Graham Bowrey

Local government investing: a form of gambling?

Graham D. Bowrey et al. — Mon, 07 Nov 2011 14:13:11 PST

Currently in the state of New South Wales (NSW) local government councils have the authority to invest ratepayers‟ money. At the end of 2006-07 financial year local councils in NSW had invested $590 million dollars in structured financial products such as collateralised debt obligations (CDO). Six months later the market value of these investments dropped $200 million to $390 million. In the light of these significant losses the NSW state government commissioned a review of the financial investments of NSW local councils to be undertaken. The Review, Cole Report, published in 2008 found that while acting within the parameters of the Local Government Act (1993), local councils had pursued high return high risk investment strategies. This paper reviews and evaluates how the local councils in NSW, identified by Cole as having a high level of financial exposure to investments such as CDOs, have disclosed their financial investments in their 2007-08 financial reports and the type of audit opinion issued on their general purpose financial reports. This paper will contribute to the literature on the 2008 global financial crisis as well as literature on Local Government council financial report audits.

The influence of Jeremy Bentham on recent Public Sector Financial Reforms

Graham Bowrey et al. — Mon, 07 Nov 2011 14:13:08 PST

Jeremy Bentham’s (1748 – 1832) work while vast is generally considered to be based primarily on economics, law, social control, public administration and public interest. His most notable contributions are in the areas of utilitarianism, a moral theory where the correct action is one which produces the greatest amount of happiness or least amount of pain for the greatest number of people, and the use of a system of constant surveillance, panopticon, to internalise the desired behaviour of individuals. Bentham also made significant contributions to public sector financial accountability through his work on the principle of publicity where he outlined the need for “the doors of all public establishments … to be, thrown wide open to the body of the curious at large” (Bentham cited in Bowring 1843, p. 46). The purpose of this paper is to identify and examine the similarities of Bentham’s work and the New Public Management practices currently influencing public sector financial reforms. The theoretical framework of this paper is shaped through a reflection of Bentham’s work on utilitarianism, public administration, bookkeeping and publicity (reporting) and a review of the rationale behind the relatively recent New Public Management ideology which has driven many of the recent public sector financial reforms. The paper argues that many of today’s public sector financial accountability processes and procedures associated with recent public sector financial reforms, which are based on New Public Management, reflect much of Bentham’s work. For example the preparation of publicly available budget reports such as Portfolio Budget Statements, which contain the proposed annual expenditure of government departments and are used to assist in the discharge of public sector organisations’ financial accountability, could be linked to Bentham’s principle of publicity. The key finding of this paper is that research based on Bentham’s work will improve the understanding of the recent New Public Management based public sector financial reforms.

Accounting Students' Reflections on a Regional Internship Program

Bonnie Cord et al. — Mon, 07 Nov 2011 14:13:05 PST

The opportunity to gain professional industry experience for accounting students while undertaking their undergraduate degree provides them with both a competitive edge in the marketplace and an opportunity to experience the activities undertaken in their chosen profession. Structured experiential learning programs provide students with the practical opportunity to apply their knowledge in an industry context and also to reflect on their personal learning journey. This paper explores the learning contribution of students’ reflection-based assessments in an innovative and flexible internship program based on an e-learning framework. Through a preliminary investigation, it has been identified that after undertaking this internship program, accounting students from an Australian regional university have advanced their learning pertaining to workplace preparedness, understanding and application of accounting principles, generic skill enhancement, and consolidation of accounting as their chosen professional career. The paper suggests that an internship program such as the one examined contributes to the professional accountancy bodies’ and community’s expectations of accounting graduates possessing key cognitive and behavioural skills.

Public sector gambling: local council investment exposures

Graham Bowrey et al. — Mon, 07 Nov 2011 14:13:02 PST

Local councils in New South Wales (NSW) have the authority to invest ratepayers' money that is not currently required for any other purpose by the council. At the end of 2006-07 financial year local councils in New South Wales had invested $590 million dollars in structured financial products such as collateralised debt obligations (CDO). By the end of January 2008, six months later, the market value of these investments dropped $200 million to $390 million. Since then the financial investment market has further significantly reduced with the value of the councils' investments losing many more millions of dollars. In NSW the state government commissioned a review of the financial exposures of NSW local councils to be undertaken by Mr Michael Cole. The Cole Report published in 2008 found that while acting within the parameters of the Local Government Act (1993), local councils had pursued high return high risk investment strategies. This paper reviews and evaluates how the local councils in NSW, identified by Cole as having a high level of exposure to these forms of investments, have disclosed their financial investments in their 2007-08 financial reports; the type of audit opinion expressed on these reports; and the impact of these investment related losses on the ability of NSW local councils to provide current and future services.

The sustainability of Public Sector Ecological Sustainable Development Reporting

G. Bowrey — Thu, 27 Aug 2009 16:05:34 PDT

Over the past two decades there has been significantly increased public awareness of and focus on the environmental impact of organisations operations. However, in spite of this increased focus on the environment, most organisations in Australia are not required by regulation to outline the impact of their organisations on the environment nor the measures they are taking to contain or reduce their impact on the environment. To be fair many private sector organisations have been voluntarily providing reports to varying degrees on their environmental performance and management. For example there has been the development and implementation of triple bottom-line reporting, which incorporates environmental performance, and a growing number of private sector organisations outline quite explicitly, in their annual report, their environmental successes. However the only legislated environmental reporting requirement is for private sector organisations to report breaches of environmental laws and licences in their annual reports (Section 299(1) of the Corporations Act 2001). In the public sector the focus on and reporting of environmental performance and management is more formal.

The Non-Executive Director of Australian Statutory Authorities

G. Bowrey et al. — Thu, 27 Aug 2009 16:05:34 PDT

This paper is based on a review of the board composition of material Commonwealth Statutory Authorities with particular focus on the profile of non-executive directors. The analysis examines the mix of non-executive directors gender, remuneration, length of board membership and the number of other directorships held and

The paper will review the roles of directors and outline a number of additional requirements these directors have in comparison to directors of private sector organisations and highlight the paradoxial requirement of independence. The paper concludes questioning the need for independent directors (if there are any) on the boards of Commonwealth Statutory Authorities.

Have Recent Financial Reforms Improved Financial Accountability in the Australian Commonwealth Public Sector?

G. Bowrey — Thu, 27 Aug 2009 16:05:33 PDT

Since the early 1990s the Australian Commonwealth public sector has undergone significant financial reforms, due primarily to the current federal Liberal government’s drive to improve the financial accountability of the Commonwealth Government. These reforms include the adoption of accrual accounting and budgeting and the development and implementation of an outcomes and outputs framework. These reforms culminated in the first full federal budget to be developed on an accrual basis in 1999 – 2000. This paper will examine the implementation of these reforms and the associated processes to determine whether or not the Commonwealth government is more financially transparent and better able to discharge its financial accountability. It is argued the complexity of the processes associated with, and the reporting requirements of these reforms may have actually decreased the level of accountability to the key party to whom accountability is due — the Australian public.

A profile of the non-executive directors of Australia's largest public companies

C. L. Cortese et al. — Thu, 27 Aug 2009 16:05:33 PDT

This paper presents a profile of the non-executive directors of Australia’s largest public companies. Using descriptive data, it assesses the extent to which these companies adhere to the requirements set down in the Australian Stock Exchange’s Principles of Good Corporate Governance. In particular, board structure and composition is evaluated, and levels of remuneration and independence among non-executive directors are assessed. The paper concludes with a discussion of the need for independence and questions whether competence, among other characteristics, is a more valuable characteristic of a non-executive director than independence.

Keeping up appearances: The Quest for Governance Legitimacy

G. Bowrey — Thu, 27 Aug 2009 16:05:32 PDT

An effective corporate governance structure is as crucial to a public sector organisation as it is to a private sector organisation. This paper reviews the profile of directors on governance boards of government controlled organisations and finds that, while the governance structures are similar with those in the private sector, the real power to set the strategic, financial and operational directions of these organisations is not in the hands of the directors, as it is in the private sector, but in the hands of the responsible ministers. This de-coupling, it is argued, is due to the perception that private sector governance practices are superior to public sector practices and therefore these government organisations, in an attempt to maintain the appearance of good governance and to legitimise their place in society, have adopted on the surface private sector governance structures and practices.

A discussion on Australia's adoption of International Accounting Standards

G. Bowrey — Thu, 27 Aug 2009 16:05:32 PDT

In July 2002 the Financial Reporting Council (FRC) announced that it fully supported the adoption by Australia of the International Accounting Standards (IAS). The main, predicted, benefits of adopting the IAS were improved access to international capital flows and reduced financial reporting costs for Australian multinational companies. This announcement was in line with section 227 of the Australian Securities and Investments Act 2001 where the Australian Accounting Standards Board (AASB) was required to participate in the development of accounting standards for worldwide use. Australian reporting entities are now required to prepare their financial statements based on the Australian Equivalents of the International Accounting Standards. The following is a fictitious transcript of an interview, in June 2003, by Mr Kerry O’Brien from the ABC with Mr Peter Costello the Federal Treasurer of the Commonwealth of Australia.

The New Researcher

G. Bowrey — Thu, 27 Aug 2009 16:05:31 PDT

Purpose This poem is a reflection of the processes and associated emotions early career academic researchers may experience in preparing, presenting and publishing their research.

Design/methodology/approach: Fictional poem

Findings: This poem highlights that the processes an early career academic researcher undertakes to publish his/her research isn’t necessarily the hardest lesson to learn. Rather the hardest lesson is learning to cope with the mix of emotions they will experience during the process.

Research Implications: Provides early career academic researchers, and their supervisors, a guide of what they can expect to experience during the first few years during their research.

Originality/Value A fun review of the early career of a new academic researcher.

Submission to the Independent Review of the Environment Protection and Biodiversity Conservation Act 1999

G. Bowrey et al. — Thu, 27 Aug 2009 16:05:31 PDT

Please find following a submission to the Independent Review of the Environment Protection and Biodiversity Conservation (EPBC) Act 1999.

This submission focuses on reviewing the level of compliance with Section 516A (Annual reports to deal with environmental matters) of the EPBC Act 1999 by addressing the following questions raised in the Independent Review of the EPBC Act’s Discussion Paper:

Question 37 – Does the Act contain sufficient comprehensive and appropriate range of enforcement mechanisms? Are those mechanisms capable of deterring and responding to contraventions of the Act?

Question 40 – Does the Act provide sufficient guidance for decision makers in their consideration of uncertainty when making decisions under the Act? If not, how should the Act deal with uncertainty?

Question 41 – Does the Act provide the appropriate opportunity for external input and scrutiny of decisions made under the Act? Is there sufficient transparency? Are the periods for public consultation adequate?

This submission includes a number of recommendations which we believe will improve the level of reporting transparency as per section 516A of the EPBC Act 1999.

Profiling non-executive directors in Australia

C. L. Cortese et al. — Thu, 27 Aug 2009 16:05:31 PDT

This paper presents a profile of non-executive directors of Australia’s largest public companies. Using descriptive data, it assesses the extent to which these companies adhere to the requirements set down in the Australian Stock Exchange’s Principles of Good Corporate Governance. In relation to these profiles, the generic roles of non-executive directors are discussed and evaluated in terms of their actual and perceived independence from management. The paper concludes with an examination of the need for independence and questions whether competence, among other characteristics, is a more valuable characteristic of a non-executive director than independence.

Corporate social responsibility reporting in Hong Kong: Case study of three note-issuing banks (2003-2006)

F. Hui et al. — Thu, 27 Aug 2009 16:05:30 PDT

The increasing public concern on the state of the world’s environment and the impact of mankind on the ecology of the world has lead to the increased scrutiny of the operations and performance of organisations. Organisations are now expected to be able to demonstrate that they are aware and are addressing the impact of their operations, both direct and indirect, on the environment and society in general. Financial institutions due to the nature of their business generally do not contribute directly to the degradation of the environment however they do provide the funds for many organisations’ projects which do directly impact on the environment. The purpose of this paper is twofold. First, this paper will review the environmental reporting practices of the three note issuing banks in Hong Kong; the Hongkong and Shangihai Banking Corporation (HSBC), the Standard Chartered Bank (SBC) and Bank of China (Hong Kong) Limited (BOCHK) for the period of 2003 to 2006. The evaluation of their environmental reporting practices will be based on the voluntary Equator Principles, first introduced in 2003, which outline how financial institutions can reflect the current environmental and social concerns associated with project funding. Secondly, this paper will add to the literature on the social constructionalist perspective of legitimation theory upon which this study is based. Unlike legitimacy theory, which focuses on the result [legitimacy], this paper will focus on the processes these three banks use to establish a relationship between their actions and their values through the use of environmental performance reports [legitimation].

Corporate Social Responsibility Reporting of Two Note-issuing Banks in Hong Kong

F. Hui et al. — Thu, 27 Aug 2009 16:05:30 PDT

The environmental performance and management disclosure of organisations has over the past decade come under increased scrutiny due to a number of factors including, in particular, the impact organisations have had on the world’s environment and the corresponding rapid change in the world’s climate. These concerns have made organisations, including financial institutions, review the level of their environmental performance and management disclosures to demonstrate, amongst other objectives, their level of social responsibility. Financial institutions due to the nature of their business are not generally seen to contribute directly to the degradation of the environment however they do provide the funds for many organisations’ projects which do directly impact on the environment. This paper will review the environmental performance and management disclosures of two note issuing banks in Hong Kong; the Hongkong and Shangihai Banking Corporation (HSBC) and Bank of China (Hong Kong) Limited (BOCHK) from 2003 to 2006. This review will be conducted with reference to the Equator Principles, a voluntary environmental performance framework, which were developed specifically for financial institutions. The second purpose of this paper is to contribute to the literature on legitimation theory with specific reference to the social constructionalist perspective of legitimation.

Australian Commonwealth public sector environmental reporting in a new public managerialism environment

G. Bowrey — Thu, 27 Aug 2009 16:05:29 PDT

The environmental impact of organisations operations on the environment has come under significantly increased public awareness, over the past two decades. Even so, most organisations in Australia are not required by regulation to report on the impact of their organisations on the environment. Some organisations have been voluntarily providing reports to varying degrees on their environmental performance and management, however the only legislated environmental reporting requirement for private sector organisations in Australia is to report breaches of environmental laws and licences in their annual reports (Section 299(1) Corporations Act 2001). In the public sector the situation is slightly different. The Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act 1999), enacted in 1999, requires federal (Commonwealth) government organisations to include in their annual reports a section detailing the environmental performance of and environmental management in their organisation as well as the organisation’s contribution to the nation’s ecologically sustainable development. This paper argues that the adherence [and lack of] to the Environment Protection and Biodiversity Conservation Act 1999 reporting requirements by Commonwealth organisations, including Commonwealth Agencies, Commonwealth Statutory Authorities and Commonwealth Companies, can be explained by the sector’s recent reforms influenced by the pervasive new public managerialism (NPM) mentality within the sector. The paper will also introduce the new concept of NPM reporting paradox.

On Foxes Becoming Gamekeepers: The capture of professional regulation by the Australian accounting profession

G. Bowrey et al. — Thu, 27 Aug 2009 16:05:29 PDT

There are such persons as liars, damned liars and experts, and there are accountants, bad accountants, and worse accountants. (Debate on the introduction of the Public Accountants Registration Act, New South Wales Parliament, 1944, p. 856) Both the state and the professions have an important interest in safeguarding the quality of service and the protection of the public with respect to the provision of professional services. In the main, the states focus on professional performance and accountability, and the professions emphasise the maintenance of quality and improvement in the skills of members. With respect to the accounting profession the state has taken two basic approaches to improving professional performance and accountability. The first approach, through imposed competencies embedded in various state registration Acts, regulates a minimum level of performance. The second approach addresses the issue of accountability through the imposition of specific standards of conduct, sanctions and reporting requirements ...

Corporate social responsibility reporting of two note-issuing banks in Hong Kong

F. Hui et al. — Thu, 27 Aug 2009 16:05:28 PDT

The environmental performance and management disclosure of organisations came under increased scrutiny over the past decade due to several factors, particularly the impact organisations have on the world’s environment and the rapid change in the world’s climate. These concerns prompted organisations, including financial institutions, to review the level of their environmental performance and management disclosures to demonstrate, amongst other objectives, their level of social responsibility. Due to the nature of their business, financial institutions are not generally seen to contribute directly to the degradation of the environment; however, they do provide the funds for many organisations’ projects which directly affect the environment. This paper reviews the environmental performance and management disclosure developments in China specifically by two note-issuing banks in Hong Kong: the Hongkong and Shanghai Banking Corporation (HSBC) and the Bank of China (Hong Kong) Limited (BOCHK) from 2003 to 2006. The review is conducted with reference to the Equator Principles, a voluntary environmental performance framework developed specifically for financial institutions. The paper also contributes to the literature on legitimation theory, using a social constructionalist perspective of legitimation.