Three Essays on Auditor Liability

Auditor liability is an important topic of accounting research as auditors respond to a constantly changing financial reporting and regulatory environment. Through three independent essays, I intend to explore how estimate uncertainty, financial statement aggregation, audit quality indicators, a company\u27s investor base, and the size of the alleged misstatement can impact auditor liability both in the courtroom, as determined by jurors, and in out of court settlement, as determined by attorneys. I find that jurors do hold the auditor more likely to be negligent when audit quality indicators suggest the auditors did a poor quality audit. I also find that jurors hold auditors to be more negligent when both estimate uncertainty is low and the income statement is disaggregated. This juror finding is in contrast to lawyers where I find that high estimate uncertainty causes auditors’ lawyers to believe that the auditors are more vulnerable for failing to detect a material misstatement and make more concessions in out-of-court settlement negotiation. Together, these studies have a number of important implications. First, the impact of high estimate uncertainty on auditor liability can go in opposite directions depending on whether the case disposition is determined by jurors or by lawyers negotiating settlement. Second, auditors’ legal counsel may erroneously concede during settlement negotiations based on incorrect beliefs about their vulnerability to jurors. Third, while accounting research has focused on juror judgments to proxy for auditor litigation risk, auditors may face very different litigation risk in out-of-court settlement, where the vast majority of auditor liability is determined

Verification of micro-scale photogrammetry for smooth three-dimensional object measurement

By using sub-millimetre laser speckle pattern projection we show that photogrammetry systems are able to measure smooth three-dimensional objects with surface height deviations less than 1 μm. The projection of laser speckle patterns allows correspondences on the surface of smooth spheres to be found, and as a result, verification artefacts with low surface height deviations were measured. A combination of VDI/VDE and ISO standards were also utilised to provide a complete verification method, and determine the quality parameters for the system under test. Using the proposed method applied to a photogrammetry system, a 5 mm radius sphere was measured with an expanded uncertainty of 8.5 μm for sizing errors, and 16.6 μm for form errors with a 95 % confidence interval. Sphere spacing lengths between 6 mm and 10 mm were also measured by the photogrammetry system, and were found to have expanded uncertainties of around 20 μm with a 95 % confidence interval

Electromagnetic inductance plethysmography is well suited to measure tidal breathing in infants

Reliable, accurate and noninvasive methods for measuring lung function in infants are desirable. Electromagnetic inductance plethysmography has been used to perform infant spirometry and VoluSense Pediatrics (VSP) (VoluSense, Bergen, Norway) represents an updated version of this technique. We aimed to examine its accuracy compared to a validated system measuring airflow via a facemask using an ultrasonic flowmeter. We tested 30 infants with postmenstrual ages between 36 to 43 weeks and weights from 2.3 to 4.8 kg, applying both methods simultaneously and applying VSP alone. Agreement between the methods was calculated using Bland–Altman analyses and we also estimated the effect of applying the mask. Mean differences for all breathing parameters were within ±5.5% and limits of agreement between the two methods were acceptable, except perhaps for peak tidal expiratory flow (PTEF). Application of the facemask significantly increased tidal volume, minute ventilation, PTEF, the ratio of inspiratory to expiratory time and the ratio of expiratory flow at 50% of expired volume to PTEF. VSP accurately measured tidal breathing parameters and seems well suited for tidal breathing measurements in infants under treatment with equipment that precludes the use of a facemask

Pathophysiology of respiratory distress syndrome

Respiratory distress syndrome (RDS) is a major cause of neonatal mortality and morbidity, especially in preterm infants. Its aetiology includes developmental immaturity of the lungs, particularly of the surfactant synthesizing system. Surfactant is produced, stored and recycled by type II pneumocytes and is detectable from about 24 weeks’ gestation. It is a mixture of phospholipids, neutral lipids and proteins and is spread as a film over the alveolar surface to lower surface tension and to prevent alveolar collapse. The resulting clinical correlates of RDS can be predicted from the immature lung structure and atelectasis which occur due to surfactant deficiency. Various clinical factors are known to dysregulate surfactant production and function, leading to the development of RDS. Apart from preventing the incidence of prematurity, antenatal steroids and prophylactic surfactant are of proven benefit in reducing the incidence of RDS

Electromagnetic inductance plethysmography to measure tidal breathing in preterm and term infants

Tidal breathing measurements which provide a non-invasive measure of lung function in preterm and term infants are particularly useful to guide respiratory support. We used a new technique of electromagnetic inductance plethysmography (EIP) to measure tidal breathing in infants between 32 and 42 weeks postconceptional age (PCA). Tidal breathing was measured in 49 healthy spontaneously breathing infants between 32 and 42 weeks PCA. The weight-corrected tidal volume (V(T) ) and minute volume (MV) decreased with advancing PCA (V(T) 6.5 ± 1.5 ml/kg and MV 0.44 ± 0.04 L/kg/min at 32-33 weeks, respectively; 6.3 ± 0.9 ml/kg and 0.38 ± 0.02 L/kg/min at 34-36 weeks; and 5.1 ± 1.1 ml/kg and 0.28 ± 0.02 L/kg/min at term, V(T) P < 0.001 and MV P < 0.01 for 32-33 weeks PCA vs. term; V(T) P = 0.016 and MV P = 0.015 for 34-36 weeks PCA vs. term). Respiratory frequency and the phase angle decreased significantly with advancing PCA but the flow parameter t(PTEF) /t(E) did not change significantly. Using a new technique to measure tidal breathing parameters in newborn infants, our data confirms its usability in clinical practice and establishes normative data which can guide future respiratory management of newborn infants. Pediatr Pulmonol. © 2012 Wiley Periodicals, Inc