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Author: Dichu Bao Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
In this paper, we examine whether the industry-specialist audit fee premium and scale discounts are attributable to financial statement complexity. Financial statement complexity is measured using a combination of the number of Arabic numerals, the number of words, and the readability of 10-K financial statement footnotes. We find that specialist auditors charge a premium for clients with higher financial statement complexity and, correspondingly, offer scale economy discounts to these clients as well. Interestingly, even though non-specialist auditors charge a higher fee for clients with higher financial statement complexity, they do not offer scale economy discounts to these clients. We also show that a client's financial statement complexity is distinct from its operational complexity. Collectively, our results suggest that the industry-specialist auditors' premium is attributable to auditors' investment in resources to handle client complexity, and not monopoly rent or compensation for audit risk.
Author: Dichu Bao Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
In this paper, we examine whether the industry-specialist audit fee premium and scale discounts are attributable to financial statement complexity. Financial statement complexity is measured using a combination of the number of Arabic numerals, the number of words, and the readability of 10-K financial statement footnotes. We find that specialist auditors charge a premium for clients with higher financial statement complexity and, correspondingly, offer scale economy discounts to these clients as well. Interestingly, even though non-specialist auditors charge a higher fee for clients with higher financial statement complexity, they do not offer scale economy discounts to these clients. We also show that a client's financial statement complexity is distinct from its operational complexity. Collectively, our results suggest that the industry-specialist auditors' premium is attributable to auditors' investment in resources to handle client complexity, and not monopoly rent or compensation for audit risk.
Author: Dichu Bao Publisher: ISBN: Category : Auditors Languages : en Pages : 190
Book Description
This paper examines the relation between financial statement footnote disclosures (my proxy for financial statement complexity) and specialist auditors as well as its relation with specialist audit fee premium. Using computer linguistic techniques, I specifically use the number of Arabic numerals (quantitative) and alphabetical words (qualitative) in footnote disclosures to proxy for financial statement complexity. I hypothesize and find that companies audited by specialist auditors are associated with more quantitative and qualitative footnote disclosures than those audited by non-specialist auditors. Moreover, I hypothesize and find that audit fees are positively related to quantitative and qualitative footnote disclosures and they attribute about 20% of the specialist audit fee premium. Finally, the positive association between audit fees and quantitative footnote disclosures is stronger for companies audited by specialist auditors. Together, the results suggest that specialist auditors audit more complex financial statements and that the specialist audit fee premium is partly attributable to financial statement complexity.
Author: Curtis M. Hall Publisher: ISBN: Category : Languages : en Pages : 27
Book Description
Purpose: This paper investigates the effect that ownership structure (public vs. private) has on the demand for high-quality auditors, specifically in the U.S. banking industry.Design/Methodology/Approach: We predict that public banks are more likely to hire a high-quality auditor than private banks and pay a higher audit fee premium for that high-quality auditor (due to higher agency costs, more demand for financial information and higher litigation risk). We analyze 2008-2014 banking data from the Federal Reserve using probit and OLS regression analysis to examine if there is a higher probability that public banks choose higher quality auditors and pay higher audit fees when they do so.Findings: Our results show that private banks are less likely to hire Big 4 auditors and industry-expert auditors than public banks. We also find that both private and public banks pay higher audit fees for Big 4 and industry-expert auditors, and that public banks pay a higher premium for Big 4 auditors and industry experts than private banks.Research Limitations/Implications: Our findings may not be full generalizable to other types of firms, as banking is a heavily regulated and complex industry. However, inferences from our study may be generalizable to other similar industries such as insurance or healthcare.Practical Implications: The results of this paper imply that public and private banks have differing priorities when hiring their financial statement auditor. This may be of interest to investors and auditing regulators.Social Implications: The findings of this paper underscore the value of hiring an industry-expert auditor in an industry that is highly complex and regulated. This may be of interest to managers and policymakers.Originality/Value: Due to data restrictions, the emphasis of prior literature on the banking industry has been on public banks. Our study is the first to analyze the differences between public and private banks' demand for audit services.
Author: Joe Oringel Publisher: A&C Black ISBN: 1849300577 Category : Business & Economics Languages : en Pages : 237
Book Description
In the wake of the recent financial crisis, increasing the effectiveness of auditing has weighed heavily on the minds of those responsible for governance. When a business is profitable and paying healthy dividends to its stockholders, fraudulent activities and accounting irregularities can go unnoticed. However, when revenue and cash flow decline, internal costs and operations may be scrutinized more diligently, and discrepancies can emerge as a result. Effective Auditing for Corporates provides you with proactive advice-to help you safeguard core value within a corporation and to ensure that auditing processes and key personnel meet the expectations of management, compliance, and stockholders alike. Aimed primarily at auditors (both external and internal), risk managers, accountants, CFOs, and consultants, Effective Auditing for Corporates covers: * Compliance and the corporate audit * Fraud detection * Risk-based auditing * The development of Sarbanes-Oxley * Cultural changes in external auditing * Auditing management information systems
Author: Nwogugu, Michael I. C. Publisher: IGI Global ISBN: 1799874206 Category : Business & Economics Languages : en Pages : 320
Book Description
Current and future issues in the global accounting/consulting, business opportunity, and credit rating agency (CRA) industries can have significant multiplier-effects on international trade, sustainable growth, and compliance (as physical phenomena). These three industries are among the most international and human-capital-intensive of all service industries. In these industries, analysis of business models and industry dynamics can provide insights about how human-computer interaction (HCI) and contract theory affect the evolution of financial market ecosystems and cross-border information flows, and how business models, work-allocation mechanisms, and liability allocation can evolve to manage change. An often-overlooked issue is that non-performing loans (NPLs), sustainability, and CRA efficiency can be significantly affected by business processes, corporate strategy, and HCI in industry ecosystems, multinational corporations (MNCs), and economic systems. Complex Systems and Sustainability in the Global Auditing, Consulting, and Credit Rating Agency Industries compares these three industries and introduces theories of public policy and “inter-business” processes. The book links industry structure, complex systems (including networks), behavioral game theory, structural changes, and antitrust problems to sustainability and the efficiency of pollution-remediation systems. The book introduces new “informal algorithms” and business/resource-allocation models that solve social-choice problems, and also contravene “impossibility theorems” that are at the core of modern computer science and mechanism design. This book is essential for professors and masters/PhD-level students and employees (in industry, financial services, research institutes, consulting firms, and government agencies) who are interested in industrial mathematics and theoretical computer science.
Author: AICPA Publisher: Wiley ISBN: 9781945498480 Category : Business & Economics Languages : en Pages : 0
Book Description
Whether a financial statement preparer or auditor, it is critical to understand the complexities of the specialized accounting and regulatory requirements for investment companies. This guide supports practitioners in a constantly changing industry landscape. It provides authoritative how-to accounting and auditing advice, including implementation guidance and illustrative financial statements and disclosures. Packed with continuous regulatory developments, this guide has been updated to reflect certain changes necessary due to the issuance of authoritative guidance since the guide was originally issued, and other revisions as deemed appropriate. The updates for this 2017 edition include extensive changes to the illustrated financial statements for registered investment companies that result from SEC's issuance of the release Investment Company Reporting Modernization and related amendments to Regulation S-X. Other updates to the 2017 edition include changes to illustrated attestation reports that result from AICPA's issuance of Statement on Standards for Attestation Engagements (SSAE) No. 18, Attestation Standards: Clarification and Recodification. Further updates include: References to appropriate AICPA Technical Questions and Answers that address when to apply the liquidation basis of accounting Appendixes discussing the new standards for financial instruments, leases, and revenue recognition Appendixes discussing common or collective trusts and business development companies
Author: Dichu Bao
Author: Dichu Bao
Author: Dichu Bao
Author: Curtis M. Hall
Author: Joe Oringel
Author: Nwogugu, Michael I. C.
Author: John R.M. Hand
Author: Johanna Miettinen
Author: AICPA
Author: 
Author: