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

Critical State in Thin Anisotropic Superconductors of Arbitrary Shape

A thin flat superconductor of arbitrary shape and with arbitrary in-plane and out-of-plane anisotropy of flux-line pinning is considered, in an external magnetic field normal to its plane. It is shown that the general three-dimensional critical state problem for this superconductor reduces to the two-dimensional problem of an infinitely thin sample of the same shape but with a modified induction dependence of the critical sheet current. The methods of solving the latter problem are well known. This finding thus enables one to study the critical states in realistic samples of high-Tc superconductors with various types of anisotropic flux-line pinning. As examples, we investigate the critical states of long strips and rectangular platelets of high-Tc superconductors with pinning either by the ab-planes or by extended defects aligned with the c-axis.Comment: 13 pages including 13 figure files in the tex

Doping change and distortion effect on double-exchange ferromagnetism

Doping change and distortion effect on the double-exchange ferromagnetism are studied within a simplified double-exchange model. The presence of distortion is modelled by introducing the Falicov-Kimball interaction between itinerant electrons and classical variables. By employing the dynamical mean-field theory the charge and spin susceptibility are exactly calculated. It is found that there is a competition between the double-exchange induced ferromagnetism and disorder-order transition. At low temperature various long-range order phases such as charge ordered and segregated phases coexist with ferromagnetism depending on doping and distortion. A rich phase diagram is obtained.Comment: 8 pages, 8 figure

Meissner-London currents in superconductors with rectangular cross section

Exact analytic solutions are presented for the magnetic moment and screening currents in the Meissner state of superconductor strips with rectangular cross section in a perpendicular magnetic field and/or with transport current. The extension to finite London penetration is achieved by an elegant numerical method which works also for disks. The surface current in the specimen corners diverges as l^(-1/3) where l is the distance from the corner. This enhancement reduces the barrier for vortex penetration and should increase the nonlinear Meissner effect in d-wave superconductors

Anomaly candidates and invariants of D=4, N=1 supergravity theories

All anomaly candidates and the form of the most general invariant local action are given for old and new minimal supergravity, including the cases where additional Yang--Mills and chiral matter multiplets are present. Furthermore nonminimal supergravity is discussed. In this case local supersymmetry itself may be anomalous and some of the corresponding anomaly candidates are given explicitly. The results are obtained by solving the descent equations which contain the consistency equation satisfied by integrands of anomalies and invariant actions.Comment: 19 pages, LaTex, NIKHEF-H 93-12, ITP-UH 07/9