Research In Accounting For Business Ethics

Executive Compensation Package

Describe about the Research in Accounting for Business Ethics.

Introduction

Not only for the Strong Build Construction Company, but also for each particular association, it is significant to gratify the right individuals for their managerial opportunity after making an appropriate classification. Consequently, the CFO and the acquaintances should need to meet the terms with the strong conciliation skills for fulfilling the requests of the persons contributed in the supervisory process. Thus, the CFO and the acquaintances ought to meet the need to act in accordance with the strong negotiation skills for fulfilling the requirements of the persons contributed in the decision-making process. In this case, the CFO must necessitate the desire to keep in mind that the unyielding posture in the employment offer will considerably challenge the employment arbitration process.

(i)

Not only for the Strong Build Construction Company, but also for every single organization, it is important to satisfy the right individuals for their executive openings after making a suitable identification. Therefore, the CFO and the associates should need to comply with the strong negotiation skills for satisfying the requirements of the individuals contributed in the executive process. In this case, the CFO must need to remember that the rigid stance in the employment offer will significantly undermine the employment negotiation process (Foss and Stea 2014). Apart from that, the CFO and the other associates should need to consult with the employees at the executive level to determine about their expectation before developing executive compensation packages for them. Considering the elements of a precise executive compensation package, there are five key features needed to be discussed below:

Basic Pay–In order to define the basic pay, the CFO must need to consider the payments made by the other similar sized companies in the certain construction industry to the employees falling in the executive category.

Benefits – The benefits section of the executive package must need to provide high emphasis to ensure the needs of the identified employees are met duly (Hermanson et al. 2012).

Short-term Incentive Compensation –The executive compensation package must need to be included of the short-term incentives in the form of either share in the company or cash with ensuring the measurable objectives can be attained within one year.

Long-term Incentive Compensation – Long-term compensation plays the major role in developing the motivational factors within the employees. Therefore, the particular type of incentive included should need to be generous and powerful to encourage the employees to commit towards the company on a long-term basis to promote the success in the respective industry (Ims, et al. 2014).

Agency Theory

Executive Perks–Given the strict regulation of the government and active responses from the media, the CFO of the company should need to be careful in deciding this certain category. Therefore, the company should need to provide creative thinking by providing multiple facilities to the company executive level of employees.

(ii)

According to the suggestion of the agency theory, a firm can be viewed from the perspective of the nexus of contracts between the different resource holders. Agency theory develops with the involvement of agency relationship where one or more individuals are hiring one or more persons for performing specific services (O’Reilly, et al. 2014). Here, the hiring individuals are called as the principals, and the hired or recruited persons are known as agents. The decision-making authority is delegated to these agents by the principals afterwards.

For the CFO of Strong Build Construction Company, it is essential to understand what pay system will be efficient and how their effectiveness will vary by considering the various contingency factors, such the environmental culture, competition, business strategy, characteristics of the employees, etc. Therefore, the company should need to develop a conceptual framework to facilitate the specific understanding (Pepper and Gore 2014). Agency theory is one of the traditional theories focusing on the divergent set of interests and goals of the numerous stakeholders of the organization to shape up the utilisation of the employee compensation. It suggests aligning the compensation packages provided to the employees according to these identified interests and goals.

(iii)

Difference between extrinsic and intrinsic motivation:

Sr. No.	Extrinsic Motivation	Intrinsic Motivation
1)	Extrinsic motivation suggests motivating a person to engage in an activity or perform in behaviour.	Intrinsic motivation suggests engaging in an activity or performing a behaviour due the process is personally rewarding.
2)	In this case, the activities are done majorly due to avoid punishment or earn rewards (Pepper and Gore 2015).	In this case, the activities are performed by the individuals for their sake, rather than earning some external rewards.
3)	Extrinsic motivation is influenced by the external sources associated with the individuals.	Intrinsic motivation is affected by the inner mind-set of the individuals.

Relationship between extrinsic and intrinsic motivation:

It is worth to mention that motivation can be categorised as extrinsic and intrinsic. There is a significant association between the both of the motivating factors. When the individuals want to do something for their sake is categorised to be intrinsic, whereas the extrinsic factors suggest the activities are done by the influence of outside elements (Ferrell, Fraedrich, and Ferrell 2014). Therefore, it can be observed that both of the motivational categories supports the organization to achieve their goals and objectives according to the mission statement, while both have their positive and negative impacts on the individuals.

(iv)

Due to the rapid change of technologic environment and different rules and regulations as part of the political atmosphere, competitive global markets including the construction industry are facing major challenges. The dynamics of the competitive global markets have accelerated the pace of the organizational change procedures. Similarly, the organizations are exposed to some major number of risks, as it can be observed in the example of Strong Build Construction Company. Due to the necessity of the organizations to go through the significant changes over the different periods, the attitudes of the employees are required to be modified accordingly (Guidotti and Guidotti 2013). Therefore, the employee perception should need to be developed with the capability of taking risks. To ensure the certain process, companies have developed different compensation packages for the specific employees. These compensation packages are required to promote the employee engagement towards the risk taking aspect.

Intrinsic and Extrinsic Motivation

(v)

Employee benefits known as the non-wage compensation offered to the employees are optional in additional to its core payment from an organization. Insurance benefits, disability protection, health, and wellbeing criteria, funding of education, and some other significant factors are the factors as part of the employee benefits (Hill 2012). These certain factors associated with the employee benefits have their individual time periods for acquisition, which drive the employees of an organization to achieve those based on their performances. Therefore, not only the additional benefits but also determining the proper timeframe with these factors be equally important for the identified company for promoting the employee desire for obtaining them (Huang, Leonard and Tong 1997). Additionally, it must need to mention that the company is only able to provide its employees the increased flexibility and access to these benefits, but also can recruit and secure their retention for a long-term period.

(vi)

The perceived fairness in determining the employee compensation plays vital roles, as it is considered as the fundamental reason causing the employees to leave the organization. The concept of equity developed by the additional efforts put forwarded by the employees to the goals of the organization or even the job objectives of their certain posts (Malik 2012). These are basic reasons leading the organization to ensure the compensation developed and offered to the employees are rooted from the principles of fairness.

Major research successfully indicated that the employees’ perception of the fairness and the equitable treatment is the fundamental attribute for the organization to drive their performance, engagement, and retention with the company. Therefore, unfair treatment is corrosive, especially in the case of the employee compensation, because of the unfairness in the treatment might have devastating impacts of the organization (Mancini, Vaassen and Dameri 2013). Destructive, procedural, and interactional are the three key types of fairness that the organization should need to consider while determining the compensation.

(vii)

By judging the case of Strong Build Construction Company, the executive compensation committee should need to provide benefits in determining the compensation for its employees. Although these advantages might be expensive for the company, these provide multiple intrinsic benefits to both the organization and the employees with maintaining a comprehensive benefits plan (Mattone 2013). With the help of the process, the organization can develop and retain the highly skilled and committed staffs, which is the fundamental driver for achieving the success in the identified industry.

Challenges Construction Companies Face

Conclusion

In order to structure the executive compensation committee, not only the CFO of Strong Build Construction Company should need to provide the utmost priority, but also, the board and management should need to provide increasing awareness (Muna and Khoury 2012). It is observed that the continuous evolution in compensation has ensured the factor to become more decisive in retaining and motivating the critical talents of the senior level executives of the companies. Such evolution is observed after recovering from the impact of the recession in 2008.

In order to develop the structure of the executive compensation committee, four mix components, and trends should need to consist (Occupational Outlook Handbook 2014).

• Annual based salary
• Developing and maintaining the bonus plans or annual incentives by considering the short-term performance measures
• Determining the long-term incentives by considering the long-term performance plans related to the implementation of the budget or returns to the shareholders
• Developing and offering the benefit plan

Determining employee compensation is a delicate subject, where most of the organizations become highly passionate in deciding the most appropriate compensation plan for their staffs and workers (Puckett 2013). As for the recommendation in determining the optimal employee compensation, the sensitive balance should need to be developed between the expectations of the employees and meeting the financial goals of the company. In line with the particular fact, some critical recommendations are highlighted below:

The compensation plan must need to be includedin the benefit plans and incentives for the employees with having the precise guidelines for minimising confusions (Sputtek 2012).

Before developing and offering the benefit plan, the company should need to have a clear understanding of the overall cost of the process. Therefore, the compensation committee should need to assess long-term expenses and direct cost adding up the total price of the benefit plan.

Last but not the least; it is crucial for the organization to develop awareness about the talent or skill required for the identified job roles to provide a balance between the supply of talent to the recruiting area and the demands of those talents (The CAESAR, POLO & ESAU papers 2007).

(i) a.

The paper developed by Gold, Gronewold, and Pott (2012) is named as “The ISA 700 Auditor’s Report and the Audit Expectation Gap – Do Explanations Matter?”. The major purpose of developing this research-based paper is to measure and evaluate the effectiveness of the particular explanations dictated by the revised ISA 700 auditor’s report. The certain revision is done for minimising the gaps in the different expectations of the auditors. In order to meet with the identified purpose of the paper, the researchers have ensured the participation of the German auditors and the financial statement users within a specific experiment (Tietz 2013). The identified experiment was based on reading the summary of the auditor’s report and financial statements with considering the explanations mandated by the ISA 700. The overall purpose of developing such an arrangement is to measure the gaps between the directed explanations of the ISA 700 and the opinions of the auditors. The implication of the process can be further identified by developing a comparative overview of the perception of those participants with the reliability of the financial statements alongside the associated responsibilities of the management (Vidal and Casey 2014). Therefore, developing this particular knowledge regarding the comparative overview is also a personal purpose of developing the identified research paper.

	Big incentive	Medium incentive	Small incentive
Group1	The auditors must need to be both internal and external.	Financial analysis is done with the involvement of junior and senior analysts.	Detailed financial information related to the financial statements can be obtained
Group2	The participation of both students from the high and middle schools and the investors can be maintained.	Auditing report can be developed with the clear indication of the profitability position of the business enterprise.	The ability of the financial information to reflect the financial strength of the organization.

Promoting Employee Engagement Towards Risk-Taking

The process related to the manipulation checks is based on determining the discrepancies involving the multiple reports developed by the auditors and the accounting statement prepared during the time of preparing the financial statements annually (Williamson, Campagna, and Ogden 2012). Apart from that, another significant purpose of the manipulation check is based on the supporting the formation of the financial statements with the accordance with the necessary guidelines and framework supposed to be adhered by the process. Based on the argument raised by Moser and Martin (2012), the auditors are responsible for producing authentic reports representing the financial statements associated with the business organizations. In order to ensure the achievement of such responsibility, the auditors must need to consider the essential roles played by the manipulation checks (Wilson 2012). On the other hand, it is necessary for the auditors to record and report the possible manipulations identified within the business organizations. In this case, the manipulation checking process must need to track different expenses associated with the operations of the organization with scrutinising the bills and vouchers generated from the transactions.

Considering the overall understanding, it can be understood that manipulation checks are responsible for resisting the illegal manipulations giving rise to the operational expenses for the business (Yeo et al. 2012). By citing the statement developed by O’Dwyer and Unerman (2014), proper identification of the possible discrepancies within the financial statements as well as the auditor’s report can be ensured by maintaining the manipulation checking process. In conclusion, it is worth to mention that multiple stringent measures are included within the process for systematically evaluating the sales revenues of the business along with the tax paid by the business organization.

Based on the investigation conducted by the studies developed by Agayei, Aye, and Owusu-Yeboah (2013) and Okafor and Otalor (2013), it is identified that both papers are developed with the primary intension of investigating the 20^th century auditing process emphasising specifically to the detection of fraud (Young 2013). However, the shift of importance can be noticed within the two papers towards the detailed information maintained within the major financial statements developed by the businesses. The profession related to auditing seeks to reduce the impact of discrepancies due to the implication of different lawsuits involving the certain business industry and the operations. Considering the preliminary understanding, the researchers have observed that the numerous stakeholders associated with the business organizations are dissatisfied with the roles played by the auditors regarding successful detection of fraud (Tietz 2013). Therefore, the significant goal of developing both of the studies is developing an assessment regarding the validity and reliability of auditors’ roles in multiple organizations of Ghana while considering the perspectives of both the stakeholders and auditors.

Employee Benefits

By considering the study developed by Okafor and Otalor (2013), it can be analysed that the auditing expectation gap is determined by preparing the difference between the certain amount of estimated performance encountered by the auditors and the multiple users of the financial statements. Apart from that, the particular study has also recognised the gap representing the expectation by establishing the differences between the auditing activities and performance and the level of information distributed through the auditing process (The CAESAR, POLO & ESAU papers 2007). In order develop the evidence; the collection of data was necessary, which was performed effectively through the questionnaire.

On the other hand, the study formed by Agayei, Aye, and Owusu-Yeboah (2013) identified that the particular gap in expectation related to the auditing process emerges mainly due to the biases of the terms and concepts involved in the overall process. Furthermore, these terms and concepts include materiality, relevance, fairness, reasonableness, reliability, and fair value. In order to accomplish the study and come up with certain findings, the sampling technique was applied sufficiently (Sputtek 2012).

By looking at the overall discussion, it seems the approach developed by Okafor and Otalor (2013) is more rigorous due to the focus was provided to the quantitative research process with considering the two major hypotheses.

As determined from the report produced by Agyei and Gyamerah (2014), the study developed by Agayei, Aye, and Owusu-Yeboah (2013) considered the selection of participants as both male and female representing 72.5% and 27.5% respectively. Amongst these participants, the researchers made sure that 60% should need to have the experience of 5 years, while 30% should possess a skill level between 5 to 10 years (Occupational Outlook handbook 2014). The rest of the participants, i.e. 10% should acquire an even higher level of experience.

On the other hand, the research paper developed by Okafor and Otalor (2013) had considered the several participants with their individual involvement in the accounting departments of different universities and public institutions. Therefore, it is quite clear that the approach developed by Agayei, Aye, and Owusu-Yeboah (2013) is superior and rigorous due to the utilisation of sampling frames and different demographic criteria.

Considering the responses obtained from the respondents of the study developed by Agayei, Aye, and Owusu-Yeboah (2013), 45% agrees with the information portrayed within the financial statements, whereas 45% disagreed, as dictated by Boateng and Agyei (2013). On the other hand, the 65% responses of the stockbroker suggest that those frauds are detected within the financial statements of the organizations or institutes.

Perceived Fairness in Determining Employee Compensation

Alternatively, the responses collected by Okafor and Otalor (2013) have led the study to reveal that the auditors are always responsible for assuring the delivery of accurate and reliable auditing reports alongside publishing the major financial statements (Muna and Khoury 2012). Another significant finding of the study proposed that 67.12% respondents reflected that they did not know about the core set of expectations out of the auditors with accordance to the statute books and relevant documents.

Therefore, by looking at the findings, it is natural that Okafor and Otalor (2013) have gained and maintained an adequate response rate whereas the various responses failed to lead the achievement of a precise conclusion by Agayei, Aye, and Owusu-Yeboah (2013).

As outlined by Ayuurebobi et al. (2015), it can be determined that the study developed by Agayei, Aye, and Owusu-Yeboah (2013) has considered two major parameters, namely “Agree” and “Disagree”. Thus, the agreement and disagreement of the various variables are judged by the process.

Okafor and Otalor (2013) measured the responses obtained from the participants by ensuring the collection of auditing and financial data. Therefore, it can be quietly observed that the data analysis approaches inducted by Okafor and Otalor (2013) are highly positive due to the consideration of the financial information will help to develop an accurate and relevant result.

Based on the argument raised by Kusi et al. (2015), some of the critical flaws have been identified in the research paper developed by Agayei, Aye, and Owusu-Yeboah (2013). The most significant error of them all is the complicated responses from the users about the auditing analysis related to the financial statements.

Conversely, faults are also there in the work developed by Okafor and Otalor (2013), as the proper emphasis was required to be provided to the educational qualifications of the research participants (Mattone 2013).

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