Supplement 4 (Кравченко Е.В., Клейменова Е.П., Кулик Л.В. - Study Guide for Postgraduates in Economics), страница 4

At the same time, they wouldalso like to protect some of their own core proprietary capabilities from being unilaterallyabsorbed or appropriated by the partner. Thus there is an underlying tension between ‘trying tolearn and trying to protect’. The dilemma arises because conditions that might facilitate thelearning process are likely to expose firms to the danger of losing some of their crown jewels to thepartner. The NUMMI alliance between General Motors and Toyota is a classic example of such analliance (Badaracco, 1988). General Motors was keen to learn some of Toyota’s manufacturingmanagement practices through the alliance. Whereas Toyota wanted to learn how to manage U.S.labor and how to run a manufacturing plant in the United States from GM.

However, both partnerswere also keen to prevent leakage of some of their core proprietary skills to the other. Toyota was25keen to protect its skills of small car design and effective supplier management and GM itscapabilities of managing dealerships in the United States.Current alliance research fails to sufficiently examine how firms can balance the apparent dualityor tension between learning and protecting. In the context, the further research needs to addressthe following question: What factors enable a firm to not only learn critical skills or capabilitiesfrom its alliance partner(s), but also protect itself from losing its own core proprietary assets orcapabilities to the partner? In my research I am going to develop hypotheses that address thesequestions and test the hypotheses using large-sample survey data from alliances worldwide.26LITERATURE REVIEW 4RISK AND MATERIALITY IN AUDIT ACTIVITYThe quantity, nature and extent of audit procedures are strongly connected with the level ofmateriality calculated by the author for the particular organization.

The level of planningmateriality is a master factor for the audit risk assumption. In turn the audit risk assumptiondetermines the quantity, nature and extent of the audit substantive procedures. The greatercalculated materiality level the greater the extent of an audit. Thus, the calculation of themateriality level is a matter of principle for every auditor. The existent regulations and academicbooks consider questions related to the materiality concept in different ways.REGULATIONSThe materiality concept was developed in the 1970’s.

Previously it was related only to theaccounting theory.ISA 25 “Materiality and audit risk” 1 was the first normative document related to the materialityconcept application in the context of the audit. This document contained important definitions ofthe main conceptions used in audit and determined reverse interconnection between materialitylevel and audit risk. ISA 25 also stated that the concept of materiality is applied both in planningand performing the audit. It addresses the questions of materiality calculation directly to theauditor.Nowadays, questions related to the materiality calculation and application are regulated by theISA 320 “Materiality in Planning and Performing an Audit” (revised and redrafted, 2009).

It is alsostated in this Standard that “the auditor’s determination of materiality is a matter of professionaljudgment”. At the same time, ISA 320 states that the concept of materiality is applied both inplanning the audit, and in evaluating the effect of identified misstatements. The evaluation of theeffect of identified misstatements is investigated in ISA 450 “Evaluation of misstatementsIdentified during the Audit” (revised and redrafted, 2009). Some provisions of mentioneddocuments are used as the basis for the Individual Standards prepared by each auditor (internalstandards of the auditor) and for the guidelines prepared by the domestic organizations.The Russian Federation as its own regulations: “Federal Rules (Standards) of the Audit Activity”.These regulations are regularly revised and redrafted in accordance with changes in theInternational Standards mentioned above.A good example of such guidelines is the Technical Release 03/08 “Guidance on the materiality infinancial reporting by UK entities” prepared by Institute of Charted Accountants in England andWhales (ICAEW).

This document contains helpful information on materiality. It examines in detailthe main determinants of materiality: size, nature and circumstances of particular business.1ISA – International Standard on Auditing27Another good example is “Guidelines on Audit Quality” (revised version for the consideration ofContact Committee of the Heads of the SAIs of the EU, Luxemburg, 2004). It concerns anotheraudit issue – the quality control.ACADEMIC BOOKSWe have already noted that existent regulations, academic books and publications considerquestions related to the materiality concept in different ways.For example, there is an issue related to the method of the calculation of the planning materialitylevel for the whole Financial Statements (FS).

Some authors believe that planning materiality levelcould be calculated first of all for the general ledgers (accounts) and then for the whole FS. Thispoint of view is supported by P.I.Kamishanov, “Guidelines on Audit”, 1998; V.I.Podolskiy, A.A.Savin,“Audit”, 2007; B.T.Djarilgazova, “Russian and International Standards on Auditing”, 2008 and byother authors. But the given method is considered more expensive and less efficient even by theauthors mentioned above.An alternative point of view is that materiality level should be calculated first of all for the whole FSand only after that it could be “transferred” to the particular accounts. This approach is supportedby John Robertson, “Audit”, 1993; R.Adams.

“Fundamentals of audit, 1995; A.D.Sheremet,V.P.Suits, “Audit”, 2005; T.M.Rogulenko, “Audit”, 2006 and by other authors.In addition to that there is an issue related to the basis for the calculation of materiality level.Some authors believe that there is only one parameter that could form the basis for thecalculation. Particularly, this point of view is supports by R.Adams in his “Fundamentals of audit” –the main classic academic book related to the audit sphere. Nowadays, this point of view is alsosupported by “Big Four” global audit companies. 2 This approach is also proposed for example byA.D.Sheremet and V.P.Suits in their “Audit”, 2005 and by other authors.A good example of another point of view is the “weighted average” approach.

Particularlym suchan approach is proposed by B.T.Djarilgasova in her “Russian and International Standards onAuditing”, 2008. It is necessary to note that similar approaches are used mostly by Russianauditors.SUMMING UPIn view of the above it is possible to draw the conclusion that the universal method of calculationof materiality level does not exist. There are several alternative approaches used by thecompanies. Almost all foreign auditors use a “classical” approach which was developed in the1970’s (a similar approach used by the companies of “Big Four”).

The alternative approaches arenot so widely accepted and are used mainly by the Russian companies. It seems reasonable todevelop a new approach to the organization of the audit activity on the basis of the informationgiven in the regulations and academic books.2Ernst&Young, KPMG, PriceWaterhouseCoopers, Deloitte&Touche28LITERATURE REVIEW 5The subject of the thesis is “Institutional infrastructure of transformation of knowledge intoeconomic development”. The main aim of the thesis is to work out a new conceptual approach toeconomic development. This aim requires an analysis of three categories (economic development,knowledge and institutions) and interrelation between them.The first category is economic development.

If we want to work out a new approach to thedevelopment, we should first of all explore how neoclassics understand economic development.We should also become acquainted with some non-orthodox theories of development. For thispurpose we may use “Theories of development” (PEET, 1999). In this book Richard Peet criticallysurveys leading theories of development, providing approaches for understanding differences inthe spatial distribution of wealth and poverty. Peet also discusses economic theories of growth anddevelopment; sociological theories of modernization; Marxist and neo-Marxist theories;poststructuralism, postcolonialism, and postdevelopmentalism; feminist theories of development;and critical modernism, radical democracy, and development.

This information provides a goodmaterial for criticism of existing development theories. We can also see positive features ofdifferent theories. Thus Marxist theories take into account the role of knowledge production, whileneoclassics does not.The next step in exploration of the concept of development is to analyse how defferent theoreticapproaches to this phenomenon influence the real state of things – first of all in the area ofeconomic policy.

A very good framework for it is provided by Keith Girffin in “Aletrnative strategiesfor economic development” (GRIFFIN, 2006). Griffin provides a comparative examination of thedifferent economic and social development strategies that have been adopted in the recentdevelopment history of the world. This (second) edition is updated by an introduction thatdiscusses the emergence of the human development approach; the phenomenon of post-socialisttransition; and the acceleration of globalization.

The author identifies six distinct types ofdevelopment strategies: the monetarist strategy, the open economy or outward-looking strategyof development, industrialization, The Green Revolution strategy, redistributive strategies ofdevelopment, anв socialist strategies. As we can see Griffin does not mention the strategy ofknowledge accumulation. It ensures the novelty of our approach.The next key notion is knowledge. Here we face an important question: what is knowledge itselfand how does it influence economy? Knowledge is an abstract category while economy is formedby real phenomena.