Bank audit fees and asset securitization risks

Using the lens of audit pricing, we provide insights into auditors’ behaviors in relation to the risk of asset securitizations to bank holding companies in a period encompassing the Global Financial Crisis (GFC) and the introduction of the accounting standards FAS 166 and FAS 167. Using US bank holding company data from 2003 to 2011, we find significant and positive associations between asset securitization risks and audit fees. We find that auditors appear to focus on different aspects of asset securitization risks after the onset of the GFC, and increase their attention to the systemic risks facing bank holding companies in general. After the implementation of FAS 166 and FAS 167, which removed the discretion to treat asset securitizations as sales and required the consolidation of the accounts of special purpose entities, asset securitization risks no longer have a significant effect on audit fees.

Audit fees and asset securitization risks

The thesis investigates “where were the auditors in asset securitizations”, a criticism of the audit profession before and after the onset of the global financial crisis (GFC). Asset securitizations increase audit complexity and audit risks, which are expected to increase audit fees. Using US bank holding company data from 2003 to 2009, this study examines the association between asset securitization risks and audit fees, and its changes during the global financial crisis. The main test is based on an ordinary least squares (OLS) model, which is adapted from the Fields et al. (2004) bank audit fee model. I employ a principal components analysis to address high correlations among asset securitization risks. Individual securitization risks are also separately tested. A suite of sensitivity tests indicate the results are robust. These include model alterations, sample variations, further controls in the tests, and correcting for the securitizer self-selection problem. A partial least squares (PLS) path modelling methodology is introduced as a separate test, which allows for high intercorrelations, self-selection correction, and sequential order hypotheses in one simultaneous model. The PLS results are consistent with the main results. The study finds significant and positive associations between securitization risks and audit fees. After the commencement of the global financial crisis in 2007, there was an increased focus on the role of audits on asset securitization risks resulting from bank failures; therefore I expect that auditors would become more sensitive to bank asset securitization risks after the commencement of the crisis. I find that auditors appear to focus on different aspects of asset securitization risks during the crisis and that auditors appear to charge a GFC premium for banks. Overall, the results support the view that auditors consider asset securitization risks and market changes, and adjust their audit effort and risk considerations accordingly.

Technical note : modelling a complex micro-multileaf collimator using the standard BEAMnrc distribution

Purpose: The component modules in the standard BEAMnrc distribution may appear to be insufficient to model micro-multileaf collimators that have tri-faceted leaf ends and complex leaf profiles. This note indicates, however, that accurate Monte Carlo simulations of radiotherapy beams defined by a complex collimation device can be completed using BEAMnrc's standard VARMLC component module.---------- Methods: That this simple collimator model can produce spatially and dosimetrically accurate micro-collimated fields is illustrated using comparisons with ion chamber and film measurements of the dose deposited by square and irregular fields incident on planar, homogeneous water phantoms.---------- Results: Monte Carlo dose calculations for on- and off-axis fields are shown to produce good agreement with experimental values, even upon close examination of the penumbrae.--------- Conclusions: The use of a VARMLC model of the micro-multileaf collimator, along with a commissioned model of the associated linear accelerator, is therefore recommended as an alternative to the development or use of in-house or third-party component modules for simulating stereotactic radiotherapy and radiosurgery treatments. Simulation parameters for the VARMLC model are provided which should allow other researchers to adapt and use this model to study clinical stereotactic radiotherapy treatments.

Is it necessary to re-fuse a non-union of a hallux metatarsophalangeal joint arthrodesis?

BACKGROUND: The standard treatment for a non-union of the hallux metatarsophalangeal joint fusion has been to revise the fusion. Revision fusion is technically more demanding, often involving bone grafting, more substantial fixation and prolonged period of immobilization postoperatively. We present data to suggest that removal of hardware and debridement alone is an alternative treatment option. ---------- MATERIALS AND METHODS: A case note review identified patients with a symptomatic non-union after hallux metatarsophalangeal joint (MTPJ) fusion. It is our practice to offer these patients revision fusion or removal of hardware and debridement. For the seven patients that chose hardware removal and were left with a pseudarthrosis, a matched control group was selected from patients who had had successful fusions. Three outcome scores were used. Hallux valgus and dorsiflexion angles were recorded.---------- RESULTS: One hundred thirty-nine hallux MTPJ arthrodeses were carried out. Fourteen non-unions were identified. The rate of non-union in males and following previous hallux MTPJ surgery was 19% and 24%, respectively. In females undergoing a primary MTPJ fusion, the rate was 2.4%. Twelve non-union patients were reviewed at 27 months (mean). Eleven patients had elected to undergo removal of hardware and debridement. Four patients with pseudarthrosis were unhappy with the results and proceeded to either revision fusion or MTPJ replacement. Seven non-union patients, who had removal of hardware alone, had outcome scores marginally worse compared to those with successful fusions.---------- CONCLUSION: Removal of hardware alone is a reasonable option to offer as a relatively minor procedure following a failed arthrodesis of the first MTPJ. This must be accepted on the proviso that in this study four out of 11 (36%) patients proceeded to a revision first MTPJ fusion or first MTPJ replacement. We also found that the rate of non-union in primary first MTPJ fusion was significantly higher in males and those patients who had undergone previous surgery.

A note on a reaction-diffusion model describing the bone morphogen protein gradient in Drosophila embryonic patterning

In this article, we consider the Eldar model [3] from embryology in which a bone morphogenic protein, a short gastrulation protein, and their compound react and diffuse. We carry out a perturbation analysis in the limit of small diffusivity of the bone morphogenic protein. This analysis establishes conditions under which some elementary results of [3] are valid.