Role of corporate governance in mitigating the selective disclosure of executive stock option information

We examine the nature and extent of statutory executive stock option (ESO) disclosures by Australian listed companies over the 2001 to 2004 period, and the influence of corporate governance mechanisms on these disclosures. Our results show a progressive increase in overall compliance from 2001 to 2004. However, despite the improved compliance, the results reveal managements’ continued reluctance to disclose more sensitive ESO information. Factors associated with good internal governance, including board independence, audit committee independence and effectiveness, and compensation committee independence and effectiveness are found to contribute to improved compliance. Similarly, certain external governance factors are associated with improved disclosure, including external auditor quality, shareholder activism (as proxied by companies identified as poor performers by the Australian Shareholders’ Association), and regulatory intervention.

Audit of the Care of the Dying in a Network of Hospitals and Institutions in Queensland

Background: Most Australians die in institutions and there is evidence to suggest that the care of these patients is not always optimal. Care pathways for the dying have been designed to transfer benchmarked hospice care to other settings (e.g. acute hospitals and residential age-care facilities) by defining goals of best care, providing guidelines to provide that care and documenting outcome. Method: A retrospective audit was undertaken across a network of health-care institutions in Queensland. The 18 goals considered essential for the care of the dying within the Liverpool Care Pathway were taken as a benchmark. Documentation of achievement of each of these goals was sought. Results: The notes of 160 patients who had died in eight institutions (four hospitals, three hospices, one nursing home) were reviewed. Several areas for improvement were identified, particularly in those goals relating to communication, resuscitation orders and care after death. Few units documented the provision of written information to families. Most patients were prescribed medications in anticipation of pain and agitation but less were prescribed drugs for other common symptoms in the dying. Most of the goals were achieved in a higher percentage of cases in hospice units. Marked differences in practice were noted between different institutions. Conclusion: The audit identified several aspects in the care of the terminally ill that could be improved. End-stage pathways may provide a model for improving the care of patients dying in hospitals and institutions in Australia.

Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.

Legislative and security requirements of audit material for evidentiary purpose

This research used the Queensland Police Service, Australia, as a major case study. Information on principles, techniques and processes used, and the reason for the recording, storing and release of audit information for evidentiary purposes is reported. It is shown that Law Enforcement Agencies have a two-fold interest in, and legal obligation pertaining to, audit trails. The first interest relates to the situation where audit trails are actually used by criminals in the commission of crime and the second to where audit trails are generated by the information systems used by the police themselves in support of the recording and investigation of crime. Eleven court cases involving Queensland Police Service audit trails used in evidence in Queensland courts were selected for further analysis. It is shown that, of the cases studied, none of the evidence presented was rejected or seriously challenged from a technical perspective. These results were further analysed and related to normal requirements for trusted maintenance of audit trail information in sensitive environments with discussion on the ability and/or willingness of courts to fully challenge, assess or value audit evidence presented. Managerial and technical frameworks for firstly what is considered as an environment where a computer system may be considered to be operating “properly” and, secondly, what aspects of education, training, qualifications, expertise and the like may be considered as appropriate for persons responsible within that environment, are both proposed. Analysis was undertaken to determine if audit and control of information in a high security environment, such as law enforcement, could be judged as having improved, or not, in the transition from manual to electronic processes. Information collection, control of processing and audit in manual processes used by the Queensland Police Service, Australia, in the period 1940 to 1980 was assessed against current electronic systems essentially introduced to policing in the decades of the 1980s and 1990s. Results show that electronic systems do provide for faster communications with centrally controlled and updated information readily available for use by large numbers of users who are connected across significant geographical locations. However, it is clearly evident that the price paid for this is a lack of ability and/or reluctance to provide improved audit and control processes. To compare the information systems audit and control arrangements of the Queensland Police Service with other government departments or agencies, an Australia wide survey was conducted. Results of the survey were contrasted with the particular results of a survey, conducted by the Australian Commonwealth Privacy Commission four years previous, to this survey which showed that security in relation to the recording of activity against access to information held on Australian government computer systems has been poor and a cause for concern. However, within this four year period there is evidence to suggest that government organisations are increasingly more inclined to generate audit trails. An attack on the overall security of audit trails in computer operating systems was initiated to further investigate findings reported in relation to the government systems survey. The survey showed that information systems audit trails in Microsoft Corporation's “Windows” operating system environments are relied on quite heavily. An audit of the security for audit trails generated, stored and managed in the Microsoft “Windows 2000” operating system environment was undertaken and compared and contrasted with similar such audit trail schemes in the “UNIX” and “Linux” operating systems. Strength of passwords and exploitation of any security problems in access control were targeted using software tools that are freely available in the public domain. Results showed that such security for the “Windows 2000” system is seriously flawed and the integrity of audit trails stored within these environments cannot be relied upon. An attempt to produce a framework and set of guidelines for use by expert witnesses in the information technology (IT) profession is proposed. This is achieved by examining the current rules and guidelines related to the provision of expert evidence in a court environment, by analysing the rationale for the separation of distinct disciplines and corresponding bodies of knowledge used by the Medical Profession and Forensic Science and then by analysing the bodies of knowledge within the discipline of IT itself. It is demonstrated that the accepted processes and procedures relevant to expert witnessing in a court environment are transferable to the IT sector. However, unlike some discipline areas, this analysis has clearly identified two distinct aspects of the matter which appear particularly relevant to IT. These two areas are; expertise gained through the application of IT to information needs in a particular public or private enterprise; and expertise gained through accepted and verifiable education, training and experience in fundamental IT products and system.

Can an effective audit committee help to mitigate earnings management in Chinese firms listed in Hong Kong?

This paper attempts to determine whether the adoption of recommended corporate governance practices by Chinese firms is associated with less earnings management proxied by abnormal accruals. We examine the role of the audit committee and ownership concentration in preventing earnings management using Chinese firms listed in Hong Kong. The results of this preliminary analysis show that the frequency of audit committee meetings is associated with reduced levels of abnormal accruals, our measure of earnings management. We conclude that audit committee activity is an important factor in constraining the propensity of managers to engage in earnings management. In contrast, we find that the size of the audit committee is associated with increased levels of abnormal accruals and suggest that increasing the size of the audit committee creates information asymmetry between the audit committee and management that reduces the monitoring capacity of the audit committee. We do not find any association between audit committee independence, financial and industry experience, or ownership concentration and abnormal accruals.

Barriers to information transfer for multi-trauma patients upon discharge from the Emergency Department in a tertiary level hospital

Purpose: Communication is integral to effective trauma care provision. This presentation will report on barriers to meaningful information transfer for multi-trauma patients upon discharge from the Emergency Department (ED) to the care areas of Intensive Care Unit, High Dependency Unit, and Perioperative Services. This is an ongoing study at one tertiary level hospital in Queensland. Method: This is a multi-phase, mixed method study. In Phase 1 data were collected about information transfer. This Phase was initially informed by a comprehensive literature review, then via focus groups, chart audit, staff survey and review of national and international trauma forms. Results: The barriers identified related to nursing handover, documented information, time inefficiency, patient complexity and stability and time of transfer. Specifically this included differences in staff expectations and variation in the nursing handover processes, no agreed minimum dataset of information handed over, missing, illegible or difficult to find information in documentation (both medical and nursing), low compliance with some forms used for documentation. Handover of these patients is complex with information coming from many sources, dealing with issues is more difficult for these patients when transferred out of hours. Conclusions and further directions: This study investigated the current communication processes and standards of information transfer to identify barriers and issues. The barriers identified were the structure used for documentation, processes used (e.g. handover), patient acuity and time. This information is informing the development, implementation and evaluation of strategies to ameliorate the issues identified.

An exploratory study into audit challenges in IT governance : a Delphi approach

Information technology (IT) has been playing a powerful role in creating a competitive advantage for organisations over the past decades. This role has become proportionally greater over time as expectations for IT investments to drive business opportunities keep on rising. However, this reliance on IT has also raised concerns about regulatory compliance, governance and security. IT governance (ITG) audit leverages the skills of IS/IT auditors to ensure that IT initiatives are in line with the business strategies. ITG audit emerged as part of performance audit to provide an assessment of the effective implementation of ITG. This research attempts to empirically examine the ITG audit challenges in the Australian public sector. Based on literature research and Delphi research, this paper provides insights regarding the impact of, and required effort to address these challenges. The authors also present the ten major ITG audit challenges facing Australian public sector organisations today.

An analysis of the differences in audit processes used in the audit of nonprofit and profit organisations

Nonprofits constitute a large part of collective behaviour in society. Presently there is little formal research addressing the role of audits in nonprofit organisations. Before models can be developed for the production of nonprofit auditing information, it is necessary to examine the present conduct of nonprofit audits. The Australian Accounting Research Foundation - Legislation Review Board has released a position paper on the Association Incorporation Acts in Australia - the most frequently used legal form for nonprofit organisations. The Board is addressing the issue of financial statement reporting including audit. This is coinciding with the investigations resulting from the collapse of the National Safety Council (Victorian Division), (NSC). The NSC, a nonprofit organisation formed as a company limited by guarantee, is in liquidation and the auditors are being sued for damages resulting from their alleged failure to perform their duties adequately.

A Delphi study into the audit challenges of IT governance in the Australian public sector

Information technology (IT) has been playing a powerful role in creating a competitive advantage for organisations over the past decades. This role has become proportionally greater over time as expectations for IT investments to drive business opportunities keep on rising. However, this reliance on IT has also raised concerns about regulatory compliance, governance and security. IT governance (ITG) audit leverages the skills of IS/IT auditors to ensure that IT initiatives are in line with the business strategies. ITG audit emerged as part of performance audit to provide an assessment of the effective implementation of ITG. This research attempts to empirically examine the ITG audit challenges in the public sector. Based on literature and Delphi research, this paper provides insights regarding the impact of, and required effort to address these challenges. The authors also present the ten major ITG audit challenges facing Australian public sector organisations today.

An audit of first-aid treatment of pediatric burns patients and their clinical outcome

This study describes the first aid used and clinical outcomes of all patients who presented to the Royal Children's Hospital, Brisbane, Australia in 2005 with an acute burn injury. A retrospective audit was performed with the charts of 459 patients and information concerning burn injury, first-aid treatment, and clinical outcomes was collected. First aid was used on 86.1% of patients, with 8.7% receiving no first aid and unknown treatment in 5.2% of cases. A majority of patients had cold water as first aid (80.2%), however, only 12.1% applied the cold water for the recommended 20 minutes or longer. Recommended first aid (cold water for >or=20 minutes) was associated with significantly reduced reepithelialization time for children with contact injuries (P=.011). Superficial depth burns were significantly more likely to be associated with the use of recommended first aid (P=.03). Suboptimal treatment was more common for children younger than 3.5 years (P<.001) and for children with friction burns. This report is one of the few publications to relate first-aid treatment to clinical outcomes. Some positive clinical outcomes were associated with recommended first-aid use; however, wound outcomes were more strongly associated with burn depth and mechanism of injury. There is also a need for more public awareness of recommended first-aid treatment.

Identity, addressing, authenticity and audit requirements for trust in ERP, analytics and big/open data in a “Cloud” computing environment : a review and proposal

Enterprises, both public and private, have rapidly commenced using the benefits of enterprise resource planning (ERP) combined with business analytics and “open data sets” which are often outside the control of the enterprise to gain further efficiencies, build new service operations and increase business activity. In many cases, these business activities are based around relevant software systems hosted in a “cloud computing” environment. “Garbage in, garbage out”, or “GIGO”, is a term long used to describe problems in unqualified dependency on information systems, dating from the 1960s. However, a more pertinent variation arose sometime later, namely “garbage in, gospel out” signifying that with large scale information systems, such as ERP and usage of open datasets in a cloud environment, the ability to verify the authenticity of those data sets used may be almost impossible, resulting in dependence upon questionable results. Illicit data set “impersonation” becomes a reality. At the same time the ability to audit such results may be an important requirement, particularly in the public sector. This paper discusses the need for enhancement of identity, reliability, authenticity and audit services, including naming and addressing services, in this emerging environment and analyses some current technologies that are offered and which may be appropriate. However, severe limitations to addressing these requirements have been identified and the paper proposes further research work in the area.

Time to analgesia for care delivered by nurse practitioners in the emergency department: A retrospective chart audit

Objectives To evaluate quality of care delivered to patients presenting to the emergency department (ED) with pain and managed by emergency nurse practitioners by measuring: 1) Evaluate time to analgesia from initial presentation 2) Evaluate time from being seen to next analgesia 3) Pain score documentation Background The delivery of quality care in the emergency department (ED) is emerging as one of the most important service indicators being measured by health services. Emergency nurse practitioner services are designed to improve timely, quality care for patients. One of the goals of quality emergency care is the timely and effective delivery of analgesia for patients. Timely analgesia is an important indicator of ED service performance. Methods A retrospective explicit chart review of 128 consecutive patients with pain and managed by emergency nurse practitioners was conducted. Data collected included demographics, presenting complaint, pain scores, and time to first dose of analgesia. Patients were identified from the ED Patient Information System (Cerner log) and data were extracted from electronic medical records Results Pain scores were documented in 67 (52.3%; 95% CI: 43.3-61.2) patients. The median time to analgesia from presentation was 60.5 (IQR 30-87) minutes, with 34 (26.6%; 95% CI: 19.1-35.1) patients receiving analgesia within 30 minutes of presentation to hospital. There were 22 (17.2%; 95% CI: 11.1-24.9) patients who received analgesia prior to assessment by a nurse practitioner. Among patients that received analgesia after assessment by a nurse practitioner, the median time to analgesia after assessment was 25 (IQR 12-50) minutes, with 65 (61.3%; 95% CI: 51.4-70.6) patients receiving analgesia within 30 minutes of assessment. Conclusions The majority of patients assessed by nurse practitioners received analgesia within 30 minutes after assessment. However, opportunities for substantial improvement in such times along with documentation of pain scores were identified and will be targeted in future research.

Public policy on corporate audit committees : case study evidence of current practice

Corporate failures and malpractices have led to an increasing emphasis on the governance role of audit committees. The Smith report Audit Committee Combined Code Guidance and the Higgs Review of the Role and Effectiveness of Non-Executive Directors (now incorporated in a Revised Combined Code) represent further attempts to strengthen corporate accountability in the UK. Although the regulatory focus on audit committees indicates confidence in their role as part of the solution to governance failures, questions remain about their efficacy in practice. Against the background of the publication of the Smith report and the wider reliance on audit committees in several countries to help improve corporate accountability, this paper provides research evidence, drawn from an ACCA-sponsored project, on the processes and effects of the audit committees in three UK companies. This study complements other research on audit committees by adopting a case study approach, in order to reflect the importance of investigating audit committee operations from within the organisation and to develop a closer understanding of audit committee impact than is available from generally observable data. The empirical evidence for the case studies was obtained from semi-structured interviews with personnel involved in the audit committee process, internal documents made available by the companies, and publicly available information, including annual reports.

Social audit: A mess or means in CSR assessment?

Social Audits play an important role in the measurement and analysis of a company's social performance. They provide corporations with a tool to plan and manage their social responsibility activities. Similarly, they provide stakeholders with a tool which they could use when monitoring, assessing and analysing concrete and accurate company data. Whilst the topic of social audits has been raised and discussed by a number of scholars, industry representatives and government institutions over the years, such contributions have mostly revolved around the general notion and importance of social audit, rather than addressing the most effective ways to achieve a widespread and reliable adoption of the practice through the implementation of specific legal regulation and other methods. This matter is of significant importance as corporations can exert a considerable amount control over the entire social audit process, allowing them to disclose only information deemed beneficial to their own corporate image instead of releasing all relevant social and environmental data. In order to achieve a truly transparent system promoting corporate accountability, there is an obvious need for social audits to be regulated. One of the purposes of this book is to provide an overview of the development of social audit practices and regulation. It also sets out to explore the issues and challenges which have arisen relating to this matter around the world.

‘True Blood’ the critical care story: An audit of blood sampling practice across three adult, paediatric and neonatal intensive care settings

Background Anaemia is common in critically ill patients, and has a significant negative impact on patients' recovery. Blood conservation strategies have been developed to reduce the incidence of iatrogenic anaemic caused by sampling for diagnostic testing. Objectives Describe practice and local guidelines in adult, paediatric and neonatal Australian intensive care units (ICUs) regarding blood sampling and conservation strategies. Methods Cross-sectional descriptive study, conducted July 2013 over one week in single adult, paediatric and neonatal ICUs in Brisbane. Data were collected on diagnostic blood samples obtained during the study period, including demographic and acuity data of patients. Institutional blood conservation practice and guidelines were compared against seven evidence-based recommendations. Results A total of 940 blood sampling episodes from 96 patients were examined across three sites. Arterial blood gas was the predominant reason for blood sampling in each unit, accounting for 82% of adult, 80% of paediatric and 47% of neonatal samples taken (p <. 0.001). Adult patients had significantly more median [IQR] samples per day in comparison to paediatrics and neonates (adults 5.0 [2.4]; paediatrics 2.3 [2.9]; neonatal 0.7 [2.7]), which significantly increased median [IQR] blood sampling costs per day (adults AUD$101.11 [54.71]; paediatrics AUD$41.55 [56.74]; neonatal AUD$8.13 [14.95]; p <. 0.001). The total volume of samples per day (median [IQR]) was also highest in adults (adults 22.3. mL [16.8]; paediatrics 5.0. mL [1.0]; neonates 0.16. mL [0.4]). There was little information about blood conservation strategies in the local clinical practice guidelines, with the adult and neonatal sites including none of the seven recommendations. Conclusions There was significant variation in blood sampling practice and conservation strategies between critical care settings. This has implications not only for anaemia but also infection control and healthcare costs.