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Auditing, accounting, finance, control.

Upper level undergraduate, MBA, MS accounting.

This case takes an internal approach by exploring how PricewaterhouseCoopers - Egypt develops and applies industry specialization in an emerging market such as Egypt. The case focuses on three aspects of specialization. First, the strategic drivers behind specialization. Second, the internal processes of building industry-specific knowledge. Finally, the costs and benefits of specialization.

Industry specialization is a strategy:

• Specialization is a strategy primarily used by Big 4 auditing firms, such as PwC-Egypt as a means of differentiating it self from the market.

Specialization is a strategy primarily used by Big 4 auditing firms, such as PwC-Egypt as a means of differentiating it self from the market.

Industry specialization is a culture:

• For specialization to be fully effective a learning culture should be in place in which firm personnel are committed to continually seek new in-depth knowledge about clients and their industries.

For specialization to be fully effective a learning culture should be in place in which firm personnel are committed to continually seek new in-depth knowledge about clients and their industries.

Human resources are the most valuable asset of auditing firms:

• Auditing is a service that involves extensive professional judgment. Thus, knowledge and expertise of its personnel is what differentiates one auditing firm's staff from another.

Auditing is a service that involves extensive professional judgment. Thus, knowledge and expertise of its personnel is what differentiates one auditing firm's staff from another.

Teaching notes.

This paper aims to investigate the performance and positioning accuracy of computer numerical controlled (CNC) feed drive system using a ball screw-based pre-loading impact factor.

Initially, axial displacement of support bearings has been computed in relation to the different preload values. Among the computed values, a basic rule equation has been developed for the calculation of elongation in the bearings. The value of displacements computed from the developed equation has been considered as a pre-loading value, and its behavior on the feed drive system has been analyzed.

The elongation of bearings impacts the positioning accuracy and repeatability of the feed drive system and of CNC machines. Next, an analytical model for the rigorous assessment of CNC feed drive system has been designed and developed. The positioning accuracy of CNC machine in relation with different pre-loading values has been analyzed.

The results obtained from these investigations enhance the positioning accuracy of CNC machining centers. The optimum pre-loading value has been analyzed among the available ranges, and it has been proposed that optimal results have been achieved at 5 per cent of dynamic load rating.

This paper proposes improved explorations toward the performance of the CNC machines by optimizing the positioning accuracy through pre-loading. Finally, analytical estimations have been carried out to prove the validity of the proposal.

This paper aims to investigate the impact of International Financial Reporting Standards (IFRS) adoption on audit and non-audit fees in the UK setting. The study investigates whether UK firms adopting IFRS for the first time or reporting under IFRS, in general, are being charged higher audit and non-audit fees and whether this impact is conditional on audit firm size and tenure.

Using empirical data for UK listed firms from 2003-2007, the paper uses a regression model that explains audit and non-audit fees by independent variables measuring auditors’ and auditees’ characteristics including IFRS adoption and reporting. Additional regressions with interaction terms were performed to test the hypothetical conditional impact of auditor size and audit firm tenure on the above-mentioned association.

Audit and non-audit fees increase significantly for companies adopting IFRS for the first time and this increase is persistent during later years. In addition, results suggest that both Big four and non-Big four auditors charge higher audit and non-audit fees to their clients adopting or reporting under IFRS in a similar manner. Furthermore, findings indicate that audit firms increase audit and non-audit fees for old and new clients using IFRS which suggests no low-balling effect is detected.

Results reported in this study provide insights to regulators in jurisdictions similar to the UK regarding the cost of IFRS adoption which includes higher audit and non-audit fees imposed by both Big four and non-Big four audit firms. In addition, this study argues, to some extent, against the notion that auditors may charge lower fees in the early years of the audit engagement to win new audit clients.

To the best of the knowledge, the findings are unique at two levels. First, the paper provides evidence on the cost of using IFRS in the UK jurisdiction which was not explored by previous research. Second, the paper investigates the potential conditional effect of auditor size and audit tenure on the association between IFRS adoption and auditors’ fees.

Auditing is seasonal, with the majority of U.S. public companies having a December fiscal year-end. This results in an audit “busy season” and “off-season” with a non-trivial seasonal impact on the pricing of audit services. We apply an economic framework that explains how audit seasonality affects both the magnitude and the price elasticity of audit demand and audit supply. We find that the audit busy season is associated with an audit fee premium of approximately 10% based on a meta-analysis of 97 analyses from 18 audit fee studies of U.S public companies. A meta-regression of the contextual differences in research design between studies reveals that examining only Big N attenuates the busy season effect size but does not eliminate it, and that the busy season effect size may be larger post-SOX.

This paper studies the audit fee structure in Hong Kong. By analysing data concerning a number of variables representing auditee size, auditee risk, complexity of audit, auditor identity, and the timing of audit, we develop a model of the determinants of audit fees which is applicable to the unique environment in Hong Kong. Using a more recent time period of 1992 and 1993, this study strongly confirms that most of the previous research findings are also applicable to the Hong Kong audit service market. We provide additional evidence relating to variables such as the Big Six (previously Big Eight) effects, auditee risk and auditee complexity which have been found to have inconclusive associations with the level of audit fees in previous research. Specifically, auditee size appears to have been the main determinant of audit fees, and the size measure is two‐dimensional, both asset and turnover respectively add explanatory power to that provided by each other. Complexity of audit adds significantly to the cost of audit. There is also evidence of Big Six effects and low‐balling. In addition, some evidence is found for the effects of auditee risk on audit fees. Finally, a longer audit delay, which reflects the possibility of inefficient audit time spent, entails higher audit fees. Future research should consider the importance of other issues such as non‐audit services and the extent of market concentration.

For ball screw feed system, a sudden start or stop has a great influence on the transmission stiffness, so the axial stiffness mutation of feed system will occur. The purpose of this paper is to study the influence of acceleration on the transmission stiffness and dynamic characteristics of the ball screw feed system.

Taking the ball screw feed system as a research object, on the basis of the Hertz contact theory and the mixed element method, axial stiffness model and dynamic model are established. And the system stability was analyzed by the time history diagram and Phase-plane portrait diagram. The feed system was analyzed theoretically and experimentally, the experimental results are in good agreement with the model results.

Lead screw lead angle, preload, load and start acceleration affected ball-screw pair, bearing and transmission stiffness. And the load, nut contact stiffness, bearing contact stiffness, preload have a large effect on the transmission stiffness. The results show that a certain acceleration value will make the axial stiffness abrupt change.

This research provides a useful theoretical support for ensuring a good dynamic for the ball screw feed system.

The purpose of this paper is to develop a cost effective ball grid array (BGA) workcell for solder ball attachment.

This paper presents the construction of a low‐cost high‐efficiency automatic ball attachment workcell. In fact, it is an economical means of simultaneous placement of all solder balls on BGA substrates containing multiple BGA units as well as singulated substrates. Common industry problems such as the effect of static charges, the solder ball oxidation, the missing ball, the extra ball, the ball alignment, the deformed ball and, etc. will be addressed and critical issues affecting yield will also be discussed in this paper.

BGA is a popular integrated circuit packaging that is often applied in laptop computers and other handheld electronic devices for the provision of a high‐connection count in a relatively small area. However, the cost of a market available BGA solder ball attachment workcell is very expensive and the flexibility in fitting various customized process is usually low.

The developed workcell cost is about half of the market available machines with similar specifications; the yield achieved is within three sigma confidence interval with competitive output rate. The maintenance and troubleshooting are easy since the machine was developed by the in‐house engineering team.

There is limited evidence on how differences in economic environments affect the demand for and supply of auditing. Research on audit pricing has mainly focused on large client markets in developed economies; in contrast, the purpose of this paper is to focus on the small client segment in the emerging economy of Thailand which offers a choice between auditors of two different qualities.

This paper is based on a random stratified sample of small clients in Thailand qualifying for audit exemption. The final sample consists of 1,950 firm-year observations for 2002-2006.

The authors find evidence of product differentiation in the small client market, suggesting that small firms view certified public accountants as superior and pay a premium for their services. The authors also find that audit fees have a positive significant association with leverage, metropolitan location and client size. Audit risk and audit opinion are not, however, significantly associated with audit fees. Furthermore, the authors find no evidence that clients whose financial year ends in the auditors’ busy period pay significantly higher audit fees, and auditors engage in low-balling on initial engagements to attract audit clients.

The research shows the importance of exploring actual decisions regarding audit practice and audit pricing in different institutional and organizational settings.

The paper extends the literature from developed economies and large/listed market setting to the emerging economy and small client market setting. As far as the authors are aware, this is the first paper to examine audit pricing in the small client market in an emerging economy.

The purpose of this study is to explore the effect of industry specialization on the absorption and competitive pricing (or lack thereof) of audits of large Andersen clients (S&P 1500 companies) who switched to the remaining Big 4 international accounting firms in 2002 due to the demise of Arthur Andersen LLP (Andersen). Did the audit clients pay a premium or discount in audit fees to their new auditor who specialized in their industry?

Ordinary least squares regression is used to test hypothesis of a positive association between industry specialization and audit fees charged to former Andersen's audit clients in 2002 following Andersen's demise. This study provides more control over size effects by design. Test variables are constructed based on national market share of audit fees within an industry. Logistic regression is used to examine the likelihood of choosing new auditor that is an industry specialist.

Results support hypothesis, consistent with auditor differentiation explanation. Proportion of clients that had engaged an industry specialist in 2001 increased from 38 percent (84 clients) to 48 percent (105 clients) in 2002. No evidence of price‐gouging in 2002 although clients who aligned with industry specialist paid a 23.2 percent premium in audit fees. Large clients lost bargaining power to negotiate lower fees. Findings are robust to the inclusion of additional alternative measures of company size.

Results of logistic regression analysis imply that large audit clients with former auditor of tarnished reputation, long auditor tenure and high leverage are more likely to switch to an industry specialist to possibly signal audit/financial reporting quality. Large sample companies may limit the ability to generalize findings to smaller companies.

Mandatory audit firm rotation (currently being debated in the profession) will have costly effect on the pricing of Big 4 audits for companies wanting to signal audit and financial reporting quality to affect market perception, and large companies would likely lose their ability to bargain for lower audit fees.

The paper focus on the alignment of Andersen clients and impact on audit fees with Big 4 industry specialists resulting from the sudden increase in audit market concentration. Prior to Andersen's collapse, evidence on the association of audit fees premium and industry specialists was mixed, and little attention has been given to the influence of auditor industry specialization on both audit fees and alignment of former Andersen clients with a Big 4 specialist. This paper fills that void.

The purpose of this paper is to examine the effect of the Enron scandal, Arthur Andersen's demise and the Sarbanes‐Oxley Act on audit fees.

The paper uses empirical methodology (univariate and multivariate).

Audit fees and the Big‐4 premium increased in 2002. Increase was larger for bigger and riskier clients. Evidence is also consistent with a competitive market for former Andersen clients.

Data requirements might bias the sample towards larger sized firms. Data availability limits the number of observations.

The research findings on audit fees in post‐Enron and Arthur Andersen period reported in this paper are important for policy makers.

It is found that the premium charged by Big 4 over non‐Big 4 has increased in 2002, and that the ability of an auditor to charge a premium is adversely affected when its reputation is tarnished. It is also reported that the frequency of voluntary switches within the Big 4 is lowest in 19 years. The audit fee model was also refined by adding two ownership variables to control for agency aspect of client firms; inside and institutional ownership.