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WILL LEASING LOSE ITS LUSTER: AN ANALYSIS OF LEASE REPORTING UNDER FAS 13
Title
WILL LEASING LOSE ITS LUSTER: AN ANALYSIS OF LEASE REPORTING UNDER FAS 13.
Creator
Gates, Casey, Pamela Roush, Dr., University of Central Florida
Abstract / Description
When standards for financial reporting are amended, potential for change in the appearance of financial position for companies reporting under those standards arises. Currently standards set forth by the Financial Accounting Standards Board (FASB) allow for two methods of reporting lease obligations on the financial statements. The first of these methods is the operating method, which allows lease payments to be expensed within the period they are incurred and only a decrease in cash or an...
Show moreWhen standards for financial reporting are amended, potential for change in the appearance of financial position for companies reporting under those standards arises. Currently standards set forth by the Financial Accounting Standards Board (FASB) allow for two methods of reporting lease obligations on the financial statements. The first of these methods is the operating method, which allows lease payments to be expensed within the period they are incurred and only a decrease in cash or an increase in an account payable is recognized on the balance sheet. The second method is the capital method, which requires the present value of the future lease payments to be recognized on the balance sheet as an asset and a corresponding liability. Both are reduced annually through depreciation and lease payments respectively. The FASB has recently proposed discontinuing the operating method of reporting a lease obligation and allowing only for the capital method to be used. The objective of this study is to examine some of the changes in appearance of financial position that might be brought on by this potential change in reporting standards. The airline industry has been selected to illustrate the effects of capitalizing future operating lease payments on the balance sheet. These future payments under operating leases for companies within the industry are capitalized using two different methods of depreciation. The companies are then ranked in order of proximity to an industry average for eight well known financial ratios. The rankings for each treatment on a given ratio are compared and differences between the expensed ranking and each capitalized ranking are measured and discussed.
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Date Issued
2013
Identifier
CFH0004366, ucf:45011
Format
Document (PDF)
PURL
http://purl.flvc.org/ucf/fd/CFH0004366
Re-Thinking the Intentionality of Fraud: Constructing and Testing the Theory of Unintended Amoral Behavior to Explain Fraudulent Financial Reporting.
Title
Re-Thinking the Intentionality of Fraud: Constructing and Testing the Theory of Unintended Amoral Behavior to Explain Fraudulent Financial Reporting.
Creator
Dill, Andrew, Sutton, Steven, Arnold, Vicky, Schmitt, Donna, Schminke, Marshall, University of Central Florida
Abstract / Description
My three-paper dissertation is aimed at applying the concepts of bounded ethicality and ethical fading to accounting fraud. Typical of relatively new fields such as behavioral ethics, theoretical models are scarce (Tenbrunsel (&) Smith-Crowe, 2008). As such, the purpose of Study 1 is to unify disparate theories and ideas from psychology and behavioral ethics as a means of constructing a theory, the Theory of Unintended Amoral Behavior (TUAB), which includes the concepts of bounded ethicality...
Show moreMy three-paper dissertation is aimed at applying the concepts of bounded ethicality and ethical fading to accounting fraud. Typical of relatively new fields such as behavioral ethics, theoretical models are scarce (Tenbrunsel (&) Smith-Crowe, 2008). As such, the purpose of Study 1 is to unify disparate theories and ideas from psychology and behavioral ethics as a means of constructing a theory, the Theory of Unintended Amoral Behavior (TUAB), which includes the concepts of bounded ethicality and ethical fading. In addition, the pressure for management to meet earnings expectations is discussed through the lens of the TUAB as an example of how one may unknowingly misreport.Studies 2 and 3 apply the TUAB to investigate how certain contextual factors interact with egocentric biases to increase the likelihood of ethical fading. Specifically, Study 2 consists of an experiment exploring how inferior pay among managers interacts with egocentric perceptions of fairness and envy to affect the likelihood of one engaging in ethical fading and fraudulent behavior. Study 3 also utilizes an experimental methodology to examine how the pressure to meet earnings forecasts interacts with egocentric perceptions of fairness and negative affect to influence the probability of ethical fading and fraudulent acts.The results for Study 2 indicate that one who is paid at a lower rate is more likely to view this disparity as unfair, which leads to a greater feeling of envy. Although envy had no significant direct effect on ethical fading in the primary analyses, a supplemental analysis revealed that a person's risk preference might moderate this relationship. The primary findings of Study 2 suggest that individuals who experience a higher degree of ethical fading are more likely to commit fraud, and that ethical fading, along with perceived unfairness, seem to be significant psychological processes that explain how differences in pay may lead to fraud. The primary finding of Study 3 is that, like Study 2, fraud is more likely to occur as an individual experiences a higher degree of ethical fading. Furthermore, this study suggests that those who are closest to meeting an earnings target are the most likely to engage in fraudulent behavior. Finally, the results failed to find any support that one's egocentric perceptions of fairness and negative affect contribute towards his or her ethical behavior in a goal achievement setting. The primary contributions of this dissertation is that it unifies various theories and ideas from psychology and behavioral ethics to establish a testable theory (TUAB) that includes the concepts of bounded ethicality and ethical fading, serves as an initial test of TUAB, and provides evidence that unethical behavior is not necessarily the result of one consciously forsaking his or her ethics for some other desired goal (i.e., profit).
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Date Issued
2016
Identifier
CFE0006097, ucf:51211
Format
Document (PDF)
PURL
http://purl.flvc.org/ucf/fd/CFE0006097