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Accounting Treatment of Research and Development Expenditure: A Critical Literature Review
Milton Owino,
Omoro Nixon
Issue:
Volume 6, Issue 2, June 2021
Pages:
36-45
Received:
20 February 2021
Accepted:
17 March 2021
Published:
7 April 2021
Abstract: Intangible investments have been found to contribute largely to value enhancement in firms and economies that spend colossus resources on them. Despite being an important component of valuation, such investments are largely ignored or given subjective treatment by the existing accounting standards and consequently, not included on firm valuation. The American standard (FASB-S2) establishes standards of financial accounting and reporting for research and development (R&D) costs. This Statement requires that R&D costs be charged to expense when incurred. It also requires a company to disclose in its financial statements the amount of R&D that it charges to expense. On the other hand, the accounting for R&D under IFRS standards requires judgment of the expectation of future economic benefit that will flow to the entity due to R&D. If it can be “ascertained”, then these costs should be treated as an asset rather than an expense since they meet the definition of an asset as prescribed by the IASB Framework for the Preparation and Presentation of Financial Statements. This paper, therefore, seeks to critically analyze the literary works of various researchers on the treatment and hence the impact of accounting for research and development expenditure on: firstly, the value relevance of financial information to investors; secondly, allocation of equity and debt resources to the firm; thirdly, growth of intangible assets; and lastly, firm value in capital markets. Previously studies conducted under here have cut across the accounting treatment of R&D expenditure, and generally, internally generated intangibles using the International Financial Reporting Standards (IFRSs) and the U.S.’ Generally Accepted Accounting Principles (GAAPs). Majority of the studies analyzed agree that sufficient disclosure of R&D investment as well as other internally generated intangibles can supplement and improve the financial information provided by the firm. This in turn will improve the outlook of the financial statements which can improve their use and reliability to investors as well as give reliable inputs to financial analysts, thus improving the applied valuation models in computing dependable valuation figures for the firm. This, by and large, should avoid the negative consequences that may result from inadequate accounting treatment of R&D expenditures.
Abstract: Intangible investments have been found to contribute largely to value enhancement in firms and economies that spend colossus resources on them. Despite being an important component of valuation, such investments are largely ignored or given subjective treatment by the existing accounting standards and consequently, not included on firm valuation. T...
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Assessing the Significance of Auditing Small Businesses and Organisations; a Case Study of Selected Organisations in Ghana
Issue:
Volume 6, Issue 2, June 2021
Pages:
46-52
Received:
27 January 2021
Accepted:
26 March 2021
Published:
20 April 2021
Abstract: Auditing is a necessary tool for business management; however, many small businesses and organisations ignore it. The lack of audits has caused the collapse of many of these businesses since probity and accountability are essential for the growth of businesses. The researcher, observes that small businesses lack the capacity to employ auditors, citing cost of audit fees as the reason. This invariably makes them more prone to fraud hence the collapse of their businesses. He therefore, resolved to analyse the effect that auditing small business have had on some organisations that he had personally audited over the years and make relevant recommendations to businesses. The research shows that small business are even more vulnerable because of lack of qualified accounting personnel in managing their books of accounts hence the need to employ auditors to evaluate the organisations activities. The research also shows that the presence of an auditor alone is a moral deterrent to fraudsters. The researcher recommends that small businesses should be educated on the importance of audits by stakeholders including finance professionals. Auditors should consider charging small businesses reasonably low audit fees to encourage them have their accounts audited. As observed in the case study, when the small businesses are audited they will begin to operate efficiently and the auditor will be able to charge economical fees as the businesses grow.
Abstract: Auditing is a necessary tool for business management; however, many small businesses and organisations ignore it. The lack of audits has caused the collapse of many of these businesses since probity and accountability are essential for the growth of businesses. The researcher, observes that small businesses lack the capacity to employ auditors, cit...
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How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country
Issue:
Volume 6, Issue 2, June 2021
Pages:
53-60
Received:
29 March 2021
Accepted:
13 April 2021
Published:
29 April 2021
Abstract: This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Central Bank (BDL) pursued a policy focused on keeping the exchange rate at 1,500 LL/$. To achieve this objective it offered the bankers very lucrative interest rates to insure they flow their dollar deposits to its coffers to stabilize the currency and to purchase dollar denominated country debt. With an underperforming economy, falling confidence in the governance of the country, and a massive drop in remittances from Lebanese immigrants living in various parts of the world, Lebanon defaulted on its international debt in 2020 despite numerous attempts through international organizations to prevent such an outcome. The paper argues that Lebanon has failed in stabilizing its currency and the economy and proposes dollarization as a permanent answer. It offers numerous ways for Lebanon to earn the necessary dollars for a well functioning economy.
Abstract: This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Cen...
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The Contribution of Ethics to Banking Governance: An Analysis in Subsidiary Banks with Predominantly Pan-African Capital
Ongono Amogo Tobie Nicaise,
Dadem Kemgou Edouard Guilaire,
Lekini Dieudonné Justin
Issue:
Volume 6, Issue 2, June 2021
Pages:
61-68
Received:
21 November 2020
Accepted:
9 December 2020
Published:
30 June 2021
Abstract: The objective of this article is to contribute to a better understanding of the contribution of ethics in banking governance. The field of investigation is Cameroon. The study covers three subsidiary banks with predominantly Pan-African capital. The empirical material results from an approach marked by documentary study and the realization of semi-structured interviews with managers and bank customers. The results of the analysis show that the banks surveyed see ethics as a governance tool that enables them to improve their image and reputation. They open a reflection on the governance model capable of promoting the consideration of ethics within the banks surveyed.
Abstract: The objective of this article is to contribute to a better understanding of the contribution of ethics in banking governance. The field of investigation is Cameroon. The study covers three subsidiary banks with predominantly Pan-African capital. The empirical material results from an approach marked by documentary study and the realization of semi-...
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