Earnings management, Ultra vires borrowing, and auditing of a scottish brewery 1884–1927

Alan Sangster, Forbes Gibb

Research output: Contribution to journalArticle

Abstract

This paper concerns a Scottish brewery company, R. & D. Sharp Ltd., an early mover in converting to limited company status in the 1880s. It explores the company’s origins, the industry in which it operated, and investigates its financial reporting and auditing practices during the first two decades of the 20th century, a period when regulation of financial reporting and auditing in the U.K. were in their infancy. This was a time of considerable difficulty for all U.K. breweries: industrial production fell and many brewing businesses failed, including the two local breweries that were R. & D. Sharp’s immediate competitors. The study finds that the company’s response to the industrial decline took two forms: the company auditor manipulated its financial data to maintain an appearance of financial stability, condoned ultra vires borrowing, and kept some defensive financial practices ‘‘off the books,’’ while the general manager managed the company’s relationship lending and borrowing. Sources of primary data include the company’s statutory annual returns and the general manager’s 800-page letter book.

Original languageEnglish
Pages (from-to)1-15
Number of pages15
JournalAccounting Historians Journal
Volume44
Issue number2
DOIs
Publication statusPublished - Dec 2017

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Auditing
Earnings management
Borrowing
Managers
Financial reporting
Competitors
Industry
Industrial production
Relationship lending
20th century
Financial data
Brewing
Financial stability
Auditors

Keywords

  • Auditing practices
  • Brewing history
  • Family businesses
  • Relationship management
  • Ultra vires borrowing

ASJC Scopus subject areas

  • Accounting

Cite this

Earnings management, Ultra vires borrowing, and auditing of a scottish brewery 1884–1927. / Sangster, Alan; Gibb, Forbes.

In: Accounting Historians Journal, Vol. 44, No. 2, 12.2017, p. 1-15.

Research output: Contribution to journalArticle

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