Effective corporate governance : experimental evidence on international auditors'judgments and the contribution of financial accounting education

1 Summary This dissertation deals with two major aspects of corporate governance that grew in importance during the last years: the internal audit function and financial accounting education. In three essays, I contribute to research on these topics which are embedded in the broader corporate governance literature. The first two essays consist of experimental investigations of internal auditors' judgments. They deal with two research issues for which accounting research lacks evidence: The effectiveness of internal controls and the potentially conflicting role of the internal audit function between management and the audit committee. The findings of the first two essays contribute to the literature on internal auditors' judgment and the role of the internal audit function as a major cornerstone of corporate governance. The third essay theoretically examines a broader issue but also relates to the overall research question of this dissertation: What contributes to effective corporate governance? This last essay takes the perspective that the root for quality corporate governance is appropriate financial accounting education. r develop a public interest approach to accounting education that contributes to the literature on adequate accounting education with respect to corporate governance and accounting harmonization. The increasing importance of both the internal audit function and accounting education for corporate governance can be explained by the same recent fundamental changes that still affect accounting research and practice. First, the Sarbanes-Oxley Act of 2002 (SOX, 2002) and the 8th EU Directive (EU, 2006) have led to a bigger role for the internal audit function in corporate governance. Their implications regarding the implementation of audit committees and their oversight over internal controls are extensive. As a consequence, the internal audit function has become increasingly important for corporate governance and serves a new master (i.e. the audit committee) within the company in addition to management. Second, the SOX (2002) and the 8th EU Directive introduced additional internal control mechanisms that are expected to contribute to the reliability of financial information. As a consequence, the internal audit function is expected to contribute to a greater extent to the reliability of financial statements. Therefore, effective internal control mechanisms that strengthen objective judgments and independence become important. This is especially true when external- auditors rely on the work of internal auditors in the context of the International Standard on Auditing (ISA) 610 and the equivalent US Statement on Auditing Standards (SAS) 65 (see IFAC, 2009 and AICPA, 1990). Third, the harmonization of international reporting standards is increasingly promoted by means of a principles-based approach. It is the leading approach since a study of the SEC (2003) that was required by the SOX (2002) in section 108(d) was in favor of this approach. As a result, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) commit themselves to the development of compatible accounting standards based on a principles-based approach. Moreover, since the Norwalk Agreement of 2002, the two standard setters have developed exposure drafts for a common conceptual framework that will be the basis for accounting harmonization. The new .framework will be in favor of fair value measurement and accounting for real-world economic phenomena. These changes in terms of standard setting lead to a trend towards more professional judgment in the accounting process. They affect internal and external auditors, accountants, and managers in general. As a consequence, a new competency set for preparers and users of financial statements is required. The basil for this new competency set is adequate accounting education (Schipper, 2003). These three issues which affect corporate governance are the initial point of this dissertation and constitute its motivation. Two broad questions motivated a scientific examination in three essays: 1) What are major aspects to be examined regarding the new role of the internal audit function? 2) How should major changes in standard setting affect financial accounting education? The first question became apparent due to two published literature reviews by Gramling et al. (2004) and Cohen, Krishnamoorthy & Wright (2004). These studies raise various questions for future research that are still relevant and which motivate the first two essays of my dissertation. In the first essay, I focus on the role of the internal audit function as one cornerstone of corporate governance and its potentially conflicting role of serving both management and the audit committee (IIA, 2003). In an experimental study, I provide evidence on the challenges for internal auditors in their role as servant for two masters -the audit committee and management -and how this influences internal auditors' judgment (Gramling et al. 2004; Cohen, Krishnamoorthy & Wright, 2004). I ask if there is an expectation gap between what internal auditors should provide for corporate governance in theory compared to what internal auditors are able to provide in practice. In particular, I focus on the effect of serving two masters on the internal auditor's independence. I argue that independence is hardly achievable if the internal audit function serves two masters with conflicting priorities. The second essay provides evidence on the effectiveness of accountability as an internal control mechanism. In general, internal control mechanisms based on accountability were enforced by the SOX (2002) and the 8th EU Directive. Subsequently, many companies introduced sub-certification processes that should contribute to an objective judgment process. Thus, these mechanisms are important to strengthen the reliability of financial statements. Based on a need for evidence on the effectiveness of internal control mechanisms (Brennan & Solomon, 2008; Gramling et al. 2004; Cohen, Krishnamoorthy & Wright, 2004; Solomon & Trotman, 2003), I designed an experiment to examine the joint effect of accountability and obedience pressure in an internal audit setting. I argue that obedience pressure potentially can lead to a negative influence on accountants' objectivity (e.g. DeZoort & Lord, 1997) whereas accountability can mitigate this negative effect. My second main research question - How should major changes in standard setting affect financial accounting education? - is investigated in the third essay. It is motivated by the observation during my PhD that many conferences deal with the topic of accounting education but very little is published about what needs to be done. Moreover, the Endings in the first two essays of this thesis and their literature review suggest that financial accounting education can contribute significantly to quality corporate governance as argued elsewhere (Schipper, 2003; Boyce, 2004; Ghoshal, 2005). In the third essay of this thesis, I therefore focus on approaches to financial accounting education that account for the changes in standard setting and also contribute to corporate governance and accounting harmonization. I argue that the competency set that is required in practice changes due to major changes in standard setting. As the major contribution of the third article, I develop a public interest approach for financial accounting education. The major findings of this dissertation can be summarized as follows. The first essay provides evidence to an important research question raised by Gramling et al. (2004, p. 240): "If the audit committee and management have different visions for the corporate governance role of the IAF, which vision will dominate?" According to the results of the first essay, internal auditors do follow the priorities of either management or the audit committee based on the guidance provided by the Chief Audit executive. The study's results question whether the independence of the internal audit function is actually achievable. My findings contribute to research on internal auditors' judgment and the internal audit function's independence in the broader frame of corporate governance. The results are also important for practice because independence is a major justification for a positive contribution of the internal audit function to corporate governance. The major findings of the second essay indicate that the duty to sign work results - a means of holding people accountable -mitigates the negative effect of obedience pressure on reliability. Hence, I found evidence that control .mechanisms relying on certifications may enhance the reliability of financial information. These findings contribute to the literature on the effectiveness of internal control mechanisms. They are also important in the light of sub-certification processes that resulted from the Sarbanes-Oxley Act and the 8th EU Directive. The third essay contributes to the literature by developing a measurement framework that accounts for the consequences of major trends in standard setting. Moreovér, it shows how these trends affect the required .competency set of people dealing with accounting issues. Based on this work, my main contribution is the development of a public interest approach for the design of adequate financial accounting curricula. 2 Serving two masters: Experimental evidence on the independence of internal auditors Abstract Twenty nine internal auditors participated in a study that examines the independence of internal auditors in their potentially competing roles of serving two masters: the audit committee and management. Our main hypothesis suggests that internal auditors' independence is not achievable in an institutional setting in which internal auditors are accountable to two different parties with potentially differing priorities. We test our hypothesis in an experiment in which the treatment consisted of two different instructions of the Chief audit executive; one stressing the priority of management (cost reduction) and one stressing the priority of the audit committee (effectiveness). Internal auditors had to evaluate internal controls and their inherent costs of different processes which varied in their degree of task complexity. Our main results indicate that internal auditors' evaluation of the processes is significantly different when task complexity is high. Our findings suggest that internal auditors do follow the priorities of either management or the audit committee depending on the instructions of a superior internal auditor. The study's results question whether the independence of the internal audit function is actually achievable. With our findings, we contribute to research on internal auditors' judgment and the internal audit function's independence in the frame of corporate governance.

Qualités psychométriques de la version française de la TAS-20 et prévalence de l'alexithymie chez 264 adolescents tout-venant [The 20-item Toronto alexithymia scale: structural validity, internal consistency and prevalence of alexithymia in a Swiss adolescent sample]

L'objectif de cette étude est d'examiner la structure factorielle et la consistance interne de la TAS-20 sur un échantillon d'adolescents (n = 264), ainsi que de décrire la distribution des caractéristiques alexithymiques dans cet échantillon. La structure à trois facteurs de la TAS-20 a été confirmée par notre analyse factorielle confirmatoire. La consistance interne, mesurée à l'aide d'alpha de Cronbach, est acceptable pour le premier facteur (difficulté à identifier les sentiments (DIF)), bonne pour le second (difficulté à verbaliser les sentiments (DDF)), mais en revanche, faible pour le troisième facteur (pensées orientées vers l'extérieur (EOT)). Les résultats d'une Anova mettent en évidence une tendance linéaire indiquant que plus l'âge augmente plus le niveau d'alexithymie (score total TAS-20), la difficulté à identifier les sentiments et les pensées orientées vers l'extérieur diminuent. En ce qui concerne la prévalence de l'alexithymie, on remarque en effet que 38,5 % des adolescents de moins de 16 ans sont considérés comme alexithymiques, contre 30,1 % des 16-17 ans et 22 % des plus de 17 ans. Notre étude indique donc que la TAS-20 est un instrument adéquat pour évaluer l'alexithymie à l'adolescence, tout en suggérant quelques précautions étant donné l'aspect développemental de cette période.

Innovative method for carbon dioxide determination in human postmortem cardiac gas samples using headspace-gas chromatography-mass spectrometry and stable labeled isotope as internal standard.

A novel approach to measure carbon dioxide (CO2) in gaseous samples, based on a precise and accurate quantification by (13)CO2 internal standard generated in situ is presented. The main goal of this study was to provide an innovative headspace-gas chromatography-mass spectrometry (HS-GC-MS) method applicable in the routine determination of CO2. The main drawback of the GC methods discussed in the literature for CO2 measurement is the lack of a specific internal standard necessary to perform quantification. CO2 measurement is still quantified by external calibration without taking into account analytical problems which can often occur considering gaseous samples. To avoid the manipulation of a stable isotope-labeled gas, we have chosen to generate in situ an internal labeled standard gas ((13)CO2) on the basis of the stoichiometric formation of CO2 by the reaction of hydrochloric acid (HCl) with sodium hydrogen carbonate (NaH(13)CO3). This method allows a precise measurement of CO2 concentration and was validated on various human postmortem gas samples in order to study its efficiency.

Female residents experiencing medical errors in general internal medicine: a qualitative study.

BACKGROUND: Doctors, especially doctors-in-training such as residents, make errors. They have to face the consequences even though today's approach to errors emphasizes systemic factors. Doctors' individual characteristics play a role in how medical errors are experienced and dealt with. The role of gender has previously been examined in a few quantitative studies that have yielded conflicting results. In the present study, we sought to qualitatively explore the experience of female residents with respect to medical errors. In particular, we explored the coping mechanisms displayed after an error. This study took place in the internal medicine department of a Swiss university hospital. METHODS: Within a phenomenological framework, semi-structured interviews were conducted with eight female residents in general internal medicine. All interviews were audiotaped, fully transcribed, and thereafter analyzed. RESULTS: Seven main themes emerged from the interviews: (1) A perception that there is an insufficient culture of safety and error; (2) The perceived main causes of errors, which included fatigue, work overload, inadequate level of competences in relation to assigned tasks, and dysfunctional communication; (3) Negative feelings in response to errors, which included different forms of psychological distress; (4) Variable attitudes of the hierarchy toward residents involved in an error; (5) Talking about the error, as the core coping mechanism; (6) Defensive and constructive attitudes toward one's own errors; and (7) Gender-specific experiences in relation to errors. Such experiences consisted in (a) perceptions that male residents were more confident and therefore less affected by errors than their female counterparts and (b) perceptions that sexist attitudes among male supervisors can occur and worsen an already painful experience. CONCLUSIONS: This study offers an in-depth account of how female residents specifically experience and cope with medical errors. Our interviews with female residents convey the sense that gender possibly influences the experience with errors, including the kind of coping mechanisms displayed. However, we acknowledge that the lack of a direct comparison between female and male participants represents a limitation while aiming to explore the role of gender.

Expression of pSTAT5 predicts FLT3 internal tandem duplications in acute myeloid leukemia.

Mutations of the Fms-like tyrosine kinase 3 (FLT3) can be detected in a significant number of acute myeloid leukemias (AML). Seventy-five cases of acute myeloid leukemia were evaluated for FLT3-internal tandem duplications (ITD) by polymerase chain reaction. Paraffin-embedded formalin-fixed trephine biopsies of these cases were evaluated for expression of phosphorylated signal transducer and activator of transcription 1 (pSTAT1), pSTAT3, and pSTAT5. Specific expression of pSTAT5 was proven in leukemic blasts in situ by double staining with a blast-specific marker. Expression of pSTAT5 in > or =1% of blasts was highly predictive of FLT3-ITD. Neither expression of pSTAT1 nor pSTAT3 were associated with FLT3 mutations. Altogether we conclude that pSTAT5 expression can precisely be assessed by immunohistochemistry in routinely processed bone marrow trephines, STAT5 is highly likely the preferred second messenger of FLT3-mediated signaling in AML, and expression of pSTAT5 is predictive of FLT3-ITD.

Genomic determinants of the efficiency of internal ribosomal entry sites of viral and cellular origin

Summary : Internal ribosome entry sites (IRES) are used by viruses as a strategy to bypass inhibition of cap-dependent translation that commonly results from viral infection. IRES are also used in eukaryotic cells to control mRNA translation under conditions of cellular stress (apoptosis, heat shock) or during the G2 phase of the cell cycle when general protein synthesis is inhibited. Variation in cellular expression levels has been shown to be inherited. Expression is controlled, among others, by transcriptional factors and by the efficiency of cap-mediated translation and ribosome activity. We aimed at identifying genomic determinants of variability in IRES-mediated translation of two representative IRES [Encephalomyocarditis virus (EMCV) and X-linked Inhibitor-of-Apoptosis (XIAP) IRES]. We used bicistronic lentiviral constructions expressing two fluorescent reporter transgenes. Lentiviruses were used to transduce seven different laboratory cell lines and B lymphoblastoid cell lines from the Centre d'Etude du Polymorphisme Humain (CEPH; 15 pedigrees; n=209); representing an in vitro approach to family structure allowing genome scan analyses. The relative expression of the two markers was assessed by FACS. IRES efficiency varies according to cellular background, but also varies, for a same cell type, among individuals. The control of IRES activity presents an inherited component (h2) of 0.47 and 0.36 for EMCV and XIAP IRES, respectively. A genome scan identified a suggestive Quantitative Trait Loci (LOD 2.35) involved in the control of XIAP IRES activity. Résumé : Les sites internes d'entrée des ribosomes (IRES = internal ribosome entry sites) sont utilisés par les virus comme une stratégie afin d'outrepasser l'inhibition de traduction qui résulte communément d'une infection virale. Les IRES sont également utilisés par les cellules eucaryotes pour contrôler la traduction de l'ARN messager dans des conditions de stress cellulaire (apoptose, choc thermique) ou durant la phase G2 du cycle cellulaire, situations durant lesquelles la synthèse générale des protéines est inhibée. La variation des niveaux d'expression cellulaire de transcription est un caractère héréditaire. L'expression des gènes est contrôlée entre autre par les facteurs de transcription et par l'efficacité de la traduction initiée par la coiffe ainsi que par l'activité des ribosomes. Durant cette étude nous avons eu pour but d'identifier les déterminants génomiques responsables de la variabilité de la traduction contrôlée par l'IRES. Ceci a été effectué en étudiant deux IRES représentatifs : l'IRES du virus de l'encéphalomyocardite (EMCV) et l'IRES de l'inhibiteur de l'apoptose XIAP (X-linked Inhibitor-of-Apoptosis). Nous avons utilisés des lentivirus délivrant un transgène bicistronique codant pour deux gènes rapporteurs fluorescents. Ces lentivirus ont été utilisés pour transduire sept différentes lignées cellulaires de laboratoire et des lignées cellulaires lymphoblastoïdes B du Centre d'Etude du Polymorphisme Humain (CEPH; 15 pedigrees; n=209) qui représentent une approche in vitro de la structure familiale et qui permettent des analyses par balayage du génome. L'expression relative des deux marqueurs fluorescents a été analysée par FACS. Nos résultats montrent que l'efficacité des IRES varie en fonction du type de cellules. Il varie aussi, pour le même type de cellules, selon les individus. Le contrôle de l'activité de l'IRES est un caractère héritable (héritabilité h2) de 0.47 et 0.36 pour les IRES de EMCV et XIAP respectivement. Le balayage du génome a permis l'identification d'un locus à effets quantitatifs [QTL Quantitative Trait Loci (LOD 2.35)] impliqué dans le contôle de l'activité de l'IRES de XIAP.

The different types of internal hernia after laparoscopic Roux-En-Y gastric by-bass for morbid obesity : MDCT features : P5

Purpose: 1. To provide an overview of the different types of internal hernia (IH) occurring after laparoscopic Roux-en-Y gastric bypass (LRYGBP) performed for morbid obesity. 2. To describe the correspondent MDCT features in relation with the underlying anatomical landmarks in order to differentiate their localisation and to direct the surgeon during following laparoscopic closure of mesenteric defects. Methods and materials: LRYGBP performed for morbid obesity is associated with less perioperative complications, shorter hospital stay and a more rapid recovery compared with the open surgical procedure. However, a relatively high incidence of IH is seen that may be due to the laparoscopic approach, but also caused by rapid weight loss with consecutive loosening of the mesenteric sutures. Results: After briefly reviewing the surgical procedure of LRYGBP (ante- versus retrocolic) we describe the exact anatomical landmarks of the different types of IH occurring at any time after operation: They are caused by surgical defects either at the level of the transverse colon mesentery, at the Petersen's space, which represents an opening between the mesocolon and jejunal mesentery, or at the enteroenterostomy site. Typical MDCT features of each IH type in axial and coronal plane as well as targeted vascular reconstructions are demonstrated. Conclusion: Exact knowledge about underlying pathophysiology and anatomical landmarks is essential for distinguishing the different types of IH occurring after LRYGBP on MDCT, since radiological features are difficult to recognize and may even overlap. The radiologist should be aware of the potential anatomic sites to ensure subsequent straightforward laparoscopic exploration.

The different types of internal hernia after laparoscopic Roux-En-Y gastric by-pass for morbid obesity: MDCT features [C-419]

Learning Objectives: 1. To provide an overview of the different types of internal hernia (IH) occurring after laparoscopic Roux‑en‑Y gastric bypass (LRYGBP) for morbid obesity. 2. To describe correspondent MDCT features in relation with the underlying anatomical landmarks in order to differentiate their localisation and to direct the surgeon during following laparoscopic closure of mesenteric defects. Background: LRYGBP for morbid obesity is associated with less perioperative complications, shorter hospital stay and a more rapid recovery compared with the open surgical procedure. However, a relatively high incidence of IH is seen that may be due to the laparoscopic approach, but also caused by rapid weight loss with consecutive loosening of the mesenteric sutures. Procedure Details: After briefly reviewing the surgical procedure of LRYGBP (ante‑ versus retrocolic), we describe the exact anatomical landmarks of the different types of IH occurring at any time after operation: They are caused by surgical defects at the level of the transverse colon mesentery, at the Petersen's space, which represents an opening between the mesocolon and jejunal mesentery, or at the entero‑enterostomy site. Typical MDCT features of each IH type in axial and coronal planes as well as targeted vascular reconstructions are demonstrated. Conclusion: Exact knowledge about underlying pathophysiology and anatomical landmarks is essential for distinguishing the different types of IH occurring after LRYGBP on MDCT, since radiological features are difficult to recognize and may even overlap. The radiologist should be aware of the potential anatomic sites to ensure subsequent straightforward laparoscopic exploration.

Resistance of the internal mammary artery to restenosis: a histomorphologic study of various porcine arteries.

BACKGROUND/AIMS: Restenosis after percutaneous transluminal angioplasty (PTA) of the internal mammary artery (IMA) grafts is much less pronounced than in other arteries and venous grafts. The aim of the study was to test whether various arteries respond differently to dilatation. METHODS: PTA of the IMA, carotid, renal and circumflex coronary (RCx) arteries was performed in 9 pigs (balloon to artery ratio of 1:1.5). After 8 weeks, angiography was repeated and vessels prepared for histological analysis. Immunohistochemical staining was done to examine proliferative activity (Ki67) and to identify the vasa vasorum of the adventitia (F VIII-RA). RESULTS: The intima-media ratio after PTA was lowest in the IMA (0.06), followed by the carotid (0.27) and renal arteries (0.49) and the RCx (0.69). Proliferation of the intima was seen at 287 degrees of the vessel circumference in the RCx, at 286 degrees in the renal and at 166 degrees in the carotid artery. No proliferative activity was seen in the IMA. The intima-adventitia ratio was lower in the IMA than in the RCx and renal arteries (p < 0.05). CONCLUSION: Intima proliferation after PTA varies between the different vessels, with best results seen in the IMA. There are differences in remodeling after PTA between muscular, muscular/elastic and elastic arteries.

Toxicity at three years with and without irradiation of the internal mammary and medial supraclavicular lymph node chain in stage I to III breast cancer (EORTC trial 22922/10925).

INTRODUCTION: The EORTC 22922/10925 trial investigated the potential survival benefit and toxicity of elective irradiation of the internal mammary and medial supraclavicular (IM-MS) nodes Accrual completed in January 2004 and first results are expected in 2012. We present the toxicity reported until year 3 after treatment. PATIENTS AND METHODS: At each visit, toxicity was reported but severity was not graded routinely. Toxicity rates and performance status (PS) changes at three years were compared by chi(2) tests and logistic regression models in all the 3,866 of 4,004 patients eligible to the trial who received the allocated treatment. RESULTS: Only lung (fibrosis; dyspnoea; pneumonitis; any lung toxicities) (4.3% vs. 1.3%; p < 0.0001) but not cardiac toxicity (0.3% vs. 0.4%; p = 0.55) significantly increased with IM-MS treatment. No significant worsening of the PS was observed (p = 0.79), suggesting that treatment-related toxicity does not impair patient's daily activities. CONCLUSIONS: IM-MS irradiation seems well tolerated and does not significantly impair WHO PS at three years. A follow-up period of at least 10 years is needed to determine whether cardiac toxicity is increased after radiotherapy.