Review of empirical research on rotation and non-audit services: auditor independence in fact vs. appearance

Confidence in the processes of corporate reporting and auditing has rapidly decreased recently due to front-page accounting scandals in both the United States and Europe. The goal of audit regulations, such as the Sarbanes Oxley Act in the United States (US) and the 8th Directive in the European Union (EU), is to restore public trust in the auditing process. Along with other regulatory aspects, requirements related to audit partner rotation and bans on providing concurrent non-audit services were implemented to maintain auditor independence, both in fact and in appearance. However, the implementation of audit regulation implies that increased requirements are able to enhance the failed audit function. Empirical research should help to understand the impact of these two regulatory aspects and indicate their effectiveness in maintaining auditor independence. Thus, we outline the newest empirical research related to audit partner rotation and non-audit services and independence in fact or in appearance. Overall, we conclude that prior research does not point to one particular requirement that would most effectively restore trust in the audit function. Rather the existence of multiple threats to auditor independence might demand a combination of several requirements to maintain auditor independence. Thus, more research is needed to investigate the joint effects of different threats to auditor independence, e.?g., non-audit fees and audit partner tenure.     

How personal and organizational drivers impact on SME international performance: The mediating role of organizational innovation

This article develops and tests a conceptual model to identify the impact of internal drivers (personal and organizational) on the international performance of small and medium-sized enterprises (SMEs). Drawing on the resource-based view of the firm and its capability extensions, it is argued that the effect of drivers is mediated by organizational innovation. To test the proposed theoretical model, we collected data from 120 exporting SMEs in Portugal. Results show that the indirect mediating effect of innovation is particularly relevant with regard to the organizational driver-performance link. Insights contribute to research on the importance of innovation for capability and resource deployment during internationalization.     

Auswirkungen der Markttransparenzstelle für Kraftstoffe

The authors analyse how the market transparency unit for fuels in Germany affects both supplier and consumer behaviour. The number of price changes has increased, mainly due to increasing price cuts, as has the spread between the lowest and the highest price of the day — both indicators of intensified competition. The concern that the introduction of the market transparency unit would facilitate collusion appears not to be warranted. In contrast, competition has intensified and consumers are increasingly making use of the price differences. The analysis also reveals that consumers purchased more gasoline in times of low prices (so-called price valleys) in 2015 than they did in 2012. The change in consumer behaviour is an indicator that at least some drivers tend to use fuel price comparison apps fed by data from the market transparency unit.     

SCAM: Design of a learning and teaching resource

University accounting students often have to assimilate technical auditing knowledge without practical audit experience. The desire to develop an appropriate experiential opportunity motivated this research - to create an audit teaching and learning resource to simulate audit experience and facilitate the development of transferable skills. Literature findings and dedicated questionnaire survey results suggested that such a resource should: (i) use a web based case-study to simulate a real-life audit scenario; (ii) require group working of the participants; (iii) facilitate the use and development of a range of transferable skills; and (iv) encourage a consideration of the wider business context. The web-based resource SCAM (www.scam-plc.co.uk) was developed to address these aims. This paper details this development process.     

A Bradley-Terry type model for forecasting tennis match results

The paper introduces a model for forecasting match results for the top tier of men’s professional tennis, the ATP tour. Employing a Bradley-Terry type model, and utilising the data available on players’ past results and the surface of the contest, we predict match winners for the coming week’s matches, having updated the model parameters to take the previous week’s results into account. We compare the model to two logit models: one using official rankings and another using the official ranking points of the two competing players. Our model provides superior forecasts according to each of five criteria measuring the predictive performance, two of which relate to betting returns.