Audit committee quality,auditor independence,and internal control weaknesses

In this paper we investigate the relation between audit committee quality, auditor independence, and the disclosure of internal control weaknesses after the enactment of the Sarbanes-Oxley Act. We begin with a sample of firms with internal control weaknesses and, based on industry, size, and performance, match these firms to a sample of control firms without internal control weaknesses. Our conditional logit analyses indicate that a relation exists between audit committee quality, auditor independence, and internal control weaknesses. Firms are more likely to be identified with an internal control weakness, if their audit committees have less financial expertise or, more specifically, have less accounting financial expertise and non-accounting financial expertise. They are also more likely to be identified with an internal control weakness, if their auditors are more independent. In addition, firms with recent auditor changes are more likely to have internal control weaknesses.     

寿险公司内部控制问题探析

当今社会经济的日益繁荣及经济来往的多元化、复杂化,使寿险公司的经营面临着诸多风险,加强内部控制研究和实施就成为寿险公司亟待解决的一个问题。本文揭示了内部控制的涵义和本质,描述了寿险公司内部控制的特点和目前存在的问题,提出了加强寿险公司内部控制应采取的对策:强化内部控制在战略管理中的地位;寿险公司内部控制作为核心竞争力的培育;建立寿险公司内部控制标准;提升内部控制设计思路;加强内部控制的执行力等。     

公司分立的会计处理初探

为适应日益复杂多变的经营环境,公司在不断调整生产经营活动之外,往往必须对组织结构、资产结构、股本规模实施重大调整。这种重大调整包括扩张型的并购、发行新股,以及收缩型的分立。前者在当前的证券市场屡见不鲜,对会计处理问题已有规范,后者则属于市场创新,对会计处理问题既少有规范,也少见相关文献。本文拟就公司分立会计处理作一初步探讨。     

An exploration of the competitive value of an accurate accounting system

The value of an accurate accounting system is compared to one that introduces a cross-subsidy. In a two-product experimental market the accurate system is shown to provide value when a competitor has a system that introduces a cross-subsidy. The value appears to arise from better product-mix decisions. But it is likely that this value is transitory, explaining in part why observational studies of practice have found it difficult to document sustained value from improved information systems.     

An empirical investigation of the impact of audit and auditor characteristics on auditor performance

We use a unique and confidential database of 15,392 tax audits performed by the Croatian Tax Administration during the 2002–2006 period to examine the impact of task complexity, auditor experience, and auditor effort on audit performance. We provide external validation to prior experimental and analytical research showing that task complexity decreases while auditor experience and effort increase audit performance. We also extend this literature by examining the roles of task complexity and experience in moderating the impact of the effort on audit performance. We find that task complexity mitigates, while experience enhances the positive relationship between auditor effort and performance. However, we also find that auditor experience reinforces the positive effect of auditor effort on performance to a greater degree when complexity is high. Taken together, our findings provide new evidence on how audit and auditor characteristics impact audit performance, and new insight into how task complexity and auditor experience separately and jointly moderate the impact of auditor effort on performance.     

An evaluation of computerized accounting practice sets

The purpose of this paper is to discuss computerized practice sets for accounting principles and a method for evaluating them. Criteria for selecting and evaluating computerized practice sets are identified. An evaluation of 10 actual computerized practice sets is presented.     

The effects of precedents and client position on auditors' financial accounting policy judgment

This paper investigates whether precedents (content, perceived similarity, and source) and the client's preferred accounting policy affects audit partner and manager financial accounting policy judgments. The research employs a combination of an experiment with an analysis of archival data. The experimental results show clear support for precedent content and perceived precedent similarity affecting auditor judgment. The archival data analysis suggests that precedent source and client position may indirectly affect auditor judgment through the precedent generation process. Implications of these findings are discussed.     

Belief perseverance among accounting practitioners regarding the effect of non-audit services on auditor independence

We hypothesize, based on management control processes in large firms (Covaleski et al., 1998), that large-firm practitioners will be less likely than small-firm auditors to report beliefs that non-audit services (NAS) impair auditor independence. Based on Goldman and Barlev’s (1974) analysis of auditor-firm conflict of interests and procedural independence safeguards, we also predict that auditors will report less concern over impairment than non-auditors. We investigate also belief perseverance – whether practitioners tend to maintain prior reported beliefs after reading research on the relationship between NAS and auditor independence.     

创办合伙会计师事务所的实践与探索

今年是我国改革开放30周年,适逢中国注册会计师行业创建90周年、中国注册会计师协会成立20周年。上海潘陈张联合会计师事务所是依照1994年实施的《注册会计师法》、由财政部批准设立的第一批合伙会计师事务所之一。回顾我所成立以来的13年历程,不禁感慨万千。这段难忘的历史,可说是我国会计师事务所改革和发展的一个缩影。     

An exploration of student failure on an undergraduate accounting programme of study

Academic failure creates financial and emotional issues for students, with associated resource and performance implications for higher education institutions. The literature reveals that much of the work on student performance is quantitative, restricting understanding of the deeper feelings and perceptions of students towards their studies. This paper explores undergraduate student performance from an experiential perspective, recognising the complexity and subjectivity of academic performance. Findings appear to highlight: the negative focus of reasoning underlying the choice of study; the impact of affect; the importance of the role of the tutor; the tutor expectations gap; levels of control and personal responsibility for learning; and patterns of participation as possible significant and important factors in understanding academic performance. Finally, the implications of the findings are discussed and further research outlined in terms of developing a predictive model that could offer early identification of students who are susceptible to academic failure and establishing appropriate, proactive support strategies for such students.     

The meaning of a defined accounting concept: regulatory changes and the effect on auditor decision making

Accounting standards exist in an attempt to “standardize” accounting practice. These standards contain definitions of accounting concepts whose function is to guide judgments made in practice. However, such judgments can have a major impact on a firm's externally reported accounting numbers, as their inherent subjectivity and discretion may be lent to the manipulation of earnings. This study provides empirical evidence of the effect of measured meaning on an accounting judgment, in the context of regulated changes to the definition of one key accounting concept used in measuring operating income. The extraordinary items classification decisions made by auditors were found to be systematically associated with differences in measured meaning of the extraordinary items definition. The study has important policy implications for accounting standard-setting.     

Management accounting systems and the economics of internal organization

The role, function and design of management accounting and control systems (MACS) are subjects that are being given considerable attention in the accounting literature. The theme of this paper is that recent developments in the economics of internal organization provide a useful framework for bringing economic choice problems associated with MACS into clearer focus. General themes already present in the managerial accounting literature (e.g. performance evaluation and control, participation, responsibility accounting and transfer pricing) gain in vitality when rooted in a more substancial theoretical base than is presently the case.     

A graphical approach to teaching the relationship between the evaluation of internal accounting controls and substantive audit testing

This note reviews auditing theory and professional standards describing the relationship between internal accounting control systems and substantive audit testing. It presents three graphical models that may be used to illustrate to students the basic theoretical relationships and to clarify some points in the professional literature that may be confusing to students and practitioners. We have found these graphical models to be a useful teaching tool. They permit students to extend beyond mere verbalizations to a visualization of the theoretical concepts involved. The final model enhances the students ability to analyze and learn major concepts.     

Reforming central government: An evaluation of an accounting innovation

This paper examines a significant accounting innovation in central government accounting – the introduction of Resource Accounting and Budgeting (RAB) in the UK. This innovation is studied through the lens of Rogers diffusion theory. The study setting is the Scotland Parliament. This research shows that, in the terms of diffusion theory, RAB can be classified as an accounting innovation. However, the implementation of RAB is problematic. While the reform of the UK central government system was initially sought as a mechanism to enhance democratic accountability, this paper shows that RAB does not connect with parliamentarians. The introduction of RAB flows as much from a managerial agenda as it does from the aim of democratic accountability.     

Accounting and environmentalism: An exploration of the challenge of gently accounting for accountability,transparency and sustainability

Concern for the natural environment has not occupied a prominent role in accounting scholarship and practice. This paper attempts to redress this omission by investigating the implications for accounting of placing the environment at the centre of the analysis. The paper introduces the principles of this “deep green” position and explores how accounting might articulate them. Whilst there may be no place for what we currently consider to be conventional financial accounting in any “green utopia” the paper does not attempt to operationalise, within a non-green world, certain of the principles of the green position. Emphasis is placed on an accounting's potential for contribution to accountability and transparency in participative democracy, the potential for non-financial accounts of the biosphere and, perhaps most contentiously, the use of current accounting techniques for the operationalisation of an accounting for sustainability.     

An experimental evaluation of the effects of internal and external e-Assurance on initial trust formation in B2C e-commerce

Both “internally-provided” (IPeA) and “externally-provided” (EPeA) e-Assurances are being used by e-commerce businesses to build trust amongst consumers by alleviating concerns about the privacy and security of e-commerce transactions. The primary focus of this study is to test the effectiveness of EPeA on increasing trust and purchase intentions among potential consumers, and to test if EPeA have an additional effect beyond e-Assurances provided internally (IPeA). Our findings show the presence of EPeA did not affect consumers' trust or purchase intentions, nor did the presence of EPeA increase trust or purchase intentions beyond IPeA, which raises concerns about the value of EPeA to the e-commerce community.     

Client corruption culture and audit quality: the conditioning effect of the competitive position of the incumbent auditor

Review of Quantitative Finance and Accounting - Prior research suggests that corporate corruption culture captures an audit client’s general attitude towards opportunistic behavior. In this...     

Political connections,auditor choice and corporate accounting transparency: evidence from private sector firms in China

This article investigates the way in which political connections impact auditor choice. Using a political connection index constructed based on the bureaucratic ranks of executive managers and board members in Chinese private sector firms, we find that for firms with weak political connections, the likelihood of hiring high‐quality auditors increases with the degree of political connectedness, while it decreases with political connectedness for firms with strong political connections. This inverse U‐shaped relationship is particularly pronounced for firms with ownership structures that intensify agency problems. Finally, we find that political connections and accounting transparency also have an inverse U‐shaped relationship.     

The influence of process accountability and accounting standard type on auditor usage of a status quo heuristic

There has been considerable discussion about the U.S. reporting standards becoming less rules based, similar to International Financial Reporting Standards (IFRS). One proposed advantage of a change to IFRS is increased comparability across multinational and non-U.S. companies. Additionally, some believe that IFRS afford greater flexibility in its principles, thereby enabling firms’ accounting choices to better reflect the true economic nature of any given transaction (FASB, 2002; SEC, 2003). With fewer rules, both financial statement preparers and auditors would be expected to adjust to having more options with regards to financial reporting. However, some proposed changes leave the option open to implement IFRS (or other principles-based standards) in ways that still follow rules in U.S. GAAP. This paper investigates whether prior year accounting treatments influence the judgment for current year treatments when one way to implement the standard is to follow the prior year treatment. We find that some auditors fixate on prior year scenarios and judgments, even if the current year scenario and applicable accounting standards are different. We find that holding auditors accountable for their decision making process reduces the likelihood of sticking with the prior year treatment most notably when the prior year standards were U.S. GAAP.