Download or read book Direct and Indirect Effects of Internal Control Weaknesses on Accrual Quality written by Hai Lu and published by . This book was released on 2016 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: Public disclosure about effectiveness of internal control systems is subject to much controversy in Canada, resulting in Canadian disclosures being made in Management Discussion and Analysis (MDamp;A). These disclosures are provided to investors without a definition of the weaknesses to be reported, without implementation effectiveness testing, no direct management certification and no external audit of such disclosures. Though the cost of such SOX North disclosures are lower than in the U.S setting, the credibility of these disclosures is far from assured, posing an important empirical issue for regulators interested in the cost versus benefit trade-off of various disclosure regimes. We use OLS regression and path analysis embedded in a structural model to examine the association between the strength of internal control and accrual quality in order to infer whether these disclosures are credible. The OLS regression finding of an overall negative net effect of internal control weaknesses on accrual quality is refined by recursive path analysis which shows that this overall negative effect is composed of a large negative direct effect of weaknesses on accrual quality and a smaller offsetting positive indirect effect of weaknesses on accrual quality via increased audit effort. The modest substitution effect implies that auditors cannot fully compensate for poor internal control by increased substantive work, which is per se evidence justifying some form of internal control disclosures for investors. Overall, our results suggest that lower cost SOX North disclosures are credible. This informs the cost-benefit debate facing regulators around the globe seeking alternatives to the costly U.S. model of internal control reporting.
Download or read book The Effect of SOX Internal Control Deficiencies and Their Remediation on Accrual Quality written by Hollis Ashbaugh Skaife and published by . This book was released on 2014 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effect of internal control deficiencies and their remediation on accrual quality. We first document that firms reporting internal control deficiencies have lower quality accruals as measured by accrual noise and absolute abnormal accruals relative to firms not reporting internal control problems. Second, we find that firms that report internal control deficiencies have significantly larger positive and larger negative abnormal accruals relative to control firms. This finding suggests internal control weaknesses are more likely to lead to unintentional errors that add noise to accruals than intentional misstatements that bias earnings upward. Third, we document that firms whose auditors confirm remediation of previously reported internal control deficiencies exhibit an increase in accrual quality relative to firms that do not remediate their control problems. Finally, we find firms that receive different internal control audit opinions in successive years exhibit changes in accrual quality consistent with changes in internal control quality. Collectively, our cross-sectional and inter-temporal change tests provide strong evidence that the quality of internal control affects the quality of accruals.
Download or read book The Routledge Companion to Auditing written by David Hay and published by Routledge. This book was released on 2014-09-15 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditing has been a subject of some controversy, and there have been repeated attempts at reforming its practice globally. This comprehensive companion surveys the state of the discipline, including emerging and cutting-edge trends. It covers the most important and controversial issues, including auditing ethics, auditor independence, social and environmental accounting as well as the future of the field. This handbook is vital reading for legislators, regulators, professionals, commentators, students and researchers involved with auditing and accounting. The collection will also prove an ideal starting place for researchers from other fields looking to break into this vital subject.
Download or read book How to Comply with Sarbanes Oxley Section 404 written by Michael J. Ramos and published by John Wiley & Sons. This book was released on 2004-03-29 with total page 306 pages. Available in PDF, EPUB and Kindle. Book excerpt: Designed specifically for Sarbanes-Oxley Section 404 compliance, How to Comply with Sarbanes-Oxley Section 404 features: A step-by-step approach to engagement performance Original material from a leading expert in auditing and accounting Practice aids, including forms, checklists, illustrations, diagrams, and tables In-depth explanations to help professionals understand how best to approach the internal control engagement Examples and action plans providing blueprints for implementing requirements of the Act Order your copy today!
Download or read book The Effect of Internal Governance on Earnings Quality written by Trung Pham and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the impact of internal governance on firms' earnings quality. Analytically developed by Acharya et al. (2011), internal governance is the checks-and-balances imposed by subordinates on the CEO, forcing the CEO to focus on the firm's long-term value. While there is a burgeoning literature on the impact of internal governance on various dimensions of firm performance such as investment and innovation efficiency, there is a lack of understanding about how internal governance affects the quality of reported accounting numbers. Given the importance of earnings quality for decisions such as investment, I investigate whether the above-mentioned bottom-up governance mechanism has any influence upon the quality of earnings. Specifically, I focus on the impact of internal governance on firms' earnings persistence, earning smoothness, accruals quality, internal control weaknesses, and financial restatements. Based on samples for the 2004-2018 period, I document that firms with effective internal governance have higher quality earnings. This finding is robust to firm- and year-fixed effects, an alternative measure of internal governance effectiveness, and additional control variables related to corporate governance. Additionally, I find some evidence that the impact of internal governance on earnings quality is weaker for firms with powerful or overconfident CEOs.This dissertation contributes to the literature on internal governance as well as the literature on earnings quality by documenting the effect of internal governance on earnings quality. The findings of this dissertation also have practical implications for various parties such as investors, financial analysts, auditors, management, and boards of directors.
Download or read book Internal Control written by and published by Springer. This book was released on 2012-11-09 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.
Download or read book Amos 4 0 User s Guide written by James Arbuckle and published by Spss. This book was released on 1999 with total page 452 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Capitalizing China written by Joseph P. H. Fan and published by University of Chicago Press. This book was released on 2013 with total page 401 pages. Available in PDF, EPUB and Kindle. Book excerpt: La 4e de couverture indique : "Despite a vast accumulation of private capital, China is not embracing capitalism. Deceptively familiar capitalist features disguise the profoundly unfamiliar foundations of "market socialism with Chinese characteristics." The Chinese Communist Party (CCP), by controlling the career advancement of all senior personnel in all regulatory agencies, all state-owned enterprises (SOEs), and virtually all major financial institutions state-owned enterprises (SOEs), and senior Party positions in all but the smallest non-SOE enterprises, retains sole possession of Lenin's Commanding Heights. The chapters in this volume examine China's high savings rate, banking system, financial markets, financial regulations, corporate governance, and public finances; and consider policy alternatives the CCP might consider if its goal is China's elevation into the ranks of high income countries."
Download or read book Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.
Download or read book Material Weaknesses in Tax Related Internal Controls and Last Chance Earnings Management written by Cristi A. Gleason and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate consequences of tax-related material weaknesses in firms' internal controls over financial reporting. We hypothesize that the presence of internal control material weaknesses (i.e., ICMWs) over the tax function makes earnings management through the income tax accrual (Dhaliwal et al. 2004) easier to implement relative to firms with non-tax-related ICMWs. We also predict that the remediation of tax-related ICMWs has the effect of constraining earnings management through the tax accrual. The results provide support for our predictions and suggest that tax-related ICMWs are associated with greater tax-expense management.
Download or read book The Impact of Sarbanes Oxley on Internal Control Remediation written by Kam C. Chan and published by . This book was released on 2019 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study uses logistic regression analysis to examine the determinants of internal control weakness remediation on a sample of firms that reported internal control weaknesses at the end of fiscal year 2004, and then reported the presence or absence of internal control weaknesses at the end of fiscal year 2005. Our sample included 243 firms. Of these, 174 firms reported internal control weaknesses in the 2004 filing with the SEC, but had successfully remediated them one year later. The remaining 69 firms reported internal control weaknesses in 2004 and again in 2005. We found that resources available to the firms (e.g., return on assets, size) was positively associated with remediation. Use of a Big 4 auditor, having more audit committee meetings, having more business segments, having less time to remediate between the 2004 financial statement filings and the end of the 2005 fiscal year (i.e., filing lag) were negatively associated with successful remediation. Also negatively associated with remediation were the number and type (general control weakness versus specific account weakness) of internal control weaknesses the firms had.
Download or read book Principles of Internal Control written by Alan Trenerry and published by UNSW Press. This book was released on 1999 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt: An accounting textbook that describes the objectives and practices of internal control.
Download or read book Financial Reporting Fraud written by Charles R. Lundelius and published by American Institute of Certified Public Accountants (AICPA). This book was released on 2003 with total page 324 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Managing Organizational Culture for Effective Internal Control written by Jan A. Pfister and published by Springer Science & Business Media. This book was released on 2009-07-07 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: In times of economic and financial crises, the content of this book rings true. Drawing from interviews with executives, senior managers and/or auditors from renowned companies (eBay, Google, Hewlett Packard, Intel, Levi Strauss & Co., Microsoft, Novartis and many others) and theory from fields of sociology and social psychology, this research study provides an understanding of how "tone at the top" imprints on an organization and why that imprint works. More specifically, it discusses how managers' principles and practices can actively shape an open-minded culture that enhances effective internal control.
Download or read book Implementing Accrual Accounting in the Public Sector written by Ms.Suzanne Flynn and published by International Monetary Fund. This book was released on 2016-08-05 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: This technical note and manual (TNM) explains what accrual accounting means for the public sector and discusses current trends in moving from cash to accrual accounting. It outlines factors governments should consider in preparing for the move and sequencing of the transition. The note recognizes that governments considering accounting reforms will have different starting points across the public sector, different objectives, and varying coverage of the existing financial statements, it therefore recommends that governments consider each of these, and the materiality of stocks, flows and entities outside of government accounts when planning reforms and design the sequencing and stages involved accordingly. Building on international experiences, the note proposes four possible phases for progressively increasing the financial operations reported in the balance sheet and operating statement, with the ultimate aim of including all institutional units under the effective control of government in fiscal reports.
