The KPMG LLP and UIUC Business Measurement Research Program

Program Overview and Call for Proposals

Technological, economic, social, and regulatory trends continue to present opportunities to business executives to better manage and differentiate the companies they lead through improved business model transparency. In response to these trends and opportunities, in 2002 KPMG LLP and the University of Illinois at Urbana–Champaign (UIUC) launched their Business Measurement Research Program. KPMG LLP and the KPMG Foundation have pledged U.S.$2.8 million to fund research activities under the program, and both KPMG and UIUC provide additional administrative support. The program funds research by competitive processes with annual calls for proposals and by commissioning specific projects.

Program Overview and Key Features
The program seeks to advance knowledge on a broad variety of business measurement topics including risk measurement and control, business process performance, internal and external business reporting, and transparency, assurance, corporate governance, and enabling technologies. Business measurement is defined broadly under the program to include the design, implementation, and validation of financial and nonfinancial measures within the business model* context, i.e., management’s strategies and operating environment, critical success and risk factors, business process activities, and any other decision-relevant objects and events within the entity’s economic network that have or could significantly impact the entity’s operational and financial results.

Important features of the program include the following:

• The reach of the program is global. Proposals are invited from research teams domiciled anywhere in the world and the program welcomes research teams with members from different geographic regions.
• The program encourages:
  • • collaborative projects with teams that include both academic researchers and business managers and/or accounting professionals knowledgeable in the subject matter under study, and
  • • multidisciplinary academic teams that bring different but complementary research perspectives and designs to the project.
• A variety of flexible funding arrangements are available under the program, including:
  • • Direct payments to the project team members
  • • Payment plans that allow funding to be provided through the employer(s).
• The amount of the typical research grant ranges from U.S.$50,000 to U.S.$100,000, although smaller and somewhat larger requests will be considered.
• The selection process is rigorous, enlisting multiple reviews from a panel of outside academics knowledgeable on the subject matter and the members of the Program Advisory Board (see below).

Projects Funded during Round One
During the Program’s first submission period in 2003, seventy-four proposals were received requesting funds totaling approximately U.S.$5,940,000. Twelve proposals totaling approximately U.S.$1 million were selected for funding, with an average award of just over U.S.$83,000. Funded topics include business model measurement and disclosure, business risk measurement, the relationship between financial performance and customer satisfaction, performance measurement and measurement-based reward systems, transfer pricing, financial-statement forecasts, and environmental measures and disclosures. Ten of the thirty-five funded researchers are domiciled outside of the U.S., which is roughly equal to the proportion of non-U.S. proposals received to total proposals received. In addition to the U.S., countries represented in the funded projects for Round One include the United Kingdom, Germany, Italy, Denmark, and Israel. Six of the twelve projects involve collaborations between the academic team and business executives. The twelve funded projects and research team members are presented in the accompanying exhibit.

In addition to the twelve projects funded under the Round One competitive call for proposals, three projects were commissioned during 2003. Topics and research team members for these three projects are: Assessing and Managing Strategic Alignment (Robin Cooper, Emory University), The Rutgers Continuous Assurance and Reporting Laboratory (Rutgers University Faculty and Doctoral Students), and Advancing the State-of-the-Art in Hospital Patient Care Reporting (David Sherman, Northeastern University and Joe Zhu, Worcester Polytechnic Institute).

Call for Proposals for Round Two
The Program is now open for the second round of research proposal submissions. All research approaches and paradigms are acceptable including modeling, experimental, archival, and field analysis applications. During Round Two the Program Advisory Board has a special interest in receiving proposals on the linkages between business modeling and measurement and fraud detection. Teleconferences for proposal authors are tentatively scheduled for Friday, November 21, 2003, 11:00 a.m.—12:00 p.m. U.S. Eastern time and Friday, January 9, 2004, 2:00 p.m.—3:00 p.m. U.S. Eastern time.

The submission deadline for Round Two proposals is February 1, 2004. Funding decisions for Round Two proposals will be announced as soon as the evaluations are complete, but no later than May 15, 2004. All proposals must be submitted electronically to the Program Assistant, Michelle Loyet, at the following email address: mloyet@uiuc.edu. Proposal text and all supporting materials must be in a single electronic file in either Word or PDF format. Multiple files or files in other formats will be returned to the authors for reformatting. Applicants who have questions about the program or proposal process should send their inquiries to Timothy Bell at tbell@kpmg.com or A. Rashad Abdel-khalik at rashad@uiuc.edu. Other inquiries should be directed to Michelle Loyet at mloyet@uiuc.edu.

The “Invitation to Submit Proposals” for Round Two and other important program information, including teleconference details, may be viewed on the program web site: http://www.business.uiuc.edu/kpmg-uiucresearch/index.htm.

The Program Advisory Board members are:
A. Rashad Abdel-khalik
Professor of Accountancy, Director of the Zimmerman Center, University of Illinois at Urbana–Champaign

Timothy B. Bell
Director, Assurance Research, KPMG International’s Assurance & Advisory Services Center

Martin P. Finegan
Managing Director of Strategy and Research, KPMG International’s Assurance & Advisory Services Center

Avijit Ghosh
Dean, College of Business, University of Illinois at Urbana–Champaign

D. Scott Showalter
Industry Sector Leader, Public Sector, KPMG LLP (Formerly Managing Partner of KPMG International’s Assurance & Advisory Services Center)

Ira Solomon
Robert C. Evans Endowed Chair in Commerce, Head of the Department of Accountancy, University of Illinois at Urbana–Champaign

* The business model may be thought of as a simplified representation of the network of causes and effects that determine the extent to which the entity creates value and earns profit (Bell, T.B., and I Solomon, Cases in Strategic-Systems Auditing, KPMG LLP, 2002, p. xi).

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