Showing papers on "Audit published in 1980"

The pricing of audit services - theory and evidence

Abstract: The question of the existence of competition among auditors has been the subject of considerable discussion in recent years. More specifically, the "Big Eight" firms as a group have been accused of monopolizing the market for audits {Staff Study of the Subcommittee on Reports, Accounting and Management of the Senate Committee on Government Operations [1977]). However, evidence on the issue is scanty and typically anecdotal (e.g., Bernstein [1978]). The evidence of the Staff Study itself is limited to concentration statistics, with the allegations relying on what has come to be called the "concentration doctrine" (Demsetz [1973]). According to this doctrine, supplier concentration is a reliable indicator of supplier behavior and performance. In this paper, I provide evidence from a test of the hypothesis that price competition prevails throughout the market for the audits of publicly held companies, irrespective of the share of a market segment which is serviced by the Big Eight firms. The evidence is based on an examination of a sample cross-section of audit fees.

A note on the impact of audit qualifications on lending and credit decisions

Abstract: This paper examines the impact of certain types of qualified auditors' report on bank lending decisions and credit analysts' decisions in the United Kingdom. The research design involved sending a set of financial statements, which contained one of four different types of audit report, to a large sample of bankers and credit analysts. They were asked to state how much they would lend, or how much credit they would give, for each of the hour audit report situations. The mean loan-credit responses for each audit report type were then examined to see if there were any significant differences. It was found that two types of audit qualification, namely going concern problems and asset valuation problems, significantly affected decisions and that firms suffering these types of qualifications had their credit standing significantly impaired.

Audit: an annual assessment of the work and performance of a surgical firm in a regional teaching hospital.

Abstract: The assessment of the results of treatment has for long been one of the responsibilities of the medical profession. Prospective and retrospective surveys have formed the basis of original and review articles in the medical press, and of lectures and seminars. Postgraduate education has been well served by these traditional methods, which have often led the individual doctor to change and so improve his or her techniques in diagnosis and treatment. The scene, however, is changing. The cost of medical treat ment required to provide a "comprehensive" health service has, for various reasons, outstripped the resources available from the State. As a consequence the allocation and reallocation of finances and personnel have become matters of great importance to administrators, doctors, and politicians. A second change has been in the attitude of the patient, who has become more knowledgeable about health, and if, sometimes, higher expecta tions of hospital or medical care are unrealised may more often turn to some form of official complaint, or even litigation. Thirdly, the profession itself is changing. The number of graduates is increasing, and their attitude is naturally influenced by the changes in the medical curriculum over the past 20 years: overall there has been a reduction in the emphasis on acute hospital medical and surgical care, which has often been a dominant factor in health care planning in the past. It would be surprising if demands for the more accurate assessment of clinical performance, related especially to cost, had not been heard. It would be equally surprising if the pro fession had not responded. Demands there are?for example,

Auditing and accounting for program efficiency and management efficiency in not-for-profit entities

Abstract: A measure of efficiency for not-for-profit entities - developed by the authors in association with Edward Rhodes - is explained and illustrated by data from Program Follow Through, a large scale social experiment in U.S. public school education. A division into Follow Through and Non-Follow Through participants facilitates a distinction between “program efficiency” and “managerial efficiency” which is also illustrated and examined for its use in evaluating such programs. Relations to comprehensive audits and other possible uses are explored.

Quality assessment and quality assurance in medical care.

Abstract: Throughout this century, quality assurance has been the explicit purpose of the medical profession in reforming medical education, establishing certi­ fication of specialists, initiating peer review, and promoting continuing medical education. During this period, hospital standards have been up­ graded, first by the Hospital Standardization Program and, since 1952, by its successor organization, the Joint Commission on Accreditation of Hos­ pitals (JCAH). Despite these manifestations of self-regulation, the effective­ ness of these measures in upgrading the quality of care has been sharply questioned (1-4). Within the past 15 years, political, social, and legal forces have combined to abruptly supplant traditional professional autonomy with regulation, mandating explicit accounting for the quality of care. The result has been rapid, nation-wide implementation of medical auditing in hospi­ tals, using methods developed independently of fundamental principles and concepts established by earlier students of quality assessment and quality assurance. The major issues surrounding this tum of events have been addressed at length in statements of policy (5, 6), in symposia and confer­ ences (7-9), and in a major private sector study (10). This review is limited to a small portion of the literature on quality assessment and assurance of personal medical care, i.e. services given by or at the direction of a physician to individual patients and the results of that care. Some important, highly relevant subjects are omitted. Practical con­ straints also dictate the exclusion of literature pertaining to the performance

Aspects of audit. 1. The background.

Abstract: Methods of reviewing health care already exist in Britain, but the debate continues about how practical and acceptable such a review is. The many different terms used to describe review only confuse the issue. "Audit" is a useful term for describing the review of medical work by medical people. This can be divided into "internal audit," or peer review, and "external audit"--that is, review by organisations outside hospital and general practice. The concepts of internal and external audit have a great impact upon the attitudes held by the medical profession about audit. The shortcomings of audit by the professional standards review organisations in the United States are not inevitable in Britian.

Auditing the Board: A New Approach to the Measurement of Company Performance

Abstract: The role of the internal auditor is evolving rapidly. More and more his ambit is encompassing the whole range of a company's operations. His activities no longer primarily consist of checking for compliance with laid down procedures but are becoming more management orientated and focused on the appraisal of efficiency and effectiveness of operational systems in general. These developments are acknowledged in the Introduction to the new IIA Standards: (IIA, 1978, p. 1):

On the Use of Index Models in Analytical Reviews by Auditors

Abstract: The audit process consists essentially of the collection and evaluation of evidential matter concerning financial statement items through (a) the study and evaluation of the client's internal control system, and (b) conducting "substantive tests." The latter include "(i) tests of details of transactions and balances, and (ii) analytical review of significant ratios and trends and resulting investigation of unusual fluctuations and questionable items."' The underlying rationale of analytical reviews is that conformity of the financial statement balances provided by the client with auditor's expectations based on past experience and other known conditions provides useful evidential matter for auditing purposes. Analytical review is thus a test of the "reasonableness" of reported financial statement items. Balances which conform with auditor's reasonable expectations may require little or no detailed investigation, whereas balances which deviate significantly from expectations call for extensive detailed tests. The extent of substantive tests, and the relative mix of its two components-analytical review and tests of detail-depend on the degree to which the auditor can rely on the firm's internal control system and other factors, such as the relative costs of analytical review and tests of detail. A critical question is how the analytical review should be conducted. Included here would be issues such as how to identify "significant ratios

Optimal Contracts with Costly Conditional Auditing

Abstract: In a wide variety of two-party economic relationships the parties employ contracts involving financial reporting and auditing to share the outcome of some project. Financial reporting and auditing thus provide evidence to one party concerning both the actual payoff and the level of input or effort provided by the second party. In many cases one observes that such contracts result in an audit only when the payoff is "low." By offering an explanation for why the audit or investigation occurs only if the payoff is low, this paper contributes to the development of a positive theory of contracts or exchange agreements in which the two parties' interests conflict and in which one cannot directly observe key aspects of the project, such as the payoff or the other individual's input. Sharecropping contracts have frequently been cited as archetypal of the agency problem.' In this formulation the Landowner contracts with a Tenant who will work the land, with the resulting crop jointly dependent on the Tenant's input or effort (how well and how intensely he works the land) and the weather. Consideration is limited here to cases in which the Tenant observes both his input and the resulting crop yield, while the Landowner is unable to observe either directly. However, it is assumed that for a certain fixed audit or investigation cost, the Landowner can learn both the crop yield and the Tenant's input. When

The job satisfaction of higher level employees in large certified public accounting firms

Abstract: This research study is divided into two parts. In the first part differences between audit, tax and management services (MS) specialists holding positions of Senior or higher and employed by large CPA firms are examined on three dimensions: (1) job satisfaction, (2) personal characteristics and (3) job features. Using multivariate analysis several differences between MS specialists and audit tax specialists as a combined group are detected. However, no statistically significant differences were found on the three dimensions between audit and tax specialists. The second part of the study concerned predicting the job satisfaction of audit, tax and MS specialists using personal characteristics and job features as independent variables in multiple regression. Moderate success was achieved in predicting the job satisfaction of audit and tax specialists, but predicting the level of job satisfaction of MS specialists was unsuccessful. The results of this study have policy implications for large CPA firms as well as research implications for job satisfaction researchers.

Aspects of audit. 4: Acceptability of audit.

Abstract: Whether or not audit is accepted in Britain will be determined principally by how it is controlled, how much it costs, and how effective it is. The objectives of audit have been defined as education, planning, evaluation, research, and anticipatory diplomacy--that is, starting internal audit before external audit is imposed on the medical profession. Published reports suggest that in Britain internal audit would be more effective andless expensive than the complex professional standards review organisation devised by the Federal Government in the United States.

Internal Audit Role Conflict: A Pluralist View

Abstract: This paper analyses the internal auditor's role from a perspective which emphasises the pluralist nature of organisational life. The internal auditor operates in organisational contexts where norms and values are at best only partially shared, and where the auditor's formal concern for improved efficiency and control of resource use may be viewed with varying degrees of favour. The pluralist nature of organisational life reflects itself in day‐to‐day strains, tensions and conflicts between internal auditors and auditees, which cannot be eliminated through traditional “Human Relations” approaches to organisational problems. There are inherent conflicts between audit and other organisational roles, and also insofar as its modern conception is concerned, within the internal auditor's role itself.

The Creativity Audit: introduction of a new research measure during programmes for facilitating organizational change

Abstract: A programme of intervention research is described centred around the application of a new instrument, the Creativity Audit. The audit has been administered to managers across a range of environments. Respondents indicate their perceptions of their organization's characteristics; results are fed back as profiles of mean scores and compared to data base standard profiles. Major deviations between the two profiles are taken as indicators of starting points for consideration in change programmes. The methodology of developing a research instrument at the same time as it is being applied in intervention activities is presented as a legitimate one, and preferable to present designs for studies if the focus of attention is primarily to assist change. It is suggested that the more traditional validatory exercises can still be conducted if further refinements in the instrument are required.

Implications of Prior Probability Elicitation on Auditor Sample Size Decisions

Abstract: During the past decade, a number of researchers have applied a Bayesian or decision-theoretic approach to the study of auditing problems. Such research is largely normative in nature, suggesting how the auditor should behave. Little work has been done, however, to determine under what conditions such models can be operationalized. In order to employ a Bayesian model in practice, the auditor(s) must be able to express probabilities and to specify appropriate loss functions. The impact of alternative loss functions on audit decisions is reported by Lewis [1980]. The purpose of the study reported on here was to examine the effects of using different elicitation techniques on a subsequent auditing decision, that of sample size selection.

Introduction to nonprofit organization accounting

Abstract: This book takes a conceptual-oriented approach allowing readers to understand why accounting procedures are followed. Readers gain practical experience with applications, questions, exercises, problems, and cases at the end of each chapter, including many from prior AICPA exams. Features of this edition include: a new chapter identifies the procedures necessary in accumulating and allocating costs; an ethical issues section has been added to several chapters; and the appendix, audits of nonprofit organizations, has been updated.

Aspects of audit. 5: Looking forward to audit.

Abstract: Whatever the misgivings of individual doctors, the formal support being given by professional bodies suggests that medical audit will become established in Britain. It is therefore appropriate to heed the advice of pioneers in the field in choosing methods and topics for audit. Practical problems can be anticipated because of the inadequacy of medical records, retrieval systems, and comparable information on practice patterns and evaluation of traditional processes of patient care. The criterion system of audit may provide a common standard for effective review. This can be used for any group of patients with some characteristic in common. It requires good records and a good records staff. Whatever method is adopted, central support should come from the royal colleges, with community physicians and clinical tutors assisting clinicians at the local level.

Mandatory Audit Regulation for Banks: An Empirical Evaluation of Its Effects

Abstract: One of the most striking characteristics of the securities industry is that it is very heavily regulated, especially with respect to information production. There are at least three identifiable levels of intervention dealing with the production of financial information: first, corporations are required to provide certain types of information and some minimum amount of information; second, the financial information, for the most part, has to be certified (audited); and finally, those who certify the statements have themselves to be licensed. All these regulations are instituted for the alleged protection of the investing public. This study will examine the second type of intervention mentioned above, namely, a mandatory audit requirement. It will specifically examine the effects of a particular Securities and Exchange Commission (SEC) requirement that mandates banks reporting to them to have their This paper examines the effects on stock returns of the mandatory audit regulation imposed on banks by the Securities and Exchange Commission in 1971. It is found that this imposition affected the stock returns negatively for those banks that did not voluntarily choose to employ external audits prior to the regulation. This is contrary to claims that such a mandatory regulation would be beneficial. The methodology employed is based on the familiar market model and the Gonedes approach.

Audit of an oral anticoagulant teaching program

Abstract: Quality assurance criteria for a pharmacist-conducted oral anticoagulant teaching program were studied. The teaching program involved the presentation of descriptive diagrams accompanied by a reinforcing explanation given by a pharmacist. Topics discussed included clotting, warfarin therapy, diet and drug interactions. An audit, consisting of a pretest and posttest, was developed to measure patient knowledge as a measurement of the program's effectiveness. Forty ambulatory patients participated in the study over a three-month period. Before instruction, only five patients were adequately knowledgeable about all of the information components. After instruction, this number increased to 20 patients, and all 40 patients had a better knowledge of each topic. The audit revealed that the program's standards were not completely appropriate and that other methods of program delivery must be evaluated and implemented.

Organizational Communication Research: Time for Reflection?: Some Conclusions from Audit and Network Studies in Different Countries

Abstract: Several reviews of organizational communication theory have been published recently in the Communication Yearbook and elsewhere (Richetto, 1977; Dennis, Goldhaber, & Yates. 1978; Redding. 1979; Jab...

Aspects of audit. 3: Audit in British general practice.

Abstract: Compared with hospitals, general practice has many handicaps in developing medical audit. This is especially true with regard to defining objectives and outcomes of care. Many methods have been proposed to overcome these problems, and several audit studies that have been published are presented here. Further work should concentrate on evaluating the effectiveness of audit in bringing about change rather than on generating information.

Reform in the Field of Public Accountability and Audit: A Progress Report

Abstract: What follows is a drama in the administrative and political sciences; it appears mainly in the guise of a British drama, but many of the issues have a general significance.

Aspects of audit. 2. Audit in British hospitals.

Abstract: British hospitals have advantages over other areas of health care for developing and evaluating audit: more uniform and comprehensive medical records, statistical and diagnostic data, fewer patient contacts, more time to examine patients and record information. Although little has been published, a few studies show the extent to which formal audit has been developed in Britain.