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Have You Seen...? Brad
Reed, Southern "Accounting
Professionals and the Accounting Profession: Linking Conduct and
Context", by F. Anderson-Gough, C. Grey, and K. Robson,
Accounting and Business Research 32 (No. 1, 2002): 41-56. Recent
research has investigated the daily conduct of accounting professionals
in Big Five firms. The authors of this study extend this prior research
by incorporating into the study of daily conduct the institutional
setting within which accountants work. The authors note that becoming
a professional is a complex socialization process that involves
induction into a wide array of formal and informal norms which have
to be both taught and learned. This paper analyzes the UK accounting
profession in terms of the fragmentation of its professional bodies
and the diversification of its markets, and links this to empirical
findings from a qualitative research project examining the professional
socialization of trainees in the UK regional offices of two Big
Five firms. Using semi-structured interviews with trainees, the
authors discuss the socialization of the trainees in three areas:
being professional, qualification as a professional, and professional
training and everyday work. "The Association Between Auditor Choice, Ownership Retained, and Earnings Disclosure by Firms Making Initial Public Offerings", by P. A. Copley and E. B. Doughett, Jr., Contemporary Accounting Research 19 (No. 1, 2002): 49-75. The authors of this paper test the predictions of Datar, Feltham and Hughes (1991) and Hughes (1986) regarding three signals to investors associated with an initial public offering. The three signals examined are auditor choice, retained ownership and earnings disclosure. Using a sample of IPOs between 1990 and 1997 the authors find that the demand for high-quality auditors increases with firm risk. Additional results show that auditor choice, earnings disclosure, and risk are determinants of retained ownership. Finally, the results suggest that the signals chosen (i.e., retained ownership, auditor choice, and disclosure) are related through their cost structures and are chosen jointly to minimize the overall cost to the entrepreneur. "Brand Name Audit Pricing, Industry Specialization, and Leadership Premiums post-Big 8 and Big 6 Mergers", by A. Ferguson and D. Stokes, Contemporary Accounting Research 19 (No. 1, 2002): 77-110. This paper investigates Big 6 brand name and industry leadership audit pricing in Australian national audit markets. Prior studies show that Big 8 auditors earn higher audit fees than non-Big 8 auditors due to quality differentiation in the audits. The authors examine samples of Australian listed public companies in each of the postmerger years 1990, 1992, 1994, and 1998 and estimate national audit fee premiums for the Big 6/5 auditors and the industry specialists and leaders. The authors find limited support for the ability of the Big 6/5 to obtain fee premiums over non-Big 6/5 for those industries not having specialist auditors. Nonspecialist Big 6/5 auditors are able to obtain fee premiums over nonspecialist non-Big 6/5 for those industries having specialist auditors. However, this result only holds for the smaller half of the sample. The authors do not find strong support for the presence of industry specialist premiums in the postmerger years, especially after 1990, using various definitions of industry specialist. Finally, the results indicate limited support for the presence of industry leadership premiums. "The Relation Between Audit Pricing and Audit Contract Type: A Public Sector Analysis", by J. Thorne, S. A. Holmes, A. S. McGowan, C. A. Strand and R. H. Strawser, Journal of Accounting and Public Policy 20 (No. 3, 2001): 189-215. This
study examines the extent to which audit contract type is capable
of explaining the variation in audit fees, after controlling for
variables found to be significant correlates in prior audit economics
studies. The authors note that two types of contracts define the
economic relationship that exists between the independent auditor
and client. Under fixed fee contracts the total fee is negotiated
prior to the evidence-gathering phase of the audit examination.
In contrast, cost-reimbursement contracts specify rates by day or
hour, to be charged for various categories of personnel, but the
total audit fee cannot be determined until after the examination
is completed and the actual hours worked are known. Using North
Carolina local government data, the authors find evidence that audit
fees are, on average, lower for fixed fee contracts than for cost-reimbursement
contracts. Also, the probability of negotiating a fixed fee contract
increased for governmental units with higher financial risk when
they engaged an independent auditor with more knowledge about the
public sector. "The Value of Management Letters to Unlisted Companies", by S. Manson, S. McCartney and M. Sherer, British Accounting Review 33 (No. 4, 2001): 549-568. In this study the researchers investigate the issues raised in management letters and the perceived value of management letters to management and the auditor. The researchers also evaluate whether the size of the audit firm or the length of audit tenure had any effect on the contents of management letters or their value to unlisted companies. The authors find that the issues most frequently raised in management letters related to internal control and accounting systems but that other issues, such as taxation and general business advice, are often included. They find little difference in the contents of management letters issued by Big 5 audit firms and other firms. Clients generally considered that the advice given in management letters was valuable. Again, there was little difference between clients of Big 5 audit firms and other firms. Similarly, the length of audit tenure had no statistically significant effect. Finally, auditors considered the most important benefit of the management letter was its potential for enhancing clients' perceptions of the auditor. "Ethical Audit Decisions: A Structuration Perspective," by J.F. Dillard and K. Yuthas, Journal of Business Ethics 36 (March 2002): 49-64. This paper discusses and applies structuration theory as a means for understanding and improving ethical decision making within the audit domain. The paper expands on previous work that suggests that an auditor's action is affected by responses to past decisions and the recognition of being held accountable for the consequences of the action. The authors argue that structuration theory provides a framework for considering ethical dilemmas by recognizing the centrality of human agency and social structures, as well as the dynamic interrelationship among the two. In an auditing context, this requires auditors to communicate with stakeholders so auditors can better understand how their actions affect stakeholders, and likewise, so stakeholders can become more informed and supportive of the auditor's objectives. "Litigation Risk and Audit Fees: Evidence from UK Firms Cross-listed on US Markets," by A. Seetharaman, F.A. Gul, and S.G. Lynn, Journal of Accounting & Economics 33 (February 2002): 91-115. The authors conduct an empirical test on whether audit fees reflect risk differences across liability regimes. The authors find that auditors of UK firms charge fee premiums for their services when their clients access US capital markets, but not when they access non-US markets. Tests indicate that the results cannot be fully explained by increased disclosure requirements mandated by US securities laws, and thus, suggest that the fee premiums (estimated to be roughly 20%) reflect the above-average litigation risk of the US capital market. "Audit Firm Industry Experience: A Review and Synthesis of the Archival Literature," by A.A. Gramling and D.N. Stone, Journal of Accounting Literature 20 (2001): 1-29. In this paper, the authors review, synthesize, and evaluate archival research on audit firm industry expertise using a framework from structural economics that characterizes the market for audit services into three dimensions: (1) market structure (studies examining internal conditions of the market such as numbers, size, and market shares of buyers [companies] and sellers [auditors]); (2) market strategy (relationship between industry expertise and audit firm strategies, such as advertising and human resource policies); and, (3) market performance (factors affecting characteristics such as quality and pricing of audit services). The paper concludes with a section on directions for future research. "Investor Dissatisfaction Toward Auditors," by B.J. Sainty, G.K. Taylor, and D.D. Williams, Journal of Accounting, Auditing & Finance 17 (Spring 2002): 111-136. A metric to measure shareholder dissatisfaction with the auditor is developed in this study by analyzing the shareholder ratification vote of the external auditing firm. Using a sample of 1,265 companies with an auditor ratification vote in 1997, the authors find significant investor dissatisfaction with lower quality auditors (non-Big 6) and the receipt of going concern audit opinions (investors reacted strongly when a financially healthy firm received a going concern and when there was a change from a non-going concern to a going concern report). In addition, after controlling for known factors influencing auditor change, the results indicate that managers show sensitivity to shareholder dissatisfaction signals by subsequently changing auditors. |