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Recent CPA-Centre Projects

Thought leadership at the intersection of accounting practice and accounting policy.

Accounting for the Unity of a Nation State: Canada and the Equalization Program

M Persson, V Radcliffe, M Stein

This project addresses how accounting for financial arrangements within states is critical to the formation and maintenance of broader state arrangements. Specifically, it examines the role of accounting in the formation and maintenance of Canada's equalization program. The role of accounting within the Canadian equalization system is not well understood even though it has a significant impact on the wealth and relative power of various provinces. The purpose of this project is to fill a hole in the accounting literature by analysing and developing an understanding of the role of accounting practices in shaping the calculations underlying the Canadian equalization system. This project will address how within the Canadian equalization system accounting practices are not neutral, objective or unchallengeable, but rather are profoundly political instruments employed in justifying particular federal fiscal arrangements.


Exogenous Expansion of the Audit Field: Boundary and Practice Work, and the Auditing of Government Advertising in Ontario

V Radcliffe, M Stein

This research investigates how the legitimacy of audit ideals and practices can be expanded into new jurisdictions through the activities of interested third parties, something we refer to as boundary pull. We examine how this concept of boundary pull led to the Office of the Auditor General of Ontario became seen as a legitimate reviewer of all political advertisements proposed by the Government of Ontario for political bias.


Alternative Accounting Measurement Bases and Price Efficiency in Laboratory Asset Markets: Does Marking-to-Market Matter?

M Sooy

Policymakers and academics have reopened debate on the possible link between accounting measurement bases and underlying economic fundamentals. Using laboratory markets where accounting regimes can be directly compared with otherwise equivalent economic parameters, we test whether and how two accounting measurement bases – historical cost accounting and mark-to-market accounting – influence investor perceptions and asset price bubbles. We predict and find that investors perceive stronger links between performance and market price changes in the mark-to-market regime, and also perceive weaker links between their performance and dividends. This corresponds with greater market-level mispricing in the mark-to-market regime. In supplementary analysis, we observe that investors in mark-to-market regimes prefer information about future market prices, but investors in historical cost regimes prefer information about future dividends.  Our study provides theory and evidence supporting the possibility that accounting methods may contribute to asset price bubbles, incremental to market economics.


Accounting and the Colonization of the State: The Formation of Ideas and Practices in Government Auditing

V Radcliffe, M Stein

This research extends prior research on the roles that accounting plays in both the construction and development of the State by exploring the ways in which accounting practices were significantly expanded and elaborated over time as a technology of government, resulting in greater power and influence being accorded to government auditing professionals. The paper focuses on how government auditing initiatives in Canada were galvanized by simultaneous initiatives taking place in the United Kingdom, United States and a range of other Commonwealth nations. It examines how Auditors-General worked both individually, and in concert, to sell the evaluative potential of accounting to key power brokers within the State, thereby creating advantageous positions for themselves.


The Relative Performance Information on Performance on Innovative Tasks

K Huo

Innovation requires creative problem-solving which takes a never-before noticed feature of the problem and then build a solution based on that feature (McCaffrey 2012). While prior research has focused primarily on the effect of relative performance information (RPI) in a setting where performance could be improved by an increase in task related effort, it remains unclear how RPI affects performance in a setting where creative problem-solving skills, not greater effort, are required to improve performance. In this study we investigate how feedback type (full or partial RPI) affect performance in a setting where task performance is improved by identifying important but obscure features in problems. We find evidence that non-top performers perform better when provided partial RPI feedback than when provided full RPI feedback, but only when the individuals reside in larger groups which afford the ability to ‘hide in the crowd’.  The results differ for top performers who are not affected by the form of RPI feedback.


The State of Ohio’s Auditors and the Enumeration of Populations

M Persson, V Radcliffe, M Stein

This paper examines the role of the accounting profession as the State of Ohio began to enumerate and identify people with disabilities as part of an attempt by the eugenics movement to eliminate disabled persons from the population. We show that the financial expertise and structures of the State were relied on for the execution of this mandate, which remained in place for over a century.


Does Targeting Organizations for Managers’ Misdeeds Increase or Decrease Accountability? The Effects of Sanction Target and Sanction Strength on Managerial Compliance

K Huo, M Sooy

Managers frequently face choices that trade off their own wealth with the welfare of others. In response, regulatory agencies have introduced punitive regulations and sanctions to protect vulnerable parties such as outside investors and other employees. We investigate one dimension of sanctions on managers’ perceptions of and compliance with protective regulations – sanctions’ target, which may penalize the violating manager, his/her firm, or both. We theorize that managers will feel greater (rather than less) accountability when sanctions target coworkers than when they target only the manager him/herself. Consequently, we predict that managers’ compliance with protective regulations will be greater in a regime where sanctions target firms for managers’ violations than in a regime where sanctions target managers themselves.


Howard Irwin Ross (1907–1974): A Canadian Pioneer in Accounting Thought and Leadership

M Persson

Ross was born in Montreal and received his BA from McGill University in 1930; MA from Oxford in 1932; and then qualified as a CA in 1917. He joined the accounting firm Touche, Ross, Bailey and Smart (now Deloitte) in 1932 and rose to Partner in 1942, but he remained involved in matters of governance, research, and academia throughout his career. In this capacity, he published articles and books, served as the President of the influential Committee on Accounting and Auditing Research of the Canadian Institute of Chartered Accountants (today CPA Canada), and as a one-term President of the Québec Institute of Chartered Accountants. This was followed by appointment as the Chancellor of McGill University in 1964 and later as the inaugural Dean of the newly established Faculty of Management (now known as the Desautels Faculty of Management) in 1969. For these accomplishments, Ross was awarded honorary doctorates from the universities of Concordia, McGill, Queens, and Sherbrooke and he became the first non-naturalized US citizen to be inducted into the Accounting Hall of Fame in 1977.


How the Prospect of Fault Influences Managers’ Compliance

M Sooy

The SEC relies heavily on ‘no-fault’ settlements in its enforcement, where targets avoid costly litigation by accepting sanctions without admitting or denying fault.  This policy is argued to enable the agency to pursue greater numbers of violators.  However, opponents argue that no-fault sanctions may be less effective, reducing fines to a ‘cost of business’.  In two experiments, I predict and find that managers faced with a compliance choice perceive their compliance differently when regulatory sanctions include fault – when sanctions include fault assignment, managers perceive and weight social objectives in their decision-making.  Consequently, these managers comply more frequently with costly regulations and select higher quality compliance than managers in no-fault conditions. My findings are consistent with fault fostering managers’ social awareness, counteracting the tendency of sanctions to crowd-out ‘civic virtue’.