Faculty of Accounting and Informatics

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Evaluation of financial accountability, financial control and financial reporting at Umtshezi Municipality : a case study
(2016) Khanyile, Manqoba Wiseman; Garbharran, Hari Lall
Financial accountability, financial control and financial reporting are the three main elements that determine the performance of the municipality. An analysis had to be made on each of these elements to find any limitations and gaps that negatively impact on the performance of the organisation. The aim of the study was to evaluate financial accountability, financial control and financial reporting of Umtshezi Municipality. The study was a census study and it was quantitative, descriptive and cross sectional in nature. The target population comprised of 45 employees from the finance department which was divided into five units, namely, Supply Chain Management, Expenditure, Asset/Fleet, Revenue and Budget. The IBM Statistical Package for Social Sciences (SPSS) version 22.0 was used to determine statistical results. The findings of the study discovered that officials lack educational qualifications and adequate understanding of the MFMA. The respondents also indicated that there was political influence affecting administration within the municipality. The study recommended that the municipality should provide funds to train employees. National Treasury should conduct consistent reviews on the implementation of the MFMA. The Department of Cooperative Governance and Traditional Affairs (COGTA) should intervene to protect the administration from political threats.
Factors affecting the success of inventory control in the stores division of the eThekwini Municipality, Durban : a case study
(2015) Nzuza, Zwelihle Wiseman; Garbharran, Hari Lall
The Stores Division reportedly found it very difficult to control inventories as well as executing roles and responsibilities allocated in the section. The aims of this study were to identify factors affecting the success of inventory control and to assess strategies used by the Stores Division of the eThekwini Municipality in Durban to control inventory stocks. In order to arrive at the deep structure underpinning inventory control, three theoretical frameworks were used, i.e., stock diffusion theory, application control theory and inventory control in theory and practice. This case study was census, descriptive, cross-sectional and predominantly quantitative in nature with only two open-ended questions. The 57 questionnaires were administered by members of staff at the Stores and Procurement Divisions of the eThekwini Municipality in Durban. Data were analysed using descriptive and inferential statistics and categorised according to themes. The IBM Statistical Package for Social Sciences (SPSS) version 21.0 was used to determine statistical results. The findings of the study revealed that employees lack proper training and education and that there is poor inventory control planning, lack of staff communication and lack of procurement time management when processing inventory orders. Respondents also indicated that there are no common strategies in place to control inventories. The study recommends that the Stores Division should consider the levels of staff qualifications, provide more staff training, and improve inventory control planning; communication; time management, and instigate innovative strategies in order to eradicate growing costs of inventory stocks. Moreover, the internal control processes need to be mapped according to the various roles identified.
The impact of cash management on profitability and sustainability of small retail businesses in the Tongaat area, KwaZulu-Natal
(2015-01-15) Mungal, Avika; Garbharran, Hari Lall
Small businesses are vital for employment and job creation in South Africa. The implementation of sound cash management practices is essential to ensure to profitability and sustainability of any successful business. The commonly used expression, “Cash is king” cannot be contested as its validity was more prevalent in this research study. The aim of the study was to identify the current cash management practices of small retail businesses in the Tongaat area and identify the impact of such practices on their profitability and sustainability. This descriptive, cross sectional study, using a quantitative research paradigm and a non-probability sampling method targeted a sample of 69 businesses in the chosen area. The sample structure consisted of small retail businesses in the Tongaat area of KwaZulu-Natal. There was a significant relationship between drawing budgets and sustainability. This finding suggests that the more often the business draws up cash budgets, the more viable and sustainable the business is. 78.3% of the respondents acknowledged the importance of keeping records in the business, however, only 29.9% drew up cash budgets. The findings of this study could be useful to potential, emerging and established owners of all types of businesses since effective and efficient cash management is an integral component of any successful business. There should be more emphasis placed on the impact of how proper cash management practices can affect profitability and sustainability of a small retail business. A recommendation that adds value to the study was to engage the final-year, National Diploma: Cost and Management Accounting students in an integrated project, where they can provide cash management advice to these businesses. This will enhance the small businesses’ knowledge of cash management and encourage implementation of these procedures to assist in increasing profitability and sustainability in their business.
The impact of the deferred tax adjustment on the EVA measure for JSE-listed food producers and retailers in South Africa
(2015-01-15) Naicker, Melissa; Garbharran, Hari Lall; Kharwa, Mohammed Saleem Essep
Economic Value Added (EVA) is a value based accounting measure used by companies to measure the amount of value created for shareholders. Accounting values derived from company annual financial statements (AFS), are used to calculate EVA. EVA requires the conversion of accounting values to economic values. This conversion process is known as the EVA adjustment. If accounting values are not converted to economic values, the value of the EVA can be distorted. Previous studies have shown that companies are experiencing difficulties in implementing EVA adjustments. To reduce these difficulties, companies have decided to limit their EVA adjustments to ten or even fewer. The problem is that if the appropriate adjustments are not made, an inaccurate EVA measure will be calculated. The aim of the research was to measure the impact of deferred taxes on the EVA measure. The study was conducted within a quantitative research paradigm. Secondary data analysis was carried out on JSE-listed Food producers and Retailers over a seven-year period, from 2004 to 2010. The unadjusted EVA was compared to the adjusted EVA measure to determine the before and after effects of deferred taxes on EVA. The findings of the study revealed that deferred taxes either understated or overstated the value of the EVA during 2004 to 2010. In addition, the results from the regression analysis revealed an overall significance for all deferred tax predictors. The regression results showed that deferred taxes significantly impacted the value of EVA. The study recommends that companies implement the deferred tax adjustment on the EVA measure.
The impact of the integrated assessment on the critical thinking skills of the first-year Extended Curriculum Programme students in the Department of Management Accounting at the Durban University of Technology
(2015) Cloete, Melanie Bernice; Garbharran, Hari Lall
Empirical evidence highlighted the problem of underprepared graduates who lack critical thinking skills required in the work environment. Institutions of higher learning have been mandated to provide graduates with these critical thinking skills. However, in order to achieve this mandate, teaching, and, in particular, assessment practices at institutions of higher learning would need to be rethought and transformed. Integrated assessments that mirror real life situations are particularly useful in the development of critical thinking skills. The purpose of this study is to investigate whether the integrated assessment conducted with the first-year ECP students in the Department of Management Accounting at the Durban University of Technology has enhanced the critical thinking skills of these students. This descriptive and inferential study employed a quantitative strategy, with a quasi-experimental, pre-test, post-test, non-equivalent group design and it was longitudinal in nature. The target population consisted of two groups: all the first-year students registered on the Extended Curriculum Programme in the Department of Management Accounting in 2014, which was approximately 40 students (experimental group); and all the first-year students registered on the Extended Curriculum Programme in the Department of Financial Accounting in 2014, which was approximately 40 students (control group). All five categories of the Watson-Glaser Critical Thinking Appraisal UK edition were administered to both the control and experimental groups in a pre-test and post-test measure. However, only the experimental group was exposed to the integrated assessment. The aim was to measure the change, if any, in the students’ critical thinking skills over a period of time. The findings revealed a statistical significance in the overall post-test scores in favour of the experimental group. The norm group comparisons also revealed that, after the completion of the integrated assessment, the experimental group’s post-test mean scores were higher than the US grade 12 students and were closely matched to the US first year of 4 year colleges. In addition, the experimental group’s pre-and post-test mean scores were closely matched to the SA norm group. These results suggested that the experimental group experienced gains in their critical thinking ability in the post-integrated assessment. It is, therefore, recommended that integrated assessments, which are based on real world problems, should be conducted in the first year and in subsequent years. It is not always possible for universities of technology to offer cooperative education/ in-service training to all students. Contextualized integrated assessments, therefore, bridge this gap by allowing students to experience workplace requirements without physically being in the work environment.
A model using ICT adoption and training to improve the research productivity of academics
(2015) Basak, Sujit Kumar; Govender, Desmond Wesley; Garbharran, Hari Lall
Research productivity is one of the core functions of a university and it plays a crucial role for a nation to develop and find its standing in our global world. This study examined the effect of ICT adoption and training on the research productivity of university academics. Much research has been done on using technology in research with a view to increase productivity. However, hardly any research could be found on the use of ICT combined with ICT training with a view to increase research productivity. This study addressed this gap in the literature. The study sought to design a model that can increase research productivity of academics while optimizing ICT adoption and training effects. The study was conducted at four public universities in KwaZulu-Natal, South Africa, whilst the part of the study on ICT training was conducted at one of the four universities. This study was conducted both in the form of a survey of 103 university academics and in the form of experimental sessions, where the use of ICT (EndNote, NVivo, AMOS, SPSS, and Turnitin) with training was used for research, the use of ICT without training was used for research and, finally, a session where a manual system (without using research software/tools and training) was used for research. The overall aim of the study was to investigate and design a model for the increase in research productivity of academics in universities after having adopted ICTs. The final results of the research revealed that the use of ICT tools (EndNote, NVivo, AMOS, SPSS, and Turnitin) with training increases research productivity as compared to using ICT tools without training, and/or using a manual system (without using research software/tools and training). A statistically proven model is recommended with a view to increase research productivity of academics.
Using environmental management accounting to investigate benefits of cleaner production at a paper manufacturing company in Kwadakuza, KwaZulu-Natal : a case study
(2015) Doorasamy, Mishelle; Garbharran, Hari Lall
Environmental degeneration, market pressures and stricter regulation and waste legislation has placed organizations under tremendous pressure to change their current processes and adopt cleaner production (CP) techniques and technologies. However, in countries like South Africa, CP implementation still remains low. In light of this problem, the government has made efforts to promote CP among industries by forming a support structure called the RECP (resource efficient cleaner production), as a strategy to encourage organizations to embrace this change and move away from the tradition end-of-pipe technologies towards CP technologies. This study is based on a case study of a paper manufacturing company in Kwadakuza, KwaZulu-Natal. The aim of this study was to use Environmental Management Accounting (EMA) to identify benefits of CP. Paper manufacturing consumes large amounts of natural resources and generates excessive wastes. Hence, the operational activities of paper mills have a negative environmental impact. However, the scope of this study was limited to the steam generation process and focused mainly on the efficiency of the current coal-fired boilers used in the boiler plant. The research methodology used in the study was both quantitative and qualitative involving triangulation. Data was collected by means of a questionnaire, semi-structured interviews and documentary review. The company uses old, obsolete boilers to generate steam. It had been discovered during a cleaner production assessment (CPA) of the process that the process uses large amounts of coal and generates excessive boiler ash (waste). This boiler ash also contains approximately 20 percent unburned coal present resulting in major losses to the company. Furthermore, the company has also experienced regular breakdowns during the year resulting in loss in production and high maintenance costs. Hence, it was concluded that the steam generation process was inefficient and that the boilers were not operating as per technological specification. However, management was unaware of the huge losses incurred due to raw material losses, more especially the coal used in the process. Environmental costs were also inaccurately calculated and thus underestimated. Hence, the ‘true environmental’ costs were not considered during strategic decision making. Over the last two decades, EMA has emerged as an important approach by organizations wanting to improve their environmental and economic performances. However, despite the many pilot projects conducted that demonstrated the positive impact that EMA has on an organization, EMA implementation remains slow and lagging in South Africa. EMA is an environmental management tool that traces environmental costs directly to the processes and products that are responsible for those costs, thereby highlighting problem areas that need to be prioritized when considering the adoption of CP. The literature review on the role and impact of implementing EMA and the benefits of adopting CP was presented to determine and outline views and findings of past researchers. Previous researchers identified that traditional costing systems did not adequately account for the actual environmental costs incurred by companies as much of these costs were hidden under overhead accounts. Hence, production costs were high, resulting in incorrect profit margins being set and ultimately impacting on company profitability. The main cause of this was that non-product output costs were added to production cost instead of being separately recorded as ‘non-product’ output. These costs are actually environmental costs as they represent waste. Material Flow Cost Accounting (MFCA), a tool of EMA, was considered as an appropriate method to implement to accurately calculate non-product output costs. MFCA made managers aware of the true magnitude of their losses and inefficiencies of current technology by increasing the transparency of non-product output costs (environmental costs). MFCA was further used to benchmark non-product output costs against technological standards and best available technological standards to highlight the economic and environmental benefits of adopting CP techniques and technologies. Based on the findings, one recommendation is that the company should consider restructuring their conventional costing system and adopt an EMA system instead. The use of an MFCA model had been suggested. This model was used by the Economy, Trade and Tourism industry in Japan to identify non-product output and improve efficiency of production processes. In addition, findings revealed that the company should implement CP techniques in the short-term to ensure that boilers are functioning according to technological specification. This will result in economic and environmental benefits for the company. However, greater savings potential is available in the long-term, by changing current technology and adopting state-of-the-art technologies. This would, however, require greater investment needs of the company to taken into consideration during strategic decision making.
Using material flow cost accounting to determine the impacts of packaging waste costs in alcoholic beverage production in an alcoholic beverage company in Durban
(2016) Tajelawi, Omolola Ayobamidele; Garbharran, Hari Lall
A large number of manufacturing companies adopt the use of the traditional accounting method in their operations. This technique fails to reflect a detailed report of all material losses incurred in their production processes. Worthy of note, is that losses/waste are considered as inefficiencies in manufacturing operations and viewed as a costly venture to the sustainability of the company. This research, therefore, through a case study analysis, examined the efficient/inefficient flow of resources in the production process of an alcoholic beverage company in the Durban metropolis. The study was carried out in order to determine the impact of packaging waste cost in an alcoholic beverage company using the material flow cost accounting technique. Measurements included the input of packaging materials against its output, while giving consideration to waste incurred as losses. The Material Flow Cost Accounting (MFCA) technique, an environmental management accounting tool developed for measuring the flows and stocks of materials of a company and production process in both physical and monetary units, was used to measure the costs of waste on two production lines. MFCA was used to trace all material inputs and categorize them as product or non-product output. MFCA is used to classify the relevant material flows as cost collectors, thereby allocating the costs of the company’s production operations and flows. Different packaging materials that constitute waste on the lines were analyzed using the mixed method approach, which includes observation, questionnaire administration, and analysis of six months production report. Two production lines were considered for sampling, and recommendations were given based on the data analyzed using the SPSS package. The MFCA technique revealed that losses on both production lines were understated, and that, the bottling plant was losing a sizeable amount of monetary value of packaging materials to waste. The MFCA technique also revealed that the traditional costing technique is unable to provide adequate information managers require for strategic cost decision making. MFCA is therefore recommended to assist managers improve production line efficiency and cost savings via accurate waste costing and reduction for corporate sustainability.