The use of internal audit by Australian companies

Purpose – The purpose of this study is to explore the voluntary use of internal audit by Australian publicly listed companies and to identify factors that lead listed companies to have an internal audit function. Design/methodology/approach – Drawing on the Institute of Internal Auditors' definition of internal auditing, the paper predicts that internal audit use is associated with factors related to risk management, strong internal controls and strong corporate governance. To test the predictions, the study combines data from a survey of listed companies with information from corporate annual reports. The paper also provides descriptive information on the use of internal audit. Findings – The results indicate that only one-third of the sample companies use internal audit. While size appears to be the dominant driver, there is also a strong association between internal audit and the level of commitment to risk management. However, the study finds only weak support for an association between the use of internal audit and strong corporate governance. Research limitations/implications – A limitation of our study is that some of the variables in the model may not be good proxies for the factors being measured. Refinement of the model and the variables used provides an opportunity for future research. Practical implications – The limited use of internal audit by Australian companies has important implications for sound corporate governance. Originality/value – This is the first study that identifies factors associated with the use of internal audit by Australian listed companies.

Audit of consultant physicians' reply letters for referrals to clinics in a tertiary teaching hospital

Background: Doctors referring patients to consultant physicians seek reply letters which both educate and assist in ongoing patient management. Highly desirable attributes in specialist letters include clearly stated and justified: (i) diagnostic formulations, (ii) management regimens, (iii) use of clinical investigations, (iv) prog-nostic statements, (v) contingency plans and (vi) follow-up arrangements. Aim: To explicitly evaluate the quality of reply letters for new patients referred to clinics at a tertiary teaching hospital. Methods: Letters were sampled from outpatient clinics of 10 different medical specialties at Princess Alexandra Hospital in Brisbane, Australia. Reply letters for new patient referrals between 1 August 2000 and 31 October 2000 were retrieved, from which data were abstracted to calculate the proportion of letters satisfying prespecified quality attributes. Results: Of 297 new patient referrals, reply letters were retrieved for 204 (69%). Of these, 147 (72%) referrals were accompanied by a referral letter, mostly (113/147; 77%) from general practitioners. For 120 referrals involving diagnostic issues, 69 (56%) letters stated a diagnostic formulation. Of 114 letters recommending further clinical investigations, 61 (53%) described a rationale for such testing. In 125 cases where therapy was a key issue, 83 (66%) letters recommended changes to current treatment for which reasons were specified in 46 (55%) cases, and contingency plans provided in 13 (16%). Prognosis was mentioned in only 18 (9%) cases. Follow-up arrangements were detailed in 123 (60%) letters. Assessments of patient understanding and likely adherence to therapy were stated in less than 15% of -letters. Conclusions: Opportunities exist for improving quality of consultant physicians' reply letters in terms of greater use of problem lists, contingency plans, prognostic statements and patient-centred assessments, as well as more frequent enunciation of consultants' reasoning behind requests for further tests and changes to current management. Use of structured letter templates may facilitate more consistent inclusion of key information to referring doctors.

An audit of structured diabetes care in a rural general practice

Objective: To assess the impact of structured diabetes care in a rural general practice. Design and setting: A cohort study of structured diabetes care (care plans, multidisciplinary involvement and regular patient recall) in a large general practice in a medium-sized Australian rural town. Medical care followed each doctor's usual practice. Participants: The first 404 consecutive patients with type 2 diabetes who consented to take part in the program were evaluated 24 months after enrolment in July 2002 to December 2003. Main outcome measures: Change in cardiovascular disease risk factors (waist circumference, body mass index, serum lipid levels, blood pressure); change in indicators of risks associated with poorly controlled diabetes (glycated haemoglobin [HbA1(c]) concentration, foot lesions, clinically significant hypoglycaemia); change in 5-year cardiovascular disease risk. Results: Women had a lower 5-year risk of a cardiovascular event at enrolment than men. Structured care was associated with statistically significant reductions in mean cardiovascular disease risk factors (waist circumference, -2.6 cm; blood pressure [systolic, -3 mmHg; diastolic -7 mmHg]; and serum lipid levels [total cholesterol, -0.5 mmol/L; HDL cholesterol, 0.02 mmol/L; LDL cholesterol, -0.4 mmol/L; triglycerides, -0.3 mmol/L]); and improvements in indicators of diabetic control (proportion with severe hypoglycaemic events, -2.2%; proportion with foot lesions, -14%). The greatest improvements in risk factors occurred in patients with the highest calculated cardiovascular risk. There was a statistically significant increase in the proportion of patients with ideal blood pressure (systolic,