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1 – 10 of over 2000
Book part
Publication date: 21 November 2018

Audrey A. Gramling, Arnold Schneider and Lori Shefchik Bhaskar

This study’s purpose is to examine whether providing prior consulting services influences internal auditors’ subsequent assessments when providing assurance services to assist…

Abstract

This study’s purpose is to examine whether providing prior consulting services influences internal auditors’ subsequent assessments when providing assurance services to assist management in its assessment of internal control over financial reporting. A behavioral experiment is used, with internal auditors as participants. We provide some evidence that internal auditors who perform prior consulting services are less likely than others to conclude that an identified control deficiency is a material weakness, but only when the deficiency is directly related to the prior consulting services performed. Limitations include relatively small sample sizes and manipulation check failure rates that, although consistent with several prior studies, are somewhat high. If internal auditors have provided consulting services, they may want to consider limiting the assurance services provided to management that are more directly related to their consulting services. While prior studies have examined the effects of internal auditors’ role in designing internal controls on subsequent services, this is the first study to focus on the impact of providing internal audit consulting services on subsequent assurance services.

Book part
Publication date: 28 November 2017

Francesco Bellandi

Part IV provides readers with the extant requirements for the application of materiality to recognition, measurement, presentation, and disclosure in the financial statements…

Abstract

Part IV provides readers with the extant requirements for the application of materiality to recognition, measurement, presentation, and disclosure in the financial statements. This part also includes a detailed critical review of the recent Practice Statement on materiality, the FASB’s proposed ASU on the notes and the amendments to the Conceptual Framework proposed by the IASB and the FASB.

The part expands to issues that are typical of Management Commentary, including the SEC guidance on materiality in Management Discussion and Analysis.

It informs about the complexities and subtle differences between financial statements and bookkeeping and the different standards of reasonableness versus materiality.

A section moves from materiality to material misstatements and covers the application of materiality in auditing.

Another section goes in depth on internal control over financial reporting, showing the linkages between materiality and risk appetite and risk tolerance and the related application guidance.

Details

Materiality in Financial Reporting
Type: Book
ISBN: 978-1-78743-736-4

Keywords

Book part
Publication date: 6 November 2012

Joseph M. Onumah, Ransome Kuipo and Victoria A. Obeng

Purpose – This study examines the effectiveness of internal control systems of listed firms in Ghana. The recent (especially international) financial reporting scandals have…

Abstract

Purpose – This study examines the effectiveness of internal control systems of listed firms in Ghana. The recent (especially international) financial reporting scandals have caused regulators to place a lot of attention on internal control systems as a mechanism that could help improve the quality of financial reporting.

Design/methodology/approach – The study examined annual reports of a sample of 33 firms listed on the Ghana Stock Exchange. In measuring the level of internal control effectiveness, 23 items relating to internal control categorised under control environment, information and communication, risk assessment, control activities and monitoring were operationalised and the effectiveness score was determined based on the items.

Findings – Overall internal control system showed an average level of effectiveness in this study, which implied an overall low level of effectiveness. Of the five categories assessed under internal control system, control environment showed a higher level of effectiveness.

Originality/value – The study makes a contribution to the academic research activities relating to internal controls in Ghana.

Limitations – Inherent in the measurement process is an element of estimation error as a result of the use of subjective judgement for some items operationalised in assessing internal control effectiveness.

Details

Accounting in Africa
Type: Book
ISBN: 978-1-78190-223-3

Keywords

Book part
Publication date: 12 November 2016

Haiyan Zhou, Hanwen Chen and Zhirong Cheng

In this paper, we investigate whether internal control and whether corporate life cycle would affect firm performance in the emerging markets of China.

Abstract

Purpose

In this paper, we investigate whether internal control and whether corporate life cycle would affect firm performance in the emerging markets of China.

Methodology/approach

We use Chen, Dong, Han, and Zhou’s (2013) internal control index on the effectiveness of internal control and Dickinson’s (2011) definition on firm life cycle. We use multivariate regression analysis.

Findings

We find that the internal control improves corporate performance. When dividing firm life cycle into five stages: introduction, growth, mature, shake-out and decline, we find that the impacts of internal control on firm performance vary with different stages. The positive impact of internal control on firm performance is more significant in maturity and shake-out stages than other stages.

Research limitations/implications

Our findings would have implications for the regulators and policy makers with regards to the importance of internal control in corporate governance and the effectiveness of implementing standards and guidelines on internal control in public firms.

Practical implications

In addition, our findings on the various roles of internal control at different stages of firm life cycle would help managers and board of directors find more focus in risk management and board monitoring, respectively.

Originality/value

Although the prior literature have examined the link between internal control, information quality and cost of equity capital (Ashbaugh-Skaife, Collins, Kinney, & LaFond, 2009; Ogneva, Subramanyam, & Raghunandan, 2007), our study would be the first attempt to investigate the link between internal control and firm performance during different stages of firm life cycles.

Details

The Political Economy of Chinese Finance
Type: Book
ISBN: 978-1-78560-957-2

Keywords

Content available
Book part
Publication date: 21 November 2018

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78756-543-2

Book part
Publication date: 14 December 2023

Natalie Tatiana Churyk, Martin Ndicu and Thomas C. Pearson

Creating a mindset for research, including the development of professional research skills and critical thinking, is of the utmost importance in preparing students for the…

Abstract

Creating a mindset for research, including the development of professional research skills and critical thinking, is of the utmost importance in preparing students for the business world. To help faculty with this mindset, we discuss novel approaches for incorporating professional research and interactions into the undergraduate classroom, although the recommendations can apply to the entire curriculum. We describe three scenarios where our recommendations might apply – research/financial, tax, and accounting information system courses. Using a professional accounting research course and a financial course as examples, we start out broadly discussing a practitioner-coauthored professional case study approach that is applicable to any course, at any level. We then present a capstone undergraduate tax research course followed by an introduction of a specific project in an accounting information systems course. We include suggested syllabi, projects, and assessment rubrics throughout the discussion.

Book part
Publication date: 28 November 2017

Francesco Bellandi

Part III reviews the uses and effects of materiality as an accounting, legal, audit, and managerial concept. After mentioning several uses of materiality as a legal concept and…

Abstract

Part III reviews the uses and effects of materiality as an accounting, legal, audit, and managerial concept. After mentioning several uses of materiality as a legal concept and explaining the FASB’s proposed direction to avoid an accounting definition, it goes in depth to the differences in the respective definitions, applications, practical interactions, and different nature of the legal and accounting views. It then draws on the differences between audit and accounting uses of materiality.

It counterbalances the interests and positions of the various stakeholders involved, such as investors, preparers, standard-setters, auditors, regulators, financial analysts, and other users of the financial statements. It shows that those who regulate, use, decide, and assess materiality are different subjects.

Finally, the part capitalizes on the author’s vast experience in industry to theorize a plethora of alternative and complementary models of materiality with their pros and cons.

Details

Materiality in Financial Reporting
Type: Book
ISBN: 978-1-78743-736-4

Keywords

Book part
Publication date: 4 September 2015

Jacqueline A. Burke and Hakyin Lee

Mandatory auditor firm rotation (mandatory rotation) has been a controversial issue in the United States for many decades. Mandatory rotation has been considered at various times…

Abstract

Mandatory auditor firm rotation (mandatory rotation) has been a controversial issue in the United States for many decades. Mandatory rotation has been considered at various times as a means of improving auditor independence. For example, in the United States, the Public Company Accounting Oversight Board (PCAOB) has considered mandatory rotation as a solution to the independence problem (PCAOB, 2011) and the European Parliament approved legislation that will require mandatory rotation in the near future (Council of European Union, 2014). The concept of implementing a mandatory rotation policy has been encouraged by some constituents of audited financial statements and rejected by other constituents of audited financial statements. Although there are apparent pros and cons of such a policy, the developmental process of such a policy in this country has not necessarily been an open-democratic, objective process. Universal mandatory rotation may or may not be the ideal solution; however, an open-democratic, objective process is needed to facilitate the development of a solution that considers the needs of all major stakeholders of audited financial statements – not simply accounting firms and public companies, but also investors. The purpose of this paper is to critically examine key issues relating to mandatory rotation and to encourage and stimulate future research and ongoing dialogue regarding this issue, in spite of efforts by certain constituents to silence the issue. This paper provides an overview of the various reasons, including practical, theoretical, political, and self-motivated reasons, why a mandatory rotation policy has not been implemented in the United States in order to address the potential conflict of interest between the auditor and client. This paper will also discuss how some deliberations of mandatory rotation have been flawed. The paper concludes with a summary of key issues along with two approaches for regulators, policy makers, and academics to consider as ways to improve the process and address auditor independence. The authors are not advocating for any specific solution; however, we are advocating for a more objective, unified approach and for the dialogue regarding auditor rotation to continue.

Details

Sustainability and Governance
Type: Book
ISBN: 978-1-78441-654-6

Keywords

Book part
Publication date: 2 December 2021

Thomas R. Weirich and Natalie Tatiana Churyk

The accelerated pace of change in the global economy and capital markets along with the complexity of transactions and financial reporting that involve applying fair value…

Abstract

The accelerated pace of change in the global economy and capital markets along with the complexity of transactions and financial reporting that involve applying fair value measurements (FVM) is a major third-party user concern. The 2008 financial crisis highlighted risks that investors are exposed to when making FVM-related capital allocations. Accounting estimates often involve subjective assumptions and measurement uncertainty, increasing potential management bias (Choudhary, 2011; Ramanna & Watts, 2012). FVMs are of critical importance to the reliability of the financial statements. Therefore, the purpose of this chapter is to inform educators of the possible need to evaluate their curriculum as to coverage of FVM topics. The support for this evaluation is based on our attempt to: (1) evaluate the extent of reported FVM-related deficiencies with reference to regulatory bodies’ findings of significant deficiencies in FVM; (2) examine the use of FVM specialists; (3) determine if colleges and universities are keeping pace with FVM demands; (4) list the Uniform CPA Examination Blueprint FVM testing areas; and (5) provide curricular FVM topic recommendations.

Book part
Publication date: 29 July 2009

Charles Lockhart, Kristin Klopfenstein and Jean Giles-Sims

Nursing facility inspections routinely produce statistics revealing sharp disparities in care at both the facility and the state level. But whether high rates of deficiencies are…

Abstract

Nursing facility inspections routinely produce statistics revealing sharp disparities in care at both the facility and the state level. But whether high rates of deficiencies are more indicative of stringent enforcement of standards, leading to improved care, or ongoing poor quality care remains unclear. Until this question is answered, families of nursing facility residents, responsible public officials and interested professionals, are all unable to make sound decisions about long-term care quality. We employ cross-sectional, panel data to compare states on multiple indices of both care quality and enforcement stringency. We use the multi-method-multi-trait approach to distinguish these concepts. We find that low rates of deficiencies are positively associated with independent measures of high quality care. But, a prominent nursing facility enforcement index likely registers poor quality care more than stringency of enforcement since it is associated positively with independent indices of poor quality care and negatively with independent measures of enforcement. Attentive publics can have reasonable confidence that low rates of deficiencies indicate high quality care. High rates tend to reflect glaring deterioration in care quality. They are less signals of stringent enforcement than of obviously poor care which prompts more visible enforcement activities. Sadly, there is little evidence suggesting that these enforcement measures improve state-level care quality and thus reduce cross-state disparities in the quality of nursing facility long-term care. However, at least some of the factors responsible for sharp disparities in nursing facility care lie within the capacity of states to rectify even in the short term.

Details

Social Sources of Disparities in Health and Health Care and Linkages to Policy, Population Concerns and Providers of Care
Type: Book
ISBN: 978-1-84855-835-9

1 – 10 of over 2000