The effect of audit partner digitalization expertise on audit fees

This study focuses on the effects of digitalization on the auditing industry and the impact of audit partner expertise in digitalization on audit fees. Using data from listed U.S. companies between 2016 and 2021, we document a statistically and economically significant audit fee premium for audit partners who specialize in digitalization. This premium is separate from the partner’s industry specialization and is strongest in industries with a high level of digitalization, especially during the first half of the sample period. Our subsample analysis shows that, while the premium appears to be diminishing in less digitalized industries, it remains significant in highly digitalized industries. This change may be due to the general increase in digitalization expertise among audit partners, leading to diminishing returns to specialization for less digitalized audits

Audit evidence, technology and judgement: a review of the literature in response to ED-500

In October 2022, the International Auditing and Assurance Standards Board (IAASB) issued Exposure Draft 500 (ED-500). This is focused on revising and integrating the standard auditors use when evaluating audit evidence during an external audit. This study contributes to the ongoing discourse as the IAASB evaluates feedback to ED-500 and executes its standard-setting agenda. We review academic literature published in the past 10 years to synthesize extant knowledge specifically on the use of technology and the application of professional skepticism during audit evidence evaluation. Our review offers factors the IAASB should consider when seeking to modernize and future-proof its standards, suggesting improvements to the proposed ED-500. We also identify fruitful avenues for future academic research

Auditing in the Era of Digital and Policy Uncertainties: The Effects of Auditor Knowledge and Client Bargaining Power on Audit Outcomes

Defence is held on 1.10.2021 13:00 – 16:00 Zoom https://aalto.zoom.us/j/69405764382The goal of this doctoral dissertation is to better understand the effects of the external factors shaping the profession of auditing, particularly changes in digitalization, regulations, and macroeconomic policies. Specifically, this work consists of an introduction and three self-contained essays that, using empirical data and methods, study how external factors affect auditing, particularly how digitalization and regulations penetrate through auditor competences, and the policy uncertainty through client bargaining power. The first essay examines the relationship between audit partner expertise in client digitalization and audit fees. This study examines if clients value audit partners' expertise in client digitalization and whether they are willing to pay higher audit fees for such expertise. The second essay explores the importance of auditors' knowledge and skills over any specializations. Specifically, the essay focuses on the generic level of knowledge and technical competence of an auditor and how higher levels of knowledge and competence are reflected in subsequent career success and the quality of audits. The third essay examines the relationship between uncertainty regarding economic policy and audit fees, focusing on the client's bargaining power. The study explores whether auditors compromise on audit prices with their clients with high bargaining power during periods of high policy uncertainty

W-transform for exponential stability of second order delay differential equations without damping terms

Abstract In this paper a method for studying stability of the equation x ″ ( t ) + ∑ i = 1 m a i ( t ) x ( t − τ i ( t ) ) = 0 $x^{\prime \prime }(t)+\sum_{i=1}^{m}a_{i}(t)x(t- \tau_{i}(t))=0$ not including explicitly the first derivative is proposed. We demonstrate that although the corresponding ordinary differential equation x ″ ( t ) + ∑ i = 1 m a i ( t ) x ( t ) = 0 $x^{\prime \prime}(t)+\sum_{i=1}^{m}a_{i}(t)x(t)=0$ is not exponentially stable, the delay equation can be exponentially stable

Maximum Principles and Boundary Value Problems for First-Order Neutral Functional Differential Equations

We obtain the maximum principles for the first-order neutral functional differential equation where , and are linear continuous operators, and are positive operators, is the space of continuous functions, and is the space of essentially bounded functions defined on . New tests on positivity of the Cauchy function and its derivative are proposed. Results on existence and uniqueness of solutions for various boundary value problems are obtained on the basis of the maximum principles.</p

On exponential stability of second order delay differential equations

summary:We propose a new method for studying stability of second order delay differential equations. Results we obtained are of the form: the exponential stability of ordinary differential equation implies the exponential stability of the corresponding delay differential equation if the delays are small enough. We estimate this smallness through the coefficients of this delay equation. Examples demonstrate that our tests of the exponential stability are essentially better than the known ones. This method works not only for autonomous equations but also for equations with variable coefficients and delays

About nondecreasing solutions for first order neutral functional differential equations

Conditions that solutions of the first order neutral functional differential equation $$(Mx)(t)\equiv x^{\prime }(t)-(Sx^{\prime })(t)-(Ax)(t)+(Bx)(t)=f(t), t\in \lbrack 0,\omega ],$$ are nondecreasing are obtained. Here $A:C_{[0,\omega ]}\rightarrow L_{[0,\omega ]}^{\infty }$ ,$\;B:C_{[0,\omega ]}\rightarrow L_{[0,\omega]}^{\infty }$ and $S:L^{\infty }{}_{[0,\omega ]}\rightarrow L_{[0,\omega]}^{\infty }$ are linear continuous operators, $A$ and $B$ are positive operators, $C_{[0,\omega ]}$ is the space of continuous functions and $L_{[0,\omega ]}^{\infty }$ is the space of essentially bounded functions defined on $[0,\omega ]$. New tests on positivity of the Cauchy function and its derivative are proposed. Results on existence and uniqueness of solutions for various boundary value problems are obtained on the basis of the maximum principles

Linear Hyperbolic Functional-Differential Equations with Essentially Bounded Right-Hand Side

Theorems on the unique solvability and nonnegativity of solutions to the characteristic initial value problem u1,1(t,x)=l0(u)(t,x)+l1(u1,0)(t,x)+l2(u0,1)(t,x)+q(t,x),   u(t,c)=α(t) for t∈[a,b],  u(a,x)=β(x)  for  x∈[c,d] given on the rectangle [a,b]×[c,d] are established, where the linear operators l0, l1, l2 map suitable function spaces into the space of essentially bounded functions. General results are applied to the hyperbolic equations with essentially bounded coefficients and argument deviations