Non-audit services and auditor independence: some evidence from Ireland

This study reports the results of an investigation into the effects of the provision of non-audit services (NAS) on perceptions of auditor independence held within the Irish commercial environment, an environment not previously subject to a study of this nature. The methodology used in the study combined the use of a mail questionnaire and semi-structured interviews to allow both breadth of coverage and the opportunity to probe deeper into the nature of the perceptions held. The principal findings of the study were that perceptions of auditor independence were significantly diminished when NAS were provided to clients by personnel involved in the audit rather than by either a separate department within the audit firm or to non-audit clients only. The study highlighted that users of financial statements were willing to accept some reduction in auditor independence consequent upon the provision of NAS if this resulted in firms obtaining better or more cost-effective advice or if it resulted in a higher standard of audit. Analysis of the interviews provided further insights into the manner in which users of financial statements formed these perceptions and also suggested that, in the opinion of the interviewees, the small size and closeness of the Irish audit market acted to enhance rather than diminish audit independence.     

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.     

International Comparisons of Labour Productivity in Transport and Communications: The US,the UK and Germany

We construct benchmark estimates of labour productivity covering the transport and communications sectors for the US, UK and Germany for 1992 and 1993. The US lead is substantial in rail and trucking, even after adjusting for differences in stage length, but Britain leads in air transport and all three countries have similar productivity levels in local transport. In telecommunications and postal services the US enjoys a large lead over both the UK and Germany. We compare these estimates based on industry data with ones derived from the national accounts and find them similar in communications but not in transport. For 1973–96, and also 1989–96, productivity was growing slower in the US, hence some of the gap has been closed.     

Reviewing the Working Time Directive: rationale,implementation and case law

In November 1993 the Social Affairs Council of the EU adopted the Directive on the Organisation of Working Time. The EU Commission is committed to a review of the operation of this Directive in 2003. In this paper we re‐examine the economic rationale for such regulations, assess the different legal arrangements for the implementation of the Directive and summarise recent case law. In conclusion, we suggest that the forthcoming review is likely to provide an important indicator of any EU reassessment of economic and social priorities.     

中国会计国际协调:进展、障碍、对策

国际协调是中国会计准则建设的重大命题。文章回顾了中国会计国际协调与改革开放的进程,指出中国会计国际协调进程中的主要障碍,并提出推进中国会计准则国际化的对策。     

The international firms as new entrants to the statutory audit market: an empirical analysis of auditor selection in Greece, 1993 to 1997

This paper investigates choice of statutory auditor in Greece in the five years subsequent to the 1992 liberalization of the audit market. We analyse auditor choices by 205 companies which, by 1997, represented almost 90% of companies listed on the Athens Stock Exchange. We find that the level of shareholdings by foreign shareholders is positively associated with choice of a Big Six versus any other auditor both immediately after liberalization in 1993 and still in 1997, indicative of the role of the Big Six in providing audit credibility in the eyes of international investors. In addition, Big Six auditors strengthened their position in the finance sector and, outside the finance sector, among larger companies over the period studied. We also find that in both 1993 and 1997 Big Six firms were distinguished specifically from the second-tier international firms, consistent with the view that, in post-liberalization Greece, companies by their choice of auditor appear to be distinguishing Big Six firms from all others but not between second-tier international firms and local auditors. These findings shed light on the hitherto unresearched area of which companies Big Six auditors target in order to gain market share when they are new entrants in an environment radically changed by regulatory reform. In addition the research extends the auditor name brand reputation debate by its finding that, in post-liberalization Greece, second-tier international firms appear to be distinguished from the Big Six but not from the local audit firms.     

Human resource and industrial relations practices of UK and US multinationals in Germany

Most of the research about HRM and IR practices of MNCs in their host country has been conducted in deregulated countries such as the UK and the US. Host countries with relatively weak institutional arrangements facilitate the transfer of home-country practices. In contrast, those with institutionally strong systems, such as Germany, impose stronger pressures for adaptation. This paper reports research about nine US and four UK subsidiaries operating in Germany. It examines how their HRM and IR practices are shaped by German labour and IR institutions, how they differ from a control group of indigenous firms and what room for manoeuvre is left for the introduction of home-country practices. The main conclusions are that small and medium-sized subsidiaries in particular can to some extent avoid the pressures exerted by German labour and IR institutions. This facilitates the transfer of home-country practices. However, even larger affiliates that comply with the German institutions can transfer practices from their parent company. The highly regulated German system leaves some room for flexibility. Nevertheless, the institutional environment prevents large companies from following a unitarist HRM and IR approach.     

审计处罚的内涵和主体

审计处罚权是审计机关重要的行政执法权。现行审计法律法规对审计处罚做了原则性规定。但有些方面的规定尚不明确,实践中存在着模糊认识。目前审计机关和审计理论界对审计处罚关注不多,审计处罚的一些理论、实务问题亟待探讨明确。该文立足审计实践需要.力求澄清、界定审计处罚实践中的模糊和不明确之处。以服务审计实践。     

Reinventing auditing,redefining consulting and independence

This paper deals with recent developments in auditing, taking KPMG's ‘business measurement process’ as its example. From this example it is discussed how and why auditing is currently being ‘reinvented’. The ‘reinvention’ of auditing, it is argued, represents a fundamental break with the established epistemological dualism between auditing and management advisory services,¹ that is central to most literature on auditor independence, including the European Commission's Green Paper. Consequently, it is not only auditing that is being reinvented, it is also consulting and independence, and the consequences of this rupture are finally discussed. The paper concludes that the auditor cannot be independent because auditing is no longer independent.     

Coping with International Accounting Diversity: Fund Managers' Views on Disclosure,Reconciliation, and Harmonization*

In this paper we examine the practices of representative samples of U.S.- and U.K.-based international investment managers in order to determine whether and how they are affected by accounting diversity and, therefore, by the presence or absence of quantitative reconciliation, and what their views are towards greater disclosure, reconciliation, or harmonization. We find that all three forms of reduced diversity-more uniform disclosure, quantitative reconciliation to U.S. GAAP, and international harmonization are viewed as good things by managers. None, however, appears to be critical in the investment process. Reconciliation is a costly requirement and we conclude that the SEC's insistence on reconciliation is not well-founded and that other means, especially greater emphasis on mutual recognition subject to certain minimum standards of disclosure and presentation, would be more effective.     

UK trading: A guide to charities and the tax implications

Due to the recession, the National Lottery and the increase in numbers of charities seeking funds to satisfy their objectives, charities are moving into new areas of fundraising which undoubtedly are leading towards the increasing role of trading. What this paper hopes to achieve is to define trading, discuss some of the major types of trading and their taxation aspects, and to point out some of the pitfalls and how they might be overcome.     

Auditor independence,incomplete contracts and the role of legal liability

We develop a model in which there is conflict of interest between the management and the shareholders of an organization. Incompleteness of contracts prevents a simple contracting solution to this problem. We suggest that auditors can play a role in aligning the conflicting interests. However, this result is dependent on auditors maintaining independence from management. Again however, incompletenesses in contracting causes difficulties because it may be hard to ensure that auditors maintain this required independence. In this context, the imposition of potential legal liability (punishment) on the auditor, may be an important commitment mechanism for the auditors, making it credible that they will not collude with the management. In order to give our model institutional structure we study how this collusion may take place through the reappointment concerns of the auditor. In the reappointment game, we consider how legal liability levels could be chosen so that it becomes credible to expect that auditors will not implicitly collude with management and provide a low duty of care.     

损益要素的国际比较、协调及对我国的启示

各国财务会计概念框架中的损益要素存在重要差异,表现在损益要素的构成和要素的内涵、外延方面。通过国际比较,指出收益的两种观点、收入(费用)与利得(损失)是否分列、是否单独设置业绩要素等实质性分歧。在损益要素国际协调的背景下,对我国损益要素的重构提出建议。     

Global Accounting Harmonization from a German Perspective: Bridging the GAAP

This paper presents the results obtained from a survey of various aspects of international accounting harmonization in which we submitted questionnaires to senior managers of major German companies and university professors of accounting. Most corporate managers were at least sceptical with regard to US-GAAP principles. The professors held divergent views, ranging from clear rejection to decided approval. Almost all participants agreed, albeit to different degrees, that German accounting rules reduce the demand for German shares abroad. With respect to the information value for investors in capital markets, the majority of managers had a positive opinion of German accounting. They further assumed that US accounting practice has a negative effect on capital market conditions in that it encourages short-term thinking. The academics, in contrast, were more in favor of US accounting and more critical towards German accounting. In the light of these results it was surprising to find that German accounting experts, including the managers interviewed, were far from rejecting further harmonization. Only a quarter of the managers and less than 10 per cent of the professors were decidedly against any modification of current German accounting rules. However, the experts clearly wished to limit the harmonization of accounting to consolidated financial statements. The majority of managers were in favor of giving German corporations the option of preparing their consolidated financial statements in accordance with either the German Commercial Code (HGB), IAS or US-GAAP. The academic experts, on the other hand, wished to see IAS as the authoritative basis for consolidated financial statements.     

Seniority,experience, and wages in the UK

This paper uses BHPS data to investigate the relative importance of seniority and experience in determining male wages in the UK labor market. Using both the Altonji and Shakotko instrumental variable and the Topel two-step estimation approaches, I find that for all male workers, tenure plays a modest role, increasing wages by about 1% each year over the first 10 years on the job. General labor market experience has a larger role, so that after 30 years wages have increased by about 60%. Individual and job match heterogeneity are important, and should be carefully modeled when estimating wage equations for the British labor market. These results are remarkably similar to the most recent evidence about these relationships in the US labor market. After extending the standard model to include industry and occupation experience, the estimated impact of job seniority becomes negligible for nonunion workers. Instead, the wages of nonunion workers rise because of the accumulation of general and sector-specific experience. The wages of union workers are still found to increase with job seniority over the first ten years with their employer, suggesting that if seniority matters for wages it is only for union workers.