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Article
Publication date: 1 March 2006

Sumithira Thavapalan, Robyn Moroney and Roger Simnett

This paper investigates the impact of the PricewaterhouseCoopers (PwC) merger in Australia on existing and potential clients of the new merged firm. From prior theory it…

Abstract

This paper investigates the impact of the PricewaterhouseCoopers (PwC) merger in Australia on existing and potential clients of the new merged firm. From prior theory it is expected that some existing clients may have an incentive to switch away from a newly merged firm as the same larger firm now audits close competitors once audited by separate firms. Prior theory also suggests that another group of potential clients should be attracted to the newly merged firm where the merger enhances or creates industry specializations. The expectation is that in both of these instances there will be increased switching activity associated with the newly merged audit firm. Contrary to expectations, a significantly lower level of switching behaviour was observed for the newly merged firm compared with that of the other Big 5 firms, suggesting that an advantage of enhanced specialization may not be the attraction of new clients but the retention of existing clients. When comparing the nature of the switches, some support was found for the view that the switches to the new firm were likely to be in enhanced areas of specialization, but no evidence was found to suggest that close competitors would switch away from this firm. The greater rate of retention of clients compared with other Big 5 firms was not associated with a more competitive audit pricing policy.

Details

Pacific Accounting Review, vol. 18 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 2 March 2015

Roger Simnett and Anna Louise Huggins

This paper aims to provide insights into salient issues in the development of the Integrated Reporting (<IR>) Framework, and emerging issues in the implementation of this…

Abstract

Purpose

This paper aims to provide insights into salient issues in the development of the Integrated Reporting (<IR>) Framework, and emerging issues in the implementation of this Framework, with the aim of identifying opportunities for future research. The International Integrated Reporting Council (IIRC) has recently produced a reporting framework for the preparation of a concise, user-oriented corporate report which expands the scope of a company’s reporting using a multiple capitals concept and requires a description of a company’s business model, allowing a better communication of its value creation proposition. To gain international acceptance, the market-based benefits of adopting the framework must be demonstrated.

Design/methodology/approach

The paper takes the form of an archival analysis of the responses to the IIRC’s public consultation phases, providing insights into arguments for and against salient aspects of the framework, and identifying issues that would benefit from future research.

Findings

Identifying issues that arose during the framework preparation, this paper identifies a range of future research opportunities and outlines the research approaches by which academics can assess the costs and benefits of companies reporting in accordance with the <IR> Framework and assuring this information.

Research limitations/implications

Research opportunities associated with the International <IR>) Framework and associated assurance are identified.

Practical implications

This paper provides insights and details of the process of adoption of <IR> and has implications for adopters and assurance providers of integrated reports, standard setters and regulators. The development of a sophisticated business case informed by rigorous research will be critical to the further uptake of <IR>.

Social implications

Research opportunities identified include the expansion of the <IR> Framework to reporting entities other than corporations, including government and not-for-profit organisations, as well as measurement and assurance of a broader array of capitals, including social capital.

Originality/value

The paper identifies <IR> research opportunities from an archival analysis of the responses to the IIRC’s public consultation phases, providing insights into arguments for and against salient aspects of the framework that would benefit from future research.

Details

Sustainability Accounting, Management and Policy Journal, vol. 6 no. 1
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 11 May 2012

Roger Simnett

The International Auditing and Assurance Standards Board (IAASB) is currently in the process of revising International Standard on Assurance Engagements (ISAE) 3000. The…

Abstract

Purpose

The International Auditing and Assurance Standards Board (IAASB) is currently in the process of revising International Standard on Assurance Engagements (ISAE) 3000. The purpose of this paper is to review the implications of this revision process for providing assurance on sustainability reports, and identify policy‐related research opportunities associated with this review.

Design/methodology/approach

The paper takes the form of a conceptual and critical review of standards development, and archival analysis of ISAE 3000 exposure draft responses.

Findings

In the revision of ISAE 3000, concerns have been expressed by a number of parties around the distinction between reasonable and limited assurance, the procedures necessary in properly undertaking a limited assurance engagement and the structure and content of a limited assurance report. These concerns can be addressed by appropriate research initiatives which can inform these policy issues.

Research limitations/implications

Research opportunities are identified, in particular the use of experimental design to examine implications of changing the requirements of the procedures for limited assurance on assurance practitioners and of changing aspects of the assurance report on the level of assurance conveyed by limited assurance reports.

Practical implications

The paper contains a review of the standard‐setting process and has implications for assurance providers of sustainability reports, standard setters and regulators.

Originality/value

The paper provides an update of relevant standards for assurers of sustainability reports and review and appraisal of issues raised in the recent revision process of ISAE 3000.

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Book part
Publication date: 15 June 2001

Jean C. Bedard, Roger Simnett and James A. DeVoe-Talluto

The issue of auditors' responsibility for financial statement fraud is a primary concern of most major auditing standard setting bodies in the world. This paper explores…

Abstract

The issue of auditors' responsibility for financial statement fraud is a primary concern of most major auditing standard setting bodies in the world. This paper explores the actual and potential contribution of behavioral research in informing standard setters regarding auditors' consideration of fraud, and in assisting audit firms in implementing auditing standards in this area. As such, the paper should be of interest to both behavioral auditing researchers and standards setters.

As an organizing scheme for our review, we analyze the extant behavioral literature on fraud according to four basic issues identified by the Fraud Task Force of the U.S. AICPA's Auditing Standards Board: (1) the validity of the concept of a separate fraud risk assessment; (2) identification and evaluation of risk factors in fraud risk assessment; (3) the effects of decision aids or decision aid design on evaluation of fraud risk; and (4) the relationship between a separate fraud risk assessment and other phases of the audit. We note the importance of each issue, and how each is addressed in current U.S. auditing standards (SAS 82) and in the proposed revision of international auditing standards (ISA 240). Further, we assess how well behavioral research has addressed each issue, identify unmet research needs, and suggest how behavioral studies could aid in addressing those needs.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-0-76230-784-5

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Article
Publication date: 5 October 2015

Yi Fu, Elizabeth Carson and Roger Simnett

The purpose of this study is to compare the information disclosed by leading Australian audit firms in their first-time audit firm transparency reports. Australia has…

Abstract

Purpose

The purpose of this study is to compare the information disclosed by leading Australian audit firms in their first-time audit firm transparency reports. Australia has mandated the preparation and release of transparency reports by audit firms in 2013 to provide better information to stakeholders about audit firms, their governance and their internal governance systems. These reports promote increased transparency regarding issues which are believed to contribute to audit quality.

Design/methodology/approach

The paper takes the form of an archival analysis where the authors summarise the governance and other information for the 21 leading Australian audit firms as disclosed in their first-time 2013 transparency reports.

Findings

The authors find that audit firms meet the minimum transparency report disclosure requirements, but have different approaches to governance in the areas which may impact audit quality. These areas include: the internal quality control systems, independence practices, continuing education and partners’ remuneration structures. The authors identify specific areas where transparency reports may give rise to future research opportunities.

Originality/value

Australia is one of the first countries to require audit firms to publish transparency reports, and this is the first study to examine these reports. By summarising transparency report disclosures, we present a comprehensive picture of how Australian leading audit firms govern and oversee their business activities. This is useful to transparency report preparers, report users and regulators.

Details

Managerial Auditing Journal, vol. 30 no. 8/9
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 6 September 2011

Nonna Martinov‐Bennie, Jeffrey Cohen and Roger Simnett

The purpose of this paper is to examine the potential impact of two affiliation factors, as encapsulated by the chief financial officer's (CFO) prior organizational…

Abstract

Purpose

The purpose of this paper is to examine the potential impact of two affiliation factors, as encapsulated by the chief financial officer's (CFO) prior organizational (alumnus vs non‐alumnus) and professional background (audit vs non‐audit ex‐partner), on auditor independence in post‐Enron and post‐HIH era.

Design/methodology/approach

The study is a 2×2 factorial between subjects experimental design with 52 audit partners and managers as participants. The two manipulated independent variables are client CFO prior firm affiliation (alumni vs non‐alumni) and professional background (audit partner vs non‐audit partner providing taxation, accounting and other non‐audit services).

Findings

The results of the study do not appear to signal loss of independence and professional skepticism in auditors' judgment when dealing with an alumni or ex‐auditor CFO. On average, auditors' endorsement of the client's preferred aggressive accounting treatment is low and the audit adjustment is material and significantly greater than the client's proposed adjustment.

Originality/value

The 2001 corporate collapses of Enron in the USA and HIH in Australia have reshaped the auditing profession. HIH, the most publicized corporate fraud in Australia resulting in estimated losses of $5 billion, was partly blamed on Arthur Andersen yielding to management's aggressive accounting policies and failure to display independence as a result of close relationships between the former partners and the audit team. As distinct from a number of prior studies conducted pre‐Enron and pre‐HIH, the results of this study, conducted with experienced audit professionals in Australia, do not support a loss of independence and professional skepticism by auditors in the current post‐Enron and post‐HIH environment and are consistent with the findings of the only other recent experimental study by Kerler III and Killough examining the closeness of the auditor‐client relationship. The results are also consistent with results of recent archival studies which find a decline in earnings management behavior, either because of reduced management incentives or reduced auditor willingness to consent. The evidence of this study lends supports to the latter explanation.

Details

Managerial Auditing Journal, vol. 26 no. 8
Type: Research Article
ISSN: 0268-6902

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Book part
Publication date: 15 June 2001

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-0-76230-784-5

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Article
Publication date: 7 April 2015

Peter John Carey

This study aims to investigate whether “small- and medium-sized enterprises” (SMEs) benefit from their external accountants’ business advice through enhanced firm…

Abstract

Purpose

This study aims to investigate whether “small- and medium-sized enterprises” (SMEs) benefit from their external accountants’ business advice through enhanced firm performance. Most SMEs draw on external support, and their main advisors are external accountants (Bennett and Robson, 1999). The resource-based view of the firm suggests that firms will seek external support if they perceive a gap in their internal resources.

Design/methodology/approach

Data were collected from a questionnaire mailed to a random sample of Australian SMEs, defined as businesses having between 5 and 200 full-time employees.

Findings

An analysis of 380 survey respondents confirms a positive relationship between the voluntary purchase of business advice and SME performance, and that SME performance is further enhanced when business advice is purchased jointly with auditing. These relationships apply to the small (5-49 employees) but not to the medium-sized (50-200 employees) businesses. Findings are consistent with smaller firms having narrower resource bases and thus a greater need to source business advice.

Practical implications

The accounting profession has long encouraged a broadening of its service base, and evidence that small businesses perceive a performance benefit from their accountants’ business advice provides support for the profession’s strategy.

Originality/value

This research extends the empirical literature investigating the link between the business advice of an external accountant and SME performance. It explains small firms’ demand for business advice by extending the application of the resource-based view of the firm and provides new evidence consistent with “knowledge spillover” from auditing to business advice in the small firm environment.

Details

Pacific Accounting Review, vol. 27 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 21 September 2010

Roger L. Burritt and Stefan Schaltegger

The paper aims to discuss the current development of sustainability accounting research, the identification of critical and managerial paths, and to assess of the future…

Abstract

Purpose

The paper aims to discuss the current development of sustainability accounting research, the identification of critical and managerial paths, and to assess of the future of sustainability accounting and reporting.

Design/methodology/approach

The paper is a review of recent literature in sustainability accounting.

Findings

Assessment of recent literature leads to the conclusion that both management decision making, through problem solving and scorekeeping, and a critical approach, through awareness raising, contribute to the development of sustainability accounting and reporting; however, the development of sustainability accounting and reporting should be orientated more towards improving management decision making.

Originality/value

The paper is a systematic review of recent research developments in sustainability accounting.

Details

Accounting, Auditing & Accountability Journal, vol. 23 no. 7
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 21 September 2010

René Orij

The purpose of this study is to investigate whether corporate social disclosure levels relate to national cultures.

Abstract

Purpose

The purpose of this study is to investigate whether corporate social disclosure levels relate to national cultures.

Design/methodology/approach

The sample consisted of 600 large companies from 22 countries. Cultural measures were applied: a measure for secrecy, as proposed by Hope et al. and a newly constructed measure for generic types of cultures (Gannon), both derived from Hofstede's national culture dimensions. Two other dimensions, masculinity and long‐term orientation, not part of secrecy and generic types of culture measures, were also tested separately.

Findings

A number of significant statistical relationships between corporate social disclosures and cultural measures are identified. The results are consistent with the associations suggested by stakeholder theory and a country‐specific stakeholder orientation. It is concluded that corporate social disclosure levels are likely to be influenced by national cultures.

Research limitations/implications

The results of Van der Laan Smith et al. are largely supported. Culture is clearly related to corporate social disclosure levels, although cultural data may need refinement. Further, the potential limitations of the application of stakeholder theory for this type of study need to be taken into account.

Practical implications

The outcomes can be useful to the managers of multinational corporations, when preparing corporate social disclosures.

Originality/value

Instead of a comparison between two nations, as is undertaken by Van der Laan Smith et al. a scaled relationship between generic types of cultures and CSD levels is found.

Details

Accounting, Auditing & Accountability Journal, vol. 23 no. 7
Type: Research Article
ISSN: 0951-3574

Keywords

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