Audit market competition: auditor changes and the impact of tendering

Increased competition within the external audit market and the recent phenomenon of audit tendering has renewed interest in the factors influencing auditor changes. In this paper, a questionnaire instrument is used to elicit perceptions of the factors which influence auditor-client realignments in this new environment and to indicate the relative influence of economic and behavioural factors. Positive, statistically significant associations were found between unsolicited approaches and the consideration of either a change in auditor or the conduct of a competitive tender. Fees are both the most frequently cited reason for considering auditor change and the most frequently cited factor influencing the selection of a new auditor. The chemistry of the relationship with senior audit firm personnel was ranked as more important than service issues in new auditor selection. Several significant associations between the reasons for change and both company size and type of change are identified. In particular, smaller companies, and companies changing from a non-Big Six firm, were more likely to change due to the need for a wider range of services and the influence of third parties. Findings indicated that 55% of auditor changes were effected by means of a tender, with the incumbent auditor having only an 18% chance of retaining the client. The various stages of the tender process appear to be dominated by the finance director, with audit committees having a restricted role. Tenders resulted in significant fee reductions in the year of change

Essays on the Implications of Accounting and Audit Regulations

Papers I-III are excluded from the dissertation until they will be published.In this dissertation, some questions relating to the implications of these developments, particularly regarding audit pricing, accounting quality, and auditors’ use of experts are examined. In the first essay, a bibliometric review of the literature is conducted to synthesize the academic research with a focus on insights about the impact of these regulatory and technological changes on audit fees. Given that audit fees is a function of audit effort, stakeholders including regulators, practitioners, and investors have been interested in understanding the impact of accounting and audit regulations on audit fees. Secondly, accounting quality is often cited as a major motivation for regulatory changes. The second study examines the impact of IFRS adoption approaches on accounting quality. Countries use different approaches to implement international accounting standards. Some adopt the standards without changes, others adopt with changes aimed at incorporating their local context into these standards. Although these two approaches are particularly common in Africa, questions about the impact of these approaches on accounting quality are yet to be empirically examined. The final study focuses on a recent development in the audit environment following the adoption of ISA 701: Communicating Key Audit Matters. This relatively new standard is a response to the longstanding criticism of the audit report. Users assert that the audit report is standardized and boilerplate thereby not providing client-specific information beyond the pass or fail opinion (B dard, Coram, Espahbodi, & Mock, 2016; Mock et al., 2012). The associated increased transparency has provided a rare insight into the internal working of audit firms, especially in relation to their use of experts in the most significant areas of the audit. Consequently, the study exploits this unique information to empirically examine the factors associated with auditors’ use of experts in an audit.publishedVersio

Measuring the need for manufacturing flexibility and evaluating its economic benefits

Flexible systems are known of enabling organizations to take advantage of diversified products, low volume production items with short life-cycles. They also improve the ability to respond to market changes. Flexibility has thus become a strategic manufacturing need in recent years. Because of the high initial capital outlay involved, the selection of the appropriate flexible solution has become a critical issue. This thesis proposes a methodology to determine the most cost effective and feasible flexibility strategy. A flexibility audit is developed to analyze and evaluate the changes taking place in a facility\u27s environment. These changes and a measurement scheme is then used to compute the needed measure of four types of flexibilities. The audit provides the percentage gap between the actual and needed measures which is used to select the appropriate strategy. Finally, factors like payback, opportunity cost, organizational readiness and top management support are considered to determine the most cost effective strategy. As a part of this thesis, the audit has been automated using Visual Basic 4 software

Prisoner transportation

Examines how effectively, efficiently and economically prisoners have been transported throughout Victoria\u27s criminal justice system. Audit summary:  In Victoria, there is a minimum of 58 000 prisoner movements per year for a variety of reasons. Prisoners are moved between prisons to accommodate changes in their risk profile, maximise prison capacity, attend health and welfare programs, and facilitate court appearances. They move between police cells to maximise capacity and attend court and are also moved to hospitals and forensic health facilities for planned and emergency medical care. Recent changes to the external criminal justice environment have affected prisoner numbers and, consequently, the need for prisoner movements. Changes include modifications to the parole process and the abolition of some suspended sentences, which took effect in the County and Supreme Courts in September 2013. Combined with additional factors, such as increases in average sentence lengths and imprisonment rates, these changes have contributed to significant growth in prisoner movements. The audit assessed whether the transportation of prisoners in Victoria\u27s criminal justice system is effective, efficient and economical. It examined prisoner transport services managed by Corrections Victoria and used by Victoria Police and the Department of Human Services. The audit scope also examined the transportation of prisoners by Victoria Police. It excluded interstate and overseas prisoner movement. The audit included prisoners as defined by the Corrections Act 1986, and youth detainees where they are defined as prisoners for the purposes of prisoner transport services. &nbsp

Audit Performance and Practicing Environment Reform: Audit Practicing Environment in Egyp

This thesis presents a study to identify and measure the interrelationship between proposed audit environment’s main factors, in order to present a suggested model for audit fundamentals’ reform in Egypt. This model will increase the professional auditors' and practicing regulatory bodies’ roles. Due to the globalization of capital markets, the audit environment becomes more complex and includes many interactive relationships between its main fundamental factors. Recent accountability failures in the United States and other countries raised the fact that the accounting and auditing professional practicing environment needs to be reformed, modernized, and expanded. Despite the increased global attention to the importance of audit practice reforms, there are a limited number of academic researches that discussed the practicing environment changes and their affects on auditors' responsibility and operating process. An extensive review of the literature revealed a strong relationship between audit practicing and recent financial failures, as well as the subsequent global expansion of practicing reforms. This thesis makes an important contribution to the audit-practicing global harmonization through developing a theoretical Conceptual Practicing Environment model that has been created and follows a deductive approach, and primary data questionnaires collected from the designated practitioners in different local big audit firms. Data was analyzed according to their descriptive properties and underlying correlation structure. Several principal components were derived from these analyses, which were used in hypothesis testing, in order to examine the interrelationships between the factors associated with audit-practicing environment. Furthermore, implications for academics and practitioners are drawn that indicate the relevance and applicability of this research to audit practice reforms. Research limitations for possible future research are set out. The thesis is organized into eight chapters, which are entitled in the following order: chapter one introduces the overview and the background of the study, chapter two introduces a review of related literatures, chapter three presents an analysis of the relationship between audit practice and recent financial market failures, chapter four examines different internal and external audit-practicing environment variables, chapter five discusses the current environment of audit practice in Egypt, chapter six proposes the suggested factors that affect the efficiency of the audit-practicing environment, chapter seven analyzes the correlation and multiple regressions based on the questionnaire and empirical tests of the hypothesis, and chapter eight provides suggestions for Egypt’s local practice reforms. The magnitude of each variable in the practicing environment will be differentiated from one country to another based on the local culture and influence power of environment of different variables. The thesis confirmed that the current Egyptian local practice environment is classified as a dormant, complex, and uncertain environment that needs major reforms in order to increase its practice organizations effectiveness. Also, empirical research results raised a consensus between the selected sample answers about the importance of increasing professional accountants’ and auditors’ technical and judgmental capability, in addition to the necessity of increasing the non-governmental organizations’ subscriptions in developing and managing the practicing profession

The climate-related financial disclosure regulations 2022: A step in the right direction for ESG in the private sector

This legislative note examines the recent regulatory changes that were introduced on 6 April 2022, and which consequently affect the Companies Act 2006 and the Limited Liability Partnerships (Account and Audit) (Application of Companies Act 2006) Regulations 2008. The amendments mean that companies and limited liability partnerships (LLPs) that fall within the regulations’ scope must now disclose their climate change risks and opportunities. It is submitted in this work that these amendments are a step in the right direction for ‘environment social governance’ (ESG) in the private sector. Indeed, the need to report on climate change risk is likely to drive the appetite of affected businesses to develop their ESG programmes within their overall risk management frameworks. Together with this intrinsic impact, the changes are also likely to increase ESG and CSR within the markets more broadly

Resource allocation and efficiency in public sector audits

In recent years, the push for reform in the Australian public sector audit has placed the Office of the Auditor-General (hereafter OAG) in a more contestable or market- like environment, where the OAG is accountable for an efficient and effective provision of public sector audit. The purpose of this study is to compare the cost efficiency of in-house and contract-out arrangements to deliver financial audits in the public sector. It empirically tests whether there are audit cost and audit fee differences between in-house providers (i.e., the OAG) and contractors (i.e., public accounting firms). The secondary aims of this study are to develop audit cost and fee models for the public sector. The unit of analysis is audit cost/fee at the audit engagement level. The data for this study is collected for a sample of financial statement audit engagements for year-end 1998, at the state level in Western Australia. The data is extracted from publicly available and private sources. The audit cost and fee models are used to test for the cost differences between in- house providers and contractors. Prior audit production and audit fee studies in the private and public sectors provide the basis for the development of the two models. The results indicate that agency size, complexity and risk are positively associated with audit costs and audit fees. In addition, the total advice provided to the agencies by the OAG and agency type are also significantly associated with audit costs and audit fees. Overall, by incorporating these factors into the models, the audit cost model explains 82 percent of the variance in audit costs, while the audit fee model explains 86 percent of the variance in audit fees. More importantly, the main findings suggest that contract-out audits are more costly than in-house audits. However, this finding is conditional on agency type. Further analysis reveals that the type of audit arrangement is significantly associated with audit costs for the statutory authority audits only. There is no significant difference in audit costs between contract-out and in-house arrangement for hospital audits. This analysis shows that the statutory authority audits are driving the significance of the interaction between type of audit arrangement and agency type. Specifically, the costs of contract-out audits are, on average, significantly higher than in-house audits. This result is attributed to the contractor\u27s lack of expertise in auditing statutory authority as there is no equivalent of this agency type in the private sector. As such, the OAG bas the greater advantage of delivering a lower audit cost for statutory authority audits compared to the contractors. However, the non-significant interaction term in the audit fee model suggests that cost differences between in-house and contract-out audits for the statutory authority audits are not reflected in audit fees billed to agencies. Further analyses, using audit hours as the dependent variable, generally corroborate the findings from the audit cost and audit fee models. Sensitivity analyses on the OAG\u27s supervision costs reveal that these costs have a significant effect on the interpretation of the cost efficiency results. By excluding supervision costs from contract-out audits, there are significant changes in the results for the total sample and the two sub-samples (partitioned by agency type). Generally, these changes favour the contract-out audits for all groupings, where contract-out audits are now more cost efficient than in-house audits for hospitals, and not significantly different in costs for statutory authority audits. Additional tests to investigate the determinants of the GAG\u27s supervision costs in contract-out audits reveal that agency size, risk, reliance on internal control, total advice provided by the OAG and packaged audits (a single contract for two or more audits) are significantly associated with the supervision costs of contract-out audits. The main contribution of this study is to add to the growing literature on audit market efficiency (see Dopuch, Gupta, Simunic & Stein, 2000; Knechel & Payne, forthcoming). It provides evidence on the production function of different type of suppliers in the public sector and their relative efficiency in providing audit services. This study contributes to the recent discussions on the changing nature of public sector audit market towards a market-based provision of public sector audits. The evidence from this study allows researchers and policy-makers to compare the two types of audit arrangement to undertake public sector audits. In pan, this study also contributes to the line of inquiry that examines the difference between government auditors and public accounting firms in US municipalities (Copley, 1989; Dwyer & Wilson, 1989; Rubin, 1992). The secondary contribution of this study is to develop and test the audit cost and fee models in the public sector and provide validity on the transferability of audit models from the private and public sectors. This study adds to the literature that examines the public sector audit market. More importantly, it is one of the few non-US studies that examine the public sector audit market and the findings from this study suggest that the public sector audit studies from the US are generalisable to Australia. These findings add to our understanding of the range of market conditions under which it is so far known to hold

Classroom audit: student self-performance, group performance, and tutor performance in a problem-based learning tutorial

The educational industry has been the subject of a number of enquiries throughout this century. Although some changes have been made in medical education in recent years, many improvements are still needed. Problem-based learning (PBL) is one of the innovative changes that have been made in many universities all over the world; the Universiti Kebangsaan Malaysia (UKM) Medical Centre has also adopted it as one of its major teaching modalities. A fundamental aspect of the effectiveness of PBL is classroom interpersonal skills. To investigate these interpersonal skills in terms of self-, group, and tutor performance, a questionnaire survey was administered to a group of ten first semester medical students at UKM Medical Centre during mid-2009. In terms of self-performance in decision making, this study revealed that the students made decisions by consensus, while 80% of the students understood other team members and asked questions to clarify. Furthermore, 70% of the students were aware of differences in thinking styles, while 90% were patient listeners. In regard to group performance, 90% of the students felt the group was discussing knowledge, and 100% felt that the group was sharing knowledge. Regarding tutor performance, all students were of the opinion that the tutor established rapport, demonstrated the ground rules of PBL well, and created a non-threatening learning environment. The characteristics of interpersonal skills required in PBL were maintained in this classroom. However, many more students should be aware of the differences in thinking styles among themselves to avoid conflict, and the role of the tutor is very important in this regard. This study reflects the audit of a single PBL classroom. Further audits involving other classrooms are recommended in order to promote organisational performance

Observations and models to support the first Marine Ecosystem Assessment for the Southern Ocean (MEASO)

Assessments of the status and trends of habitats, species and ecosystems are needed for effective ecosystem-based management in marine ecosystems. Knowledge on imminent ecosystem changes (climate change impacts) set in train by existing climate forcings are needed for adapting management practices to achieve conservation and sustainabililty targets into the future. Here, we describe a process for enabling a marine ecosystem assessment (MEA) by the broader scientific community to support managers in this way, using a MEA for the Southern Ocean (MEASO) as an example. We develop a framework and undertake an audit to support a MEASO, involving three parts. First, we review available syntheses and assessments of the Southern Ocean ecosystem and its parts, paying special attention to building on the SCAR Antarctic Climate Change and Environment report and the SCAR Biogeographic Atlas of the Southern Ocean. Second, we audit available field observations of habitats and densities and/or abundances of taxa, using the literature as well as a survey of scientists as to their current and recent activities. Third, we audit available system models that can form a nested ensemble for making, with available data, circumpolar assessments of habitats, species and food webs. We conclude that there is sufficient data and models to undertake, at least, a circumpolar assessment of the krill-based system. The auditing framework provides the basis for the first MEASO but also provides a repository (www.SOKI.aq/display/MEASO) for easily amending the audit for future MEASOs. We note that an important outcome of the first MEASO will not only be the assessment but also to advise on priorities in observations and models for improving subsequent MEASOs

Briefing: Auditor/company interactions in the 2007 UK regulatory environment

No abstract availabl