The impact of the auditee’s industry on type II audit misclassifications

Abstract. The purpose of this thesis is to contribute to the literature concerning Going Concern opinions and their relative misclassifications. Firms prepare their financial statements under the Going Concern assumption, under which the firm is expected to continue operating during the normal course of business without facing bankruptcy risks. Auditors are required to deliver an opinion concerning the appropriateness of the Going Concern assumption. Past literature refers to Type II audit misclassifications when discussing those misclassifications occurring when auditors fail to modify an audit report for Going Concern, and the client subsequently files for bankruptcy within one year from the issuance of the report. Type II audit misclassifications are often seen as “audit failures” by regulators and investors, as auditors failed to warn about the Going Concern issues of their clients, and the same also have consequences for auditors, who face potential litigation fees and reputation loss in case they do not render a GCO to a firm that subsequently fails. The focus of this thesis is for this reason on Type II audit misclassifications. Past research has broadly studied factors influencing GCO issuances and their relative misclassifications (e.g., client size, audit tenure, auditor dependency). This study explores whether the industry the auditee belongs to can be a potential determinant of increased likelihood of Type II misclassifications. A distinction between complex industries (e.g., Construction, Financial services, IT services) and non-complex industries is made following a previous line of research and binary logistic regression models are used to analyze the association between the industries and the likelihood of Type II audit misclassifications. The hypotheses are that an increased likelihood of Type II audit misclassifications might be observed in complex industries and, specifically, in the IT services industry, as these industries are more unpredictable due to revenue-recognition and measurement processes that are heavily influenced by accruals and longer-than-average operating cycles. The results show that the likelihood of auditors failing to issue a GCO when needed is higher when the client belongs to a complex industry and if it belongs to the IT services industry alone. These findings might be helpful for the decision-making process of those investors who positively weigh a clean audit report of a firm for their investment decisions. Further, this increased likelihood of Type II audit misclassifications in the aforementioned industries might serve as groundwork for future research and for practitioners, as additional audit procedures and audit requirements might be needed when clients belong to complex industries

Measurement of inclusive π0\pi^{0} production in hadronic Z0Z^{0} decays

An analysis is presented of inclusive \pi^0 production in Z^0 decays measured with the DELPHI detector. At low energies, \pi^0 decays are reconstructed by \linebreak using pairs of converted photons and combinations of converted photons and photons reconstructed in the barrel electromagnetic calorimeter (HPC). At high energies (up to x_p = 2 \cdot p_{\pi}/\sqrt{s} = 0.75) the excellent granularity of the HPC is exploited to search for two-photon substructures in single showers. The inclusive differential cross section is measured as a function of energy for {q\overline q} and {b \bar b} events. The number of \pi^0's per hadronic Z^0 event is N(\pi^0)/ Z_{had}^0 = 9.2 \pm 0.2 \mbox{(stat)} \pm 1.0 \mbox{(syst)} and for {b \bar b}~events the number of \pi^0's is {\mathrm N(\pi^0)/ b \overline b} = 10.1 \pm 0.4 \mbox{(stat)} \pm 1.1 \mbox{(syst)} . The ratio of the number of \pi^0's in b \overline b events to hadronic Z^0 events is less affected by the systematic errors and is found to be 1.09 \pm 0.05 \pm 0.01. The measured \pi^0 cross sections are compared with the predictions of different parton shower models. For hadronic events, the peak position in the \mathrm \xi_p = \ln(1/x_p) distribution is \xi_p^{\star} = 3.90^{+0.24}_{-0.14}. The average number of \pi^0's from the decay of primary \mathrm B hadrons is found to be {\mathrm N} (B \rightarrow \pi^0 \, X)/\mbox{B hadron} = 2.78 \pm 0.15 \mbox{(stat)} \pm 0.60 \mbox{(syst)}

Measurements of the leptonic branching fractions of the τ\tau

Data collected with the DELPHI detector from 1993 to 1995 combined with previous DELPHI results for data from 1991 and 1992 yield the branching fractions B({\tau \rightarrow \mbox{\rm e} \nu \bar{\nu}}) = (17.877 \pm 0.109_{stat} \pm 0.110_{sys} )\% and $B({\tau \rightarrow \mu \nu \bar{\nu}}) = (17.325 \pm 0.095_{stat} \pm 0.077_{sys} )\%$

Search for scalar fermions and long-lived scalar leptons at centre-of-mass energies of 130 GeV to 172 GeV

Data taken by DELPHI during the 1995 and 1996 LEP runs have been used to search for the supersymmetric partners of electron, muon and tau leptons and of top and bottom quarks. The observations are in agreement with standard model predictions. Limits are set on sfermion masses. Searches for long lived scalar leptons from low scale supersymmetry breaking models exclude stau masses below 55~GeV/c$^2$ at the 95\% confidence level, irrespective of the gravitino mass

Search for Neutral Heavy Leptons Produced in Z Decays

Weak isosinglet Neutral Heavy Leptons ($\nu_m$) have been searched for using data collected by the DELPHI detector corresponding to $3.3\times 10^{6}$ hadronic~Z$^{0}$ decays at LEP1. Four separate searches have been performed, for short-lived $\nu_m$ production giving monojet or acollinear jet topologies, and for long-lived $\nu_m$ giving detectable secondary vertices or calorimeter clusters. No indication of the existence of these particles has been found, leading to an upper limit for the branching ratio $BR($Z$^0\rightarrow \nu_m \overline{\nu})$ of about $1.3\times10^{-6}$ at 95\% confidence level for $\nu_m$ masses between 3.5 and 50 GeV/$c^2$. Outside this range the limit weakens rapidly with the $\nu_m$ mass. %Special emphasis has been given to the search for monojet--like topologies. One event %has passed the selection, in agreement with the expectation from the reaction: %$e^+e^- \rightarrow\ell \bar\ell \nu\bar\nu$. The results are also interpreted in terms of limits for the single production of excited neutrinos

Energy dependence of the differences between the quark and gluon jet fragmentation

Three jet events arising from decays of the Z boson, collected by the DELPHI detector, were used to measure differences in quark and gluon fragmentation. Gluon jets were anti-tagged by identifying b quark jets. Unbiased quark jets came from events with two jets plus one photon. Quark and gluon jet properties in different energy ranges were compared for the first time within the same detector. Quark and gluon jets of nearly the same energy in symmetric three jet event topologies were also compared. Using three independent methods, the average value of the ratio of the mean charged multiplicities of gluon and quark jets is $$=1.241\pm 0.015\ (stat.) \pm 0.025\ (syst.).$$ Gluon jets are broader and produce fragments with a softer energy spectrum than quark jets of equivalent energy. The string effect has been observed in fully symmetric three jet events. The measured ratio R_{\gamma} of the charged particle flow in the q\overline{q} inter-jet region of the q\bar{q}g and q\bar{q}\gamma samples agrees with the perturbative QCD expectation. The dependence of the mean charged multiplicity on the hadronic center-of-mass energy was analysed in photon plus n-jet events. The value for \alpha_s(M_Z) determined from these data using a QCD prediction with corrections at leading and next-to-leading order is \[ \alpha_s(M_Z)=0.116 \pm 0.003\ (stat.) \pm 0.009\ (syst.). \

Investigation of the splitting of quark and gluon jets

The splitting processes in identified quark and gluon jets are investigated using longitudinal and transverse observables. The jets are selected from symmetric three-jet events measured in Z decays with the Delphi detector in 1991-1994. Gluon jets are identified using heavy quark anti-tagging. Scaling violations in identified gluon jets are observed for the first time. The scale energy dependence of the gluon fragmentation function is found to be about two times larger than for the corresponding quark jets, consistent with the QCD expectation TeX . The primary splitting of gluons and quarks into subjets agrees with fragmentation models and, for specific regions of the jet resolution TeX , with NLLA calculations. The maximum of the ratio of the primary subjet splittings in quark and gluon jets is TeX . Due to non-perturbative effects, the data are below the expectation at small TeX . The transition from the perturbative to the non-perturbative domain appears at smaller TeX for quark jets than for gluon jets. Combined with the observed behaviour of the higher rank splittings, this explains the relatively small multiplicity ratio between gluon and quark jets

Search for new phenomena using single photon events in the DELPHI detector at LEP

Data are presented on the reaction \epem~\into~\gamma + no other detected particle at center-of-mass energies, \sqs = 89.48 GeV, 91.26 GeV and 93.08 GeV. The cross section for this reaction is related directly to the number of light neutrino generations which couple to the \zz boson, and to several other phenomena such as excited neutrinos, the production of an invisible `X' particle, a possible magnetic moment of the tau neutrino, and neutral monojets. Based on the observed number of single photon events, the number of light neutrinos which couple to the \zz is measured to be N_\nu = 3.15 \pm 0.34. No evidence is found for anomalous production of energetic single photons, and upper limits at the 95\% confidence level are determined for excited neutrino production (BR < 4-9 \times 10^{-6}), production of an invisible `X' particle (\sigma < 0.1 pb), and the magnetic moment of the tau neutrino (< 5.2 \times 10^{-6} \mu_B). No event with the topology of a neutral monojet is found, and this corresponds to the limit \sigma < 0.044/\epsilon pb at the 95\% confidence level, where \epsilon is the unknown overall monojet detection efficiency

Measurement of the Bd0^{0}_{d} oscillation frequency using kaons, leptons and jet charge

A measurement of the mass difference, \Delta m_d, between the two physical \mbox{B}^0_d states has been obtained from the analysis of the impact parameter distribution of a lepton emitted at large transverse momentum (p_t) relative to the jet axis and from the analysis of the flight distance distribution of secondary vertices tagged by either a high p_t lepton or an identified kaon. In the opposite hemisphere of the event, the charge of the initial quark has been evaluated using a high p_t lepton, a charged kaon or the mean jet charge. With 1.7 million hadronic Z^0 decays recorded by DELPHI between 1991 and 1993, \Delta m_d is found to be: \Delta m_d = 0.531^{+0.050}_{-0.046} ~(stat.) \pm 0.078 ~(syst.) ~ {\mathrm{ps}}^{-1} \,