate Governance

This chapter considers the legitimacy of shareholder (also known as investor) activism as a means of exercising influence in the corporate decision- making process and identifies engaged boards as a superior solution to addressing issues that activists attempt to address. Drawing on ideas from multiple principal agency theory, the board of directors’ wider role is conceptualized as representing the common interests of multiple principals who have both common and divergent interests. When any one principal is able to serve its own interests by influencing corporate decision-making through shareholder/investor activism, other principals’ interests may be compromised. A set of initiatives available to boards is suggested that focuses on the social dimension of their strategic governance role in mediating among multiple stakeholders to address their concerns while at the same time working towards the long-term sustainability of the business. The chapter highlights the application of multiple principal agency theory to the context of corporate governance, along with other concepts relating to the social dimension and the emerging relational perspective on board competence. From these perspectives it is proposed that the board takes a proactive role in leading this type of engagement, while at the same time recognizing that directors will need better relational skills than has traditionally been expected of them in fulfilling their fiduciary responsibilities.