Audit Adjustments and Public Sector Audit Quality

In the context of austerity-inspired reforms to public audit in England we investigate the extent to which audit firms mitigate management bias in public sector financial reports. A substantial body of literature finds that both public and not-for-profit managers manage ‘earnings’ to report small surpluses close to zero by managing deficits upwards and surpluses downwards. Under agency theory, auditors acting in the interests of their principal(s) would tend to reverse this bias. We exploit privileged access to pre-audit financial statements in the setting of the English National Health Service (NHS) to investigate the impact of audit adjustments on the pre-audit financial statements of English NHS Foundation Trusts over the period 2010–2011 to 2014–2015. We find evidence that auditors act to reverse management bias in the case of Trusts with a pre-audit deficit, but find no evidence that this is the case for Trusts with a pre-audit surplus. In the case of Trusts in surplus, these findings are consistent with auditors’ interests being aligned with management, rather than principals.     

The Market for External Audit Services in the Public Sector: An Empirical Analysis of NHS Trusts

This study investigates the market for audit services in the UK National Health Service (NHS). The market has a number of interesting features, including the presence of the Audit Commission as a regulator, appointer and provider of audit services. Following a theoretical overview of audit pricing in the NHS, evidence is provided on the behaviour of private sector auditors in an environment where audit risk characteristics differ from the private sector. The research also investigates, for the first time in the public sector, the relationship between audit fees and non–audit (consultancy) fees. Comparisons are also drawn between audit fees in the public and private sectors in an analysis of audit fees by industry. Despite some key similarities, the study shows that a number of differences exist between private and public sector audit fee models. In particular, we find no evidence of Big 6 (or mid–tier) auditor premiums, but we do find a significant negative relationship between audit and consultancy fees providing support for the 'knowledge spill–over' hypothesis. In addition, the fees charged to trusts appear significantly lower than their private sector counterparts, despite trust auditors having additional duties to perform. Possible explanations for this finding are offered in the paper.     

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。     

Measurement Challenges and Consequences in the Australian Public Sector

Among the transformations in accounting and measurement practice that have swept through the public sector in the past decade, the widespread adoption of some variant of cuwent or replacement cost accounting for non-cuwent assets has attracted keen research attention (eg, Walker 1993, Walker et a1 1997). This paper addresses two key issues. First, it explains why cuwent cost accounting style measurement has proliferated in the budget- funded public sector while becoming largely1 extinct in the private sector. Second, it argues that the significance of measurement choices in the public sector extends beyond the appearance and composition of public-sector financial statements, and may have significant implications for contracting and outsourcing choices.     

The Existence and Composition of Audit Committees in the New Zealand Public Sector

This study investigates the association between the source of funding of New Zealand public‐sector entities (PSEs) and the existence and composition of their audit committees. We examine 134 PSEs in the health, local government and tertiary sectors. Of these PSEs, 81 (60%) have an audit committee. The size of the audit committees are on average larger than recommended by best practice guidelines. However, most of the PSEs comply with guidelines recommended for audit committee independence but not financial expertise. PSEs with higher levels of government funding are more likely to establish audit committees and PSEs that rely on funding from rate payers and debt providers are more likely to have audit committees with a majority of independent members. There is no support for the association between the source of funding and the level of financial expertise on audit committees.     

澳大利亚内部审计模式调查与研究

澳大利亚是审计制度比较完善的西方国家,内部审计的历史很长。目前澳大利亚内审在发挥传统作用的同时,正在成为企业风险管理的重要组成部分,其审计规范和模式非常值得我们借鉴。本文在介绍澳大利亚传统审计规范的同时,重点对其审计定位、审计创新进行了研究,如内审的独立性、内审人员的地位及业绩评价,风险导向审计及IT审计的作法等。此外,本文还详细介绍了一家澳洲企业的内审实例,最后论文提出了对我国的内审制度进行改进的一些建议。     

GRI Sustainability Reporting by Australian Public Sector Organizations

This article analyses voluntary sustainability reporting practices in seven Australian public sector organizations which use the Global Reporting Initiative (GRI) guidelines. Reporting practices are diverse and the use of the GRI public agency supplement fragmented, with the annual report being only one of several media used by organizations for sustainability disclosures.     

The Contribution of Internal Audit as a Determinant of External Audit Fees and Factors Influencing This Contribution

Despite extensive research on the determinants of external audit fees, there is little empirical evidence on the effect of internal audit contribution on the external audit fee. Using a cross-sectional regression model based on prior audit fee research, this study provides evidence that internal audit contribution is a significant determinant of the external audit fee. Further, a second model that provides evidence on the determinants of internal audit contribution is developed and tested. This second model indicates that internal audit contribution is influenced by internal audit quality and, conditional on the level of inherent risk, the availability of internal audit and the extent of coordination between internal and external auditors. These results are based on a unique data-set comprised of publicly available data matched with survey responses from internal and external auditors affiliated with 70 non-financial services Fortune 1000 firms. The sample includes all of the former "Big 6" international accounting firms and clients from twenty-nine different industries.     

An Empirical Investigation of the Interface Between Internal and External Auditors

Professional standards place specific responsibilities on auditors for the discovery of material mis-statements in reports of corporate financial performance. Certain factors have been shown to increase the likelihood of fraudulent financial reporting. One warning sign is the potentially pervasive effect of a weak internal control environment consistent with a weak internal audit group. This study investigates the impact of internal audit department quality differences on auditors ‘willingness to place reliance on the work performed by internal auditors. The study also gives consideration to auditors’ recent experiences with material errors and irregularities and examines the influence of two previously untested individual auditor differences on audit judgment decisions: (1) conflict management style and (2) perception of internal/external auditor communication barriers. The results indicate that auditors attend to internal audit department quality differences and that individual auditor differences exhibit significant influence over auditor judgments. Implications for audit practice are considered and directions for future research are suggested.     

An Empirical Investigation of Audit Pricing in the Public Sector: The Case of Greek LGOs

This paper investigates the associations between audit pricing and multidimensional characteristics of local governments by using a sample of Greek municipalities. The Greek institutional setting is interesting because it is politically pluralistic. Moreover, independent auditors appointed through a bid process exclusively perform the audits. Our results suggest a considerable variation on audit fees which is mainly driven by politically related factors indicating the importance of relevant theoretical anticipations in audit pricing in the public sector. Agency costs appear strong enough to explain audit pricing. We also confirm prior findings on the significance of audit complexity and size. Results also suggest that audit fees are reduced when an internal team dedicated to accrual accounting is appointed. Therefore, our conclusions offer practical implications for policy setters and regulators in the public sector in relation to audit quality.     

Constituent Participation in the Australian Public Sector Accounting Standard-Setting Process: The Case of ED 55

The Australian public sector has recently undergone a period of intense reform including a comprehensive reform of financial reporting policies. A major aspect of this reform is the involvement of the Australian accounting profession in the formulation of financial reporting standards through the Public Sector Accounting Standards Board (PSASB). Despite this extensive change, scant research has examined constituent participation in the Australian public sector accounting standard-setting 'due process'. This paper considers the regulatory model adopted for accounting standard-setting in the public sector in Australia and identifies the implications of this model for constituent access to the 'due process'. In particular, the co-operation between the PSASB and the various regulatory bodies in each Australian jurisdiction suggests that these bodies may have more direct influence over the standard-setters than other constituents. The submissions made on ED 55 Financial Reporting by Government Departments are examined as a case study of the 'due process' as it operates in the public sector. Different constituent groups were found to respond in varying proportions, to hold conflicting positions on some issues contained in ED 55 and to use different strategies to present these positions. The research identifies a lack of input by the major group affected by the proposed standard, the account preparers (government departments). In addition, account preparers which did respond to ED 55 were found to use less sophisticated lobbying strategies than other respondents who weighted their responses by commenting on a greater number of issues and by supporting their position with conceptual arguments. These results support the contention that some constituents have favourable access to the 'due process' and that standard-setters may not have received all pertinent information from affected and/or knowledgeable constituents.     

论风险导向审计在我国中央银行内部审计中的应用

风险导向审计模式是内部审计的发展方向。目前我国中央银行对风险导向内部审计的应用还停留在理论探索阶段。本文基于风险导向审计的定义和特征,结合我国中央银行内部审计的运行现状,论述了人民银行风险导向内部审计的涵义、应用的动因与可行性,以及应用中需要注意的几个问题。     

Application of Accrual Accounting in the Australian Public Sector – Rhetoric or Reality

This paper presents a contextual. historical analysis of recent accrual accounting developments in the Australian Public Sector (APS). It takes a critical stance in that it questions the accrual accounting developments on a number of grounds. The paper examines changes in public sector financial management and accountability in four distinct settings, being: accrual financial reporting, accrual management systems, whole of government reporting, and accrual based budgeting. The findings show that already in Australia accrual accounting has made significant encroachments into some areas of annual financial and budget reporting. This influx has meant that terms such as 'deficit', 'debt', 'liabilities', 'operating results', 'assets', etc. have begun to change in meaning, which it is argued has important implications for the current process of transformation of aspects of the APS.     

An Examination of Substitution among Monitoring Devices: The Case of Internal and External Audit Expenditures

Much of the agency literature assumes that various monitoring devices are partial substitutes in reducing total agency costs. In particular, internal and external auditing often are characterized as monitoring devices that should be partial substitutes. We argue that reliable evidence of this relation is lacking because prior studies using cross-sectional archival data have not carefully considered the implications of microeconomic theory of substitution for the models estimated. Our analysis leads to a reexamination of the relation using time-series data. We find no evidence that systematic substitution of internal for external auditing (or vice versa) occurred during the period 1989–1993. Further analysis indicates that the relative prices of internal and external auditing inputs did not change during the period. Therefore a necessary condition for substitution to occur did not exist. Although we do not detect substitution with our sample, the analysis and methodology we develop contribute to the literature by enhancing researchers understanding of substitution among monitoring methods.     

The Relevance of AAS 29 to the Australian Public Sector: A Cause for Doubt?

In December 1993, the AARF issued Australian Accounting Standard AAS 29, Financial Reporting by Government Departments . The Standard requires all Australian government departments (GDs) to adopt comprehensive accrual financial reporting no later than 30 December 1996. Given the magnitude and potential financial cost of these reforms, the claimed benefits of AAS 29 justify empirical investigation and scrutiny. The purpose of the present study was to test underlying rationales of AAS 29 by reference to ratings and opinions of 172 federal and state GDs in Australia. The key rationale of AAS 29 is that accrual-based financial reports will be relevant to the economic decision making of GDs and their external users. While the empirical results presented in this paper are confined to the internal viewpoints of senior GD officials and representatives, they cast into doubt the relevance of AAS 29 in the Australian public sector.     

Role of Internal Audit in Australian Local Government Governance: A Step in the Right Direction

While the functions of local government are many and varied, the primary role is to provide effective performance which arguably will coincide with good governance for its municipality. Internal audit and relevant controls play a key role in ensuring that good governance. The introduction of accrual accounting in local government certainly has added complexity and additional risks, with cases of fraud, corruption and high risk investments in several Australian local councils being reported periodically by the media. Those cases have been accompanied by proposed governance reforms including the introduction of an internal audit function to address the issues raised. Although seen as an essential part of the governance process, the results here suggest there is still some confusion as to the role of the internal audit and its perceived effectiveness in Australian local government.     

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。     

网络银行内部审计研究

Internet作为网络银行的基础，正在改变着银行传统的财务会计工作模式和内部审计模式，甚至人们的生活方式，随着网络银行的快速发展，对内部审计的要求也越来越高。网络银行的内部审计就以风险基础审计模式为主，兼顾账项基础审计和制度基础审计两种模式。网络银行内部审计具有鲜明的特点，其审计方法多样，但就积极创造条件，尽快利用计算机进行实时监控和定期检查，提高内部审计效率，帮助机构达到预期目标。     

风险导向审计视角下央行内部审计的发展与创新

新形势下,加强风险管理,引入与采用风险导向审计模式,开展风险管理审计是我国审计界适应现代经济发展的必然选择,开展风险导向审计对央行内部审计机构管理机制必将产生影响,央行应顺应时代发展,调整思路,改革现有的内部审计机构管理机制.