Hooks, Karen L.

Health promotion and community intervention models are available for
community projects. Project volunteers with business backgrounds may lack
knowledge of these models, but be familiar with business plans. This study analyzed
a community project using the Planned Approach to Community Health (PATCH)
model and a business plan and proposed a new model based on that analysis. The
documented processes and activities of the United Way of Broward County. Florida,
Women's Way 2006 Helmets for the Holidays committee were collected, subjectively
evaluated, and used as the basis for a new model integrating components of PATCH
and a business plan. The significant contribution of the resulting model is its
incorporation of a community outreach component into a planning and management
model that uses business-comfortable language.

This study examines two questions: (1) whether the level professional judgment required in the application of accounting standards affects the comparability of financial reporting; (2) whether financial statement preparers exploit the professional judgment in accounting standards in order to engage in earnings management. The study is motivated by former FASB Chair Dennis Beresford's call for simple accounting standards which rely heavily on the exercise of professional judgment and by SEC Chair Arthur Levitt's concerns that managers exploit the flexibility in accounting standards to engage in earnings management. Agency theory is used to develop two hypotheses which predict the conditions under which financial statement preparers exploit the professional judgment allowed in the application of accounting standards in order to manage earnings. Normative arguments are used to develop a third hypothesis about the relationship between the level of professional judgment required to apply accounting standards and the comparability of financial reporting. The study uses an experiment methodology to examine the financial reporting decisions of 111 financial statement preparers in corporations located throughout the United States. Participants are randomly assigned to one of four experimental groups (a control group, a profit-sharing plan group, an information asymmetry group, and a moral hazard group). The study's results support the hypothesis that there is less comparability in financial reporting when accounting standards rely heavily on the exercise of professional judgment than when standards place fewer demands on professional judgment. The findings also provide some support for the idea that moral hazard conditions interact with the level of professional judgment required in the application of accounting standards to affect the reporting decisions of financial statement preparers. However, the male financial statement preparers in this study reacted differently than their female counterparts when faced with moral hazard conditions.