Auditor independence: regulation, oversight and inspection

Much of what auditors do is unobservable. Indeed, what goes on in an audit has been described as ‘secret audit business’. Audits in this context are of financial reports and those financial reports are the representations of the management of those companies, not the auditors. The audits of financial reports are of value in that they provide a competent and independent (of auditee management) attestation of the validity of those management representations. This attestation lowers the ‘information risk’ for the users of these financial reports. There has been a marked increase in activity to regulate matters relating to independence. The proposals outlined in CLERP 9 are one example of this. The requirements in the United States under the Sarbanes-Oxley Act are a further example.

Audit firms operate in a highly regulated yet highly competitive market. Evidence exists to suggest that audit firms are active competitors in respect of audit pricing and competency, including specialist industry expertise. Until recently, there has been little or no observable evidence that audit firms compete in respect of independence. The issues as they relate to audit independence are complex. One issue is that threats to independence are frequently subtle and difficult to observe and measure. Hence, controlling the decisions that relate to them cannot rely solely on regulation which itself inevitably relies on crude definitions and imprecise measures. Additionally, further regulation may not achieve the desired end without other processes being but in place in tandem.

This paper argues that:

1. auditors of certain classes of companies (in particular, those that are publicly traded) should be provided with incentives or requirements to have observable processes on independence
2. the means of observability should be in the form of an inspection and review process focussing on issues critical to the audit, such as independence
3. expert persons not having a current or past financial interest in the firm or in the commercial outcomes of the review should be used in the inspection and review process
4. the review process should have wide-ranging powers of inspection to examine the policies, processes, structures and ‘culture’ of audit firms
5. the report of the inspection and review should be made public, unedited and in full, and in a timely fashion. The primary objectives of this proposal are to (1) make more transparent to the market for information the characteristics of the audit firms and their process to ensure audit independence, and (2) provide a rigorous oversight of independence decision-making by persons who have no commercial interest in the outcome of the decision.

ACCCN national nursing workforce survey of intensive care units

A descriptive study was designed and implemented by the Australian College of Critical Care Nurses (ACCCN) Workforce Planning Advisory Committee to capture data pertaining to workforce issues of intensive care nurses. All intensive care units (ICUs) within Australia were mailed a self reporting survey. Despite a low response rate (52 per cent) and difficulty reported by respondents in gaining the appropriate data requested, the results revealed an interesting snapshot of the intensive care nursing workforce.
Types of services offered by units varied considerably; paid overtime hours were low (<2 per cent of total hours worked) and use of both part-time and agency staff was also low (10 per cent of total hours worked). Private hospitals utilised a greater proportion of part-time and agency nursing staff than public hospitals (20:10 per cent). The turnover rate for registered nursing staff was estimated at 18 per cent, with education, skill acquisition and improved communication reported as the major incentives used by managers to attract and retain staff. This study demonstrated that valuable data are currently uncaptured and recommends a more refined process of a national database to record and manage this important information for future workforce planning.

Globalization, Agency, and Institutional Innovation: The Rise of Public-Private Partnerships in Global Governance

Public and private actors increasingly cooperate in global governance, a realm previously reserved for states and intergovernmental organizations (IOs). This trend raises fascinating theoretical questions. What explains the rise in public-private institutions and their role in international politics? Who leads such institutional innovation and why? To address the questions, this paper develops a theory of the political demand and supply of public-private institutions and specifies the conditions under which IOs and non-state actors would cooperate, and states would support this public-private cooperation. The observable implications of the theoretical argument are evaluated against the broad trends in public-private cooperation and in a statistical analysis of the significance of demand and supply-side incentives in public-private cooperation for sustainable development. The study shows that public-private institutions do not simply fill governance gaps opened by globalization, but cluster in narrower areas of cooperation, where the strategic interests of IOs, states, and transnational actors intersect.

Sequential technology adoption with asymmetric firms

We analyse the incentives and welfare implications of costly technology adoption in a two-period duopoly model where firms have different amounts of capital. We also extend our framework to an open economy set-up and examine the relationship between trade and technology adoption. Our findings are as follows. First, no monotone relationship exists between the threshold cost of adoption and capital shares. Second, an unequal distribution of capital, despite lessening competition, can increase total surplus. Third, trade generally encourages adoption of modern technology unless the share of capital for the adopters is too low.

Price and subsidy policy on soil conservation: application to smallholder tea growers

The role of commodity prices and subsidies on the adoption of soil conservation has been widely debated yet is poorly understood. One reason for this is the complex nature of the relationship between soil loss and yield damage. This paper examines the effects of price and subsidy policy on adoption of soil conservation measures in tea lands in Sri Lanka. The soil conservation technologies considered are lateral drains, stone terraces and Sloping Agricultural Land Technique (SALT). The study uses a non-linear yield damage function to estimate tea yield loss due to soil erosion. The yield function is then used in conjunction with a simple analytical model to examine the effects of changes in price and subsidies
on the incentives to adopt various soil conservation technologies. When there is a yield increment with soil conservation, increases in both prices and subsidies are found to make soil conservation economically attractive.

Purchase commitments : Big business bias or solution to the 'neglected diseases' dilemma?

Miniscule research resources are allocated to researching the diseases of developing countries such as malaria, tuberculosis (TB), dengue fever, river blindness, Chagas disease and leishmaniasis, and the strains of HIV prevalent in Africa. Plainly, the patent system and the commercial model of drug research fail to respond to the needs of the poor for the simple reason that the poor exercise little purchasing power. But pressures are mounting on governments and corporations to tackle the ‘neglected diseases’ calamity. An important argument in an intense global debate is that corporations would respond to the needs of developing countries if the diseases of the poor could be made profitable. This is the idea developed by Kremer and Glennerster in a crisply written book, Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases.

Building information modelling project decision support framework

Building Information Modelling (BIM) is an information technology [IT] enabled approach to managing design data in the AEC/FM (Architecture, Engineering and Construction/ Facilities Management) industry. BIM enables improved interdisciplinary collaboration across distributed teams, intelligent documentation and information retrieval, greater consistency in building data, better conflict detection and enhanced facilities management. Despite the apparent benefits the adoption of BIM in practice has been slow. Workshops with industry focus groups were conducted to identify the industry needs, concerns and expectations from participants who had implemented BIM or were BIM “ready”. Factors inhibiting BIM adoption include lack of training, low business incentives, perception of lack of rewards, technological concerns, industry fragmentation related to uneven ICT adoption practices, contractual matters and resistance to changing current work practice. Successful BIM usage depends on collective adoption of BIM across the different disciplines and support by the client. The relationship of current work practices to future BIM scenarios was identified as an important strategy as the participants believed that BIM cannot be efficiently used with traditional practices and methods. The key to successful implementation is to explore the extent to which current work practices must change. Currently there is a perception that all work practices and processes must adopt and change for effective usage of BIM. It is acknowledged that new roles and responsibilities are emerging and that different parties will lead BIM on different projects. A contingency based approach to the problem of implementation was taken which relies upon integration of BIM project champion, procurement strategy, team capability analysis, commercial software availability/applicability and phase decision making and event analysis. Organizations need to understand: (a) their own work processes and requirements; (b) the range of BIM applications available in the market and their capabilities (c) the potential benefits of different BIM applications and their roles in different phases of the project lifecycle, and (d) collective supply chain adoption capabilities. A framework is proposed to support organizations selection of BIM usage strategies that meet their project requirements. Case studies are being conducted to develop the framework. The results of the preliminary design management case study is presented for contractor led BIM specific to the design and construct procurement strategy.

Enhancing patient engagement in chronic disease self-management support initiatives in Australia : the need for an integrated approach

♦ Although emphasis on the prevention of chronic disease is important, governments in Australia need to balance this with continued assistance to the 77% of Australians reported to have at least one long-term medical condition.

♦ Self-management support is provided by health care and community services to enhance patients’ ability to care for their chronic conditions in a cooperative framework.

♦ In Australia, there is a range of self-management support initiatives that have targeted patients (most notably, chronic disease self-management education programs) and health professionals (financial incentives, education and training).

♦ To date, there has been little coordination or integration of these self-management initiatives to enhance the patient–health professional clinical encounter.

♦ If self-management support is to work, there is a need to better understand the infrastructure, systems and training that are required to engage the key stakeholders — patients, carers, health professionals, and health care organisations.

♦ A coordinated approach is required in implementing these elements within existing and new health service models to enhance uptake and sustainability.

Generic medicines in Australia : business dynamics and recent policy reform

This article describes the role of generics in the Australian prescription drug market and patterns of business activity in this dynamic market segment. The Pharmaceutical Benefits Scheme (PBS) is the central mechanism for the supply of prescription medicines. PBS prices are arrived at through cost-effectiveness analyses comparing new products against already available products and therapies. In this system, prices do not operate effectively as incentives for consumers or prescribers to choose generics, and their market share was historically marginal. In recent years, generics suppliers achieved a growing market share through discounts (trading terms) to pharmacists. It is estimated that around 30% of PBS scripts, representing around 15% of PBS sales by value, are now filled with generics. Complex changes to the PBS were introduced in 2007, to be phased in over the period to 2012, aimed at increasing the scope for cost benefits to the government, and to lesser extent consumers, from the expanding availability of generic medicines.

Learning through research : a regional university and its community

Regional universities bring a research capacity to their home locations that is rarely available through other mechanisms in the region. University initiated research projects conducted locally can provide an opportunity for regional communities to examine their practices through a different lens. Through these projects, researchers in regional universities whose research includes sites internal and external to the region are able to connect their region to national and global contexts. Research presents many opportunities for regional universities and their communities to learn together.

There is some evidence that policy-makers are aware of the importance of behavioural relationships in the engagement of regional universities with communities. Policy documents tend to focus on the macro, institutional level benefits, structural incentives and impediments to university and community engagement. This paper examines research from one faculty based on a regional university campus: the Faculty of Education at the University of Tasmania in Launceston in Australia. It takes a micro view, considering benefits and factors influencing success for small research teams and individual researchers and their community research associates. A learning community approach, where synergies from collaboration can generate new knowledge for the benefit of all university and community players, emerges as an effective model for regional engagement through research.

Extension and the VET sector : time for closer alignment?

Extension (industry training) and VET (the formal vocational education and training system), each vital to Australia's education and training for agriculture, have developed as separate domains. Recent research suggests that the potential of closer alignment should be further explored. Extension provides usually non-certified courses to primary producers. The VET sector involves accredited training in a quality- assured national framework. Despite subsidy incentives for producers to access VET, they are increasingly interested in the short courses and flexible delivery offered by extension. This paper explores implications for improving outcomes from investment in training and for rural capacity building from a project in which a sample of management level extension courses across Australia was analysed for the extent of alignment with VET. 84 percent of these extension courses are mapped to training package competencies. The potential is there for VET to capture new enrolees for its diploma and advanced diploma courses. Closer alignment between sectors would facilitate this process.

The outlier phenomenon in entrepreneurship and economic growth : mollycoddling policies create New Zealand’s perfect storm

Analyzing GEM 2005 data, we confirm that entrepreneurship and economic development form a U-shaped curve. We seek to understand New Zealand’s large deviation from the modeled curve by factor-analyzing all countries’ deviations from the curve. We make recommendations that would move New Zealand toward the trend line and thus aid in increasing its level of economic development. Our findings indicate that measures that overprotect workers, spoil incentives, or indulge welfare passivity can stymie economic growth even in conditions of high entrepreneurial activity.

Property transactions : a note on ethics

Some activities that are applied in the property market to facilitate transactions have the potential to lead to unethical behaviour. Two conditions required for a sale price to be acceptable as market value are that the transaction is at arm’s length and the parties to the transaction are knowledgeable and prudent. The well-known difficulties associated with access to market pricing information are exacerbated by several of these activities including dummy bidding at auctions, two-tier marketing and the provision of lease incentives. Added to these is a common requirement that any negotiation be commercial-in-confidence. The lack of information has the potential to distort the market and this has been well publicised in recent times particularly in the residential market.
The definition of market value is visited and the nature of ethics in property transactions is outlined. Several examples of activities that could lead to unethical behaviour are described. It is concluded that unethical behaviour is hard to identify. Some recommendations are included for consideration and discussion.

Endogenous transportation technology in a cournot differential game with intraindustry trade

We investigate a dynamic Cournot duopoly with intraindustry trade, where firms invest in R&D to reduce the level of iceberg transportation costs. We adopt both open-loop and closed-loop equilibrium concepts, showing that a unique (saddle point) steady state exists in both cases. In the open-loop model, optimal investments and the resulting efficiency of transportation technology are independent of the relative size of the two countries. On the contrary, in the closed-loop case firms’ R&D incentives are driven by the relative size of the two countries. Policy implications are also evaluated.

Programmer friendly and efficient distributed shared memory integrated into a distributed operating system

Distributed Shared Memory (DSM) provides programmers with a shared memory environment in systems where memory is not physically shared. Clusters of Workstations (COWs), an often untapped source of computing power, are characterised by a very low cost/performance ratio. The combination of Clusters of Workstations (COWs) with DSM provides an environment in which the programmer can use the well known approaches and methods of programming for physically shared memory systems and parallel processing can be carried out to make full use of the computing power and cost advantages of the COW. The aim of this research is to synthesise and develop a distributed shared memory system as an integral part of an operating system in order to provide application programmers with a convenient environment in which the development and execution of parallel applications can be done easily and efficiently, and which does this in a transparent manner. Furthermore, in order to satisfy our challenging design requirements we want to demonstrate that the operating system into which the DSM system is integrated should be a distributed operating system. In this thesis a study into the synthesis of a DSM system within a microkernel and client-server based distributed operating system which uses both strict and weak consistency models, with a write-invalidate and write-update based approach for consistency maintenance is reported. Furthermore a unique automatic initialisation system which allows the programmer to start the parallel execution of a group of processes with a single library call is reported. The number and location of these processes are determined by the operating system based on system load information. The DSM system proposed has a novel approach in that it provides programmers with a complete programming environment in which they are easily able to develop and run their code or indeed run existing shared memory code. A set of demanding DSM system design requirements are presented and the incentives for the placement of the DSM system with a distributed operating system and in particular in the memory management server have been reported. The new DSM system concentrated on an event-driven set of cooperating and distributed entities, and a detailed description of the events and reactions to these events that make up the operation of the DSM system is then presented. This is followed by a pseudocode form of the detailed design of the main modules and activities of the primitives used in the proposed DSM system. Quantitative results of performance tests and qualitative results showing the ease of programming and use of the RHODOS DSM system are reported. A study of five different application is given and the results of tests carried out on these applications together with a discussion of the results are given. A discussion of how RHODOS’ DSM allows programmers to write shared memory code in an easy to use and familiar environment and a comparative evaluation of RHODOS DSM with other DSM systems is presented. In particular, the ease of use and transparency of the DSM system have been demonstrated through the description of the ease with which a moderately inexperienced undergraduate programmer was able to convert, write and run applications for the testing of the DSM system. Furthermore, the description of the tests performed using physically shared memory shows that the latter is indistinguishable from distributed shared memory; this is further evidence that the DSM system is fully transparent. This study clearly demonstrates that the aim of the research has been achieved; it is possible to develop a programmer friendly and efficient DSM system fully integrated within a distributed operating system. It is clear from this research that client-server and microkernel based distributed operating system integrated DSM makes shared memory operations transparent and almost completely removes the involvement of the programmer beyond classical activities needed to deal with shared memory. The conclusion can be drawn that DSM, when implemented within a client-server and microkernel based distributed operating system, is one of the most encouraging approaches to parallel processing since it guarantees performance improvements with minimal programmer involvement.