Prem Lal Joshi

The international diffusion of new management accounting practices: the case of India

Abstract Since 1991, the liberalization of the Indian economy has increased the pressure for international competition and changed the information needs of Indian companies. This study examines the management accounting practices in a sample of 60 large and medium size manufacturing companies in India. The study was conducted through the use of questionnaire to examine the extent to which Indian manufacturing companies have adopted certain traditional and recently developed management accounting practices, the benefits received, and their intentions of future emphasis on these practices. The results for Indian were compared to the results of a study in Australia that looked at the same factors. The findings reveal that the adoption rate in India for traditional management accounting practices was higher than for the recently developed techniques and the adoption rate for the newly developed techniques had been rather slow. Most of the practices adopted relate to traditional budgeting and performance evaluation systems. The future emphasis in India is on traditional practices and less on the new techniques, because higher benefits were derived from such techniques. Size (total assets) has an influential factor in the adoption of the newly developed practices. Apart from some similarities in practices between Indian and Australian firms, statistically significant differences were found in respect to adoption rates, benefits derived, and the focus for future emphasis, both for traditional and newly developed practices. Most of the differences could be attributed to the differences in cultural values. Indian management generally avoids risk, is quite conservative, and less innovative in adopting new management accounting techniques. Since, Indians have a long history of their heritage; it takes them longer time to change their societal values and practices, which also seems true in the case of adopting new management accounting practices.

The adoption of international accounting standards by small and closely held companies: evidence from Bahrain

Abstract This study examines the accounting practices and the degree of adoption of international accounting standards (IASs) by small and closely held companies in Bahrain. It finds that 86% (31) of the 36 companies responding to the questionnaire applied IASs and they considered IASs to be very relevant for them. All firms prepare balance sheets, and the majority prepares income statements and cash flow statements. They also duly audit these statements. The data collected also revealed that the quotient influence on whether or not a firm adopted IAS was exerted by their external auditors. External auditors exerted the greatest influence on getting firms to adopt IASs. Banks and company partners were the primary users of company financial statements; inventories, depreciation, disclosure on financial statements, and the presentation of current assets and liabilities. The main IASs followed by a majority of firms are those pertaining so. Some of the standards were considered totally irrelevant, contrary to the prevailing idea that adoption of IASs creates an information overload for small and closely held companies. The results of this study indicate that a majority of our respondents did not find that it was costly to adopt or interpret IASs. Those few firms that experienced some difficulties sought clarification from their external auditors. About 84% of those who adopted IASs strongly agreed that using IASs improves their organizations ability to financial assistance from the banking sector. Also, about 90% of the respondents fully agreed that IASs help to achieve the objectives and improve the effectiveness of financial reporting.

Determinants of Audit Fees: Evidence from the Companies Listed in Bahrain

Many studies have been conducted on the market for audit services in Anglo-Saxon countries, but, to-date, none of them have focused on the Middle Eastern countries. This paper examines the audit fee structure in Bahrain for 38 companies listed on the Bahrain Stock Exchange (BSE). By analyzing the data concerning a number of variables representing size, risk, complexity, timing of audit, and profitability, a model is developed of the determinants of audit fees. The study strongly confirms that most of the previous research findings are also applicable to the Bahrain market, and that audit fees are significantly associated with the size, risk, profitability and complexity of the client operations. The study also suggests that other important issues be considered, such as non-audit services, the extent of market concentration, and audit services in the unregulated market.

Corporate budget planning, control and performance evaluation in Bahrain

Examines budget planning; implementation and performance evaluation practices by utilizing a questionnaire survey of 54 medium and large sized companies located in Bahrain. Most of the companies prepare long‐range plans and operating budgets, and they follow a definite budget procedure and implementation methodology. Uses budget variances to measure a manager’s ability, for timely recognition of problems, and to improve the next period’s budget. While both the listed and non‐listed companies have reported many similar budget practices, the main differences were specific purposes served by budgets, degree of budget participation, periodicity of variance reporting, and purposes and authority to evaluate budget variance reports. In certain cases, firm size influences budgeting practices. Contributes toward filling a gap in the literature on the use of budgets as a planning and control tool in developing countries. Most prior studies were mainly confined to advanced countries. The study findings suggest the need for research on attitudes held by the budgetees towards the use of budget variances in the context of advanced management accounting techniques.

A study of the audit committees' functioning in Bahrain

Audit committees (ACs) are a powerful tool in effective corporate governance. This study examines the functioning of ACs in Bahrain from the responses of 30 companies listed on the Bahrain stock exchange. Data were collected from questionnaires from companies and the audit firms. The study primarily focuses on the extent to which companies in Bahrain have been following the standard recommendations and guidelines provided by the blue ribbon committee (BRC). Size, type of auditors and industry type influence the establishment of ACs in Bahrain. The establishment of ACs have been slow yet, most of the companies have been following by and large BRCs recommendations. However, the concept of independent ACs is yet to be popularized in Bahrain. ACs do not report their findings to shareholders, but other functions seem to accord with the BRCs recommendations. However, some perceptions of audit firms negate the claims of the companies to comply with BRC recommendations.

A survey of environmental accounting and reporting in Bahrain

This survey examines the environmental awareness, current disclosure practices and problems associated with environmental accounting and reporting of twenty large and medium sized companies from the industrial sector in Bahrain. A review of literature from Western and Asia‐Pacific regions indicate a low level of environmental disclosure practices but there has been a considerable increase in the number of organisations performing environmental accounting and reporting. The present survey reveals that companies in Bahrain are environmentally sensitive, yet none of the companies are actually performing environmental accounting for external purposes. Half of them stated that they prepare environmental reporting for management requirements. A majority of them were strongly in favour of introducing accounting regulations in this area. Over 85% of them stated that both financial and non‐financial information should be reported. However, quantification and provision of information is both costly and subjective. ...

INTERIM REPORTING PRACTICES BY COMPANIES IN BAHRAIN: PREPARATION OF INTERIM ACCOUNTS AND EARLY ADOPTION OF IAS 34

Abstract This study examines the preparation of interim accounts and adoption of International Accounting Standard 34 (IAS 34) by companies in Bahrain. Data was gathered through questionnaires returned from 31 companies listed on the Bahrain Stock Exchange (BSE). It was found that although 87.6% of the sample did prepare interim reports, only 65.5% have adopted IAS 34. Four hypotheses were tested to determine the factors influencing the early adoption of IAS 34. A discriminant analysis model was employed and three variables namely, size, profitability and leverage were found significant as the most discriminating variables between the early adopters and non-adopters. The predictive power of the model was found to be more than 80%. Companies prepare interim reports for a variety of purposes including management control and listing requirements.

Company characteristics and compliance with IFRS’s practice statement (management commentary) by listed companies in Bahrain

The purpose of this paper is to examine the factors influencing the voluntary compliance with the IFRS Practice Statement Management Commentary by listed companies in Bahrain in their 2010–2011 annual reports. The statistical analysis shows that there is a moderate tendency to comply with the practice statement. The compliance levels range from 40% to 97% with an average of 72.4%. The profitability, financial leverage, and industry types have positive and significant relationships with the disclosure in management commentary. But the board size affects the disclosures negatively. The compliance pattern suggests that most firms, on average, place greater emphasis on disclosures regarding the internal workings of the firm but less emphasis on the external factors and influences. Overall, the firms have complied with many aspects of the management commentary. We identify two areas – ‘resources, risks and relationships’ and ‘performance measures and indicators’ – where compliance can be improved.

The extent of disclosure on implicit capital and firm's characteristics: Malaysian experience

We conduct a study based on disclosure index constructed on implicit capital. Very limited studies have been reported in this segment. The study explores whether the firms are truly revealing those information that are likely to be contributing to the growth and survival of the firm. The sample consists of 114 companies belonging to various industry segments, listed on Malaysian Bursa Stock Exchange, in 2012. Twenty factors are identified that are responsible for keeping the firm competitive. Six hypotheses are built up and are tested using, OLS, stepwise and rank regressions. We find no impact of independent directors, size of the firms as also market performance of the firm, on the quality and quantity of disclosure, but find profitability and good performance of the management of the firms are important factors for higher disclosure, while leverage induces a very low positive impact on disclosures of information on implicit capital.

Some aspects of the adoption of IFRS-4 (insurance contract) by insurance companies in Bahrain: an exploratory study

Using a questionnaire method on a small sample size of insurance companies that claim to have been applying IFRS-4 in Bahrain, this study examines to what extent these companies have been applying the provisions of the standard. The study covers the views of the insurance companies on the relevance and usefulness, understanding and knowledge of accounting requirements, and their disclosure practises. The study reports that large-size companies (based on the number of clients) apply a liability adequacy test (LAT) to a larger extent. Deferment of acquisition costs and amortising it over the life of the contract is a common practise. Listed insurance companies, and also those that are audited by BIG4 audit firms, have higher tendency to disclose more information with respect to risk-related disclosures and disclosure of accounting policies. For enhancing transparency and comparability, insurance companies in Bahrain should improve their compliance practises as phase 2 accounting requirements will be more challenging.