Double digit growth : tools from top firms

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InfoTech Update, Volume 2, Number 4, Summer 1993

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Impact of Job Complexity and Performance on CFO Compensation

Prior research suggests that Big 4 auditors provide higher quality audits by virtue of their large size. Still, the recent reforms mandated by the Sarbanes Oxley Act – by increasing client and auditor incentives for accurate reporting – may have narrowed audit quality differences across auditor groups. In this paper, we examine audit quality for Big 4 and Mid-tier auditors during 2003-06 and include clients of other smaller audit firms for comparison purposes. We examine actual audit quality (as proxied by earnings management metrics) as well as perceived audit quality (as proxied by the client- and year-specific eloading and ex ante equity risk premium metrics). We include in our analysis only those Big 4 clients for whom the Mid-tier firms are potentially viable as auditors. Relative to other smaller audit firm clients, we find Big 4 and Mid-tier audit clients to have (1) lower levels of accrual management, (2) higher levels of real earnings management, and (3) higher levels of investor-perceived accruals quality. In each case, we were unable to reject the null that Big 4 and Mid-tier audits are similar. However, we find Big 4 audit clients to have a lower client-specific ex ante equity risk premium relative to both Mid-tier and other smaller audit firm clients. Collectively, our findings indicate that in situations where a Mid-tier auditor is potentially viable, Big 4 clients could utilize a Mid-tier firm without adversely affecting audit quality. Still, the results suggest that Big 4 clients have a lower ex ante cost of equity capital which is likely related to the insurance considerations (“deep pockets”) – rather than the audit quality -- associated with having a Big 4 auditor.Auditor concentration, Audit quality, Earnings management, Cost of equity capital.

A Case Study in the Trend of Financial Institutions Outsourcing Their Internal Audit Function; Specializing in Smaller to Mid-Sized Banks

Internal audit has gained the reputation of being a "necessary evil." Thus, many firms are looking for alternatives to the traditional audit department. Outsourcing ofthe internal audit function is an option that has become increasingly popular over the past several years, even though it has been in existence for more than 20 years. Over one-half of the decisions to outsource have been made over the last five years. Financial institutions, specifically, have been one of the most active in the decision to outsource. According to a 1997 survey, over one-third ofthe industry has out-sourced their internal audit function. This paper investigates several specific institutions and their justifications for outsourcing (or not outsourcing), along with interviewing the institutions' outside internal audit service provider. The heart ofthis case study revolves around small to mid-size banks. Interviews with bank executives have lent credible and relevant knowledge to the study. The root motives behind the outsourcing of the internal audit department among smaller banks is shown to be an interrelated combination among cost and quality factors. Furthermore, the choice to outsource (or not to out source) has clearly been in the best interest of stakeholders. Smaller financial institutions are realizing that in most cases a higher quality end product can be achieved with little additional cost (or even cost savings) when the internal audit department is outsourced to a competent provider.B.S. (Bachelor of Science

InfoTech Update, Volume 3, Number 1, Fall 1993

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Avoiding Telephone Fraud; Technology Alert, August 1992

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AICPA committees, 1990-91: Officers, board of directors and council, boards and committees, staff organization, state CPA societies, dates of board, council, and annual meetings

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THE INDIANA ENTERPRISE ZONE PROGRAM: FISCAL IMPACT OF A JOB CREATION TAX CREDIT

This paper estimated the fiscal impact of a job creation tax credit, a proposed incentive for establishments participating in the Indiana enterprise zone program. State unemployment insurance files were utilized with GIS to obtain enterprise zone data. Labor demand and labor supply were estimated. Job creation due to the credit was calculated from empirical results.Community/Rural/Urban Development, Public Economics,