Corporate governance, firm characteristics and risk management committee formation in Australian companies

Purpose – The purpose of this paper is to examine how a risk management committee (RMC), as a newly evolving sub-committee of the board of directors, functions as a key governance support mechanism in the oversight an organisation's risk management strategies, policies and processes. However, empirical evidence on the factors associated with the existence and the type of RMCs remains scant.

Design/methodology/approach – Using an agency theory perspective, this study investigates the association between board factors such as proportion of non-executive directors, Chief Executive Officer duality, and board size; as well as, other firm-related factors (e.g. auditor type, industry, leverage, and complexity), and the existence of a RMC, and the type of RMC (namely, a separate RMC versus one that is combined with the audit committee). Data was collected from the annual reports of the top 300 Australian Stock Exchange (ASX)-listed companies.

Findings – The results, based on logistic regression analyses, indicate that RMCs tend to exist in companies with an independent board chairman and larger boards. Further, the results also indicate that in comparison to companies with a combined RMC and audit committee, those with a separate RMC are more likely to have larger boards, higher financial reporting risk and lower organisational complexity.

Research limitations/implications – Data limited to top 200 top ASX-listed companies, thus restricting generalisability of the results.

Originality/value – The findings of this study provide additional information on the use and design of RMCs in a voluntary setting.

Internal auditors' assessment of their contribution to financial statement audits : the relation with audit committee and internal audit function characteristics

This paper examines the relation between audit committee characteristics, internal audit function characteristics and internal auditors' assessment of their contribution to financial statement audits. Using survey data from chief internal auditors of 76 Malaysian publicly-listed firms, we provide evidence of a positive relationship between internal auditors' assessment of their contribution to financial statement audits and three audit committee characteristics: the proportion of independent audit committee members, their knowledge and experience of accounting and auditing, and the extent of audit committee review of internal audit programmes, budget and coordination proposals. Further, a positive relationship is found between internal auditors' evaluation of their contribution to the financial statement audit and internal audit function characteristics including size, prior experience of staff in auditing, time availability and the closeness of the function's relationship with the external auditor. The results indicate that more effective audit committees and well-resourced internal audit units tend to be positively associated with the internal auditors' assessment of their contribution to the external audit.

Assurance of sustainability reports : impact on report users' perceptions of reliability

This study examined whether (1) assurance, (2) the level of assurance (reasonable vs. limited), and (3) the type of assurance provider (accountant vs. specialist consultant) affect users’ perceptions of reliability of sustainability reports. Based on an experimental questionnaire, we find that the provision of assurance improves report users’ perceived reliability of the environmental and social information. There were no significant main effects between the two experimental factors; level of assurance and type of assurance provider, and report users’ perceptions of the reliability of sustainability reports. However, a significant interaction was found between the two experimental factors and report users’ perceptions of reliability of such reports. More specifically, report users placed more confidence in the sustainability reports where the level of assurance provided is reasonable (high), and when such assurance is provided by a top tier accountancy firm, rather than when the assurance is provided by a specialist consultant. No such difference was found when the level of assurance provided was limited (low) for either type of assurance provider group. The results of this study thus highlight the relevance of assurance for sustainability reporting.

The existence and nature of risk management committees in Australian companies

A risk management committee (RMC), as a newly evolving sub-committee of the board of directors, functions as a key governance support mechanism in the oversight an organisation’s risk management strategies, policies and processes. However, empirical evidence on the factors associated with the existence and the type of RMCs remains scant. Using an agency theory perspective, this study investigates the association between board factors such as proportion of non-executive directors, CEO duality, and board size; as well as, other firm-related factors (e.g. auditor type, industry, leverage, and complexity), and (1) the existence of a RMC, and (2) the type of RMC (namely, a separate RMC versus one that is combined with the audit committee). Data was collected from the annual reports of the top 300 ASX-listed companies. The results, based on logistic regression analyses, indicate that RMCs tend to exist in companies with an independent board chairman and larger boards. Further, the results also indicate that in comparison to companies with a combined RMC and audit committee, those with a separate RMC are more likely to have larger boards, higher financial reporting risk and lower organisational complexity. The findings of this study provide additional information on the use and design of RMCs in a voluntary setting.

Quality of reporting of randomized clinical trials in abstracts of the 2005 annual meeting of the American College of Rheumatology.

Objective: To determine the quality of abstracts reporting randomized clinical trials (RCT) at the 2005 Annual Scientific Meeting of the American College of Rheumatology.

Methods: All 2005 abstracts including late-breaking abstracts were assessed. An abstract was deemed to be reporting an RCT if it indicated that participants were randomized in the title or body of the abstract. RCT were excluded if they included only pharmacokinetic data. The CONSORT checklist was applied and relevant data extracted. We defined manufacturer support as acknowledgment of industry support or industry employee as co-author.

Results: Of 2146 abstracts, 143 (6.7%) reported RCT. Of these, 78.3% were drug trials, and 63.6% indicated manufacturer support. Only 30.8% of abstracts used "randomized" in the title, 44.1% did not explicitly state whether blinding was undertaken, and only 7.0% clearly stated who was blinded. Thirty percent of studies did not give an explicit definition of eligibility criteria of participants. While 84.6% explicitly described the experimental intervention, only 37.1% explicitly described the comparator intervention. Only 21% explicitly stated that an intention to treat analysis was performed. Baseline demographic and clinical characteristics were reported in 48.3%. While most abstracts reported summary results for each treatment group, only 35.7% reported effect size with its precision.

Conclusion: The quality of reporting is suboptimal in many RCT abstracts. Abstracts reporting RCT would benefit from a structured approach that ensures more detailed reporting of eligibility criteria, active and comparator interventions, flow of participants, and adequate summary and precision of results.

Internal audit - an Asia-Pacific profile and the level of compliance with internal auditing standards

Purpose – The purpose of this paper is to provide an overview of the profile of internal audit in five Asia-Pacific countries and investigate the usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by organizations' internal audit activities (IAAs). This paper shows the differences between Australia, China, Japan, New Zealand and Taiwan. It also discusses part of the results of the Common Body of Knowledge 2006 global study conducted by the IIA.

Design/methodology/approach – The paper reports the results of a questionnaire survey sent to the global membership of the IIA in September 2006 on various aspects of internal audit practices.

Findings – The profile of internal audit differs amongst the countries with much older organizations exist in Australia, Japan and New Zealand. Respondents in New Zealand, Japan, Chinese Taiwan, China and Australia all report to have a reasonably high level of usage of Standards. However, Australia has the highest number of respondents who report that they are in full compliance of the Standards.

Originality/value – This is the first global study of internal auditors' compliance with the IIA Standards.

Exploring the issues in sustainable development journal reporting

There is concern about the environmental claims organisations make in corporate social reports and advertising. Similar concerns may also occur with reporting of environmental initiatives in journals. This paper explores what information is being conveyed in academic and industry journals. In particular, we examine the types of projects that are discussed and the level of detail provided in the reporting of sustainable development initiatives to identify what is being communicated and whether there is substance to the reporting. The results show that there are issues with the lack of detail reported and its anecdotal nature.

Oxygen delivery to patients after cardiac surgery : a medical record audit

OBJECTIVE: To describe how intensive care nurses manage the administration of supplemental oxygen to patients during the first 24 hours after cardiac surgery.
METHODS: A retrospective audit was conducted of the medical records of 245 adult patients who underwent cardiac surgery between 1 January 2005 and 31 May 2008 in an Australian metropolitan hospital. Physiological data (oxygen saturation measured by pulse oximetry and respiratory rate) and intensive care unit management data (oxygen delivery device, oxygen flow rate and duration of mechanical ventilation) were collected at hourly intervals over the first 24 hours of ICU care.
RESULTS: Of the 245 patients whose records were audited, 185 were male; mean age was 70 years (SD, 10), and mean APACHE II score was 17.5 (SD, 5.14). Almost half the patients (122, 49.8%) were extubated within 8 hours of ICU admission. The most common oxygen delivery device used immediately after extubation was the simple face mask (214 patients, 87%). Following extubation, patients received supplemental oxygen via, on average, two different delivery devices (range, 1-3), and had the delivery device changed an average of 1.38 times (range, 0-6) during the 24 hours studied. Twenty-two patients (9%) received non-invasive ventilation or high-flow oxygen therapy, and 16 (7%) experienced one or more episode of hypoxaemia during mechanical ventilation. A total of 148 patients (60%) experienced one or more episodes of low oxygenation or abnormal respiratory rate during the first 24 hours of ICU care despite receiving supplemental oxygen.
CONCLUSION: These findings suggest that the ICU environment does not protect cardiac surgical patients from suboptimal oxygen delivery, and highlights the need for strategies to prompt the early initiation of interventions aimed at optimising blood oxygen levels in cardiac surgical patients in the ICU.