Funds Statements and the Two-Entity Test: A Reponse

Robb (1985) criticizes the two-entity test proposed by McKinnon et al. (1983) as confusing and contradictory. This reply demonstrates that his criticisms also are confusing and contradictory.     

THE IMPACT OF BOARD COMPOSITION AND OWNERSHIP ON AUDIT QUALITY: EVIDENCE FROM LARGE UK COMPANIES

This paper examines the impact of board composition and ownership structure on audit quality in the UK prior to the adoption of the recommendations of the Committee on the Financial Aspects of Corporate Governance ([5]). In this study I use audit fees as a proxy for audit quality and seek to investigate whether the proportion of non-executives, the extent of managerial ownership or ownership by large blockholders influences the extent of auditing, and consequently, the audit fee. Utilizing data from a sample of 402 quoted companies I find that the proportion of non-executive directors has a significant positive impact on audit fees. I also find that audit fees are negatively related to the proportion of equity owned by executive directors. I find no evidence that ownership by large blockholders (institutional or otherwise) or CEO/chairman duality has a significant impact on audit fees. Overall, the findings suggest that non-executive directors encourage more intensive audits as a complement to their own monitoring role while the reduction in agency costs expected through significant managerial ownership results in a reduced need for intensive auditing.     

Auditors' Responsibilities for Events Arising After Balance Date

This paper critically evaluates relevant Australian and international professional documents applicable to the auditor's duties to audit and report on listed companies'annual accounts in the open-ended period subsequent to balance date. This examination suggests certain defects within these documents of potentially serious legal consequence. Particular attention is focused on matters relating to the tenure of the statutory audit appointment, the derivative contractual arrangement and the notion of auditor reliance upon management. The extent to which compliance with professional documents, adopted throughout the profession, is a necessary and sufficient defence in lawsuits grounded in negligence claims is analysed. This analysis is sustained in terms of the legal standard of care that may be judicially applied in the determination of auditor liability in the open-ended post balance date period.     

Whitehall's Half-Nelson on Small Business

Both Conservative and Labour Governments have discovered the small business and have pretended to assist its creation and expansion. Graham Dawson maintains that whatever the Government has done to encourage small business, it has done even more to depress and discourage it.