Audit fees, non-audit fees and auditor going-concern reporting decisions in the United Kingdom

The accounting profession has come under increased scrutiny over recent years about the growing number of non-audit fees received from audit clients and the possible negative impact of such fees on auditor independence. The argument advanced is that providing substantial amounts of non-audit services to clients may make it more likely that auditors concede to the wishes of the client management when difficult judgments are made. Such concerns are particularly salient in the case of reporting decisions related to going-concern uncertainties for financially stressed clients. This study empirically examines audit reports provided to financially stressed companies in the United Kingdom and the magnitude of audit and non-audit service fees paid to the company’s auditors. We find that the magnitude of both audit fees and non-audit fees are significantly associated with the issuance of a going-concern modified audit opinion. In particular, financially stressed companies with high audit fees are more likely to receive a going-concern modified audit opinion, whereas companies with high non-audit fees are less likely to receive a goingconcern modified audit opinion. Additional analyses indicate that the results are generally robust across alternative model and variable specifications. Overall, evidence supports the contention that high non-audit fees have a detrimental effect on going-concern reporting judgments for financially stressed U.K. companies.

Auditor's engagement risk and audit fees:the role of the audit firm alumni

This study explores the effect of the association of audit firm alumni with their alma mater on audit prices. The tests indicate that there is a moderate reduction of up to 21% in the level of audit fee when alumni (i.e., former employees) of the incumbent audit firm sit on the client board of directors which is consistent with the engagement risk theory. This suggests that there is an 'alumni effect' in the market for audit services. The findings hold only in the large company segment of the market. The results are robust to different model specifications and alternative samples. The sample comprises all executive and non-executive directors who run the UK quoted companies and are simultaneously ICAEW qualified chartered accountants. The study's implications for the accounting profession and the regulators are also discussed. © 2007 The Author Journal compilation © 2007 Blackwell Publishing Ltd.

Audit committees in Scottish local authorities 1998-2005

During the last 15 years corporate governance has become increasingly prominent in the public sector. The Audit Commission's 1993 report on probity in local government recommended the establishment of audit committees. However, progress on this was slow, as demonstrated by a survey of Scottish local authorities by the authors in 1998. Recent major changes in government in Scotland at both a local and national level have prompted councils to improve the accountability, openness and integrity of their operations. One major aspect of this exercise was the formation of scrutiny committees to provide objective scrutiny of the process and audit committees were the most common vehicle for this. This article explores recent developments in Scottish local government and their impact on audit committees. The article also reports the results of a 2005 survey of Scottish local authorities and compares these with the 1998 survey. This indicates a significant growth in the number of audit committees in Scottish councils and although the level of their perceived effectiveness is patchy, they are a more important feature of local government than they were in 1998.

Extrinsic factors in the perception of bistable motion stimuli

When viewing a drifting plaid stimulus, perceived motion alternates over time between coherent pattern motion and a transparent impression of the two component gratings. It is known that changing the intrinsic attributes of such patterns (e.g. speed, orientation and spatial frequency of components) can influence percept predominance. Here, we investigate the contribution of extrinsic factors to perception; specifically contextual motion and eye movements. In the first experiment, the percept most similar to the speed and direction of surround motion increased in dominance, implying a tuned integration process. This shift primarily involved an increase in dominance durations of the consistent percept. The second experiment measured eye movements under similar conditions. Saccades were not associated with perceptual transitions, though blink rate increased around the time of a switch. This indicates that saccades do not cause switches, yet saccades in a congruent direction might help to prolong a percept because i) more saccades were directionally congruent with the currently reported percept than expected by chance, and ii) when observers were asked to make deliberate eye movements along one motion axis, this increased percept reports in that direction. Overall, we find evidence that perception of bistable motion can be modulated by information from spatially adjacent regions, and changes to the retinal image caused by blinks and saccades.

Size frequency distribution of senile plaques in post-mortem brains of five patients with senile dementia of the Alzheimer type (SDAT)

Numerous senile plaques are one of the most characteristic histological findings in SDAT brains. Large classical plaques may develop from smaller uncored forms. There is no strong evidence that, once formed, plaques disappear from the tissue. We have examined cresyl-violet stained sections of the parahippocampal gyrus (PHG), hippocampus, frontal lobe and temporal lobe of five SDAT patients. The frequency of various sizes of plaques were determined in each of these brain regions. Statistical analysis showed that the ratio of large plaques to small plaques was greater in the hippocampal formation (especially the PHG) than in the neocortex. One explanation of these results is that plaques grow more rapidly in the hippocampal formation than elsewhere. Alternatively, if the rate of plaque growth is much the same in different brain regions, the data suggest that plaques develop first in the hippocampal formation (especially the PHG) and only later spread to the neocortex. This interpretation is also consistent with the theory that the neuropathology of SDAT spreads from the olfactory cortex via the hippocampal formation to the neocortex. Further development of this technique may help identify the site of the primary lesion in SDAT.

What determines the size frequency distribution of β-amyloid (Aβ) deposits in Alzheimer's disease patients?

The factors determining the size of individual β-amyloid (A,8) deposits and their size frequency distribution in tissue from Alzheimer's disease (AD) patients have not been established. In 23/25 cortical tissues from 10 AD patients, the frequency of Aβ deposits declined exponentially with increasing size. In a random sample of 400 Aβ deposits, 88% were closely associated with one or more neuronal cell bodies. The frequency distribution of (Aβ) deposits which were associated with 0,1,2,...,n neuronal cell bodies deviated significantly from a Poisson distribution, suggesting a degree of clustering of the neuronal cell bodies. In addition, the frequency of Aβ deposits declined exponentially as the number of associated neuronal cell bodies increased. Aβ deposit area was positively correlated with the frequency of associated neuronal cell bodies, the degree of correlation being greater for pyramidal cells than smaller neurons. These data suggested: (1) the number of closely adjacent neuronal cell bodies which simultaneously secrete Aβ was an important factor determining the size of an Aβ deposit and (2) the exponential decline in larger Aβ deposits reflects the low probability that larger numbers of adjacent neurons will secrete Aβ simultaneously to form a deposit. © 1995.

Size frequency distributions of β-amyloid (Aβ) deposits:a comparative study of four neurodegenerative disorders

Deposition of ß-amyloid (Aß ), a 'signature' pathological lesion of Alzheimer's disease (AD), is also characteristic of Down's syndrome (DS), and has been observed in dementia with Lewy bodies (DLB) and corticobasal degeneration (CBD). To determine whether the growth of Aß deposits was similar in these disorders, the size frequency distributions of the diffuse ('pre-amyloid'), primitive ('neuritic'), and classic ('dense-cored') A ß deposits were compared in AD, DS, DLB, and CBD. All size distributions had essentially the same shape, i.e., they were unimodal and positively skewed. Mean size of Aß deposits, however, varied between disorders. Mean diameters of the diffuse, primitive, and classic deposits were greatest in DS, DS and CBD, and DS, respectively, while the smallest deposits, on average, were recorded in DLB. Although the shape of the frequency distributions was approximately log-normal, the model underestimated the frequency of smaller deposits and overestimated the frequency of larger deposits in all disorders. A 'power-law' model fitted the size distributions of the primitive deposits in AD, DS, and DLB, and the diffuse deposits in AD. The data suggest: (1) similarities in size distributions of Aß deposits among disorders, (2) growth of deposits varies with subtype and disorder, (3) different factors are involved in the growth of the diffuse/primitive and classic deposits, and (4) log-normal and power-law models do not completely account for the size frequency distributions.

The global audit profession and the international financial architecture:understanding regulatory relationships at a time of financial crisis

This paper explores how regulatory relationships in the global audit arena are being affected by the current financial crisis. Key policy initiatives and debates are analyzed, along with institutional interactions, in particular between the International Federation of Accountants (IFAC), international regulators and the large audit firms. The events are placed in the context of the new international financial architecture which has developed over the last decade. Using the illustrative lens of bank auditing, questions are asked of the nature and status of audit practice and the regulatory arrangements governing such practice. The paper shows the active nature of the regulatory responses to the crisis and the shifting and competing influences among key regulatory and professional participants in the global audit arena. Emphasis is placed on the need for audit researchers to be sensitive to the developing global financial architecture, and its potential implications for the study of audit practice in different national and international contexts.

The development of a symptom questionnaire for assessing virtual reality viewing using a head-mounted display

ABSTRACT: Purpose. Virtual reality devices, including virtual reality head-mounted displays, are becoming increasingly accessible to the general public as technological advances lead to reduced costs. However, there are numerous reports that adverse effects such as ocular discomfort and headache are associated with these devices. To investigate these adverse effects, questionnaires that have been specifically designed for other purposes such as investigating motion sickness have often been used. The primary purpose of this study was to develop a standard questionnaire for use in investigating symptoms that result from virtual reality viewing. In addition, symptom duration and whether priming subjects elevates symptom ratings were also investigated. Methods. A list of the most frequently reported symptoms following virtual reality viewing was determined from previously published studies and used as the basis for a pilot questionnaire. The pilot questionnaire, which consisted of 12 nonocular and 11 ocular symptoms, was administered to two groups of eight subjects. One group was primed by having them complete the questionnaire before immersion; the other group completed the questionnaire postviewing only. Postviewing testing was carried out immediately after viewing and then at 2-min intervals for a further 10 min. Results. Priming subjects did not elevate symptom ratings; therefore, the data were pooled and 16 symptoms were found to increase significantly. The majority of symptoms dissipated rapidly, within 6 min after viewing. Frequency of endorsement data showed that approximately half of the symptoms on the pilot questionnaire could be discarded because <20% of subjects experienced them. Conclusions. Symptom questionnaires to investigate virtual reality viewing can be administered before viewing, without biasing the findings, allowing calculation of the amount of change from pre- to postviewing. However, symptoms dissipate rapidly and assessment of symptoms needs to occur in the first 5 min postviewing. Thirteen symptom questions, eight nonocular and five ocular, were determined to be useful for a questionnaire specifically related to virtual reality viewing using a head-mounted display.

Regulating audit beyond the crisis:a critical discussion of the EU green paper

With the European Commission making global leadership claims in the field of audit regulation, the content of its 2010 Green Paper on ‘Audit Policy: Lessons from the Crisis’ warrants careful scrutiny. Important issues raised in the Green Paper include regulatory oversight, competition in the audit market, the dangers of having very few firms with the capacity to audit global transnational corporations, professional judgement, innovative audit practices and, last but not least, social responsibility. This article analyses the principal perspectives and assumptions underpinning the construction of the Green Paper. The aims are threefold: to enhance understanding of the contemporary regulatory mindset of the European Commission, contribute to policy debate and inspire future research.

Crunch time for bank audits? Questions of practice and scope for dialogue

Purpose – The purpose of this paper is to review the way in which auditing issues have been raised and addressed during the credit crunch and developing global financial crisis. Design/methodology/approach – Analysis is based on a review of the academic auditing literature, regulatory and audit reports, together with papers from the financial press. Findings – After highlighting the relative lack of media attention devoted to the external auditing function in the light of major corporate collapses, the paper considers what, contrastingly, is an active and ongoing series of responses to the current crisis on the part of auditing firms and the profession more generally. Through such analysis the paper explores a number of implications of the credit crunch for both auditing practice and research. Research limitations/implications – The paper is constrained in part by the rapidly unfolding nature of events, with important policy developments arising almost on a daily basis. The paper draws primarily on events up to the beginning of October 2008. Practical implications – The paper has important messages for audit practice and research, including the technical capacities of external audits in the banking sector, the contributions of standard setting bodies and regulatory oversight, and the scope for enhanced dialogue between such parties and audit researchers. Originality/value - The paper serves both to focus and stimulate analysis of the credit crunch on the audit profession. It demonstrates the complexity of contemporary practice and highlights the importance, especially from an educational perspective, of developing understanding of banking audit practice and associated regulatory interactions – including the presented possibilities both for research and enhanced academic‐practitioner dialogue.

Ideological aspects of the translation of business annual reports in Oman (English-Arabic)

The socioeconomic context in the renaissance era in Oman has resulted in the development of new forms of discursive prastises and thus, in the introduction of new genres. One of these new genres is the business annual report, which in Oman exists in English and Arabic. This thesis examines the role of translation in the production of annual reports. This research makes a contribution to the field of Translation Studies by examining institutional translation in order to gain insights into translation agents, processes, practises and underlying policies with reference to national business institutions in their sociopolitical and historical and institutional contexts .Business reports are still largely under-researched as a genre in Translation Studies. The thesis starts with an overview of relevant aspects of Translation Studies to arrive at a theoretical framework which informs the analysis. The empirical analysis is based on sixty seven reports produced by different Oman-based companies which vary in size and organisational patterns. Annual reports are characterised as a genre in terms of function and structure at the macro-level as well as the micro-level. They have an informative and a persuasive function, as they are produced by different companies in their attempt to promote and fulfil their respective business interests and objectives.The thesis presents the sociocultural and political contexts of the production of the English and Arabic versions of the annual reports, focusing on the underlying functions and principles of institutions and agents. The next chapter illustrates the textual profiles of the English and the Arabic versions, identifying typical translation strategies. The discussion here operates within the framework of product-oriented Descriptive Translation Studies (Lambert and van Gorp 1985). It is argued that the two language versions reflect aspects of ideology, political affiliation and power relations at both the macro and micro- structural levels. These ideological aspects can be seen in particular in the addition, omission and change of specific expressions which refer to religious or interpersonal aspects. These strategies signal the aim to appeal to wider Arab readers and to fulfil the agendas of different agents (government, companies, chairpersons, directors, etc.). The description of the texts is followed by an account of these aspects in terms of sociopolitical and institutional conditions in the production of the translations. For this explanation, reference is made to sociological approaches to translation, mainly building on the work of Bourdieu (1991). This thesis emphasises that the translation of annual reports is a collective effort which takes place in a particular institutional context. Consequently, the translation strategies are regulated by the objectives of the institution within which translators and other agents operate. The translations are prepared in order to meet the expectations and needs of the intended Arabic language addressees; in addition, the generic features of the reports reveal a progression of transmission and development over the course of time in the spheres of business and economy in Oman. This thesis demonstrates that business companies too can be seen as institutions which contribute significantly to disseminating business terms and concepts and promoting investment opportunities domestically and internationally through translation work.