Audit services, non-audit services, and audit firm tenure: Three perspectives on audit quality

The faith in financial reporting quality and the corresponding auditing process has suffered a lot within the last decade, due to significant accounting scandals (e.g. Enron, WorldCom, Parmalat, etc.). As an answer to these accounting scandals, the law-makers in Germany and the European Union, respectively, have strengthened audit regulations in order to improve the quality of the conducted audits. The aim of this cumulative dissertation is to provide empirical evidence on the effects of intended and already implemented regulative audit requirements in Germany. ln order to consider the wide range of different audit requirements, the dissertation is based on four different study manuscripts, highlighting various perspectives with regard to the appointment, duration, and remuneration of a statutory auditor in the German audit environment. Besides the empirical evidence for separate auditing issues, this dissertation is also aimed to provide a solid theoretical background and critical suggestions for future research.:I. Audit services, non-audit services, and audit firm tenure – three perspectives on audit quality … 1 II. Abnormal audit fees and audit quality in German audit market: initial evidence on association of audit fee premiums and audit fee discounts with earnings management … 13 III. Effects of initial audit fee discounts on audit quality: evidence from Germany … 32 IV. Non-audit services and audit quality: blessing or curse? … 60 V. Relationship of auditor tenure to audit quality: empirical evidence from the German audit market … 8

Initial Evidence from the German Audit Market

This study investigates the economic auditor–client dependency issue by examining the association between abnormal audit fee pricing and audit quality. Our study is the first to analyze this phenomenon empirically for the institutional setting of German IFRS firms by using a sample of 2,334 firm- year observations for the period from 2005 to 2010. Our empirical results demonstrate that positive abnormal audit fees are negatively associated with audit quality and imply that the audit fee premium is a significant indicator of compromised auditor independence due to economic auditor–client bonding. Audit fee discounts generally do not lead to a reduced audit effort, or respectively, audit quality is not impaired when client bargaining power is strong. The association of positive abnormal audit fees and audit quality is robust to different audit quality surrogates such as absolute discretionary accruals, financial restatements, and meeting or beating analysts’ earnings forecasts

Phytochromes in Agrobacterium fabrum

The focus of this review is on the phytochromes Agp1 and Agp2 of Agrobacterium fabrum. These are involved in regulation of conjugation, gene transfer into plants, and other effects. Since crystal structures of both phytochromes are known, the phytochrome system of A. fabrum provides a tool for following the entire signal transduction cascade starting from light induced conformational changes to protein interaction and the triggering of DNA transfer processes

Time‐resolved fluorescence anisotropy with Atto 488‐labeled phytochrome Agp1 from Agrobacterium fabrum

Phytochromes are photoreceptor proteins with a bilin chromophore that undergo photoconversion between two spectrally different forms, Pr and Pfr. Three domains, termed PAS, GAF, and PHY domains, constitute the N-terminal photosensory chromophore module (PCM); the C-terminus is often a histidine kinase module. In the Agrobacterium fabrum phytochrome Agp1, the autophosphorylation activity of the histidine kinase is high in the Pr and low in the Pfr form. Crystal structure analyses of PCMs suggest flexibility around position 308 in the Pr but not in the Pfr form. Here, we performed time-resolved fluorescence anisotropy measurements with different Agp1 mutants, each with a single cysteine residue at various positions. The fluorophore label Atto-488 was attached to each mutant, and time-resolved fluorescence anisotropy was measured in the Pr and Pfr forms. Fluorescence anisotropy curves were fitted with biexponential functions. Differences in the amplitude A$_2$ of the second component between the PCM and the full-length variant indicate a mechanical coupling between position 362 and the histidine kinase. Pr-to-Pfr photoconversion induced no significant changes in the time constant t$_2$ at any position. An intermediate t$_2$ value at position 295, which is located in a compact environment, suggests flexibility around the nearby position 308 in Pr and in Pfr

Structural snapshot of a bacterial phytochrome in its functional intermediate state

Phytochromes are modular photoreceptors of plants, bacteria and fungi that use light as a source of information to regulate fundamental physiological processes. Interconversion between the active and inactive states is accomplished by a photoinduced reaction sequence which couples the sensor with the output module. However, the underlying molecular mechanism is yet not fully understood due to the lack of structural data of functionally relevant intermediate states. Here we report the crystal structure of a Meta-F intermediate state of an Agp2 variant from Agrobacterium fabrum. This intermediate, the identity of which was verified by resonance Raman spectroscopy, was formed by irradiation of the parent Pfr state and displays significant reorientations of almost all amino acids surrounding the chromophore. Structural comparisons allow identifying structural motifs that might serve as conformational switch for initiating the functional secondary structure change that is linked to the (de-)activation of these photoreceptors

Optimized management of urolithiasis by coloured stent-stone contrast using dual-energy computed tomography (DECT)

Background We analysed in vitro the appearance of commonly used ureteral stents with dual-energy computed tomography (DECT) and we used these characteristics to optimize the differentiation between stents and adjacent stone. Methods We analysed in vitro a selection of 36 different stents from 7 manufacturers. They were placed in a self-build phantom model and measured using the SOMATOM® Force Dual Source CT-Scanner (Siemens, Forchheim, Germany). Each sample was scanned at various tube potentials of 80 and 150 peak kilovoltage (kVp), 90 and 150 kVp and 100 and 150 kVp. The syngo Post-Processing Suite software program (Siemens, Forchheim, Germany) was used for differentiation based on a 3–material decomposition algorithm (UA, calcium, urine) according to our standard stone protocol. Results Stents composed of polyurethane appeared blue and silicon-based stents were red on the image. The determined appearances were constant for various peak kilovoltage (kVp) values. The coloured stent-stone-contrast displayed on DECT improves monitoring, especially of small calculi adjacent to indwelling ureteral stents. Conclusion Both urinary calculi and ureteral stents can be accurately differentiated by a distinct appearance on DECT. For the management of urolithiasis patients can be monitored more easily and accurately using DECT if the stent shows a different colour than the adjacent stone

Ten millennia of hepatitis B virus evolution

Hepatitis B virus (HBV) has been infecting humans for millennia and remains a global health problem, but its past diversity and dispersal routes are largely unknown. We generated HBV genomic data from 137 Eurasians and Native Americans dated between ~10,500 and ~400 years ago. We date the most recent common ancestor of all HBV lineages to between ~20,000 and 12,000 years ago, with the virus present in European and South American hunter-gatherers during the early Holocene. After the European Neolithic transition, Mesolithic HBV strains were replaced by a lineage likely disseminated by early farmers that prevailed throughout western Eurasia for ~4000 years, declining around the end of the 2nd millennium BCE. The only remnant of this prehistoric HBV diversity is the rare genotype G, which appears to have reemerged during the HIV pandemic

Audit services, non-audit services, and audit firm tenure: Three perspectives on audit quality

The faith in financial reporting quality and the corresponding auditing process has suffered a lot within the last decade, due to significant accounting scandals (e.g. Enron, WorldCom, Parmalat, etc.). As an answer to these accounting scandals, the law-makers in Germany and the European Union, respectively, have strengthened audit regulations in order to improve the quality of the conducted audits. The aim of this cumulative dissertation is to provide empirical evidence on the effects of intended and already implemented regulative audit requirements in Germany. ln order to consider the wide range of different audit requirements, the dissertation is based on four different study manuscripts, highlighting various perspectives with regard to the appointment, duration, and remuneration of a statutory auditor in the German audit environment. Besides the empirical evidence for separate auditing issues, this dissertation is also aimed to provide a solid theoretical background and critical suggestions for future research.:I. Audit services, non-audit services, and audit firm tenure – three perspectives on audit quality … 1 II. Abnormal audit fees and audit quality in German audit market: initial evidence on association of audit fee premiums and audit fee discounts with earnings management … 13 III. Effects of initial audit fee discounts on audit quality: evidence from Germany … 32 IV. Non-audit services and audit quality: blessing or curse? … 60 V. Relationship of auditor tenure to audit quality: empirical evidence from the German audit market … 8

Audit services, non-audit services, and audit firm tenure: Three perspectives on audit quality

The faith in financial reporting quality and the corresponding auditing process has suffered a lot within the last decade, due to significant accounting scandals (e.g. Enron, WorldCom, Parmalat, etc.). As an answer to these accounting scandals, the law-makers in Germany and the European Union, respectively, have strengthened audit regulations in order to improve the quality of the conducted audits. The aim of this cumulative dissertation is to provide empirical evidence on the effects of intended and already implemented regulative audit requirements in Germany. ln order to consider the wide range of different audit requirements, the dissertation is based on four different study manuscripts, highlighting various perspectives with regard to the appointment, duration, and remuneration of a statutory auditor in the German audit environment. Besides the empirical evidence for separate auditing issues, this dissertation is also aimed to provide a solid theoretical background and critical suggestions for future research.:I. Audit services, non-audit services, and audit firm tenure – three perspectives on audit quality … 1 II. Abnormal audit fees and audit quality in German audit market: initial evidence on association of audit fee premiums and audit fee discounts with earnings management … 13 III. Effects of initial audit fee discounts on audit quality: evidence from Germany … 32 IV. Non-audit services and audit quality: blessing or curse? … 60 V. Relationship of auditor tenure to audit quality: empirical evidence from the German audit market … 8