International risk management:systems, internal control and corporate governance

This book is very practical in its international usefulness (because current risk practice and understanding is not equal across international boundaries). For example, an accountant in Belgium would want to know what the governance regulations are in that country and what the risk issues are that he/she needs to be aware of. This book covers the international aspect of risk management systems, risk and governance, and risk and accounting. In doing so the book covers topics such as: internal control and corporate governance; risk management systems; integrating risk into performance management systems; risk and audit; governance structures; risk management of pensions; pension scheme risks e.g. hedging derivatives, longevity bonds etc; risk reporting; and the role of the accountant in risk management. There are the case studies through out the book which illustrate by way of concrete practical examples the major themes contained in the book. The book includes highly topical areas such as the Sarbanes Oxley Act and pension risk management.

Associations between SOX 404 opinions and auditors, audit committees, and executives

This dissertation examined three issues associated with Section 404 of the Sarbanes-Oxley Act (SOX) that are of current interest to regulators and the accounting profession. For the first essay, I examined auditor changes from 2003 to 2005 for 2,454 non-financial firms that filed their initial SOX 404 opinions prior to July 1, 2005. My results showed that there is a significant association between the receipt of an adverse SOX 404 opinion and auditor resignations - both before and after the issuance of the SOX 404 opinion. The data related to auditor dismissals show that clients are not successful in opinion shopping, since clients dismissing the auditor before the SOX 404 report also are more likely to receive an adverse SOX 404 opinion than clients not changing auditors. My second essay examined the relation between audit committee characteristics and changes in material weaknesses in internal control over financial reporting under the new SOX regime. My results showed that improvements in internal control in the second year of SOX are associated with: (1) the number of audit committee members and (2) financial expertise of audit committee members. My third essay examined the relation between the appointment of the new executives and the subsequent receipt of initial section 404 of SOX opinions. My results showed that adverse SOX 404 reports will be more likely at firms that recently hired a new chief financial officer (CFO).

Internal control reporting by non-accelerated filers

I examine three issues related to internal control reporting by non-accelerated filers. Motivation for the three studies comes from the fact that Section 404 of the Sarbanes-Oxley Act (SOX) continues to be controversial, as evidenced by the permanent exemption from Section 404(b) of SOX granted to non-accelerated filers by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Dodd-Frank Act also requires the SEC to study compliance costs associated with smaller accelerated filers. In the first part of my dissertation, I document that the audit fee premium for non-accelerated filers disclosing a material weakness in internal controls (a) is significantly lower than the corresponding premium for accelerated filers, and (b) declines significantly over time. I also find that in the case of accelerated filers remediating clients pay lower fees compared to clients continuing to report internal control problems; however, such differences are not observed in the case of non-accelerated filers. The second essay focuses on audit report lag. The results indicate that presence of material weaknesses are associated with increased audit report lags, for both accelerated and non-accelerated filers. The results also indicate that the decline in report lag following remediation of problems is greater for accelerated filers than for non-accelerated filers. The third essay examines early warnings (pursuant to Section 302 disclosures) for firms that subsequently disclosed internal control problems in their 404 reports. The analyses indicate that non-accelerated firms with shorter CFO tenure, presence of accounting experts on the audit committee, and more frequent audit committee meetings are more likely to provide prior Section 302 warnings. Overall the results suggest that there are differences in internal control reporting between the accelerated and non-accelerated filers. The results provide empirical grounding for the ongoing debate about internal control reporting by non-accelerated filers.

Essays on audit report lag

Audit reporting lag continues to remain an issue of significant interest to regulators, financial statement users, public companies, and auditors. The SEC has recently acted to reduce the deadline for filing annual and quarterly financial statements. Such focus on audit reporting lag arises because, as noted by the Financial Accounting Standards Board, relevance and reliability are the two primary qualities of accounting information; and, to be relevant, information has to be timely. In my dissertation, I examine three issues related to the audit report lag. The first essay focuses on the association between audit report lag and the meeting or beating of earnings benchmarks. I do not find any association between audit report lag and just meeting or beating earnings benchmarks. However, I find that longer audit report lag is negatively associated with the probability of using discretionary accruals to meet or beat earnings benchmarks. We can infer from these results that audit effort, for which audit report lag is a proxy, reduces earnings management. The second part of my dissertation examines the association between types of auditor changes and audit report lag. I find that the resignation of an auditor is associated longer audit report lag compared to the dismissal of an auditor. I also find a significant positive association between the disclosure of a reportable event and audit report lag. The third part of my dissertation investigates the association between senior executive changes and audit report lag. I find that audit report lag is longer when client firms have a new CEO or CFO. Further, I find that audit report lag is longer when the new executive is someone from outside the firm. These results provide empirical evidence about the importance of senior management in the financial reporting process.

An interactive environmental site assessment audit for Wagner Creek river basin clean up project

The primary purpose of this thesis was to design and create an Interactive Audit to conduct Environmental Site Assessments according to American Society of Testing Material's (ASTM) Phase I Standards at the Wagner Creek study area. ArcPad and ArcIMS are the major software that were used to create the model and ArcGIS Desktop was used for data analysis and to export shapefile symbology to ArcPad. Geographic Information Systems (GIS) is an effective tool to deploy these purposes. This technology was utilized to carry out data collection, data analysis and to display data interactively on the Internet. Electronic forms, customized for mobile devices were used to survey sites. This is an easy and fast way to collect and modify field data. New data such as land use, recognized environmental conditions, and underground storage tanks can be added into existing datasets. An updated map is then generated and uploaded to the Internet using ArcIMS technology. The field investigator has the option to generate and view the Inspection Form at the end of his survey on site, or print a hardcopy at base. The mobile device also automatically generates preliminary editable Executive Reports for any inspected site.

Enhancing Cloud Security and Privacy: The Cloud Audit Problem

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Flammability Standards – A Major Role in Flame Retardant Exposure? Televisions as a case study.

Flame retardants (FRs) are added to materials to enhance the fire safety level of readily combustible polymers. Although they have been purported to aid in preventing fires in some cases, they have also become a significant cause for concern given the vast data on environmental persistence and human and animal adverse health effects. Evidence since the 1980s has shown that Canadian, American and Europeans have detectable levels of FRs in their bodies. North Americans in particular have high levels of these chemicals due to stringent flammability standards and the higher use of polybrominated diphenyl ethers (PBDEs) in North America as opposed to Europe. FRs have been detected in household dust and some evidence suggests that TVs could be a significant source of exposure to FRs. It is imperative to re-visit the flammability standard (UL94V) that allows for FR use in TVs plastic materials by providing a risk versus benefit analysis to determine if this standard provides a fire safety benefit and if it plays a major role in FR exposure. This report first examined the history of televisions and the progression to the UL94V flammability test standard to understand why FRs were first added to polymers used in the manufacturing of TVs. It has been demonstrated to be due to fire hazards resulting from the use of plastic materials in cathode-ray tube (CRT) TVs that had an “instant-on” feature and high voltage and operating temperatures. In providing a risk versus benefit analysis, this paper presents the argument that 1) by providing a market survey the current flammability test standard (UL94V) is outdated and lacks relevance to current technology as flat, thin, energy efficient Liquid Crystal Displays (LCDs) dominate over traditionally used heavy, bulky and energy-intensive CRTs; 2) FRs do not impart fire safety benefits considering that there is a lack of valid fire safety concern, such as reduced internal and external ignition and fire hazard, and a lack of valid fire data and hazard for television fires in general and finally; 3) the standard is overly stringent as it does not consider the risk due to exposure to FRs in household dust due to the proliferation and greater use of televisions in households. Therefore, this report argues that the UL94V standard has become trapped in history and needs to be updated as it may play a major role in FR exposure.

The Impact of Internal Market Orientation on Staff Service Behaviours

The impact of service direction, service training and staff behaviours on perceptions of service delivery are examined. The impact of managerial behaviour in the form of internal market orientation (IMO) on the attitudes of frontline staff towards the firm and its consequent influence on their customer oriented behaviours is also examined. Frontline service staff working in the consumer transport industry were surveyed to provide subjective data about the constructs of interest in this study, and the data were analysed using structural equations modelling employing partial least squares estimation. The data indicate significant relationships between internal market orientation (IMO), the attitudes of the employees to the firm and their consequent behaviour towards customers. Customer orientation, service direction and service training are all identified as antecedents to high levels of service delivery. The study contributes to marketing theory by providing quantitative evidence to support assumptions that internal marketing has an impact on services success. For marketing practitioners, the research findings offer additional information about the management, training and motivation of service staff towards service excellence.