UNIVERSITY OF PORT HARCOURT
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING
ASSIGNMENT ON
THE PROCESSES OF CONDUCTING RESEARCH IN
ACCOUNTING TOPICS
PRESENTED BY
EDEMA COURAGE ORITSEWEYINMI
U2018/0606002
COURSE TITLE: ACCOUNTING RESEARCH
COURSE CODE: ACT 356.2
LECTURER: DR. EBERE
DECEMBER 2022
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INTRODUCTION
Accounting research examines how accounting is used by individuals,
organizations and government as well as the consequences that these practices
have. Starting from the assumption that accounting both measures and makes
visible certain economic events, accounting research has studied the roles of
accounting in organizations and society and the consequences that these
practices have for individuals, organizations, governments and capital markets.
It encompasses a broad range of topics including financial
accounting research, management accounting research, auditing research,
capital market research, accountability research, social responsibility research
and taxation research.
Academic accounting research "addresses all aspects of the accounting
profession" using the scientific method, while research by practicing
accountants focuses on solving problems for a client or group of
clients] Academic accounting research can make significant contribution to
accounting practice, although changes in accounting education and the
accounting academia in recent decades have led to a divide between academia
and practice in accounting.
“Academic research looks at how accounting affects the world around us and
how the world affects accounting.” Teresa P. Gordon and Jason C. Porter
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Accounting research plays an essential part in creating new knowledge. The
hard sciences have produced models of research and testing that can be used
and applied over many disciplines, including accounting research. Using these
models along with evidence such as financial statements, stock prices, surveys,
experiments, computer simulations, and mathematical proofs, we can gain a
scientific perspective and basis for the following:
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Deciding and implementing new accounting or auditing standards
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Presenting unusual economic transactions in the financial statements
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Learning how new tax laws impact clients and employers
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Discerning how the accounting profession affects the capital markets
through academic accounting research
Researchers perform two main types of research, positive and normative.
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Positive research is the branch of academic research in accounting that
seeks to explain and predict actual accounting practices.
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Normative research, in contrast, seeks to derive and prescribe
"optimal" accounting standards.
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Qualitative Research Assessment Methods
The primary assessment methods that a reviewer of accounting research uses is
empirical, qualitative and quantitative. Empirical assessments evaluate based on
first-hand observation or experience. However, reviewers will typically
combine this assessment method with either qualitative or quantitative methods
of assessment. The difference between the two assessments lies in the
evaluation of quality versus quantity. Qualitative methods of research
assessment, then, look at the quality of the research rather than simply the
amount produced.
The processes of conducting research in accounting topics
at the quality of the research rather than simply the amount produced.
1. Problem Definition
2. Objective of research
3. Research design
4. Data collection
5. Data Analysis
6. Interpretation of result
7. Validation of result
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Step 1) Establish the Facts; Identify the Issues
"The researcher's first task is to gather the facts surrounding the particular
problem. However, problem-solving research cannot begin until the researcher
has clearly and concisely defined the problem. One needs to know the 'why' and
'what' about the issue in order to begin the research process."1 We will use the
merger in 2001 between America Online and Time Warner to form Time
Warner as our example. Internet portal America Online paid $147 billion for
media conglomerate Time Warner in 2001. But the book value of Time
Warner's assets was only $51 billion. The enormous $96 billion difference
amounts to "Goodwill", or the value of Time Warner's brands, trademarks and
other intangible assets, "subtracting an astonishing $1.5 billion a quarter from
the bottom line."2 How is this "Goodwill" accounted for in the new AOL Time
Warner's financial statements? What effect will the new Financial Accounting
Standards Board (FASB) Statement 142 concerning Goodwill and Other
Intangible Assets have on AOL's financial reporting? What are the implications
of deals like this on the integrity of financial statements used by investors,
analysts, regulators and others?
Step 2) Make a List of Keywords and Concepts
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Accounting terminology embodies established accounting issues.
Most Handbooks and Textbooks have excellent indexes that will lead you to
discussions of the topic and provide you with potential keywords and concepts
you can use in your search. Checkpoint offers the Handbook on Accounting
and Auditing published by Warren, Gorham and Lamont as part of its WG&L
Library. Goodwill is an "Intangible Asset" resulting from a "Business
Combination" and is defined "as the excess cost of an acquired company over
the sum of identifiable net assets." Critical issues in accounting for Goodwill
involve "Valuation" and "Amortization", the "Purchase Method" vs. "Poolingof-Interests Method" of accounting for "Business Combinations.". So now we
have a vocabulary we can use when searching for information: Goodwill,
Business Combinations, Intangible Assets, Valuation, Amortization, Purchase
Method, and Pooling-of-Interests. We might add "Mergers" and "Acquisitions"
and additional terms as we learn more about the topic.
Step 3) Use the Accounting Information Centre to Identify Research Resources
The Accounting Information Centre to find accounting standards, articles,
books, case studies, databases, examples, websites and other resources to use in
researching accounting issues.
Step 4) Find an Overview of the Topic
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Handbooks and Textbooks are often the best places to start looking for
information on unfamiliar topics. Their mission is to define, explain and provide
examples for students and practitioners. The World Wide Web offers a new way
to search for information about accounting topics. Google is especially good for
quickly finding relevant material. In all cases you must carefully consider the
authority, reputation and timeliness of the source of the information.
Step 5) Identify Authoritative Pronouncements
Accounting research relies heavily on authoritative precedents promulgated by
recognized standard setting bodies. The Financial Accounting Standards Board
(FASB) is currently making available the full text of the FASB Statements on
the FASB Website
Step 6) Search for Articles, Case Studies and Examples About the Issues and
Their Implications
Online article databases including ABI/INFORM, Business Source Premier
(EBSCO), Factiva and Nexis Uni offer a tremendous opportunity for
finding background information, literature reviews, specific examples, practical
and public policy implications and other material on virtually any substantive
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accounting issue. The more controversial the issue the more likely it is to be
widely discussed in the periodical literature.
Step 7) Search the Web
Google will help to locate additional materials freely available.
Step 8) Examine the Financial Statements Published in SEC Filings
U.S. and Foreign Companies whose stock trades publicly in the United States
are required to file audited financial statements that meet U. S. Generally
Accepted Accounting Principles (GAAP) with the Securities and Exchange
Commission (SEC). These are made available in the SEC's EDGAR database.
You can also retrieve EDGAR filings in Factiva, D&B Hoovers, S&P Net
Advantage, Merging, and Statista, as well as Corporate Investor
Relations sites. Pay particular attention to the Financial Footnotes published in
the 10Ks where significant accounting policies are disclosed These are usually
found in Note 1. For example, in AOL's September 2001 10Q (quarterly filing)
there are numerous references to "goodwill" due to the substantial negative
impact on earnings of amortizing the excess purchase price under current rules.
In 2002 under the new FASB Statement 143 the charges to earnings were
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magically transformed into an asset carried on future balance sheets. Reported
earnings greatly benefited.
Step 9) Search Investment Research Reports
Goodwill is a good example of an accounting issue that has major implications
for investment analysis and strategy. Investment banks all have sophisticated
research departments that analyse accounting rule changes for their impact on
financial statements, corporate strategy and investment opportunities. D&B
Hoovers has a good selection of reports from leading firms including Credit
Suisse, Deutche Banke and others that evaluate the impact of changes in
Goodwill Accounting. Refinitiv's After Market Research (AMR) has thousands
of current and historical investment research reports. And numerous, detailed
reports will be found on all major publicly traded companies.
Step 10) Putting It All Together
Now you should have command of the topic. You know the accounting terms
used to describe the issues. You are familiar with specific information
resources. You’ve located overviews, articles and other material that provide a
basic understanding and perspective on the issues as well as areas where
controversy remains. You’ve identified relevant information sources, databases,
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books, reports and Web sites and utilized effective search strategies. You know
the important published authoritative and semi-authoritative pronouncements
and who issued them. You have seen examples in published financial
statements. You’re ready to apply all of this information to your specific
situation.
References
1.Thomas R. Weirich and Alan Reinstein. Accounting & Auditing Research. 4th
ed. (Cincinatti, Ohio: South-Western College Publishing, 1996), 12.
2. Pablo Galarza. "The Goodwill Games." Money 30 No. 13 (December 2001):
61. In ABI/INFORM.
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3. D.R. Carmichael, Setphen B. Lilien and Martin Mellman. Accountants'
Handbook. 9th ed. (New York: John Wiley & Sons, 1999) Volume 1: 17.1.
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