A Comparative Analysis Of Audit Service Supply Using Desk And Working Paper Reviews

The Texas Education Agency (TEA) performs extensive reviews of audit working papers for selected Texas school district audits to evaluate the quality of audit services rendered by independent accountants. These reviews are referred to as Quality Control Reviews (QCRs). The TEA also conducts desk reviews of all audited financial statements issued by Texas independent school districts. During the desk review process, the TEA performs a limited check of the accuracy of financial statement amounts, completeness of financial disclosures, and existence of proper audit output. Prior research suggests that desk reviews and quality control reviews both measure audit quality (Colbert and O’Keefe 1995; Copley et al. 1994; Deis and Giroux 1992, 1996; Giroux et al. 1995; O’Keefe and Westort 1992; O’Keefe et al. 1994). The purpose of the paper is to determine if desk reviews capture the same audit quality information as quality control reviews. If so, regulators should focus resources on desk reviews since they are more timely and economical than QCRs. The results of the study, however, indicate that desk reviews and quality control reviews do not measure the same constructs. The findings suggest that desk reviews measure the industry specific knowledge of the auditor, which is only one aspect of audit quality. Moreover, it was observed that some audits passing the desk review were graded low in quality by the working paper review. This finding suggests that low audit quality may be more prevalent than generally suspected and that steps to improve audit quality and auditor credibility are warranted

Saltmarsh plants, but not fertilizer, facilitate invertebrate recolonization after an oil spill

Foundation species contribute to the recovery of animal communities from disturbance by engineering, by improving habitat quality, and by regulating food availability. In a salt marsh impacted by the Deepwater Horizon oil spill, we tested the hypothesis that nutrient subsidies would enhance the positive effects of the foundation species Spartina alterniflora on the initial recolonization of benthic invertebrate communities (e.g., copepods, annelids, nematodes) by augmenting food (i.e., microalgae) availability. After two months, plantings of S.alterniflora significantly elevated the densities of the polychaete Capitella capitata, meiofauna-sized annelids, and total macroinfauna over unplanted plots. After 7months, the significant effect of plantings persisted for meiofauna-sized annelids, but not for C.capitata and total macroinfauna. Plantings had no effect on copepods (including Nannopus palustris, the dominant species), nematodes, or microalgal biomass for either month. Nutrient additions did not influence any taxon, despite initial increases in benthic microalgal biomass after 2months. We hypothesize that the structural effects of plants were important to early colonization, possibly by facilitating larval settlement or ameliorating temperature and desiccation stress. Our results emphasize the importance of re-establishing foundation species in oil-impacted sites to enhance recolonization of saltmarsh annelids, but suggest that recolonization is not promoted by the addition of nutrients

Marine Ecoregion and Deepwater Horizon Oil Spill Affect Recruitment and Population Structure of a Salt Marsh Snail

Marine species with planktonic larvae often have high spatial and temporal variation in recruitment that leads to subsequent variation in the ecology of benthic adults. Using a combination of published and unpublished data, we compared the population structure of the salt marsh snail, Littoraria irrorata, between the South Atlantic Bight and the Gulf Coast of the United States to infer geographic differences in recruitment and to test the hypothesis that the Deepwater Horizon oil spill led to widespread recruitment failure of L. irrorata in Louisiana in 2010. Size-frequency distributions in both ecoregions were bimodal, with troughs in the distributions consistent with a transition from sub-adults to adults at ~13 mm in shell length as reported in the literature; however, adult snails reached larger sizes in the Gulf Coast. The ratio of sub-adults to adults was 1.5–2 times greater in the South Atlantic Bight than the Gulf Coast, consistent with higher recruitment rates in the South Atlantic Bight. Higher recruitment rates in the South Atlantic Bight could contribute to higher snail densities and reduced adult growth in this region. The ratio of sub-adults to adults in Louisiana was lower in 2011 than in previous years, and began to recover in 2012–2014, consistent with widespread recruitment failure in 2010, when large expanses of spilled oil were present in coastal waters. Our results reveal an important difference in the ecology of a key salt marsh invertebrate between the two ecoregions, and also suggest that the Deepwater Horizon oil spill may have caused widespread recruitment failure in this species and perhaps others with similar planktonic larval stages

The association between audit fees and reported earnings quality in pre- and post-Sarbanes-Oxley regimes

Purpose – The purpose of this paper is to examine the empirical association between expected and unexpected audit fees and reported earnings quality for a sample of Big 4(5) client companies over a period from 2000 to 2005. Design/methodology/approach – The paper employs a cross-sectional multiple regression model for a sample of 1,142 firms (6,852 firm-years) covering a time period of six years comprising 2000 to 2005 to evaluate the relationship between both expected and unexpected audit fees and performance-adjusted discretionary accruals that are estimated from the extended version of the modified Jones model. Findings – The paper finds that both expected and unexpected audit fees are associated with an increase in earnings quality, as indicated by the reduction of both absolute and signed discretionary accrual adjustments. Furthermore, in some analyses these associations are found to persist into the post-Sarbanes-Oxley Act (SOX) period. The main results hold in sensitivity tests that involve using both the absolute and signed unexpected audit fees as independent variables and in tests that use both the absolute and signed current accruals as dependent variables of interest. Research limitations/implications – The results suggest that audit efforts consistent with client-specific business attributes and reflected in expected audit fees mitigate financial reporting biases, the effect of which is incrementally observable to some extent in the post-SOX period as well. Unexpected audit fees, a proxy for fee surprise arising out of auditor-client-specific contractual situations, are also associated with an increase in earnings quality. The association is, in some analyses, significant for the post-SOX years. The test results do not exhibit any evidence of auditor independence problems associated with high expected and unexpected audit fees; a result that supports the “reputation protection” argument for auditors' reporting decisions. Originality/value – In a time period surrounding the introduction of SOX when nonaudit consulting services have severely been restricted, and the audit fee growth for publicly traded companies have been dramatic, an analysis of this nature potentially produces valuable insights into the auditors' fee decision, audit efforts, and auditor independence issue. The study looks into a new perspective concerning the relationship between audit fees and financial reporting practice over the two regulatory regimes, pre- and post-SOX.Auditing, Auditor's fees, Earnings, Legislation, United States of America

Do artificial income smoothing and real income smoothing contribute to firm value equivalently?

This paper examines the potential impacts of artificial smoothing (abnormal accruals) and real smoothing (derivatives) on firm value. We find that the value of the firm decreases with the magnitude of abnormal accruals and increases with the level of derivative use. Moreover, the accrual discount is more pronounced in firms with weak investor protection and the hedging premium is greater for poorly governed firms. These results suggest that although managers can engage in real smoothing to improve the informativeness of firms' earnings and thus reduce agency costs, they might use artificial techniques to cosmetically improve the income stream in order to expropriate minority shareholders. In further support of agency theories, we report that poor corporate governance motivates the use of abnormal accruals and discourages derivative use.Abnormal accruals Corporate governance Derivatives Income smoothing

Ecological Evaluation of a Beach Nourishment Project at Hallandale (Broward County), Florida. Volume II, Evaluation of Benthic Communities Adjacent to a Restored Beach, Hallandale (Broward County), Florida

Source: https://erdc-library.erdc.dren.mil/jspui/Benthic communities adjacent to a restored beach at Hallandale (Broward County), Florida were analyzed and compared to similar communities at nearby Golden Beach (Dade County). Five sand stations and four reef stations were sampled at each locality along a transect from the intertidal zone through the second reef. This study assesses the postnourishment condition of sandy-bottom and reef-dwelling communities approximately 7 years after beach nourishment and offshore dredging. The study also provides prenourishment data for an impact analysis of a fill project underway at Hallandale in September 1979. Core samples at sand stations yielded 114 invertebrate species, not including nemerteans and oligochaete annelids. More than 90 percent of the fauna occurred at the two outer stations in densities of up to 17,144 individuals per square meter. Quadrat samples of reef biota showed a maximum abundance and diversity of corals, alcyonarians, and sponges in the middle and outer regions of the second reef. The reefs appeared in good condition, and showed no apparent effects from a 1971 beach nourishment project

Legacy effects of Hurricane Katrina influenced marsh shoreline erosion following the Deepwater Horizon oil spill

Disturbance interactions occur when one perturbation influences the severity and perhaps the baseline state of succeeding disturbances. Natural and anthropogenic disturbances are frequent in dynamic coastal ecosystems and can often be linked. We evaluated potential for disturbance interactions associated with the 2010 Deepwater Horizon (DWH) oil spill, which was preceded by disturbance from Hurricane Katrina in 2005, by quantifying marsh shoreline retreat across both events. Our goal was to determine the degree to which Hurricane Katrina altered baseline rates of erosion prior to the DWH spill. We quantified erosion rate and fetch from aerial images of northern Barataria Bay, Louisiana marsh shorelines classified as reference, moderately-oiled, and heavily-oiled over three pre-spill time periods (1998-2004, prior to Hurricane Katrina; 2004-2005, during Katrina; 2005-2010, post-Katrina but pre-oil spill) and a post-spill period from 2010 to 2013. Prior to Hurricane Katrina, marsh shoreline erosion rates were low (from 0.38 to 1.10 m yr). In contrast during Hurricane Katrina (2004-2005), erosion increased by 661% and 756%, respectively, for shorelines that would subsequently become moderately and heavily-oiled; reference shoreline erosion increased by 59%. These high erosion rates were associated with increased fetch and higher wave action due to loss of protective geomorphic features such as small islands and spits and persisted during the post-Katrina/pre-spill period of 2005-2010 (0.62, 1.38, and 2.07 m yr for reference, moderately, and heavily-oiled shorelines, respectively). Erosion rates increased modestly after the DWH event (reference = 1.13 m yr, moderate oiling = 1.45 m yr; heavy oiling = 2.77 m yr), but not significantly, compared to the post-Katrina period. Consequently, we could not detect a post-spill increase in marsh shoreline erosion. Rather, we concluded that Hurricane Katrina reset the erosion baseline, thereby connecting the two disturbances, and was the major driver of marsh shoreline erosion at our research sites during the study period

Response of salt marshes to oiling from the Deepwater Horizon spill: Implications for plant growth, soil surface-erosion, and shoreline stability

We investigated the initial impacts and post spill recovery of salt marshes over a 3.5-year period along northern Barataria Bay, LA, USA exposed to varying degrees of Deepwater Horizon oiling to determine the effects on shoreline-stabilizing vegetation and soil processes. In moderately oiled marshes, surface soil total petroleum hydrocarbon concentrations were ~70mgg(-1) nine months after the spill. Though initial impacts of moderate oiling were evident, Spartina alterniflora and Juncus roemerianus aboveground biomass and total live belowground biomass were equivalent to reference marshes within 24-30months post spill. In contrast, heavily oiled marsh plants did not fully recover from oiling with surface soil total petroleum hydrocarbon concentrations that exceeded 500mgg(-1) nine months after oiling. Initially, heavy oiling resulted in near complete plant mortality, and subsequent recovery of live aboveground biomass was only 50% of reference marshes 42months after the spill. Heavy oiling also changed the vegetation structure of shoreline marshes from a mixed Spartina-Juncus community to predominantly Spartina; live Spartina aboveground biomass recovered within 2-3years, however, Juncus showed no recovery. In addition, live belowground biomass (0-12cm) in heavily oiled marshes was reduced by 76% three and a half years after the spill. Detrimental effects of heavy oiling on marsh plants also corresponded with significantly lower soil shear strength, lower sedimentation rates, and higher vertical soil-surface erosion rates, thus potentially affecting shoreline salt marsh stability

Shoreline oiling effects and recovery of salt marsh macroinvertebrates from the Oil Spill

Salt marshes in northern Barataria Bay, Louisiana, USA were oiled, sometimes heavily, in the aftermath of the oil spill. Previous studies indicate that fiddler crabs (in the genus ) and the salt marsh periwinkle ( were negatively impacted in the short term by the spill. Here, we detail longer-term effects and recovery from moderate and heavy oiling over a 3-year span, beginning 30 months after the spill. Although neither fiddler crab burrow density nor diameter differed between oiled and reference sites when combined across all sampling events, these traits differed among some individual sampling periods consistent with a pattern of lingering oiling impacts. Periwinkle density, however, increased in all oiling categories and shell-length groups during our sampling period, and periwinkle densities were consistently highest at moderately oiled sites where aboveground biomass was highest. Periwinkle shell length linearly increased from a mean of 16.5 to 19.2 mm over the study period at reference sites. In contrast, shell lengths at moderately oiled and heavily oiled sites increased through month 48 after the spill, but then decreased. This decrease was associated with a decline in the relative abundance of large adults (shell length 21-26 mm) at oiled sites which was likely caused by chronic hydrocarbon toxicity or oil-induced effects on habitat quality or food resources. Overall, the recovery of facilitated the recovery of fiddler crabs and periwinkles. However, our long-term record not only indicates that variation in periwinkle mean shell length and length-frequency distributions are sensitive indicators of the health and recovery of the marsh, but agrees with synoptic studies of vegetation and infaunal communities that full recovery of heavily oiled sites will take longer than 66 months