City-level auditor industry specialization, economies of scale, and audit pricing

We examine the effects of city-level auditor industry specialization and scale economies on audit pricing in the United States. Using a sample of Big N clients for the 2000-2007 period, and a scale measure based on percentile rankings of the number of audit clients at the city-industry level, we document significant specialization premiums and scale discounts in both the pre- and post-Sarbanes-Oxley Act (SOX) periods. However, the effects of industry specialization and scale economies on audit pricing are highly interactive. The negative effect of city-industry scale on audit fees obtains only for clients of specialist auditors. By contrast, clients of non-specialist auditors obtain scale discounts only when they enjoy strong bargaining power, suggesting that auditors are "forced" to pass on scale economies to clients with greater bargaining power.

Retrospective clinical audit of outcomes for patients admitted to an inpatient palliative care unit for restorative care

Background Restorative care in palliative care is a subset of rehabilitation that aims to improve quality of life through restoration or maintenance of physical functions. Outcomes for restorative care programmes delivered by palliative care units have not adequately been assessed.

Objectives The objectives are to examine the outcomes of a restorative care programme in an inpatient palliative care unit, including discharge destination, performance status changes and length of stay.

Methods Retrospective clinical audit of consecutive patients admitted to Calvary Health Care Bethlehem in Melbourne, Australia, principally for restorative care from July 2010 to December 2011.

Results 79 admissions met inclusion criteria. Mean age was 76.5 years (SD=11.14) and 43 (54%) were men. 75 (95%) patients had a malignant diagnosis; of these, the majority had lung cancer (24%). 16 patients (20%) were discharged home, 51 (65%) died and 12 (15%) were transferred. Of the patients discharged home, only 6 (38% of those discharged home) improved their performance status. Those discharged home had a significantly shorter length of stay (17 days compared to 39 days; p<0.05). Patients discharged home also had significantly better Australia-modified Karnofsky Performance Status (AKPS) and Resource Utilisation Groups-Activities of Daily Living (RUG-ADL) scores on admission than others (both p<0.05).

Conclusions The majority of patients referred for restorative care died during admission, with only a minority discharged home. Patients discharged most commonly experienced maintenance and not improvement in performance status. A successful discharge home following restorative care was associated with a shorter length of stay. Implications and recommendations for successful restorative care will be discussed.

Discharge communication from inpatient care: an audit of written medical discharge summary procedure against the new National Health Service Standard for clinical handover

OBJECTIVE: To audit written medical discharge summary procedure and practice against Standard Six (clinical handover) of the Australian National Safety and Quality Health Service Standards at a major regional Victorian health service. METHODS: Department heads were invited to complete a questionnaire about departmental discharge summary practices. RESULTS: Twenty-seven (82%) department heads completed the questionnaire. Seven (26%) departments had a documented discharge summary procedure. Fourteen (52%) departments monitored discharge summary completion and 13 (48%) departments monitored the timeliness of completion. Seven (26%) departments informed the patient of the content of the discharge summary and six (22%) departments provided the patient with a copy. Seven (26%) departments provided training for staff members on how to complete discharge summaries. Completing discharge summaries was usually delegated to the medical intern. CONCLUSIONS: The introduction of the National Service Standards prompted an organisation-wide audit of discharge summary practices against the external criterion. There was substantial variation in the organisation's practices. The Standards and the current audit results highlight an opportunity for the organisation to enhance and standardise discharge summary practices and improve communication with general practice.

Who's counting? Legitimating measurement in the audit culture

What gives legitimacy to the numbers that constitute the measurement techniques of the audit culture? We argue that the audit culture’s blind application of numbers to people as if there was no moral or ethical dimension to the calculation rests on a military discourse resi-dent in mathematics. This argument is based on the genealogy presented in this paper, which uncovers a regime of measurement-by-number, sedimented as legitimate through an associa-tion with military power. We claim that this military measurement-by-number is a dubious technique of government on which the audit culture relies for its highly questionable authori-ty.

Executive equity risk-taking incentives and audit pricing

Using a large sample of U.S. firms spanning the period 2000-2010, we document a strong positive association between the sensitivity of CEO compensation portfolio to stock return volatility (vega) and audit fees. We also show that the positive association between vega and audit fees is weaker in the post-Sarbanes-Oxley Act (SOX) period. In supplementary tests, we show that the relation between vega and audit fees is stronger for firms with older CEOs and in firms where the CEO is also chairman of the board. Collectively, our results suggest that audit firms incorporate executive risktaking incentives in the fees they charge for their services.

Inter-hospital 'patient expect' calls of clinical handovers for expected patients transferred from rural to metropolitan hospitals: a retrospective clinical audit

Patients requiring inter-hospital air transport across large geographical spaces are at significant risk of adverse outcomes. The aims of this study were to examine the characteristics of clinical handover conducted by telephone and subsequently transcribed in medical records during the inter-hospital transfer of rural patients, and to identify any deficits of this telephone clinical handover. A retrospective audit was conducted of transcribed telephone handovers ('patient expect' calls) occurring with inter-hospital transfers from two rural hospitals to a metropolitan tertiary hospital of all rural patients (n = 127) between January and June 2012. Patient transport between various sites occurred through the Royal Flying Doctor Service. For these hospitals, patient expect calls constituted the only handover record for clinicians during the time of patient transport. Information on patient identification stickers relating to patients' age or gender did not always correspond with details collected during patient expect calls. The name of a clinician at the receiving hospital authorising the transfer was provided in 14 calls (11.1%). It was difficult to determine who made and received calls, and who accepted responsibility for patients at the receiving site. Deterioration in a patient's condition was made in three calls. Actions to be taken after patients' arrival were included in 24 (19%) calls. Planning was restricted to identifying who to contact to review instructions. Inconsistent and overuse of abbreviations was likely to have affected the ability to accurately read back patient information. Crucial information was missing from calls, which may have contributed to delayed and inappropriate delivery of care.

Trajectory of sedation assessment and sedative use in intubated and ventilated patients in intensive care: a clinical audit

Background: Sedation is crucial for the recovery of patients in intensive care units (ICUs). Maintaining comfort and safety promotes optimal care for critically ill patients. Purpose: To examine sedation assessment and management undertaken by health professionals for mechanically ventilated patients in one Australian ICU. Methods: A retrospective clinical audit was undertaken of medical records of all eligible, mechanically ventilated patients admitted to an ICU of an Australian metropolitan, teaching hospital over a 12-month period. A Sedation Audit Tool was used to collect data from the day of intubation to 5 days after intubation. Findings: Data were extracted from medical records of 150 patients. The Riker Sedation-Agitation Scale (SAS) was the scoring system used. Patients were unarousable or very sedated between 57% and 81% at some point during the study period, while between 5% and 11% were agitated, very agitated or extremely agitated across this time. Patients' sedation scores were not documented in between 3.3% and 23.3% of patients. Medications commonly used were propofol, midazolam, morphine, and fentanyl. There were 135 situations of adverse events, which related to patients pulling endotracheal tubes leading to malpositioning, patients biting endotracheal tubes causing desaturation, patient experiencing excessive agitation requiring restraint use, patients experiencing increased intracranial pressure above desired limits, patients self-extubating, and patients experiencing over-drowsiness leading to delays in extubation. Conclusions: Many patients were either very sedated or agitated at some point during the study period, and some patients experienced adverse outcomes associated with sedation practices. The findings inform future quality initiatives to improve sedation practices.

Business group affiliation, board quality and audit pricing behavior: evidence from indian companies

This study examines the relationships among business group affiliation, board quality and audit fees in an emerging market setting. Using data from Indian firms listed on the Bombay Stock Exchange (BSE) over a nine-year period (2004-2012), our results indicate that firms affiliated with a business group pay higher audit fees than those without such affiliations. We also find that group-affiliated firms with higher-quality boards pay relatively higher audit fees compared to other counterparts. Further, our findings suggest that group-affiliated firms pay lower fee premiums when an audit is undertaken by a Big 4 firm or its affiliates, which implies that economies of scale may be a potential competitive advantage held by larger auditors. The results of the study have implications for the management of audit fees by group-affiliated firms through board structure and processes.

The influence of remuneration structures on financial reporting quality: evidence from Australia

This cross-sectional study investigates the influence of a company's remuneration structure on managers' opportunistic behaviour. The findings support the proposed hypothesis that a higher level of compliance with Remuneration Principle 8-ASX Corporate Governance Council) is associated with a lower level of earnings management. The findings support the efficient functioning of the ASX proposed remuneration structure. This cross-sectional study investigates the influence of remuneration structures on financial reporting quality, based on a sample of companies listed on the Australian Securities Exchange (ASX). Compliance with Remuneration Principle eight issued by ASX (providing recommendations on formation, operation and disclosure of remuneration committees) is expected to improve financial reporting quality represented by a decreased level of earnings management. This study expands the corporate governance literature by examining an under-researched mechanism to address the agency problem. Earnings management, as a consequence of the agency problem, is measured using the level of absolute discretionary accruals. In this study, we use the modified Jones model to measure the level of discretionary accruals and the existence of reduced earnings management. The study is conducted using a random sample of 214 firm-year observations selected from the ASX listed companies. Our findings show a higher level of compliance with the principle on remuneration is associated with lower levels of earnings management. The findings support the efficient functioning of the ASX-proposed remuneration structure in reducing earnings manipulations.

Audit of gross decay treatment in young children under general anaesthetic

Abstract In Australia, dental caries is one of the most prevalent diseases effecting children. For more severe cases a dental general anaesthetic (GA) is required. A retrospective analysis of clinical records for all patients aged up to 10 years who attended Barwon Health (Geelong, Victoria, Australia) for a dental GA from 2010-2012 was performed. There were 236 separate events in 234 children, with 223 new cases and 11 that had already received a dental GA prior to the study period. The average age of patients at their dental GA procedure was 6.3 ± 2.0 years. Prior to the GA, the average dmft/ DMFT was 8 (6-12) (median, interquartile range). The length of time from referral to GA increased significantly from 166.4 days (SD 108.1), 164.3 days (SD 98.9) to225.4 days (SD 129.5) in 2010, 2011 and 2012, respectively. Follow up review appointments after GA appointment was attended by 10.8%, 37.3% and 36.0% of patients, respectively across the same years. Following the findings of long waiting times for GA procedures for children with severe dental caries, and the low rate of attendance for post-GA reviews, a change in dental process is urgently needed.

Joint consultative committees

This handbook provides an up-to-date survey of the current research into employee voice, sets this research into context, and sets a marker for future research in the area.

Auditee religiosity, external monitoring, and the pricing of audit services

Based on prior studies which show that firms headquartered in high religiosity counties exhibit high level of business ethics, this study examines whether these firms are associated with low audit risk, and therefore low audit fees. In investigating this relationship, we draw a distinction between intrinsic and extrinsic religiosity of auditees. Using a sample of 25,872 U.S. observations from 2003 to 2012, we find that intrinsic religiosity of the auditees is associated with low audit fees after controlling for auditee extrinsic religiosity, social capital, firm-specific characteristics, and county-specific characteristics. Furthermore, we find that external monitoring (institutional ownership and leverage) weakens the negative relationship between auditee intrinsic religiosity and audit fees. Finally, we conclude that the effect of auditor religiosity on audit fees is a regional effect that may affect the relationship between audit fees and auditee intrinsic religiosity.

Non-audit services, auditor quality and the value relevance of earnings

This paper tests the hypothesis that there is an inverse relation between non-audit services (NAS) provided by a firm auditor and the value relevance of earnings(measured as the earnings response coefficient) and that this relation is weaker for firms with Big 6 auditors. The hypothesis is based on anecdotal evidence and previous research that suggests that the provision of NAS by the external auditor is likely to adversely affect investors’ perceptions of the credibility of financial reports, and that Big 6 auditors, because of reputational capital and litigation costs,are likely to mitigate the adverse effects of NAS. Results using 840 firm-year observations of Australian companies document a statistically significant inverse relationship between NAS and the value relevance of earnings, and this inverse relationship is weaker for Big 6 auditors, therefore supporting the hypothesis.

Was audit quality of Laventhol and Horwath poor?

Laventhol and Horwath (L&H), the then seventh largest accounting firm in the US, declared bankruptcy in November 1990. The firm claimed that its bankruptcy was due to the perception of it being a deep pocket rather than inherent deficiencies in its performance. In this study, we examine whether the audit quality of L&H was lower than other auditors. Results do not show that L&H is associated with lower quality audits either in terms of lower likelihood of issuing modified audit opinion, higher levels of discretionary accruals for its clients, or lower predictability of discretionary accruals for future non-discretionary net income for its clients than for clients of other auditors. Results of additional tests also do not suggest that auditors that take up clients of L&H report differently from L&H. This evidence does not support the proposition that L&H’s audit quality was less than audit quality of other audit firms during the period leading up to the bankruptcy.

Ownership concentration, foreign shareholding, audit quality, and stock price synchronicity : evidence from China

This paper investigates the effects of largest-shareholder ownership concentration, foreign ownership, and audit quality on the amount of firm-specific information incorporated into share prices, as measured by stock price synchronicity, of Chinese-listed firms over the 1996–2003 period. We show that synchronicity is a concave function of ownership by the largest shareholder with its maximum at an approximate 50% level. Further, we find that synchronicity is higher when the largest shareholder is government related. We also find that foreign ownership and auditor quality are inversely associated with synchronicity. Finally, we show that the amount of earnings information reflected in stock returns is lower for firms with high synchronicity.