Forensic Accounting (data analysis & reporting)

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Research Report Guidelines

The research report is designed to give you the opportunity to investigate a financial accounting and/or reporting issue of interest to you, and apply course concepts and evidence from accounting research to arrive at conclusions concerning the issue you have chosen. The report will give you an opportunity to practice and thus improve your critical thinking, research, and writing skills. This document outlines the four items I am expecting each group to submit, formatting instructions, what I expect for the contents of each individual argument/analysis, suggests some information sources that may be helpful to you, and provides details on how the research report will be evaluated.

Four items must be submitted for the research report:

1. A brief proposal identifying your research topic, along with 1-2 paragraphs explaining in a little more detail what you intend to investigate and why it is worth investigating, and a few sample references to show that there is evidence on the issue you wish to examine. The due date for this is noted in the class schedule. The topic, accompanying paragraph, and links to the references (include permanent URLS and abstracts, but not the PDFs themselves) should be posted to the appropriate forum on Moodle – first come, first served, as only one group may do each topic. You should thus check the forum for other groups’ topics to ensure you are not duplicating some other group’s choice.

The big challenge here is defining a topic of appropriate specificity, and having some comfort that there is related evidence that will enable you to explore the issue. A few hints: ideas for topics like “fair value accounting” or “earnings management” are too broad, and are arguably not issues by themselves (nor is it obvious what conclusions you could draw), while topics like “is fair value accounting more useful for investors than historical cost accounting” or “how do behavioural biases affect investors’ use of accounting information” are much more specific, and I think you could arrive at reasoned conclusions to these. Review the material in the textbook to get a sense of some of the issues you could investigate. The business press may also be helpful. Ideally the issue should be of interest to financial statement users, preparers, or regulators, and you should explain why it is interesting in your paragraph.

I strongly encourage you to discuss your topic with me before posting it to ensure it is feasible and of appropriate specificity (A subset of the group is fine to discuss it with me). I will provide feedback on your topic choice within a week of you posting it. Groups may provide this item prior to the deadline if they wish earlier feedback.

2. A substantially complete list of the references and associated abstracts you plan to use, labelled and organized by the argument and group member who plans to use them. (e.g. Sally tends to discuss information asymmetry problems created for investors by the use of fair value accounting, and has five related references. I would thus expect to see a

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subheading “information asymmetry problems created for investors by the use of fair value accounting – Sally”, followed by the references and related abstracts Sally plans to use. Please use APA format 6th edition for the references. Please provide no more than five references per group member (as you are unlikely to be able to use more than this); if you have more references, then provide your five most promising ones.

Each group member should have something similar, and the overall heading for the references should be your topic name. This should be uploaded to the appropriate forum on Moodle. Unlike your topic identification, this will not be accessible to others, but only to me and your group members.

Obviously to do this, your group will need to have a reasonable idea of the argument each group member plans to make in the final report, and how each member’s argument will be distinct from that of the other group members. Arguments may be distinct because they consider different concepts (e.g. one argument is focused on information asymmetry while another is focused on decision usefulness), or because they consider different geographical settings (e.g. developed countries versus developing countries), or possibly different time periods, where changes in technology, regulation, etc. may cause differences in findings.

The point of this submission is to ensure each group member has the resources available to develop a distinct argument, and to avoid leaving a lot of work to the last minute. Groups may provide this item prior to the deadline if they wish earlier feedback.

3. A draft report will be uploaded to the appropriate assignment dropbox on Moodle. This will give your group an opportunity to receive feedback on the report prior to your final report. I will provide comments on the report and return it to you so that you can make changes before submitting your final report. The draft report should include all of the requirement included in point four below (i.e., the point describing the final report).

4. A final written report will be uploaded to the appropriate forum on Moodle prior to the deadline on course outline. This report should have the following:

• ❖  A cover page, with an appropriate title, and your group members’ names and group number
• ❖  An introduction, which clearly explains the purpose of your report, why it is important, summarizes IFRS standard(s) or Canadian regulations relevant to the overall topic using the original sources such as the CPA Handbook or security commission websites, and outlines the contents of the report. Conclusions should also be briefly summarized. You will find most accounting research papers have a similar introduction – you may find these helpful as templates. You must have a discussion of relevant standards and/or regulations in your introduction.
• ❖  The group’s main arguments/analysis, organized by argument, and clearly labelled with a descriptive title and the name of the group member responsible for that

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analysis/argument. Each argument/analysis section should have its own short overview explaining what that argument is about, and the nature of the evidence you will consider in your analysis. See below for more details on what is expected for each member’s arguments/analysis. Each group member’s argument/analysis may not exceed three pages.

• ❖  Conclusions, which should be a synthesis of your group’s findings, and which address the purpose of your report. Recommendations to key stakeholders such as regulators, investors, or financial statement preparers may also be provided.
• ❖  References – organized alphabetically, by group member, in APA 6th edition format (references pertaining to the group developed parts of the paper, such as the introduction, can be in a section labelled “group”). These references should be substantially the same as those submitted earlier – with no more than 20% of the references being additional from those submitted earlier for each group member. References that are not used should not be cited, so you may drop references that you originally submitted without penalty.
• ❖  Any appendices you wish to use – these may include figures, graphs, diagrams, or tables. Remember appendices are always optional to read, so material here must be supplementary to your main points.
• ❖  Good grammar and spelling throughout, with proper use of sentences and paragraphs, and subtitles

❖ The report should be formatted as follows:

• –  About 12-15 pages in length, excluding the title page, references, and any appendices.
• –  Times New Roman font, 12 point, double line spacing, and a 1 inch margin on all four

sides

• –  Indicate the page number at the bottom of each page, except the cover page.
• –  Please use .doc, .docx, or .pdf formats.

The Contents and Structure of Individual Arguments

You should think of each argument as being like a package, which must consist of course concepts AND supporting evidence to be complete. The information in Appendix A should help you find articles and papers that will help you refine your ideas and provide evidence to support them. Please note the following points in constructing your arguments:
(a) Start with a conceptual argument. Try to clearly explain using course concepts or related

ideas the conceptual perspective underlying your position. Why would theory suggest a particular relationship exists? For example, investors might prefer companies with good environmental disclosures because such disclosures help in assessing future cash flows, or in assessing risk. You could use these course concepts to develop a conceptual argument for why your assertion might be true.

You do not need to provide definitions for concepts that you use that are provided in the textbook, but you should make sure that you apply them in a manner that is consistent with the textbook definition. Research studies will often help you understand these concepts better by discussing them. Note however that the term “value relevance” is not the same as “relevance” but closer in meaning to “decision usefulness.” Do provide definitions for

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concepts you use that are not defined in the textbook, and try to link them to textbook concepts.

(a) Stay focused and be consistent. For example, if you want to argue a particular IFRS change improves information timeliness, then your argument should place timeliness in the context of relevance and decision usefulness, and your evidence should show that the particular IFRS change did indeed improve timeliness. Don’t suddenly discuss reliability if you are supposed to be talking about relevance, and don’t provide evidence about information asymmetry for an argument that is supposed to be about relevance.

(b) You must use author-date in-text citations to link points in your argument to specific information sources, again formatted using the required citation style. Information sources, in addition to providing evidence, may provide arguments, examples, and quotes to support your position. It is ABSOLUTELY CRUCIAL to avoid committing plagiarism that all ideas used in each argument that are not your own MUST have a citation shown for them, and items that are quotes MUST be clearly indicated as such (changing one or two words does not make it your own work – still quote the parts that come from the other paper). Plagiarism committed within an individual argument will affect the individual’s grade, not that of the group; plagiarism committed outside of an individual argument will affect the group grade.

(c) You must restate arguments and points from the evidence in your own words to make it clear you understand what is being said. An argument that is primarily quotes from other sources is not acceptable.

(d) You must then provide strong empirical evidence (data) to support (or refute) your conceptual perspective, as this is key to a persuasive argument. For example, suppose your topic is “Investors prefer to invest in companies with good environmental disclosures”. Things that might be used to support this assertion (listed in order from weakest to strongest) include:

• ▪  Others say it too (opinion pieces, editorials) – not empirical, very weak (not evidence) – don’t rely on nothing but opinions or assertions for support, no matter what the source is. Expert opinions not supported by evidence do not count as evidence for this course.
• ▪  Case studies (one or two companies) showing for a couple of specific companies that investors appeared to want to invest in them more because of their environmental disclosures – supporting one point in your argument with a case study is fine, but the majority of your evidence for each argument should come from studies based on fairly large samples (say 100 companies or more), or experimental studies.
• ▪  Surveys with basic descriptive statistics – means, medians, responses to various questions. For example, you might find a survey of investors that finds that the majority of those surveyed say they prefer to invest in companies that provide clear disclosures about their effects on the environment.

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• ▪  Experiments: where the researchers can control confounding factors to better examine the issues of interest. Smaller samples than the next category, but the tight control and ability to examine causality makes up for this. A relevant experiment might use an experimental market that holds performance and other disclosures constant to see if investors will spend less for shares of companies with poor environmental disclosures, when they have incentives to make profits.
• ▪  Large sample analysis, such as archival studies – control for a variety of other factors, and often examine actual behavior rather than simply what people say they will do. A relevant research study to support your assertion would find that investors pay less for shares of companies with poor environmental disclosures, controlling for differences in financial performance and industry. Don’t substitute review articles (that look at a lot of different studies) for individual archival or experimental studies, although you may find them helpful in locating relevant studies by consulting their references. Experimental or large sample studies should constitute the majority of your evidence for each argument/analysis.

Provide details about the study (sample/participants, period studied/sample size, industry, key measures, key findings etc.) to make it clear why the study is relevant to your argument/analysis. You do not need to go into detail about the statistical techniques used, but measures of practical or economic significance (such as changes in cost of capital or graphs that portray key results should be provided where available. At a minimum, try to explain in your own words the nature of the evidence and how it supports your argument.

For example, you might have something like the following as an argument with supporting evidence (your argument would be explained a little better and have clea): “We believe that environmental disclosures about sustainability should be made mandatory in Canada. Investors find sustainability disclosures to be decision useful. Smith (1998) and Jones (2003), in a study of 2,000 U.S firms’ environmental disclosures made from 1995-2000, finds that stock market prices change by an average of 1% in response to these disclosures, which assuming market efficiency suggests they are decision useful in predicting cash flows”. Expand to include more details, provide conceptual argument. – write out as complete example.

(e) Please remember to write in paragraphs, with good grammar and spelling. Make sure your argument has a logical flow, and use subheadings as needed.

Evaluation of the Research Report and Lateness Penalties

Your report will be evaluated on both the group and individual components. The group component will be assessed on the introduction and conclusions. The individual component will be assessed based on the quality of the arguments presented (both concepts and evidence). Both components will be additionally assessed on the quality of writing, the ability to put things in your own words, and the appropriate use of references.

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Penalties will be assessed for failure to submit the topic identification or list of references by the due dates. If an individual group member fails to provide their part of a submission before a deadline, the remaining group members may submit the work that is available prior to the deadline to avoid late penalties for them.

Please see the evaluation form in Appendix B for details on how the report will be evaluated.

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Appendix A
Researching Your Topic for Your Research Paper

You Must Provide Evidence (not just the opinions of others) To Support Your Positions!!!!

Sources of Evidence:
(a) Research studies in Library Databases: Key accounting research journals within these

databases include: The Accounting Review; Journal of Accounting Research; Journal of Accounting and Economics; Accounting Organizations and Society; Contemporary Accounting Research; Journal of Accounting and Public Policy; and Review of Accounting Studies. There are many others. Make at least some use of research studies directly, rather than sources that only briefly discuss others’ work. To qualify as a research study, the paper should make use of data, either that the authors have collected themselves or from archival sources. You will also find that these journals do not contain advertising, to remove the possibility of conflict of interest. They are also peer reviewed, meaning that other academics have critiqued the work and found it suitable for publication (usually after making some changes).

You may also find some review articles in research journals that synthesize many other studies to develop some conclusions about a particular topic. These are often helpful, but consult a few of the research studies directly rather than relying on review articles.

The publications listed above can usually be found in full text form using ABI Inform and Business Source Complete, available under the Accounting/Finance subheading within the “Databases by Subject” tab at the U of L library. Note that Google Scholar by itself is extremely unlikely to find all relevant material for a particular topic, and therefore should not be the only search tool you use. The document databases often let you restrict your search to “peer reviewed” (i.e. research studies), which can make your task a lot easier.

(b) Research Studies in Databases outside the Library: The Social Science Research Network (SSRN – http://www.ssrn.com) – The Accounting Research Network component contains many full text research studies that are both unpublished (but usually somewhere in the publication process), and abstracts from published studies. This is an excellent source of information for relatively recent issues and relatively recent studies (where relatively recent means “within the past five years”).

(c) Professional and Business Press in Library Databases or outside the Library: These include articles from CA Magazine, CMA Magazine, CPA Journal; Strategic Finance; The Economist; Fortune; Forbes, The Wall Street Journal, and CFO magazine. While these journals sometimes have short articles that refer to research, they are not a substitute for directly reviewing research articles in question, and more often are simply opinion pieces. These publications can usually be found in full text form using ABI Inform and Business Source Complete. In some cases the publications can be accessed directly via the Internet. Again, a little bit of use of these is fine, but they are not a substitute for research studies.

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However, these sources can be very useful for examples, illustrations, quotes, and graphs (particularly The Economist for the latter).

(d) Sources of Information on Accounting Standards: International Accounting Standards Board (IASB). International standards can be found in Knotia, available from the “Databases by Subject” Tab at the U of L library.

(e) Sources of Information on Financial Reporting Regulation and Examples:

• Securities commission websites: Ontario Securities Commission (OSC), Alberta Securities Commission (ASC); Securities Exchange Commission (U.S.).
• Annual reports and proxy reports may be found at SEDAR for Canadian ones, and EDGAR for U.S. ones.
• Knotia carries a source called “Financial Reporting in Canada” that provides survey results of commonly used accounting practices in Canada

Evaluating Information Sources

• Who is providing the information or conducting the research? Is the author(s) likely to have a bias? (e.g., works for an organization on one side of the issue)
• What is the publication process – no formal review (Wikipedia); some review (standard business press), or peer reviewed (research journals)?
• What is the nature of the evidence? In order from weakest to strongest: opinion with a few examples; case study; several case studies; surveys; fairly complete archival sources or experiments.
• Applicability of evidence – is it the same time period? Country? Different contextual factors?

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Appendix B – Research Report Evaluation Form

Item	Marks Available	Marks Awarded
Group
Introduction – topic clear, background and/or relevant standards summarized, importance explained, remainder of paper outlined including arguments to be presented. Topic largely the same as that approved by instructor.	10
Conclusions/recommendations flowed logically from preceding analysis, were reasonably complete and well organized, with no new assertions introduced; findings synthesized in conclusions	10
Introduction and conclusions well written – good sentence and paragraph structure, good grammar and spelling, reasoning easy to follow, written in own words	5
References used appropriately, both for quotes and use of others’ ideas, and correctly formatted	5
Sub-total	30
Individual
Use of course concepts in argument/analysis – concepts identified, developed into a clear conceptual perspective on your topic, and used appropriately	15
Use of empirical evidence in arguments/analysis – evidence on topic goes beyond textbook, is clearly relevant to concept and context provided, and discussed such that its intuition and relevance to overall argument made clear. Details on nature of data and key measures are discussed.	20
Arguments stated in own words as much as possible, making it clear you understand what the analysis means	15
References used appropriately, both for quotes and use of others’ ideas, and correctly formatted; substantially the same as those approved by instructor	7
Argument had good sentence and paragraph structure, and reasoning easy to follow	8
Good grammar and spelling	5
Sub-total	70
Group/Individual Penalties/bonuses (for any particularly well or poorly done component) – up to 15% of available subsection marks
Total (Capped at 100%)	100

 

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