Research Articles (School of Accountancy)

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Accountancy students’ and lecturers’ perceptions of the effect of open-book assessments on writing examinations
(HESA, 2020) Kruger, Stephan J.
Open-book assessment (OBA) can contribute to the development of competency in handling large amounts of information in the knowledge economy. This is one of the reasons why the South African Institute of Chartered Accountants (SAICA) implemented OBA for its Initial Test of Competence. This empirical study investigated final year accountancy students’ and lecturers’ perceptions of the effect on writing examinations after their method of assessment changed from a closed-book (CBA) to an open-book assessment format. Students and lecturers perceived a change in writing behaviour, reduced anxiety, and improved performance. On some aspects the level of agreement between students and lecturers differed significantly. There is also evidence that African students perceived OBA to be less beneficial compared to the perceptions of white students. For subjects for which substantial texts were available, students perceived the least change happened for Auditing while lecturers perceived the least change for Financial Accounting. Both students and lecturers perceived the most change happened for Taxation. It is important that lecturers at departments of accountancy take cognisance of these perception gaps and to adjust their teaching to enable their students to utilise their texts as an additional resource optimally. This study is also of value to the regulatory bodies to evaluate their assessment practises
Accounting students' perceptions : internal control theory moves outside the classroom and online
(HESA, 2019) Sexton, N. D.
Many have argued that faculty should transform the way accounting programmes are presented to undergraduate students. Changes in student expectations, professional qualifications and employer demands have driven innovative experiential learning interventions. Students want to learn collaboratively, inside and outside of the classroom, they want to use information technology and have fun. In response, this article reports on an auditing assignment where students were required to identify control weaknesses in everyday life, record it and report back using Facebook. A Facebook group was created where students posted photos or videos of the control weakness they identified. Other students could “like,” comment and share posts. This was the first assignment of this nature. This research presents the accounting students’ perceptions of the assignment as a whole, the pervasive skills applied and the use of Facebook. These were generally positive and should encourage educators to keep integrating technology and real life into learning.
The accounting treatment of credit card rewards programmes : a South African perspective (part I)
(AOSIS, 2017-04) Brink, Sophia M.
Credit card rewards programmes are a common phenomenon in the South African market. On 1 July 2007 the International Accounting Standards Board (IASB) issued IFRIC 13 Customer Loyalty Programmes to give specific guidance to suppliers on the accounting treatment of customer loyalty programme transactions. Although credit card rewards programmes are specifically included in the scope of this Interpretation, in practice not all credit card rewards programmes currently account for award credits under the revenue deferral model (IFRIC 13). During May 2014 the IASB and the United States Financial Accounting Standards Board (FASB) published IFRS 15 Revenue from Contracts with Customers intended to replace six existing Standards and Interpretations, including IFRIC 13. Currently there is uncertainty whether or not a credit card rewards programme transaction falls within the scope of IFRS 15. Despite concerns raised the Boards decided against providing any additional guidance to credit card rewards programmes and indicated that they leave it up to management.
The accounting treatment of credit card rewards programmes : a South African perspective (part II)
(AOSIS, 2017-06) Brink, Sophia M.
Most credit card issuers offer their card holders participation in a customer loyalty programme. On 1 July 2007 the IASB issued IFRIC 13 Customer Loyalty Programmes to give specific guidance to suppliers on the accounting treatment of customer loyalty programme transactions. Despite the fact that credit card rewards programmes are specifically included in the scope of this Interpretation, in practice not all credit card rewards programmes currently account for award credits under the revenue deferral model (IFRIC 13). These divergent practices make one question the relevance of the current guidance provided in IFRIC 13 to credit card rewards programmes; otherwise what is the reason behind credit card rewards programmes accounting for these transactions differently? During May 2014 the IASB and the United States Financial Accounting Standards Board (FASB), published IFRS 15 Revenue from Contracts with Customers intended to replace six existing Standards and Interpretations, including IFRIC 13. The aim of IFRS 15 is to streamline accounting for revenue across all industries and to correct inconsistencies in existing Standards and practices. Credit card rewards programme respondents raised many queries and uncertainties based on the proposed model but despite these concerns the Boards decided against providing any additional guidance to credit card rewards programmes. They indicated that they leave it up to management’s judgement to determine how to account for these transactions (in effect not achieving the aim of streamlining accounting for revenue across all industries). The main objective of the research reported in this article is to determine whether or not credit card rewards programmes should have been included in the scope of IFRIC 13 and consequently whether or not credit card rewards programmes should be included in the scope of IFRS 15. It was found that the differences between a credit card rewards programme and a typical customer loyalty programme prove that a credit card rewards programme transaction should be treated differently for accounting purposes and that these transactions should fall outside the scope of IFRIC 13 and IFRS 15.
The accounting treatment of credit card rewards programmes : a South African perspective (part III)
(AOSIS, 2017-10) Brink, Sophia M.
Most credit card issuers offer their cardholders participation in a customer loyalty programme. Currently all credit card rewards programmes fall within the scope of IFRIC 13. For annual reporting periods beginning on or after 1 January 2017 IFRIC 13 will be withdrawn and will be replaced by the new revenue Standard, IFRS 15. In the process of compiling the new revenue model, credit card rewards programmes raised various concerns and uncertainties regarding the application of IFRS 15 to credit card rewards programme transactions. Despite concerns raised, the IASB and FASB decided against providing any additional guidance to credit card rewards programmes and indicated that they leave it up to management’s judgement to determine how to account for these transactions. Although the effective date of the new revenue Standard is 1 January 2017, in view of the nature of a credit card rewards programme transaction it would be prudent for credit card rewards programmes to start collecting data immediately for the retrospective application. Given the time limit, the unanswered uncertainties and problem areas identified together with the minimal specific guidance to credit card rewards programmes, the main objective of the research reported in this article was to determine how to account for credit card rewards programme transactions, within the scope of IFRS 15 through the formulation of specific guidelines, and specifically to address the uncertainties raised by credit card rewards programme respondents. The study was also aimed at assisting credit card rewards programmes in converting from IFRIC 13 to IFRS 15 by highlighting the differences between the requirements contained in IFRIC 13 and IFRS 15.
The accounting treatment of single-company client loyalty programme transactions
(AOSIS, 2013-10) Brink, Sophia M.
Client loyalty programmes have been prevalent in South Africa since the 1980s, but the popularity of these programmes has increased drastically over the past few years, with more than 100 suppliers in South Africa currently making use of them. On 1 July 2007 the IASB issued IFRIC 13 to give specific guidance to suppliers on the accounting treatment of client loyalty programme transactions. The IASB is currently compiling a new revenue standard. This single new revenue standard will replace six existing standards or interpretations, including IFRIC 13. A critical analysis of IFRIC 13 will assist the development of this new revenue standard. The main objective of the research was therefore to determine whether the guidance in IFRIC 13 regarding the accounting treatment of a single-company client loyalty programme transaction is consistent with other accounting standards and recent developments. The accounting treatment of each component of a client loyalty programme transaction with a change in estimate was considered. It was found that inconsistencies exist in the initial measurement of the fair value and how a change in accounting estimate is recognised.
Addressing the challenge of strategic alignment faced by small and medium-sized entities during the selection of accounting software packages
(Clute Institute, 2016-12-27) Bishop, William Arthur
ENGLISH SUMMARY : Alignment between an entity’s strategic business objectives and its information systems (ISs) has recently received research attention. Currently, small and medium-sized entities (SMEs) still face the challenge of successfully aligning their strategic business objectives with their ISs. Various small generic accounting software packages are available for purchase by SMEs. These accounting packages all have functionalities that enable SMEs to keep proper accounting records. However, due to their generic nature, these accounting packages do not always have sufficient functionalities to drive the SMEs’ strategic business objectives, resulting in IS misalignment. Not selecting the correct accounting software package will result in the accounting software not addressing the strategic business needs of the SME. The purpose of this study is to review and discuss the challenges faced by SMEs when selecting generic accounting packages and to develop a mapping between strategic business objectives commonly found within SMEs and software package functionalities that SMEs can refer to during the selection and implementation of new accounting software packages. This is accomplished on a non-empirical basis through a review of pertinent literature. In order for a SME to select the correct accounting software package, it is important that it invest time and effort in considering the software functionalities provided by the software package and map it against its strategic business imperatives to prevent failure of the package.
Addressing the incremental risks associated with adopting Bring Your Own Device
(AOSIS, 2018) Weber, Lyle; Rudman, Riaan J.
Bring Your Own Device (BYOD) involves allowing employees to use their own mobile devices to access their organisations’ networks. Many organisations are embracing this trend as a means to cut information technology (IT) expenditure, enhance employee satisfaction, etc. However, these and other benefits come at a cost in the form of exposing an organisation to new risks. The aim of this research was to assist organisations to identify the incremental risks they could potentially encounter if they implement a BYOD programme and how they can reduce the risks directly related to BYOD to an acceptable level. An extensive literature review was performed to identify the risks which arise as a result of the adoption of a BYOD programme. COBIT 5 was identified as the most appropriate framework which could be used to develop possible safeguards to mitigate the incremental risks associated with a BYOD programme to an acceptable level. Safeguards were developed to address the risks.
An analysis of issues relating to the taxation of cryptocurrencies as financial instruments
(AOSIS, 2020) Basson, Remerta
Orientation: This article examines the normal tax treatment of cryptocurrency transactions performed by natural persons in South Africa. Research purpose: The aim of this article was to document the normal tax treatment of cryptocurrency transactions subsequent to the inclusion of cryptocurrency in the definition of ‘financial instrument’ in section 1(1) of the Income Tax Act No. 58 of 1962, and to determine whether this inclusion gives rise to unanticipated issues. Motivation for the study: This investigation was necessitated by the distinguishing features of cryptocurrency that differentiate it from other financial instruments. Research approach/design and method: This article falls within the reform-orientated genre of doctrinal research. A desktop literature review was conducted to determine the normal tax treatment of cryptocurrency transactions, based on an interpretation of relevant legislation and a review of secondary commentary. Key issues identified in the normal tax treatment of cryptocurrency transactions were documented, and recommendations were made for addressing the issues identified. Main findings: A misalignment may occur between taxable incomes and economic gains of taxpayers engaged in cryptocurrency mining. Practical/managerial implications: The South African Revenue Service (SARS) should allow for a deduction equivalent to the market value of cryptocurrency acquired through cryptocurrency mining in terms of section 22(2)(a). Contribution/value-add: A risk of misalignment between taxable incomes and economic gains of taxpayers performing cryptocurrency mining has been identified and documented, which may inform legislative amendment, or the practice of the SARS.
An analysis of the tolerance for ambiguity among accounting students
(Clute Institute, 2014-03) Steenkamp, L. P.; Wessels, P. L.
Tolerance for ambiguity is a personality characteristic that reflects the general feelings and attitudes of an individual toward ambiguity and ambiguous situations. Prior research has found accounting students to be significantly less tolerant of ambiguity than the general population, with female accounting students less tolerant than their male counterparts. The research on which this article is reporting aimed to examine the personality characteristic ‘tolerance for ambiguity’ among accounting students to determine whether those currently being attracted to the profession are still less tolerant of ambiguity than the norm as reported by prior research, taking into account the drive from the accounting profession to attract individuals to the profession who are effective communicators, who can think and act strategically, are able to solve unstructured problems, and are aware of business issues. Tolerance for ambiguity was measured using the AT-20 scale, a widely used and validated instrument developed by MacDonald (1970). The results of this study confirm that students enrolled for accounting degree programmes are less tolerant for ambiguity (mean = 7.50) than students enrolled for other business programmes (mean = 8.16). Female students enrolled in accounting degree programmes were significantly less tolerant for ambiguity than their male counterparts.
Assessment of current practices in creating and using passwords as a control mechanism for information access
(AOSIS OpenJournals, 2007-06) Wessels, P. L.; Steenkamp, L. P.
One of the critical issues in managing information within an organization is to ensure that proper controls exist and are applied in allowing people access to information. Passwords are used extensively as the main control mechanism to identify users wanting access to systems, applications, data files, network servers or personal information. In this article, the issues involved in selecting and using passwords are discussed and the current practices employed by users in creating and storing passwords to gain access to sensitive information are assessed. The results of this survey conclude that information managers cannot rely only on users to employ proper password control in order to protect sensitive information.
Belasting op toegevoegde waarde : gevolge van klientelojaliteits-programtransaksies vir verskaffers
(AOSIS, 2013-10) Brink, Sophia M.
Client loyalty programmes are a common phenomenon in the South African market. Despite the fact that client loyalty programmes have been prevalent in South Africa since the 1980s, the South African Revenue Service has issued minimal guidance on the value-added tax treatment of client loyalty programme transactions. The main objective of the research was to determine whether South African client loyalty programme suppliers correctly account for client loyalty programme transactions for value-added tax purposes. In order to meet this objective, available local literature was analysed to determine the proposed value-added tax treatment of a client loyalty programme transaction. The proposed correct value-added tax treatment was compared with a survey circulated to a population of client loyalty programme suppliers in South Africa. The comparison indicated that in practice the Value-Added Tax Act 89 of 1991 is not always interpreted correctly. This incorrect tax treatment could result in financial loss to the client loyalty programme supplier as taxpayer.
Beyond King III : assigning accountability for IT governance in South African enterprises
(AOSIS, 2010) Butler, R.; Butler, M. J.
With the increasing dependence on IT in modern enterprises and the significant risks associated with omnipresent IT systems in business, IT governance is becoming imperative to all organisations. King III is based on the "apply or explain" approach, that forces South African entities for the first time to apply the IT governance principles as contained in the report, or explain the reasons for not applying these principles. This paper provides a macrolevel view of IT governance, derived from King III, and determined that it correlates strongly with the growing body of knowledge on IT governance. The paper investigates the responsibilities for IT governance within organisations and provides clear guidelines on the responsibilities of management roles, from the board to the operational level, involved in IT governance to ensure accountability.
The case for business rescue
(Accountancy SA, 2010-6) Lamprecht, Christiaan
ENGLISH SUMMARY : The penalty for declaring bankruptcy in ancient Rome was slavery or being cut to pieces. The choice was left to the creditor. By the Middle Ages, the treatment of insolvent debtors had softened considerably. In northern Italy, bankrupt debtors hit their naked backsides against a rock three times before a jeering crowd and cried out, "I declare bankruptcy". In French medieval cities, bankkrupts were required to wear a green cap at all times, and anyone could throw stones at them. (World Bank, Doing business in 2004)
Cash flow reporting : do listed companies comply with AC 118
(University of Pretoria, 2003) Steyn, B. W.; Hamman, W. D.
This article assesses the state of cash flow reporting by listed South African industrial companies in order to evaluate whether the users of financial statements can accept them as being reliable and use them as a tool to compare the operating performance of various companies. As the cash flow statement has been in use since 1989, it was envisaged that compliance would be high. However, it was found that there are several companies that deviate from some of the requirements of AC 118 regarding cash flow statements.
Changes in South African executive share-based remuneration
(AOSIS, 2018) Steenkamp, Gretha; Wesson, Nicolene
Orientation: Institutional theory proposes that companies respond to environmental factors (such as changes in accounting requirements and the economy) in order to gain or retain legitimacy. As such, environmental factors can affect executive remuneration paid by companies. Research purpose: The purpose was to determine whether the implementation of International Financial Reporting Standard (IFRS) 2 as well as the financial recession affected the characteristics of share-based remuneration paid to South African executives. Motivation for the study: Stakeholders should be aware of whether environmental factors influence business practice relating to share-based remuneration (especially in an emerging economy, such as South Africa, where international evidence might not be applicable). Research design/approach and method: Share-based remuneration details of the chief executive officers of 28 South African listed companies were obtained for the period 2002–2009 (these dates were chosen to include both the effective date of IFRS 2 and the financial recession). Data were analysed (using analysis of variance and generalised estimating equalisation techniques) to determine whether there were statistically significant differences in the share-based executive remuneration between the period before and after the effective date of IFRS 2, as well as before and during the financial recession. Main findings: Share options usage decreased after the effective date of IFRS 2, and even further during the recession. Share-appreciation rights were increasingly used after the effective date of IFRS 2 and seemed to have replaced share options subsequent to the implementation of IFRS 2. The use of share purchase plans decreased during the recession and was replaced by performance shares. Performance vesting conditions were more prevalent in share-based remuneration schemes in the post-IFRS 2 period. Practical/managerial implications: Shareholders and regulators should take cognisance of the fact that business practice in respect of share-based remuneration is affected by new accounting standards and the economy. Contribution/value-add: This study addressed the knowledge gap in the literature regarding the effect of IFRS 2 and recession on executive share-based remuneration in emerging economies, and specifically in South Africa.
Cloud computing activities : guidelines on the South African income tax classification
(AOSIS Publishing, 2016) Steenkamp, Shene; Nel, Rudie
The classification of income from cloud computing activities, according to the substance-over-form doctrine, is fundamental to the application of the correct taxation source test. The designation of IaaS, PaaS and SaaS, the three main cloud computing service models, clearly denotes the form of cloud computing activities as that of a service. However, the nature of cloud computing inherently raises the question of whether or not cloud computing income should not rather be classified as income from leasing activities or the imparting of know-how. In fact, the findings of this study suggest the classification would not necessarily always be that of a service. The possible classification as lease income can be either income from the lease of tangible computer hardware and/or of intellectual property (royalty income). The aim of this study was to formulate guidelines to assist in the correct classification of income from cloud computing activities. This was achieved by performing doctrinal research based on the South African and international literature.
Cloud computing activities : South African normal tax source determination
(AOSIS Publishing, 2016) Nel, Rudie; Steenkamp, Shene
The location-independent nature of cloud-based transactions results in many source-related difficulties for normal tax purposes. This study considered the source determination for each of the possible classifications of cloud-based income (lease, service and royalty income, and/or income from know-how) by performing a doctrinal study based on South African and international literature. This study identified and formulated the challenges in applying traditional source tests in the context of cloud-based transactions. These challenges stem from the potential absence of physical presence of the provider in the country of consumption, in contrast to traditional source tests where physical presence indicate a tax presence; as well as the location-independent nature of cloud-based transactions from the perspective of both the provider and the consumer. The findings of the study suggest that the source determination for cloud-based transactions could be based on the source of the payment or residency of the payer, rather than the physical location.
Combating impermissible tax avoidance through efficient administrative approaches : what SARS can learn from its Canadian counterpart
(University of South Africa, 2012) Steenkamp, Lee-Ann
Impermissible tax avoidance transactions cross the dividing line between legal tax avoidance and illegal tax evasion. In response, governments across the globe have adopted legislative, judicial and administrative measures to combat this type of tax avoidance. This article reviews the use of the administrative techniques employed by the Canada Revenue Agency (CRA). These include awareness resources, monitoring tools, audits and administrative penalties. Through the evaluation of Canada’s regime, the article seeks to make recommendations in an attempt to improve the South African administrative approach. It is proposed that the South African Revenue Service (SARS) continues to develop a cogent compliance programme in order to improve tax compliance.
Consolidation of the number of treasury shares : the South African experience
(AOSIS, 2014) Vermeulen, M.; Yaffar, Y.
Unlike most other values found in companies’ annual reports, there are no accounting standards that prescribe the calculation of market capitalisation and net asset value per share. These two figures play quite a significant role when valuing and comparing different companies. It is also frequently used in determining when a company should repurchase its own shares. In South Africa the number of the holding company’s shares can differ from the total number of the group’s shares after consolidation, as subsidiaries and share trusts are allowed to hold shares in their holding company. The published financial statements of a sample of JSE-listed companies were investigated to determine which number of shares companies use to calculate net asset value per share and market capitalisation, and if it is used consistently. Eight different combinations of consolidated and unconsolidated numbers of shares were found in the calculations of market capitalisation and net asset value per share showing inconsistency in application across the JSE-listed companies.

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