Summery

1.what could be meant by traditional and new accountabilities in the context

of EU multi-level governance?

first,New mechanisms of accountability are diagonal or even horizontal in character

and include accountability to administrative forums, to citizens, clients, and civil
society.
Secondly, accountability forums increasingly adopt individual strategies of
accountability.They are not satisfied with calling only the agency or its minister to
account, but also turn to individual officials.
Thirdly, the rise of quasi-autonomous or independent agencies has weakened the
legitimacy of the Weberian and Diceyan systems of political control through the
minister.
Fourthly, the rise of New Public Management, which went hand in hand with the rise
of quangos, has introduced more horizontal forms of accountability into the public
sector.Executive agencies have been turned into performance-based organizations
(PBO), and are being evaluated on the basis of targets, performance indicators, and
benchmarks, which have been laid down in (quasi)
fifth,The latter should become forums of political accountability, so the argument
goes, and agencies or individual public managers should feel obliged to account for
their performance to the public at large or to civil interest groups, charities, and
associations of clients.This is called social accountability, because the
accountability forums are located in the civil society.

2.Accountability Deficits in EU Governance: Three Perspectives?

One major accountability deficit from this perspective is the political accountability
of the Council at the European level.Neither the Council itself, nor its individual
members are accountable to any political forum at the European level.
second,The EU is held together by an elaborate, multi-level system of legal, financial,
and administrative checks and balances.It has been a constant point of concern
whether the Commission itself, as the major executive power within the EU, is not
prone to corruption or other forms of administrative deviance.
Thirdly, from a cybernetic perspective on accountability, the purpose of
accountability lies also in maintaining and strengthening the learning capacity of the
government.

3. We can distinguish between three different meanings of regulation?

First, in the narrowest sense regulation means formulating authoritative sets of rules
and setting up autonomous public agencies or other mechanisms for monitoring,
scrutinizing, and promoting compliance with these rules.
Second, regulation can be defined more broadly as all types of state intervention in
the economy or the private sphere designed to steer them and to realize public
goals.
Third, regulation can be seen as social control of all kinds, including non-intentional
and non-state mechanisms.
4. There are generally three conditions for agency autonomy?
1. political differentiation from the political executives
2. independent organizational capacity;
3. political legitimacy generated by a strong organizational reputation
embedded in an independent power base

4.We will distinguish between three broad approaches?

Rational economic models focus on interests and intentionality and assume rational
actors with clear, consistent, stable, and a priori goals, scoring high on rational
calculation and social control and hence able to fulfill their interests.
1.Public interest theory.According to this theory, a main reason for economic
regulation is to correct market failures that prevent markets from operating in the
public interest, such as externalities, market power, natural monopoly, and
information problems
2.Self-Interest and Regulatory Capture.it asserts that special interests and interest
groups will try to pursue their own goals and influence the outcome of regulatory
processes.

The Organizational-Structural Perspective.A main feature of the organizational

approach is the concept of bounded rationality which presupposes that decision-
makers have limited time and attention and therefore cannot address all goals, all
alternatives, or all consequences.According to an organizational-structural
perspective, central actors in the field of regulatory policy act on behalf of formal
public organizations.

Institutional Perspectives.In institutional models informal norms, identities, and the

logic of appropriateness are more important than interests and intentions and the
logic of consequentiality.Ideas and culture are central features and can be located
within organizations and administrative systems or in the environment.
1.Institutionalized organizations. This variant of institutional theory focuses more on
informal norms and values within agencies and political-administrative systems.
2. Institutional environments. This is a social constructivist approach focusing on
external norms and different ways of constructing and interpreting regulatory reality.
Regulatory rules depend on the situation, the context, and the environment in which
they are formulated.
5.what are the main challenges in regulatory reforms?

1.implementation.The shortcomings or pathological aspects of regulation, such as

“regulatory creep”, “agency drift”, information asymmetry, and biased bureaucratic
behavior are well known.
2.Coordination.The fragmentation of public administration by growth,
disaggregation,structural devolution, and the establishment of single-purpose
organizations might reduce central policy capacity and increase coordination
problems.
3.Accountability. how to make agencies independent and at the same time
accountable. The autonomy of regulatory agencies from government may lead to
agency capture, creating a problem of democratic accountability.
4.Legitimacy.The emerging Regulatory State has been accused of lacking legitimacy
and criticized for undermining political accountability, individual participation, and
universal services
5.De-politicization.Behind the idea of establishing autonomous agencies lies the
assumption that it is possible to separate politics from administration and to insulate
certain decisions from political considerations.
6.Power.Regulatory policy and the creation of autonomous agencies is not only a
question of political and administrative efficiency but also of the redistribution of
power within the polity.

6.what are Three of the most prominent external forces driving the spread of
the regulatory state?

First, the rise of regulation as a mode of policy making is an off- shoot of the NPM
reform trajectory and its focus on privatization, especially in the area of public
utilities, and its emphasis on disaggregation and structural devolution within the
public sector aimed at putting more distance between public agencies and
politicians.
second important factor for understanding the rise of the Regulatory State in Europe
is greater European integration and the emergence of the EU as a regulatory body
focusing on competition and the development of a free internal.
third central actor in the emergence of the Regulatory State is the OECD as a
producer, certifier, and carrier of new reform ideas, prescriptions, and doctrines.
7. what is the deference between agencies and networks ?
While agencies commonly represent the fragmentation of regulatory authority and
the delegation of responsibility (even if limited) from the ‘political’ Commission to
‘professional’ and independent institutions, networks represent an effort to
harmonize the fragmented institutional landscape.
When compared with the Commission and agencies, networks appear to represent
less hierarchical and more open and collegial modes of governance.The most
important difference between agencies and network is not so much in function as in
the degree to which they can develop administrative and regulatory capacities, and
can be subject to accountability and transparency requirements. On these three
grounds – capacity, accountability, and transparency – agencies are the ‘natural’
choice.

8. what is an agancy?
An agency is defined as an administrative organization with a distinct, formal identity,
an internal hierarchy, functional capacities, and, most important, at least one
principal.

9.what is a network?

A network is a set of relatively stable relationships of a non-hierarchical and

interdependent nature which link a variety of actors.Unlike agencies, networks often
do not have principals or administrative and independent financial capacities. Their
decision rules are flexible and informal, and membership of them is voluntary.

10.The four functional tasks of regulation?

1. information gathering
2. rule setting
3. monitoring
4. enforcement

11.When is networks is a preferred?

When voluntarism and mutual interdependence are prioritized, networks are the
preferred institutional form.
When resources are limited and political commitment is weak – network might be
the preferred form of choice.
12.Three processes of institutionalization and de-institutionalization are
important to understanding the intuitional architecture of the SERS?

1.Governancing’ is the act of designing governance systems. If governing is the act

of government and the design of a hierarchy of governmental institutions, then
governancing is about decentralization of power and the creation of decentralized,
informal, and experimental systems of governance.

2.‘Agencification’ is one strategy of governancing. It is the process of formalizing

roles and missions in organizations with spatial boundaries and formal identities,
either by the devolution of functions from the core organization or the creation of
new organizations for performing new functions.

3.‘Networkation’ – or the creation and formalization of networks – is also a strategy

of governancing because networks are associated with governance rather than
governing.it is the process of formalizing roles and missions in loose organizations in
a way that bridges the gaps between insulated hierarchies to form a network of
stable and interdependent relations.

13.A distinction between economic regulations and social regulations?

Economic regulations include those that aim to shape the organization and the
governance of the market.They can be constitutive (about the creation of markets)
or corrective, that is, directed towards market failures such as monopolies and
cartels.Social regulations include those that aim to shape the organization and the
governance of the social aspects of human life.They come in multiple forms such as
safety regulation, health regulation, integrity regulation, moral regulation, rights, and
environmental regulation.

14.what is the concept of an “accounting constellation”?

the concept of an “accounting constellation” which is comprised of a particular field

of relations existing “between certain institutions, economic and administrative
processes, bodies of knowledge, systems of norms and measurement, and
classification techniques

15. what is legitimacy Theory ?

Input legitimacy aims at including stakeholders and third parties that have an
interest in the setting of standards. Throughput or procedural legitimacy seeks
acceptance for the organization’s activities through transparent and reliable
procedures of consultation. Output legitimacy, which is acknowledged as
particularly important in expertise-based rule-setting, concerns the adoption and
diffusion of IFRS by preparers, auditors and regulators.
16. what is the the three underlying principles of consultation of IASB’s
procedures?

1. transparency
2. full and fair consultation
3. accountability

17.what are the due process handbook steps ?

1. agenda setting
2. project planning
3. publication of discussion papers (voluntary round of initial public comment)
4. publication of exposure draft (mandatory round of public comment),
5. standard development and publication
6. post standardization follow up

18.what is Legitimacy problems with consultation procedures?

1.First, a proper application of the due process might help to counter one-sided
influence, but offers no certainty against it. Direct evidence is hard to trace, but
empirical findings of who actually participates in the IASB’s consultations
underscores the constant interest and engagement of the financial industry and big
auditing firms in particular.
2.Second, it can be assumed that any actors with material interest in the setting of
standards, be it preparers, users or auditors, continue to use manifold ways of
influencing the IASB, “striving to ensure that their interests are given due regard in
standards development.

19.what are Political criticism emerged after financial crisis to

IASB?
1. procylicality of IFRS due to its fair value orientation
2. the IASB’s lack of accountability to public authority
3. the lack of sufficient procedures for setting standards
4. the content of standards – most notably off-balance sheet provisions.
20. what is the most significant change which International
Financial Reporting Standards (IFRS)?
is in the role and valuation of assets.This change presents itself in two forms: Fair
value accounting (FVA) and the balance sheet approach.

21. what does Mittelstand means?

The term ‘Mittelstand’ refers to the small- and medium-sized, mostly family owned
companies that form the backbone of German industrial production.

22. how does IAS32 effect the Mittelstand companies?

For ‘Mittelstand’ companies, by far the most controversial standard is IAS 32, which
stipulates how to account for equity capital. The current version of IAS 32, as
revised in 2003, classifies the paid-in capital from members or partners in a
Mittelstand company as a financial liability and not as equity—because the capital is,
in principle at least, repayable.
In addition, IAS 32 demands that this ‘liability’ is accounted for at fair value, which in
this case is the current market value of the company, based on future earning
expectations by the market. The net effect of IAS 32 will not only be to strip
Mittelstand companies of their equity capital but also to substantially increase their
liabilities because the fair value of the company is in most cases much higher than
the value of paid in capital.

23. what is intangible assets ?

non-physical sources of future economic benefits. Non-productive factors such as

monopoly, market knowledge and trade secrets therefore actually become assets

24. Why companies should accept the tranational accuonting standards?

1.First, In order to have better access to global capital markets many enterprise
managers anyway have to accept the accounting regulations of other countries
besides their own.
2.Second, private authority is preferred in this perspective because of its assumed
speed and flexibility, in particular with regard to the accounting treatment of fast-
changing fields of business such as financial instruments and the ‘New Economy’ of
intangible assets.
3.Lastly, public regulation might also bring in ‘political’ considerations that are not
based on a narrowly conceived efficiency perspective.
25.what is the meaning sedimentation process?

Within this process, regulatory change does not occur in some ‘grand narrative’
form with regulatory practice at the national level being transformed by transnational
actors. Instead, transnational regulatory requirements often operate alongside
national requirements or may even rely on traditional national actors for their
acceptance and implementation.

26.What is The regulatory space concept?

A regulatory space is an abstract conceptual space constructed by people,

organisations, and events acting together upon a set of specific regulatory issues
subject to public decisions.
Within this space, different issues and interests are voiced, and regulatory agendas
and the ‘‘destiny for different forms of regulation are set’’.

27.what does regulatory capture means?

whereby powerful special interest groups (representing regulatees) capture the

regulatory process to promote the (economic) welfare of their members, but rather
seeks to understand the nature of the shared space, the rules of admission to the
space, and the relations between actors.
28.what is Oliver’s typology of strategic responses to institutional pressures?
Oliver theorises that actors who are the targets of proposed institutional changes
(termed ‘targeted actors’) will adopt a variety of passive and active strategic
responses to these changes largely aimed at resisting threats to their autonomy.
specifically theorises ‘‘how elite and powerful institutions will attempt to actively
shape and defeat legislation and regulation that adversely affects their interests.

The typology identifies five possible strategies of response ranging from passive to
active: acquiescence, compromise, avoidance, defiance, and manipulation.

1.An acquiescence strategy adopts tactics encompassing: unconsciously following

taken-for-granted rules or values; imitating other institutional or organisational
models; and consciously complying with existing values, norms or regulations.

2.A compromise strategy mobilises the tactics of balancing, pacifying and

bargaining. Balancing tactics attempt to achieve parity among or between multiple
external and internal stakeholders regarding their various demands. Pacifying tactics
adopt minor levels of resistance to institutional pressures emanating from, what we
term, ‘pressurising constituents’ and primarily focus on appeasement. Bargaining
tactics are a more active form of compromise involving attempts by targeted actors,
such as regulatees, to obtain some concessions from, say, regulators (‘pressurising
constituents’), regarding their demands or expectations.

3.An avoidance strategy attempts to preclude the necessity of conformity by

shielding actors from inspection and public scrutiny using tactics of concealment,
buffering and/ or escape.

4.A defiance strategy resists institutional pressures more actively and enrols the
tactics of dismissal, challenge, and attack.

5.Manipulation is the most active response to institutional demands and

expectations and involves a resolute and opportunistic attempt to co-opt, influence
or control institutional pressures and evaluations.It aims to change or exert power
over the content of the expectations themselves or the pressurising constituents
seeking to express or enforce them.

29. what is the Four core resources are available to actors in a regultory
space?

1. formal (legal) authority

2. organisational capacities such as marketing, lobbying and professional advice
and expertise
3. control of information
4. wealth
30.what is the three stages in the regulatory realignment process?

stage1– proposal to realign the regulatory space

stage2– limiting the realignment of the regulatory space
stage3–mandate interpretation within a regulatory space realignment

30. How disclosure can be benefical?

1. in securing corporate accountability and the exercise of good corporate
governance on behalf of stakeholders
2. in enabling better investment decisions and the smooth running of capital
markets
3. as a form of indirect regulation that achieves the goals of regulators.

31.what is the difference between supportive and preventive view of internal

control?

the original ‘‘supportive’’ notion that internal control systems were an integral part of
the structure of an organisation which enabled its goals to be achieved, to the more
recent view of internal control as a substantially ‘‘preventive’’ system, designed to
minimise obstructions to goal achievement and carrying significantly greater
expectations of the effectiveness of such systems.

32.what the difference between accounting control and administrative control

definition?

split the four parts of the original definition between ‘‘accounting control’’
(safeguarding assets and checking reliability and accuracy of accounting data) and
‘‘administrative control’’ (promotion of operational efficiency and encouragement of
adherence to prescribed management policies) and defined auditors’ responsibility
as reviewing accounting controls only.

33.what is the definition of internal control?

A process … designed to provide reasonable assurance regarding the achievement

of objectives in the following categories:
• Effectiveness and efficiency of operations.
• Reliability of financial reporting.
• Compliance with applicable laws and regulations
34. what is The users’ needs view?
which usually comes down to an ‘investors’ needs’ view, is that the purpose of
disclosure is to provide information to securities markets so that investors can make
better investment decisions.

35. what does Boilerplate term mean?

‘Boilerplate’ is a term used in a legal context to mean standard terms and conditions
that can be inserted without change into a wide variety of documents.

36. what is three kinds of forces are at work based on institutional theory?

1.Regulatory forces include rules imposed by other institutions (such as law) upon
the organisation.
2.Mimetic forces arise from organisational responses to new problems or
uncertainty.
3.Normative forces arise from internalisation of shared patterns of thought such as
arise from the professionalisation of occupations;

37. what is the definition of legitimacy?

“generalized perception or assumption that the actions of an entity are desirable,

proper or appropriate within some socially constructed system of norms, values,
beliefs and defnitions”

38. what is the legitimacy theory?

1.Input legitimacy refers to the qualifcations of rule-making participants and their

ability to connect with the will of its constituents
2.Throughput legitimacy is the fairness of the process used to convert inputs into
outputs
3.output legitimacy, has to do with policy efcacy. This resultsbased concept implies
political salience. Once a good standard (a standard that resolves technical
problems and furthers the common good) is developed, it is accepted and adopted
into law with sanctions for non-compliance.

39. what is four key stakeholder groups?

1. users
2. preparers
3. accountants
4. regulators
40. How does Integrated Reporting enhance accountability?

such emerging practices will “enhance accountability” by soliciting disclosures

about “how key stakeholders’ legitimate needs and interests are understood, taken
into account, and responded to through decisions, actions, and performance, as
well as on-going communication”

41. what is the definition of IR?

“concise representation of how an organisation’s strategy, governance,

performance and prospects, in the context of its external environment, lead to value
creation over time”

Although IR should tell “a firm’s value creation narrative going forward, by

specifically referring to corporate strategy, how the strategy translates into a firm’s
business model and how the business model takes advantage of the six forms of
capital to create or destroy value”. its different ingredients (e.g. strategy, business
model, corporate governance, performance, prospects) could be combined in
diverse ways

42.who is the user of IR?

IR users as financial (e.g. investors, analysts) or nonfinancial (e.g. customers,

employees) stakeholders.

42. what is Preparers’ narrative mode of cognition?

First, the IR provides a sequential order of events as declared at the beginning of the
IR
Second, the IR presents the narrators voice, i.e., the voice of the new management
offering its view on the value creation process, the renewed strategy and its
cascade
Third, the IR highlights the agentivity of the Company’s management in dealing with
the complexities linked to the new strategy implementation.
Fourth, the IR narrative forges a link between the ordinary and the exceptional

43. what are the mian characters of Story telling in IR?

Corporate strategy and business model are intended as the main “characters” of
this value creation story. Every IR “is devoted to explain strategy and to show its
cascade: strategy implied two main themes in IR
44. how Strategy help to tell the company story?

Strategy emerges all along the reports from the beginning (where the main aspects
of the new strategy are introduced) to the middle of the story (with a specific section
dedicated to the strategy), and implicitly at the end (where the performances are
explained as the result of the new strategy implementation).
The other central “character” of the IR value creation story is business model. The
business model “character” is helpful in explaining the strategy implementation, thus
giving coherence to the whole value creation story

45.what are three external(Financial) stakeholders?

1. debt investors
2. equity investors
3. rating agencies

46.what does break the silos means?

The main work of the IR team is to “break the silos” between different areas and
cultures in the company, then make sure the information is connected and
comprehensible beyond the corporation.

47. which accounting practices use to facilitate greater stakeholder

orientation?

1. social and environmental accounting

2. triple bottom line reporting
3. sustainability reporting
4. intellectual capital statements
5. integrated reporting

Ball and Brown compared the outcomes of a naïve, random walk model of share
price behaviour to a model that controlled for market effects on all firms. They
undertook this comparison to investigate the impact of accounting information,
communicated via annual earnings announcements, on share price returns. Based
on their analyses, Ball and Brown concluded that accounting income numbers were
useful because they were related to share prices . Accounting information was
useful because it conveyed either good or bad “news”, which had a positive or
negative impact respectively on a firm’s share price.Although Ball and Brown (1968)
offered “definitive conclusions” (p.176) concerning the usefulness of accounting
information, they acknowledged a prevailing counterargument asserting the
economic meaninglessness of accounting information. This is attributed to a
“fallacy of mixed aggregation”.
Accounting information is imperfect– but this does not render it “necessarily
meaningless” (2013, p. 8). Many decisions are made in our day-to-day lives based
on similarly imperfect forms of information.

48. what is faithful representation?

Representational faithfulness entails three qualities: completeness, neutrality, and

freedom from error.
1.Completeness encompasses the “numerical depiction” of economic phenomena,
as well as any descriptive explanation.
2.The neutrality of accounting information refers to a lack of “bias”
3. finally, freedom from error refers to the absence of “errors or omissions”

49. what does operational accounting information?

goods have prices, firms have a market value, and each item in a firm’s accounts is
given an exact monetary value. … this appearance is misleading because the
numbers attached to economic phenomena are what I propose to call operational
numbers. Whereas numbers in physics are estimates, which may be more or less
accurate of, exact quantities which exist in reality, operational numbers do not
correspond to any real quantities.
Whilst operational accounting information is not representational, it is based on
fabrications giving the impression of being a “fact” (Latour, 1987, p. 23). This fact-
likeness emanates from complex processes of enrolment, corralling networks of
allies to support the perpetuation of particular numbers and their mobilisation in
decision-making. These processes fortify and stabilise accounting information as a
fact-like but imperfect creation.

50.what is Actor-Network Theory(usefulness of accounting number)?

Accounting information can be made useful because of its capacity (through

inscription) to be made mobile, stable, and combinable

1.First, mobility incorporates practices moving information from one site to another.
Accounting information can be moved from source documents, such as invoices,
into the ledger and different accounting reports, which can travel across the globe.
2.Second, accounting information is useful because of its stability to withstand
“distortion, corruption or decay” (Latour, 1987, p. 223). Conventions have been
instituted to ensure accounting information remains unaffected by time and place.
3.Finally, routines combining numbers also make accounting information useful.
Despite purists’ arguments concerning the heterogeneity of accounting numbers,
we put these misgivings aside and calculate and compare financial ratios
Operational accounting information incorporates stakeholder interests either
directly through interaction or indirectly through the invocation of the
imagined latent (and potentially disruptive) power of stakeholders affected by
particular choices.

A2

An investor controls an investee when it is exposed, or has rights, to variable

returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee.

• Thus, an investor controls an investee if and only if the investor has all
the following:
(a) power over the investee
(b) exposure, or rights, to variable returns from its involvement with the
investee and
(c) the ability to use its power over the investee to affect the amount of the
investor’s returns.

The three criteria are:

1) Power
2) Exposure to variable returns
3) Linkage between power (1) and variable returns (2).

An investor has power over an investee when the investor has existing rights
that give it the current ability to direct the relevant activities

Relevant activities “significantly affect the investee’s returns”. They include :

– Selling and purchasing of goods and services
– Managing financial assets during their life
– Selecting, acquiring or disposing of assets
– Researching and developing new products or processes
– Determining a funding structure or obtaining funding
Proprietary Theory

The proprietary theory of accounting views the firm as an extension of its

owners
• The assets and liabilities of the firm are considered to be assets and
liabilities of the owners themselves
• Similarly, revenue of the firm is viewed as increasing the wealth of the
owners, while expenses decrease the wealth of the owners
When applied to the preparation of consolidated financial statements, the
proprietary concept results in a pro rata consolidation
• The parent company consolidates only its proportionate share of the assets
and liabilities of the subsidiary

Parent Company Theory

The parent company theory recognizes that although the parent does not
have direct ownership of the assets or direcct responsability for the liabilities
of the subsidiary, it has the ability to exercise effective control over all of the
subsidiary’s assets and liabilities, not simply a proportionate share

Entity Theory

Emphasis under the entity approach is on the consolidated entity itself, with
the controlling and noncontrolling shareholders viewed as two separate
groups, each having an equity in the consolidated entity
• Neither of the two groups is emphasized over the other or over the
consolidated entity
Because the parent and subsidiary together are viewed as a single entity
(under the entity approach), all the assets and liabilities of the subsidiary and
any goodwill are reflected in the consolidated balance sheet at their full
values on the date of combination regardless of the actual percentage of
ownership acquired
• Additionally, consolidated net income is a combined figure that is allocated
between the controlling and noncontrolling ownership groups

Accountability as a virtue refers to the ethical principle of being responsible

and answerable for one's actions and decisions. It is a personal
characteristic or trait that an individual possesses.

Accountability as a social mechanism refers to the way in which individuals

and organizations are held responsible and answerable for their actions and
decisions within a society. This can include laws, regulations, and social
norms that ensure that individuals and organizations are held accountable for
their actions.
In summary, accountability as a virtue is a personal characteristic, while
accountability as a social mechanism is a system or structure that holds
people accountable for their actions.