Implications Of the AWA Decision For External Auditors, Internal Auditors And Management

The decision in AWA Ltd v Daniels has important implications for auditors, directors and other professionals providing accounting services to clients. Previously, where the external auditor had been negligent, Australian courts awarded full damages against the auditor in favour of the plaintiff In AWA, a defence of contributory negligence succeeded and damages were apportioned between the company and the external auditor. Also, the auditor succeeded in a claim for contribution against the chief executive officer. This paper analyses the implications of the AWA decision for internal and external auditors and management. It examines issues related to contributory negligence and contribution. These issues are important in the light of recent discussion about reform of the law concerning "proportional" liability.     

The Interface between Internal and External Audit in the Australian Public Sector

This study seeks to answer the research question ‘using reliance as the pivotal consideration, what factors determine the efficient and effective interrelationship between internal and external audit?’, within the context of the Australian public sector. A qualitative approach, framed within agency theory, was adopted using a case study and structured interviews. Findings included factors supporting prior literature as well as some unique to the research described here. As a result, this article makes a contribution to the literature examining public sector internal and external audit interrelationships as well as the literature on police audit and performance. It also has practical implications for both the case study site and similar organisations throughout the world.     

The Association Between Operating Cash Flows and Dividend Changes: An Empirical Investigation

The Association between earnings and dividend changes has been established since Lintner's (1956) pioneering work. Subsequent research attempted to establish an association between operating cash flows and dividend changes, given earnings, without success (Simons, 1994). Recently, there has been increased attention in cash flow reporting. Regulatory bodies worldwide have stressed the significance of cash flow information in capital markets. Research on the association between cash flows and dividends has been limited, yielding inconclusive results. The purpose of this study is to re-evaluate and extend prior studies by examining the incremental ability of cash flows to explain dividend changes, given earnings. We argue that a positive relationship between cash flows and dividend changes should exist due to liquidity and accruals management considerations. The empirical evidence of this study supports that the dividend changes-cash flow relationship is significantly positive (a) when operating cash flows are low compared to earnings, and (b) when firm growth is moderate.     

国际内部审计师协会关于公共部门内部审计能力模型的研究与启示

国际内部审计师协会(简称IIA)2009年发布了公共部门内部审计能力模型研究报告,本文从背景、原则、主要内容三个方面介绍了这份研究报告。通过这份研究报告,我们可以看出:公共部门内审人员胜任能力建设是一个不断制度化的过程;控制环境建设的完善程度将影响内审人员能力的提升;应通过相关法律、法规建设,政府审计建议,以及中国内部审计协会来推动我国公共部门内部审计制度的建立、完善。     

An Empirical Investigation of the Arbitrage Pricing Theory

Empirical tests are reported for Ross' [48] arbitrage theory of asset pricing. Using data for individual equities during the 1962–72 period, at least three and probably four priced factors are found in the generating process of returns. The theory is supported in that estimated expected returns depend on estimated factor loadings, and variables such as the own standard deviation, though highly correlated (simply) with estimated expected returns, do not add any further explanatory power to that of the factor loadings.     

An Empirical Investigation of the Option-Adjusted Realized Return

The issue of meaningful evaluation of professionally managed portfolios remains to be resolved satisfactorily within the investment community. The fact that many of the current procedures for evaluating portfolio performance are deeply rooted in conventional mean-variance (M-V) analysis raises serious concerns from a theoretical perspective. The primary objective of this paper is an empirical investigation (as differentiated from a thorough empirical test) of an ordinal portfolio performance measure, called the Option-adjusted Realized (average rate of) Return or ORR, developed recently by Smith and Kokoska (1998). The ORR is a leverage- and risk-adjusted average realized rate of return that can be used directly in evaluating portfolio performance.Using returns data for June 1992 to May 1998, we estimate ORRs for two portfolios—the CREF Stock Fund and a hypothetical market index portfolio whose composition is identical to that of the S&P 500 Index. Also, we estimate Sharpe and Treynor ratio values for each portfolio and compare rankings provided by these methods for the two portfolios with rankings provided by the ORR method. For the interval of time from June 1995 to May 1998, the rankings provided by the three methods are not consistent. The ORR rankings for this time period indicate the CREF Fund underperformed the S&P Index on a risk-adjusted basis. Additional partitioning of the data creates other multiple intervals or holding periods for which the evaluation results (ex post) support at least moderate likelihood of unambiguous inconsistency ex ante. We argue that, given our set of assumptions, the ORR rankings, founded in option-pricing theory, are more reliable than the others that are M-V based.     

A Study of the Informal Interactions between Audit Committees and Internal Auditors in Australia

This paper finds evidence for the growing importance of informal interactions between the internal audit function and the audit committee (AC) in Australia – a relatively unexplored topic in the literature – using a survey of Chief Audit Executives (CAEs). It also describes the nature of these informal interactions. The most innovative elements of this paper are the findings that certain personal characteristics of CAEs, the specific knowledge and expertise of the AC chair, as well as some of the AC chair's personal characteristics are associated with the existence (and increase) of informal interactions.     

Internal versus External Financing: An Optimal Contracting Approach

We study optimal financial contracting for centralized and decentralized firms. Under centralized contracting, headquarters raises funds on behalf of multiple projects. Under decentralized contracting, each project raises funds separately on the external capital market. The benefit of centralization is that headquarters can use excess liquidity from high cash‐flow projects to buy continuation rights for low cash‐flow projects. The cost is that headquarters may pool cash flows from several projects and self‐finance follow‐up investments without having to return to the capital market. Absent any capital market discipline, it is more difficult to force headquarters to make repayments, which tightens financing constraints ex ante. Cross‐sectionally, our model implies that conglomerates should have a lower average productivity than stand‐alone firms.     

An Empirical Investigation of the Campbell-Cochrane Habit Utility Model

Abstract:  This paper tests whether the Campbell and Cochrane (1999) habit utility model generates a valid stochastic discount factor for the 25 Fama-French size/book-to-market and size/momentum sorted portfolios. Campbell and Cochrane (1999) derive a consumption based habit utility asset pricing model and calibrate it to aggregate US stock market data. However, they do not test whether their model is consistent with a larger cross section of asset returns. We test their model using the methodology of Hansen and Jagannathan (1991) and Burnside (1994) . In contrast to previous studies, we find that for reasonable parameter values, the model's stochastic discount factor is inside the Hansen-Jagannathan bounds and therefore satisfies the necessary conditions for a valid stochastic discount factor. We trace the difference between our results and previous studies to the method used to estimate the model's parameters and the parameter values themselves.     

企业会计内部控制的内外环境分析

控制环境作为内部控制中最为基础的一环,对内部控制的有效实施起着非常重要的作用。拟从外部和内部两个方面来分析我国内部控制环境的现状,进而提出完善内部控制环境的措施。     

因子分析法下的央行内审人员胜任能力研究——基于内审增加组织价值的视角

内审部门作为央行主要的内部管理部门之一,内审工作直接影响到其履职成效和管理效果,而内审人员的胜任能力又是影响内审工作质量的重要因素,开展央行内审人员胜任能力研究十分必要.本文在参考国内外对胜任能力研究的基础上,通过因子分析法从众多影响央行内审人员胜任力的因素中提取出学识、实践和素养三个主要因子,从增加组织价值的视角,深入分析增强内审人员胜任能力的渠道和途径,实现对内审人员胜任力增加组织价值的研究.     

The Review Report: An Empirical Investigation

A laboratory study was used to investigate two questions of relevance to the expectations gap: (1) what differences do the users of financial statements perceive between an audit and a review?, and (2) what impact does changing the format of the audit report from the short form wording used in the UK prior to September 1993 to an expanded version (based on the expanded US audit report) have on these perceptions? Results of investigating (1) indicate that users perceive a number of differences between the audit and the review. Results of investigating (2) demonstrate that expansion of the audit report increases the number of differences perceived by users. The paper goes on to discuss the results in the context of the differences between an audit and a review suggested by IFAC guidelines. It was found that, in a number of respects, IFAC guidelines are inconsistent with user perceptions irrespective of the expansion of the audit report. The implication for audit policy is that any proposal to promote the use of reviews in the UK should address this inconsistency either by reappraising and refining IFAC's guidance on the review and/or by sharpening user perceptions of the review through careful wording of both the review and the audit reports.     

内部控制信息披露经济后果实证研究

2002年《萨班斯法案》颁布实施以来,内部控制信息披露作为预防舞弊保护投资者利益的重要制度安排,受到世界各国证券监管部门的重视.我国要求2011年起境内外同时上市公司全面披露内部控制信息,2012年起两大交易所主板上市公司强制披露内控信息.研究发现披露内部控制鉴证报告的样本公司支付的审计费用更高,而是否披露内部控制自我评价报告及是否披露内部控制缺陷与审计费用变化不存在显著关系.研究结论提供了我国内部控制信息披露制度在审计领域引发经济效果的客观证据,同时发现与验证了新制度环境下影响上市公司支付审计费用变化的新的重要影响因素.     

委托外部审计师对外资银行现场检查的研究

委托外部审计师对外资银行进行现场检查是许多国家监管当局在监管实务中的普遍做法,它通过提供独立的专业评估视角,有助于提升银行现场检查质量和水平.因此,应在完善细化相关立法的基础上,从机构选择、质量控制、检查范围等多个方面完善我国现有制度.     

Housing Price Dispersion: An Empirical Investigation

The efficiency of a market is challenged when price dispersion occurs. Previous studies focused on non-durable consumption goods. This study extends the analysis to the case of residential property, whose transactions are dominated by a second-hand market with many potential buyers and sellers. We demonstrate that housing price dispersion exists, and the degree of dispersion changes systematically with some macroeconomic factors, though the second and the third moment of the price distribution react differently to the macroeconomic variables. Some directions for future research are suggested.     

An Empirical Investigation of Eastern European Bond Markets

We examine the value of Eastern European emerging bond markets to global fixed income managers. In an environment where bonds from traditional developed markets are offering modest yields, emerging market bonds with attractive yields are becoming more popular with institutional managers. Furthermore, the returns on these bonds exhibit low correlations with traditional fixed income investments and thus offer opportunities for portfolio diversification. We develop a multifactor forecasting model and estimate its parameters using a dynamic Kalman filter procedure. The forecasts are then used to construct optimal mean–variance portfolios with and without emerging market bonds. We find that the portfolios that include emerging market bonds have significantly higher Sharpe ratios.