Reliance of external auditors on internal audit work : a corporate governance perspective

The literature suggests an increasing need for interactions among board of directors, management, internal audit and external audit as the four components of corporate governance and presents internal audit as a resource for the other components. External auditing standards that originated in the Western world, which are also being applied in developing countries, recommend external auditor’s reliance on internal audit to achieve audit efficiency. Nevertheless, whether this efficiency motive explains such reliance in corporate governance settings that differ from the West has not been sufficiently explored as yet. This study examines external auditor reliance on internal audit work using questionnaire survey of 119 external auditors in Ethiopia. Mann-Whitney U test results suggest that external auditors’ reliance on internal audit work is not significantly associated with the competitiveness of external audit sub-markets in Ethiopia. Results of multiple discriminant analysis indicate internal audit work performance is the most important factor that determines the extent of external auditors’ reliance on internal audit work. Overall, findings suggest that organizations can enhance corporate governance effectiveness by strengthening internal audit and fostering internal-external auditor coordination.

Principles of contemporary corporate governance

Now in its third edition, Principles of Contemporary Corporate Governance offers comprehensive coverage of the key topics and emerging themes in corporate governance in the private sector. It explains both the principles of corporate governance systems and their real-world application in an authoritative and engaging manner. This fully updated edition includes a new chapter on shareholder activism and covers developments in the areas of corporate governance in the European Union, reporting, credit rating agencies, executive remuneration and board diversity. It addresses the impact of the GFC on corporate governance and the theoretical and economic aspects of governance, and further includes comparative sections, written by specialist contributors, on corporate governance in China, Indonesia, Japan and South Africa. Principles of Contemporary Corporate Governance is an indispensable resource for academic researchers, practitioners wanting a deeper understanding of the underlying principles of corporate governance and students of business and law studying corporate governance.

The role of Transaction Cost Economics in information technology outsourcing research : a meta-analysis of the choice of contract type

Two recent reviews report that the empirical findings in information technology outsourcing (ITO) research are frequently inconsistent with the prevailing dominant analytical framework of transaction cost economics (TCE). While employing similar methodologies, the two reviews propose different strategies to resolve the inconsistencies. One is to improve the methodological rigor, specifically, the operationalization of TCE constructs. The other is to abandon TCE in favor of a new analytical framework. This paper presents a meta-analysis of the empirical findings on the choice of contract type as a function of task uncertainty. The results support both strategies. Refining the operationalization of TCE constructs, specifically of task uncertainty, would have improved the reliability of findings on TCE-based relationships between task uncertainty and the choice of contract type. However, independent of such methodological improvements, TCE is of limited relevance in recent ITO research for predicting the choice of contract type. Generalizing these findings, we conclude that ITO research requires a new analytical framework to further develop the theory of ITO and to provide sound guidance to the ITO industry.

An analysis on the utilisation of health information technology to support clinical operation of chinese medicine

Chinese Medicine (CM) has become increasingly demanding globally. Recent World Health Organisation traditional and complementary medicine strategy of integrating CM to Western Medicine (WM) indicates that it is crucial that CM developments have strong literature, scientific, and evidence-based medical approval and support. To achieve this, there is a need to form a synthesis foundation or platform for future studies. This chapter serves to discover this synthesis that is suitable for CM by discussing the basics of inquiring and Knowledge Management (KM) systems. It suggests that CM should follow a combination of Hegelian and Kantian inquiring systems with the support of Singerian and Leibnizian inquiring systems and KM features. This proposed synthesis is one of the first, if not the first study to apply Churchman's inquiring systems into the context of CM and differentiate them from WM.

The German two-tier board and the German corporate governance code

This paper deals with some interesting recent corporate governance developments in Germany. The focus is in particular on the German Corporate Governance Code, its parts, layout and how it deals with the various organs of German public corporations. The German Code is quite unique since it applies a Code of Good Practice to a two-tier board system, thus making it necessary to deal with the role and functions and the relationship between the management and the supervisory board. This paper concludes that several changes to the German law relating to public corporations since the middle of the 1990s and the introduction of the German Code will ensure that the two-tier board system will remain the favoured board structure for public corporations in Germany. It is, however, submitted that employee participation at supervisory board level will provide particular political challenges for Germany in the near future.

Accountants, ethical issues and the corporate governance context

A major survey of members of CPA Australia on the issue of ethics was recently conducted. A questionnaire was sent to 7,000 members at random, with those surveyed being asked whether they had come across any one of 14 ethical issues in the previous year. They were also asked to list the issues in order of importance as regards maintaining ethical standards, even if they had not been confronted by them.

Towards real shareholder participation in contemporary corporate governance

Enhanced shareholder participation in large public companies in Australia has not gone far enough.  Shareholders need to be given the opportunity to contribute to the forming of company decisions and strategies.  One proposal is to require that directors themselves be shareholders. A second proposal mandates shareholder committees in public companies.

Corporate governance failure and its impact on National Australia Bank's performance

The National Australia Bank (NAB) is the largest financial services institution listed on the Australian stock exchange and is within the 30 most profitable financial services organisation in the world. In January 2004, the bank disclosed to the public that it had identified losses relating to unauthorised trading in foreign currency options amounting to AUD360 million. This foreign exchange debacle was classified as operational risk, the risk of loss resulting from inadequate or failed processes, people, or systems and reiterated the importance of corporate governance for banks. Concurrent issues of National Australia Bank’s AUD4.1 billion loss on US HomeSide loans in 2001, the degree of strength of their risk management practices and lack of auditor independence, were raised by the US Securities and Exchange Commission in 2004, reinforcing the view that corporate governance had not been given the priority it deserved over a number of years. This paper will assess and critically analyse the impact of corporate governance failure by management and Board of Directors on NAB’s performance over the years 2001-2005.

Knowledge transfer in enterprise information technology support using web-based self-service systems

This paper explores Critical Success Factors (CSFs) in the transfer
of after-sales support-oriented knowledge from Information Technology (IT)
support organisations to enterprise customers, using Web-based self-service Systems (WSS). As it appears that best-in-class companies are ahead of the academic work in this area, we approached the topic through an exploratory CSF study of a best-in-class multinational IT services firm and identified 26 CSFs. Key findings from the study indicate that best-in-class IT service organisations may be cognisant of a range of factors relating to supporting customers, but are less aware of what is needed to support their own frontline support agents. Such organisations also lack an understanding of what is needed to provide enterprise support in the later stages of knowledge transfer, where enterprise customers can experience problems attempting to integrate resolutions. The study further showed that many aspects that might be characterised as encompassing socio-technical issues relating to the provision of web-based self-service are still poorly understood.

Investigating information systems analysts' possession of tacit organisational knowledge

Outsourcing of Information Technology (IT) services which are central to business strategy may be risky. Managers have made the outsourcing decision both to concentrate financially on the core competencies and to rid themselves of a troublesome and cost inefficient department. More recent research has, however, cast doubt on the promises of huge savings. In this paper, we consider the likelihood that outsourcing may lead to the loss of organisational knowledge - that organisations outsourcing their total Information Systems operations may also have lost irreplaceable tacit, cross-functional knowledge which subsisted within the minds of the professional systems analysts. The findings of our research revealed that expert systems analysts possess a unique organisational understanding and draw on this knowledge to operate efficiently in their environment. We present a model that will allow future researchers to build on our findings and examine whether outsourcing can lead to a loss of organisational memory.

Three strategic dimensions of information security in ecommerce : a literature review based conceptual model

Important eCommerce requirements are a robust and secure technical infrastructure, and the ability to ensuring the security of information, and to satisfying certain related legal requirements. In this paper, based on a literature review, we present a high-level conceptual model of information security in eCommerce, consisting of three strategic dimensions: protecting organizations' information, satisfying certain legal requirements, and enabling trusted and secure electronic transactions. Our conceptual model can be used by eCommerce managers as a tool in the strategic planning and management process, to better understand and communicate the inter-dependencies between business and legal requirements. The model can also be used for devising the goals and objectives relevant to their specific organization, for designing the policies that are needed, and deciding how technology will be managed and what training is required.

The value of information in an agency model with moral hazard

I show that the principal and the agent may each prefer that the principal or the agent has imperfect information about the principal's technology in a principal-agent environment with moral hazard. Principals expend considerable resources on data cumulation and analysis. However, such investments in information acquisition are benecial only if the agent will know that the principal is not ignorant or it allows the principal to implement a dierent action. When the principal is perfectly informed about her technology, the agent prefers to be ignorant. In addition, the value of perfect information for the agency is negative if the principal would implement the same action with either possible technology. I also investigate the dierences between ex ante and ex post contracting, and the ramications of the principal being ignorant or potentially ignorant about the technology. Finally, I determine if the principal's utility varies continuously with the degree of informativeness of the agent about the principal's technology. In this vein, I determine whether the agent's uncertainty may make the principal better o if she has the less informative technology.