Agency Assurance - UniversitÃƒÂ¤t St.Gallen

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xii Tables 1-1 Pay for Performance Contradictions 5 1-2 Select International Corporate Scandals 6 1-3 Reforms proposed versus those implemented 8 4-1 The “Audit Committee Charter Matrix” Format 70 7-1 Gross Domestic Product and % Value Added by Category in 2002 143 7-2 World exports of merchandise and commercial services, 1990-2003 145 8-1 The Knowledge Management Spectrum 170 8-2 List of Intangible Assets for Recognition by Firms 172 10-1 Mobile Business Enabling Technologies 240 12-1 Voluntary Expensing of Employee <strong>St</strong>ock Options 294 12-2 GAAP versus EVA® Reporting Systems 297
xiii Case Reviews 5-1 Financial Management and Fraud at Qwest Communications 93 5-2 Executive Compensation Receives Public Attention 96 5-3 Andersen’s and Enron’s Intransparence 106 6-1 The Good and Bad of Public Pension Fund Management 121 6-2 Conflicts of Interest for Mutual Fund Managers 124 6-3 Allianz Dresdner in the International Mutual Fund Scandal 127 6-4 U.K. Fund Managers Address Auditor Independence 128 7-1 Intangible Factors in Production of Automobiles 140 8-1 Acquisition versus Development of Intangibles at Cisco 181 10-1 Quality and Quantity Indicators at Computer Associates 223 11-1 ImClone Systems, Insider Trading, and Pre-Announcement 253 11-2 Wal-Mart’s Conservative Communications Approach 267 12-1 Special Rules for the Software Industry 275 12-2 E&Y and Cap Gemini “Measures that Matter” 284 12-3 EVA© – A Simplified, Practical Example 296 13-1 The Contradiction of Perks at Ford Motor Co. 320
Page 1 and 2: Agency Assurance: The Role of the A
Page 3 and 4: Acknowledgements I am very fortunat
Page 5: To Tina
Page 8 and 9: ii 2.2.4 The Communication Axis 28
Page 10 and 11: iv 6.1.7 Agency Cost Effectiveness
Page 12 and 13: vi 9.4.1 Transaction Cost Theory 20
Page 14 and 15: viii 12.8 Returning to Audited Fina
Page 16 and 17: x Figures 1-1 Corporate Governance
Page 20 and 21: xiv Abbreviations AICPA a.k.a. CA C
Page 22 and 23: xvi WTO www XBRL XML World Trade Or
Page 24 and 25: 2 that corporation to regain their
Page 26 and 27: 4 new role as powerful centralized
Page 28 and 29: 6 Other international leaders, howe
Page 30 and 31: 8 Table 1-3. Reforms proposed versu
Page 32 and 33: 10 Figure 1-1. Corporate Governance
Page 34 and 35: 12 1.2.2 Systemic Conflicts of Inte
Page 36 and 37: 14 board structures providing leade
Page 38 and 39: 16 Audits have become a loss-leadin
Page 40 and 41: 18 “The Big Winner, Again, Is ‘
Page 42 and 43: 20 That is, as owners who remain in
Page 44 and 45: 22 management). 5 The American Inst
Page 46 and 47: 24 their individual qualifications,
Page 48 and 49: 26 reporting.” 11 The same study,
Page 50 and 51: 28 itself into a rules-based system
Page 52 and 53: 30 CFO’s (chief financial officer
Page 54 and 55: 32 Signalling theory identifies fac
Page 57 and 58: 35 CHAPTER 3. Constitution - The Au
Page 59 and 60: 37 To understand further the logica
Page 61 and 62: 39 3.2 Stakeholder Roles and Respon
Page 63 and 64: 41 quantitative approach combined w
Page 65 and 66: 43 Figure 3-1. Two Contrasting Appr
Page 67 and 68: 45 Executive stock ownership - when
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47 or it increases the equity dilut
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49 member being a member of managem
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51 to-day management of individual
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53 CHAPTER 4. Constitution - The Re
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55 investors being driven by quarte
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57 to government authorities. From
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59 better measurement for evaluatin
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61 costs, especially residual losse
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63 This oversight function is typic
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65 The NYSE and NASD rules continue
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67 in entirety for that matter, is
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69 is reproduced in Appendix 3. 32
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71 “the Commission believes that
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73 organization. This is the percei
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75 pressure on boards’ recruitmen
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77 number of directors, as shown on
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79 In the few years following the s
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81 government has moved in the dire
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83 term. It directs more board reso
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85 CHAPTER 5. Constitution - The Ri
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87 outright fraud. Some of the prof
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89 Section 404 of the Sarbanes-Oxle
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91 data collected and analyzed. How
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93 Case Review 5-1 Financial Manage
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95 the gains for managers from high
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97 many years, not only as a result
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99 Jack Welch, the much heralded le
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101 options for future compensation
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103 equity class, which in its key
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105 1978 report identified the prob
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107 making clearly transparent warn
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109 field of management accounting,
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111 office. Although it is importan
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113 CHAPTER 6. Constitution - The I
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115 model is joint responsibility f
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117 continuously entered into the e
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119 “efficient allocation of risk
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121 The chart shows compellingly th
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123 firms to be solicited for polit
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125 in newspaper stock listings the
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127 Case Review 6-3. Allianz Dresdn
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129 managers, as well, generally do
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131 element in a constructive activ
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133 CHAPTER 7. Classification in th
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135 This is why auditors are asked
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137 products and services from comp
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139 influenced by accounting standa
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141 contact with consumers and prov
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143 supervisors, as well as any mac
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145 with products is increasingly m
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147 ownership rights that are quite
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149 dollars in trading derivatives
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151 Although there are many benefit
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153 Reinvestment and new investment
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155 7.5 Agency Assurance Addresses
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157 Transactions for acquiring or p
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159 of financial statements are lef
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161 4.) the Statement of Cash Flows
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163 CHAPTER 8. Classification for I
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165 Because the authors consider th
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167 Figure 8-1. Classification Axis
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169 Michael Polanyi in his seminal
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171 assets have the potential to be
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173 - can be transferred separately
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175 Figure 8-2. Intellectual Capita
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177 expect any accounting standard
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179 This large market correction sh
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181 streams to a net present value
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183 negotiation ability, despite si
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185 “Definitions—The item meets
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187 Anyone who has actually led a b
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189 disclosure. These groups match
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191 CHAPTER 9. Classification as a
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193 Properly trained and certified
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195 The authors of a recent study s
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197 could even convince them to exp
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199 product based on a total produc
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201 telephone sales, and Packard Be
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203 as suppliers to each other and
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205 Revenue is a first, key indicat
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207 Gross profit is not just an int
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209 begin in the first quarter and
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211 and is fully amortized. Total r
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213 significantly by a system which
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215 6. Categorization as investment
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217 Expensing of stock options was
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219 favorable, and the share prices
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221 CHAPTER 10. Communication - Dis
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223 Case Review 10-1. Quality and Q
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225 The main lesson that Computer A
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227 Based Reporting systems promulg
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229 intense conflicts of interest f
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231 also to earlier research by Chi
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233 assessment and analysis of busi
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235 A number of the Manchester area
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237 the SEC when it was reasonable
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239 JAVA are required to participat
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241 The internet embodies the techn
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243 6. Warnings, alerts, and urgent
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245 CHAPTER 11. Communications for
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247 11.2 Strategic Credibility - Il
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249 the questionnaire instruments n
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251 public releases, the analysts a
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253 direct interests to the underst
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255 is also legally bound to refrai
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257 The bank’s clients are the ac
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259 weeks of time, certainly not mo
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261 members, including the chief ex
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263 same market space. They also ca
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265 dissatisfaction over Apartheid,
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267 As was related earlier, Higgins
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269 CHAPTER 12. Communications Fail
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271 rules have been added to accoun
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273 partnerships. They simultaneous
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275 Case Review 12-1. Special Rules
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277 The AICPA was compelled to issu
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279 unfavorable opinions to the ear
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281 Inflated historical profits in
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283 industry. As might be expected,
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285 strategies leading edge compani
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287 financial statements are reliab
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289 of valuation models in preparin
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291 short-term results.” 21 Manag
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293 years” with stricter disclosu
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295 improvements in economic prospe
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297 to cover the cost of capital of
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299 in revenues and profits or impr
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301 CHAPTER 13. Agency Assurance an
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303 The contemporary corporate form
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305 13.2.3 Monitoring The second st
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307 making, which provided a voice
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309 Directors and managers are chal
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311 triaxial framework for accompli
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313 audit committee can take the le
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315 A critical contradiction in acc
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317 resulting higher book value of
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319 Executives simply should never
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321 Just a few weeks later, Ford an
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323 boards, and owners, may be a go
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325 Now they must subject themselve
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327 earnings or to overstate the co
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329 telltale sign that intransparen
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331 13.7 Final Statement The conclu
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333 performance of the company.’
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335 APPENDIX 1. ICGN APPROACH TO TH
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337 APPENDIX 2. GOOD PRACTICE GUIDE
Page 361 and 362:
339 Areas Requiring Special Attenti
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341 APPENDIX 3. AUDIT COMMITTEE CHA
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343 8. Assure that the auditor’s
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345 The AICPA Audit Committee Toolk
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Page 371 and 372:
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Page 377 and 378:
Page 379 and 380:
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359 Appendix 6. Skandia Value Schem
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361 Appendix 8. Ernst & Young Measu
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363 BIBLIOGRAPHY Aboody, David and
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365 on Improving the Effectiveness
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367 Conger, Jay A.; Finegold, David
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369 The Economist (2005-2) Too many
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371 Gustin, Sam (2005) Grasso deal
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373 Johnson, Jonathan L.; Daily, Ca
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375 LoBue, Robert (2004) Corporate
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377 Morris, Richard D. (1987) Signa
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379 Petty, Richard and Guthrie, Jam
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381 Securities and Exchange Commiss
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383 Tushman, Michael L. and O'Reill
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ROBERT M. LO BUE West Chester, PA U
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