Auditor independence and audit risk: a reconceptualisation

The principles-based U.K. regulatory framework for auditor independence (Chartered Accountants Joint Ethics Committee 1996), which was adopted in 1997, identifies threats to independence in fact, independence in appearance, and the safeguards that control these threats. These principles are incorporated in the International Federation of Accountants (IFAC 2001) ethics framework. Drawing on six case studies of interactions involving significant accounting issues between audit engagement partners and finance directors in U.K.-listed companies, we analyze the threats and safeguards to auditor independence in fact that are relevant to the outcome of each interaction. Despite the U.K.'s comprehensive regulatory framework for independence, audit quality control, and independent inspection of firms, not all the interactions have a fully compliant outcome. Independence in fact is compromised where the safeguards in the framework are insufficient defense against the threats, particularly regarding intimidation and bullying during the audit process. Further examples of existing threats are identified and additional threats emerge, in particular an urgency threat, and a loss of face threat. Management motivation is found to be a key driver of pressure. Threats to independence arising within audit firms are not recognized in the current U.K. audit risk model. An extended risk model incorporating within-firm risk is suggested. This study demonstrates the need for continual improvement to regulatory frameworks; in particular it supports the recent U.S. Securities and Exchange Commission (SEC) rule on improper influence on the conduct of audits (Securities and Exchange Commission 2003a)

A grounded theory model of auditor-client negotiations

The central research question addressed in this paper is 'How do companies and their auditors resolve important audit issues?' In-depth interviews are conducted with the audit partners and finance directors of a varied group of six major UK listed companies who had recently experienced audit interactions involving 22 significant accounting issues. A grounded theory model is developed of the negotiation process and the factors that influence the nature of the outcome of interactions. This model identifies, as principal analytical categories, a range of general relationship factors and specific accounting issue factors that influence aspects of the negotiation process. These aspects include the parties involved, the strategies adopted, the quality of the financial reporting outcome and the ease with which it is achieved. A secondary outcome of the research is that distinct categories of audit engagement partner are identified, termed the crusader, the safe pair of hands, the accommodator and the truster

The relation between the true and observed fractal dimensions of turbulent clouds

Observations of interstellar gas clouds are typically limited to two-dimensional (2D) projections of the intrinsically three-dimensional (3D) structure of the clouds. In this study, we present a novel method for relating the 2D projected fractal dimension ($\mathcal{D}_{\text{p}}$) to the 3D fractal dimension ($\mathcal{D}_{\text{3D}}$) of turbulent clouds. We do this by computing the fractal dimension of clouds over two orders of magnitude in turbulent Mach number $(\mathcal{M} = 1-100)$, corresponding to seven orders of magnitude in spatial scales within the clouds. This provides us with the data to create a new empirical relation between $\mathcal{D}_{\text{p}}$ and $\mathcal{D}_{\text{3D}}$. The proposed relation is $\mathcal{D}_{\text{3D}}(\mathcal{D}_{\text{p}}) = \Omega_1 erfc ( \xi_1 erfc^{-1}[ (\mathcal{D}_{\text{p}} - \mathcal{D}_{\text{p,min}})/\Omega_2 ] + \xi_2 ) + \mathcal{D}_{\text{3D,min}}$, where the minimum 3D fractal dimension, $\mathcal{D}_{\text{3D,min}} = 2.06 \pm 0.35$, the minimum projected fractal dimension, $\mathcal{D}_{\text{p,min}} = 1.55 \pm 0.13$, $\Omega_1 = 0.47 \pm 0.18$, $\Omega_2 = 0.22 \pm 0.07$, $\xi_1 = 0.80 \pm 0.18$ and $\xi_2 = 0.26 \pm 0.19$. The minimum 3D fractal dimension, $\mathcal{D}_{\text{3D,min}} = 2.06 \pm 0.35$, indicates that in the high $\mathcal{M}$ limit the 3D clouds are dominated by planar shocks. The relation between $\mathcal{D}_{\text{p}}$ and $\mathcal{D}_{\text{3D}}$ of molecular clouds may be a useful tool for those who are seeking to understand the 3D structures of molecular clouds, purely based upon 2D projected data and shows promise for relating the physics of the turbulent clouds to the fractal dimension.Comment: 14 pages, 7 figures. Accepted 2019 May 1

Sensor failure detection for jet engines

Revisions to the advanced sensor failure detection, isolation, and accommodation (DIA) algorithm, developed under the sensor failure detection system program were studied to eliminate the steady state errors due to estimation filter biases. Three algorithm revisions were formulated and one revision for detailed evaluation was chosen. The selected version modifies the DIA algorithm to feedback the actual sensor outputs to the integral portion of the control for the nofailure case. In case of a failure, the estimates of the failed sensor output is fed back to the integral portion. The estimator outputs are fed back to the linear regulator portion of the control all the time. The revised algorithm is evaluated and compared to the baseline algorithm developed previously

Sensor failure detection system

Advanced concepts for detecting, isolating, and accommodating sensor failures were studied to determine their applicability to the gas turbine control problem. Five concepts were formulated based upon such techniques as Kalman filters and a screening process led to the selection of one advanced concept for further evaluation. The selected advanced concept uses a Kalman filter to generate residuals, a weighted sum square residuals technique to detect soft failures, likelihood ratio testing of a bank of Kalman filters for isolation, and reconfiguring of the normal mode Kalman filter by eliminating the failed input to accommodate the failure. The advanced concept was compared to a baseline parameter synthesis technique. The advanced concept was shown to be a viable concept for detecting, isolating, and accommodating sensor failures for the gas turbine applications

HYTESS: A hypothetical turbofan engine simplified simulation

A users manual for a hypothetical turbofan engine simplified simulation is presented. This digital simulation exists as FORTRAN source code. The program is self-contained and was developed to offer those interested in engine dynamics and controls research an efficient, realistic, and easily used engine simulation. The engine is modeled using a state space formulation. Matrix elements within the linear state space structure are nonlinear functions of various engine variables

Sites of Biosynthesis of Outer and Inner Membrane Proteins of Neurospora crassa Mitochondria

Outer and inner membranes of Neurospora crassa mitochondria were separated by the combined swelling, shrinking, sonication procedure. Membranes were characterized by electron microscopy and by marker enzyme activities. A red carotenoid pigment was found to be concentrated in the outer membrane. The inner mitochondrial membrane was resolved into about 20 protein bands on polyacrylamide gel electrophoresis, whereas the outer membrane shows essentially one single protein band. Only negligible incorporation of radioactive amino acids occurs into outer membrane when isolated mitochondria are synthesizing polypeptide chains. In agreement with this observation labeling of outer membrane protein is almost entirely blocked, when whole Neurospora cells are incubated with radioactive amino acids in the presence of cycloheximide, an inhibitor of cytoplasmic protein synthesis. Finally, the essential electrophoretic protein band from outer membrane does not become labeled when mitochondria are incubated with radioactive amino acids either in vitro or in vivo in the presence of cycloheximide. It is concluded that the vast majority, if not all, of the outer membrane protein is synthesized by the cytoplasmic system and that polypeptide chains formed by the mitochondrial ribosomes are integrated into the inner mitochondrial membrane

Excitation spectrum of a two-component Bose-Einstein condensate in a ring potential

A mixture of two distinguishable Bose-Einstein condensates confined in a ring potential has numerous interesting properties under rotational and solitary-wave excitation. The lowest-energy states for a fixed angular momentum coincide with a family of solitary-wave solutions. In the limit of weak interactions, exact diagonalization of the many-body Hamiltonian is possible and permits evaluation of the complete excitation spectrum of the system.Comment: 4 pages, 1 figur