Research In Accounting Essay


Discuss about the Research in Accounting.



The preparation and presentation of the financial statements of a company is very much important as it shows the fair value of the company. The accounting ethics are maintained to prepare, disclose and present the financial information morally and ethically so the users of the financial statements get the actual value of the data. The strong built construction company has been in the downturn due to the austerity measures of the government. The company is successful to maintain its level of revenue but the profit before the tax has fallen. However, Bill strong states that conventional agency theory approaches to the executive compensation in which the employees would receive the financial benefits will help them to motivate employees(Alegria Carreira, do Amparo Guedes and da Concei??o Aleixo, 2008). The compensation plans are very much important in order to motivate the employees. The motivation of the employees will help to achieve the goals of the organization. Susan Bold states that the intrinsic considerations should be taken into account in order to determine the executive compensation.

Main Context

Constituents of the Remuneration Package

The company can provide the following remuneration packages:

Base Salary

The base salary of the employees is also called as the fixed salary that the organization pays on the basis of the skills, knowledge, talent and qualification of the employees(Bloom and Webinger, 2011). It is significant for the company to implement appropriate plan of basic salary that supports the management to retain talented employees.

Long Term Incentives

The long term incentives are given to the employees and executives to motivate them and it considered as variable compensation. It is given to the employees on the basis of the long term performance and it is paid in stocks.

Annual Bonus

The rewards are given to the employees for their efforts in order to motivate them to achieve their task goals.

Employee Benefits

The companies also provide other benefits to their employees such as saving program, pension and life insurance plans(Corporate Social Responsibility, 2016).

Traditional Agency Theory

The traditional agency theory puts emphasis on effect of compensation on motivating employees to achieve their task objectives. The compensation is provided on the basis of their performance. According to the economic perspective agency theory has been introduced to determine the executive compensation plan system that can be adopted by the organization (Cowton, 2009). It links the compensation plan with the performance of the employees, organization, stockholders’ interest and return on investment. The effect of compensation system on behavior of executives and the performance of the organization is explained in the traditional agency theory that shows how to motivate employees. There is a relationship between the performance of the company and compensation plans.

Divergence Between Intrinsic and Extrinsic Motivation and Relation Between them

The motivation of executives and staff members is very much important for an organization to achieve its goals. The introduction of different theories has explained the importance of motivating employees within an organization. The external and internal factors also play a significant role in motivating employees(Guidelines for auditing process safety management systems, 2011). There is a difference between intrinsic and extrinsic factors. Extrinsic factor means external factors that motivate employees. The motivation that are linked with the community culture, social and belief are known as extrinsic motivation. It is considered to be as an external obligations, demand and reward that are required for the achievement of the goals.

The employees should be intrinsically motivated and in such situation they should enjoy an activity, learn more things and developmental skills. The intrinsic motivation has become one of the key factors that influence the behaviour of the employees. The motivation of employees is very much important as it helps them to achieve their task objectives as well as personal development. According to the research intrinsic and extrinsic motivation depends on the one dimensional model. The achievement goal theory has been introduced that explains that employees should adopt themselves in different combinations of intrinsic and extrinsic environment(Guidelines for risk based process safety, 2007). Therefore, the following studies help to address problems and representing the negative relationship between the intrinsic and extrinsic motivation. Both the factors should be considered by an organization in order to motivate employees to achieve their goals. The study will help to measure the intrinsic and extrinsic motivation within an organization and their contribution by evaluating the differences between the two motivation factors.

Risk Adverse Employees and Risk Seeking Employees

The attitudes of the employees towards the risk can influence their compensation package. Risk refers to the increment of uncertain increment and greater volatility. Therefore, it endorses the increment of exchanges and it helps in creation of expected higher returns. The risk within an organization can influence the behaviour of the employees as well as their desired compensation package. The employees who take maxim risks deserved to get appropriate compensation packages in comparison to employees who take less risk. The risk within an organization also affects the investment decision and it may develop certain questions in the mind of the employees such as whether the company can cope with the current completive environment. Therefore, increase in the risks might affect the development of the companies and appropriate measures should be adopted to mitigate such risks. The risks adverse are referred to as appropriate enhancement of performance of employees that will help them to take appropriate decisions. Therefore, the increment of salary will help to motivate the employees and increasing the involvement of the staff members to face adverse risks.

Financial Benefits Influence and Motivate Employees

The monetary benefits that are provided to the employees help to motivate them to achieve their task objectives. The monetary benefits that are provided by the organization to their employees are fringe benefits, paid holidays, bonus and other benefits. The main purpose of the benefits is to motivate employees and it is given after experience of one year and is considered as the extra benefits. The fringe benefits include health insurance plan, paid holidays and ownership plans.

Role of Fairness While Determining Compensation

The fairness or equity consideration is significant while determining and evaluating the compensation plan system. The compensation committee must include fair or equity compensation plan and determining most appropriate strategies for compensation plans. The perception of equity or fairness is associated with the concept of equity or justice. Therefore, equity pay or fairness reward is related to the behaviour or attitudes of the employees that is necessary for the growth of the organization. It ensures pay satisfaction among employees of the company. The perception and views of the employees towards fair or equity compensation plans is related to attitudes, performance and behaviour of the employees(Knechel, 2007). Equity or fairness is important and arises in the context of compensation plan. There are some areas in which the equity or fair compensation plan is to be considered:

  • The legal issues of equal pay for the works
  • Differences in the payment caused by the competition or market pressure
  • The fairness of pay for the employees who are doing the same job
  • The employees’ perception towards the pay

The fairness or equity can influence the ability of the organization to attract, retain and motivate employees. It is achieved when the equity return is equal to investment of the company. The pay should be equal to the work value performed as per fairness or equity.

Executive Compensation Committee Provides Benefits to Determine the Compensation

To determine the compensation in the attempt to encourage and motivate the employees towards the goals and motives of the company, the executive compensation committee is responsible for providing the benefits. The committee takes the responsibility of overseeing the design, planning and the implementation of the compensation planning and the benefit strategies of the organization that includes the basic salary, retirement plans, incentive and equity compensation plans and the strategies of the organization for the benefits of the employees. The compensation plan will help in providing support to the employees(Marzo, 2011). The compensation plan will provide support to the main objectives of the company and it will also be considered according to the performance of the employees.

Structure an Executive Compensation Committee

There are both legal as well as practical reasons for the selection of a committee for compensation. The committee is consistent of an independent director. The compensation committee is responsible for dealing with the adverse and difficult conditions of the company. It is important compensation committees to be independent and autonomous in nature. The committee should have the authority to control itself because of the fact that it is mainly welfare oriented from the employee’s perspective. The committee generally consists of 3 to 5 members. The members of the committee are mostly appointed by the board of directors(Ims, Pedersen and Zsolnai, 2013). The corporate governance is responsible for appointing the committee. As a result the corporate governance is responsible for the focusing on the establishment of the qualification of the board members. It is important that the compensation committee needs to be expert in the compensation but on the other hand, they should also understand the costs, risks, mechanics and other consequences for the compensation decisions


The financial benefits are used by the companies in order to compensate for the executives and the employees. These compensations help to motivate the employees as well as the executives to get the objectives and goals achieved(Pepper and Gore, 2014). The benefits are given in the form of life insurance, disability insurance, retirement plan, paid vacation and stock ownership plans(Paterson, 2016). The compensation of the employees is the authority of the executives and benefits that are given by the employees in the form of financial matters in the attempt to motivate the employees for achieving goals and motives of the organizations.

Part 2

Question i)

1.The objective of this research is to provide auditors with the data that are helpful for the creation of the Statement ISA 700 for the purpose of the reduction of the audit expectation gap. Thus the auditor can be able to create the financial statement for the purpose of the continuation of the fair and the appropriate judgment for the creation of the accurate report and helps in building the framework for the financial reports(Hermanson et al., 2011). The financial reporting standards helps in the creation of the enhancement for the development of the framework for the report and thus it also helps in the capering t5he process that are involved during the creation of the comparison between the management and the experience of the auditors(Research on professional responsibility and ethics in accounting, 2016). Thus the creation of the comparison enhances the management for the purpose of experiencing the development strategy and also helps in enhancing the requirement made for the purpose of the creation of the financial statements. Henceforth the objectives help in the completion of the responsibility for carrying out the successful process and thus it also helps in the enhancement of the responsibility which provides the creation of the statement. Thus the audit report provides the significant characteristics that help in the creation of scope for the auditor to create the appropriate opinions for the provision of the proper facilities(Research on Professional Responsibility and Ethics in Accounting, Volume 12, 2008). Therefore the judgment of the auditor’s report helps in the creation of the proper facilities that are required for the enhancement of the proper structure for the enhancement of the structure of the company.


Group no.


Effect of the financial statement on audit expectation gap

The evaluation is made in this is done for the proper acknowledging the criterion that are requisite for the creation of the comparison between the uneducated students and the auditor. Thus it also helps in the proper enhancement of the differentiation that helps the auditors to create the acknowledgement for the students in order establish the system of education.


Responsibility of the auditor

The creation of the crucial responsibility for the auditor is crucial for the preparation of the auditor carries and hence the true value is created for the proper determination of the fraudulency and the omission of the financial statements is detected.


Audit Expectation Gap

The expectation gap also helps in creation of the audit gap which differentiates between the expectation gap and the financial; auditors. Thus it also helps in the creation of the auditing for the financial statements that are required for the development of the true value.


Effectiveness of Auditor’s report to reduce audit expectation gap

For the continuation of the evaluation method, the conclusion of this report represents the expansion of the report and thus it also helps in the enhancement of the changes that should be made for the creation of perception of the auditor.


Persistence of Audit Expectation Gap

The proper implementation of the ISA 700 helps in the creation of the expectation for the creation of the gap and thus it also helps in carrying out the changes that are required for the creation of the reduction expectation gap. Thus the purpose of the expectation gap also helps in the development of the patterns that are required for the carrying out the responsibility by the auditor for the users.

3. One of the most important objectives is to check the manipulation that assists in the realization of the manipulation existence. Moreover, it also assists providing the information to the auditor. The main objective of checking the manipulation in this context, the competitors or the participants asked the questions related to this scenario, are very useful to concern the values which are needed to enhance the survey for the purpose of the inquiry. The total mean seemed in this context like 4.81 for the whole treatment purpose of the information. Moreover, like 2.20 of this treatment were done merely(Special issue on Risk management, governance and assurance, 2010). Conversely, on the other hand, here we can conclude that the accepting of the report is done merely for the appropriate creation of their judgment which also assists to enhance the rating. Consequently, it also facilitates to provide the distinctive means of these enhancement procedures which assists to carry-out the procedures of behavior and manners of each group and the manipulation judgment.

Question ii)

  1. The audit expectation gap is differentiation between expectation of public about the auditing and the performance of the auditors or the outcome of the auditing(Gold, Gronewold and Pott, n.d.). In order to reduce this gap the auditors are trying hard and put utmost effort so that improve the auditing performance by the auditors. The new auditors have to practice under the experienced auditors and adequate training and learning program help the new auditors to improve their auditing skills thus help in eliminating the audit expectation gap(Special issue on Risk management, governance and assurance, 2009). The study help in detecting the issue related to the auditing and aid to evaluate the audit expectation gap of Ghana. In this particular context the researcher provide proper regulation in respect of the auditing as well as the profession require to modify the reasonable expectation of the various users.
  2. The procedures of auditing are performed for the appropriate improvement of the expense types as well as helps in managing the account of the firm. Therefore, the main concern is given to the firm in order to improve the expectation of the auditing performance in the yearly financial report of the firm(Special issue on Risk management, governance and assurance, 2010). If the novelty the variety of the expectation placed with the differentiation of the firm and therefore the expectation gap made in a audit report thus, original report is as well performed to the external report.
  3. In order to choose the participants for the study the academic scholar furnish a set question in order to interview the participants of the study(Woods, 2011). The researcher to collect the necessary data for the research study uses the survey methodology. The purposive sampling methodology is used to obtain the most reasonable sample for the research study. The selection of the sample is done as per the knowledge of the participants. The researcher also use the convenient sampling techniques in order to develop the system(Special issue on the practice of risk management, 2012). Therefore, it as well help in improvement of the questionnaire, which are accountable for creating the precise approach.
  4. The questionnaires research is mainly composed of the number of 50 questions that are included for the object of the continuation of this reasonable response. Moreover, it also represents in this scenario, when this 30 question are returned from the auditors. The resting part is 35 questions may return also by the stockbrokers. Moreover, from the answer of these 20 questions commonly are seemed to be functional for each of the group.
  5. The research helps also to attend and collect the primary information or data which is more important for proper participation procedure. It also collected with the help of the given data and also these answers are also received the competitors(Unerman, 2008). At the near end of the questions, it provides assistance in the development of the score that seemed to rise from 1 to 5. As a result it supports the shift from strong disagreement to rigid agreement. It is not just the transition but the anonymity is also maintained along with the continuation and the conduct of the study.
  6. The fraud detection is generally used to create the continuation of the fundamental objectives which assists in continuation of their primary objectives for the research of the procedure. The main objectives to creates the suitable reporting statement. Moreover, it also assists in continuation of the scenario of business(Foss and Stea, 2014). The procedures and the people are assists of the company, dissatisfaction of their own objectives are also to be seemed reposition with the facilities of the appropriate acquisition of their band gaps inside the expectation gaps. From this context, the two flaws are generally detected to discuss this expectation gap in this context and hereafter annual report is reflected (Tunca Caliyurt, 2007).


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