TABLE OF CONTENTS
Contents
Chapter One .................................................................................................................................... 1
1.0 Introduction ........................................................................................................................... 1
1.1 Background of the study ....................................................................................................... 1
1.2 Statement of the problem ...................................................................................................... 3
1.3 Main research question.......................................................................................................... 3
1.4 Research objectives ............................................................................................................... 4
1.5 Delimit of the study ............................................................................................................... 4
1.6 Justification. ......................................................................................................................... 5
1.7 Assumptions to the research .................................................................................................. 5
1.8 Limitations to the study ......................................................................................................... 5
CHAPTER TWO .......................................................................................................................... 6
LITERATURE REVIEW ............................................................................................................ 6
2.0 Introduction ........................................................................................................................... 6
2.1. The accounting shenanigans used by managers to reach set targets and get output related incentives. .................................................................................................................................... 6
2.1.1 Transaction Manipulation .................................................................................................. 6
2.1.2 Creative accounting ............................................................................................................ 8
2.1.3 Management override and collusion. ................................................................................. 9
2.2 Threats imposed by output related incentives on financial reporting quality. .................... 10
2.2.1 Misreporting / Falsification of financial statements. ........................................................ 11
2.2.2 Non-compliance with GAAP and IFRS ........................................................................... 12
2.2.3 Accounting fraud .............................................................................................................. 13
2.2.4 Delay of presentation of financial reports. ....................................................................... 14
2.3 Ways to reduce threats imposed by output related incentives on financial reporting quality. ................................................................................................................................................... 15
2.3.1. Employing skilled human resources. .............................................................................. 15
2.3.2 Sound Corporate governance. ........................................................................................ 16
2.3.3 Establishing an audit committee ...................................................................................... 17
2.3.4. Undertaking of audits. .................................................................................................... 18
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2.3.5 Whistleblowing ................................................................................................................ 19
2.4 Best method in implementing output related incentives. .................................................... 20
2.4.1 Bonuses ............................................................................................................................ 20
2.4.2 Commission. ..................................................................................................................... 21
2.4.3 Profit sharing. ................................................................................................................... 22
2.4.4 Stock Option / Share Ownership ...................................................................................... 23
2.5.0 Relationship between output related incentives and financial reporting quality. ............ 24
2.5.1 Significant positive relationship ....................................................................................... 24
2.5.2 Positive relationship ......................................................................................................... 24
2.5.3 Significant negative relationship ...................................................................................... 24
2.5.4 Negative relationship........................................................................................................ 25
2.5.5 Neutral relationship .......................................................................................................... 25
2.6 Chapter Summary ................................................................................................................ 26
Chapter Three ............................................................................................................................. 27
Research Methodology ............................................................................................................... 27
3.0 INTRODUCTION ............................................................................................................... 27
3.1. RESEARCH APPROACH ................................................................................................. 27
3.2 RESEARCH DESIGN ........................................................................................................ 27
3.2.1 DESCRIPTIVE RESEARCH DESIGN ........................................................................... 27
3.3 Study Population ................................................................................................................. 28
3.4 Census ................................................................................................................................. 28
3.5 Source of data ...................................................................................................................... 29
3.6 Research Instruments .......................................................................................................... 29
3.6.1 Questionnaires .................................................................................................................. 29
3.6.2 Interviews ......................................................................................................................... 30
3.7 Reliability and Validity ....................................................................................................... 30
3.8 Ethical Consideration .......................................................................................................... 30
3.9 Data analysis and Presentation ............................................................................................ 31
3.10 Chapter Summary .............................................................................................................. 32
Chapter 4 ..................................................................................................................................... 33
Data Presentation and Analysis ................................................................................................. 33
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4.0 Introduction ......................................................................................................................... 33
4.1 Response rate....................................................................................................................... 33
4.2 Analysis, Interpretation and presentation of questionnaire responses ................................ 34
4.2.1.1 Transaction manipulation .............................................................................................. 34
4.2.1.2 Creative Accounting ...................................................................................................... 35
4.2.1.3 Management override and Collusion ............................................................................ 38
4.2.2.1 Misreporting .................................................................................................................. 40
4.2.2.2 Non-compliance with GAAP and IFRS ........................................................................ 41
4.2.2.3 Accounting Fraud .......................................................................................................... 43
4.2.2.4 Delay of presentation of financial reports. .................................................................... 44
4.2.3.1. Employing skilled human resources ............................................................................ 46
4.2.3.2 Sound corporate governance. ........................................................................................ 47
4.2.3.3. Establishing an audit committee .................................................................................. 49
4.2.3.4 Undertaking audits ........................................................................................................ 51
4.2.3.5 Whistleblowing ........................................................................................................... 52
4.2.4.1 Bonuses ......................................................................................................................... 54
4.2.4.2 Commissions ................................................................................................................. 56
4.2.4.3 Profit sharing ................................................................................................................. 57
4.2.4.4 Stock options ................................................................................................................. 59
4.2.5 Question : Output related incentives affect the following elements of FRQ ................... 61
4.3 Presentation, interpretation and analysis of interview responses ...................................... 63
4.4 Chapter Summary ................................................................................................................ 66
Chapter 5 ..................................................................................................................................... 67
Summary, Conclusion and Recommendations......................................................................... 67
5.0 Introduction ......................................................................................................................... 67
5.1 Chapter Summary ................................................................................................................ 67
5.2 Major findings ..................................................................................................................... 68
5.3 Research Conclusion ........................................................................................................... 69
5.4 Recommendations ............................................................................................................... 69
5.5 Further area of study ........................................................................................................... 70
5.6 Chapter Summary ................................................................................................................ 70
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Reference List ........................................................................................................................... 71
APPENDICES .............................................................................................................................
MAKUBAZA, T (2021). The Impact Of Output Related Incentives On Financial Reporting Quality : A Case Of Bsi Steel Zimbabwe.. Afribary. Retrieved from https://tracking.afribary.com/works/the-impact-of-output-related-incentives-on-financial-reporting-quality-a-case-of-bsi-steel-zimbabwe
MAKUBAZA, TSITSIDZASHE "The Impact Of Output Related Incentives On Financial Reporting Quality : A Case Of Bsi Steel Zimbabwe." Afribary. Afribary, 04 May. 2021, https://tracking.afribary.com/works/the-impact-of-output-related-incentives-on-financial-reporting-quality-a-case-of-bsi-steel-zimbabwe. Accessed 13 Nov. 2024.
MAKUBAZA, TSITSIDZASHE . "The Impact Of Output Related Incentives On Financial Reporting Quality : A Case Of Bsi Steel Zimbabwe.". Afribary, Afribary, 04 May. 2021. Web. 13 Nov. 2024. < https://tracking.afribary.com/works/the-impact-of-output-related-incentives-on-financial-reporting-quality-a-case-of-bsi-steel-zimbabwe >.
MAKUBAZA, TSITSIDZASHE . "The Impact Of Output Related Incentives On Financial Reporting Quality : A Case Of Bsi Steel Zimbabwe." Afribary (2021). Accessed November 13, 2024. https://tracking.afribary.com/works/the-impact-of-output-related-incentives-on-financial-reporting-quality-a-case-of-bsi-steel-zimbabwe