Amount Of Conservatism Research Articles

The Effect of Periodic Auditor Designation on Audit Quality: Focusing on the Amount of Conservatism

Purpose - This purpose of this study is to verify how the periodic auditor designation system, which was implemented in Korea in 2019, affects audit quality using the amount of conservatism. Design/Methodology/Approach - To establish hypotheses, previous studies were reviewed, and 1,031 samples were selected from KOSPI-listed companies in Korea for 2019 and 2020. The dependent variable was the amount of conservatism; the impact of periodic auditors, Big 4 auditors, debt ratios, total assets, ROA, loss, and audit complexity were empirically analyzed. Findings - The study found significant differences in audit quality among other variables, and confirmed a statistically significant difference in audit quality based on periodic auditor designation between the Big 4 and Non-Big 4 accounting firms. The study concluded that periodic auditor designation is effective in suppressing opportunistic behavior and enhancing the reliability of financial reporting, ultimately strengthening conservatism. Research Implications - This study is meaningful in that it targets empirical data from 2019 and 2020 using the amount of conservatism on the effect of periodic auditor designation on audit quality. Since this system was first implemented in Korea in 2019, there are not many related data, so there are limitations in the analysis of related studies.

Convex optimisation approach to constrained fuel optimal control of spacecraft in close relative motion

This paper describes an interesting and powerful approach to the constrained fuel-optimal control of spacecraft in close relative motion. The proposed approach is well suited for problems under linear dynamic equations, therefore perfectly fitting to the case of spacecraft flying in close relative motion. If the solution of the optimisation is approximated as a polynomial with respect to the time variable, then the problem can be approached with a technique developed in the control engineering community, known as “Sum Of Squares” (SOS), and the constraints can be reduced to bounds on the polynomials. Such a technique allows rewriting polynomial bounding problems in the form of convex optimisation problems, at the cost of a certain amount of conservatism. The principles of the techniques are explained and some application related to spacecraft flying in close relative motion are shown.

Evaluating Oil Spill Risks through Stochastic and Deterministic Trajectory Modeling

Oil spill risks associated with oil and gas exploration and production are changing as industry moves to deeper water. Computer-based modeling is typically used to quantify the fate and trajectory of sub sea releases (e.g., well blowouts). Stochastic modeling has become common as computational resources have grown, allowing for a large number of combinations of met ocean parameters to be evaluated. Simulating many potential realizations of a single discharge event allows for the calculation of spatially varying probabilities of oiling due to natural variability in the prevailing wind and current, but this needs to be treated separately from the likelihood of the sub sea release occurring to appropriately evaluate the oil spill risks of the offshore activity. Some industry guidance explicitly recognizes that the likelihood of a discharge event occurring is independent of the natural variability of the environmental setting and correctly treat these items as statistically independent; however, this distinction is sometimes lost in practice. In these instances, the resulting oil spill risk assessments may inadvertently be based on highly improbable combinations of release conditions and met ocean forcing. A transparent and robust risk-based oil spill risk assessment needs to explicitly communicate the differences between the likelihood of a release event occurring and the probabilities of the potential trajectories that could result under different combinations of met ocean parameters. This poster uses a hypothetical deepwater blowout to illustrate how stochastic and deterministic modeling can be combined to characterize the probability distribution associated with the (variable) potential consequence of a discharge event. The proposed modeling strategy allows for the set of trajectories generated by stochastic modeling to be ranked based on various metrics of interest (e.g., volume of water column swept, area of surface slick, or volume of oil ashore) so the distribution of potential consequence can be evaluated. Following recently industry guidance (IPECA-OGP), it is suggested that the most probably deterministic trajectory be paired with statistical analysis, although the strategy allows for an identifiable amount of conservatism to be incorporated into the analyses by selecting one or more other trajectories for detailed impacts assessment.

Standard and customized correlation of crack resistance curves and Charpy upper shelf energy for German reactor pressure vessel steels

In order to avoid extensive and expensive testing of the JR crack resistance behavior of reactor pressure vessel steels, different correlations between the upper shelf energy obtained from Charpy impact tests and the crack resistance curve have been proposed in the literature. To analyze their applicability and the amount of conservatism, the most important correlation formulas have been compared with measured JR-curves for different German reactor pressure vessel steels. For these materials, an alternative customized correlation is proposed. All correlations investigated are found to provide reliable and conservative estimates of the crack resistance curves for temperatures up to 300 °C.

Robust Wiener filtering with non-parametric spectral uncertainty

In this article, robust least-squares filtering problems are considered for non-parametric multivariate spectral uncertainty defined by the so-called spectral band and generalised-moment constraints. Its major aim is to provide a basis for computing approximate solutions to worst-case, Wiener-filtering optimisation problems involving causal filters and multivariate signals. It hinges upon associating upper and lower bounds on the minimum worst-case performance achievable with causal filters with linear-cost/linear matrix inequality (LC/LMI)-constraint optimisation problems. On the basis of a Lagrangean duality formulation for the worst-case, least-squares performance of a given filter, upper bounds on it are obtained as the optimal values of LC/LMI problems. Then, for linearly parameterised classes of filter transfer functions, a causal filter which optimises such an upper bound on worst-case performance can also be obtained from an LC/LMI optimisation problem. To estimate the amount of conservatism incurred when relying on such upper bounds, optimal, nominal, least-squares performance for a given pair of power spectral densities (for the information and noise signal) is maximised over finite-dimensional, linearly parameterised classes of the latter. Again, such problems are shown to be equivalent to LC/LMI problems and the corresponding optimal values are lower bounds on the minimum worst-case, least-squares error achievable in the original robust filtering problem (say, μ*). Finally, two simple numerical examples are presented to illustrate how causal filters can be obtained whose worst-case, least-squares performance is quite close to the optimal one (i.e. μ*).

Efficient fracture assessment of pipelines. A constraint-corrected SENT specimen approach

Reeling has proven to be an efficient and cost effective method for offshore pipelaying. During the reeling process the pipe undergoes deformation that can strain the material by 1–2%. The existing failure assessment methods often turn out to be too conservative to allow such a strain level in the structure. The amount of conservatism can be significantly reduced by using a new failure assessment approach developed by SINTEF. This approach depends on finite element calculations for establishing the non-linear fracture mechanics parameters and the stress and strain distributions in the pipe. The present study addresses the performance of shell and line spring finite elements as a cost effective tool for performing such numerical calculations.

The Origin of the Composite Wheeled Vehicle, Two-Wheeled Trailer, and Tracked Vehicle Vibration Schedules in MIL-STD-810D/E

In the early and mid-1980s, a concerted effort was made at the Aberdeen Test Center (then Combat Systems Test Activity) to collect vibration data on a wide variety of vehicles to create laboratory vibration test schedules. The initial schedules were published in MIL-STD-810D and were updated for publication in MIL-STD-810E and ITOP (International Test Operations Procedure) 1-2-601. Although the vehicles used for schedule development are listed in the documents and a test scenario is described, little information has been published describing how the test levels compare with the actual measured levels and how the test courses used compare with the terrain likely to be encountered in the vehicle's normal operation. This paper describes the data acquisition and analysis efforts to show where and how measurements were made and how the final test levels relate to the actual measured levels. It will also describe the test courses used and show how they relate to "civilian sector" conditions such as operation on an unpaved road. The purpose of the paper is to provide an understanding of the physical severity represented by the test procedures used and the amount of conservatism and level exaggeration (to reduce test time) built into the schedule development process.

Necessity of uncertainty analyses in risk assessment

The potential risks to human health associated with contaminant discharges from the waste area groupings (WAGs) at Oak Ridge National Laboratory (ORNL) have been estimated and ranked. Human health risks are estimated using selected exposure relationships for human receptors and local con- taminant concentrations associated with individual waste sites. The ranking of the waste areas using deterministic methods yields disparate ran- kings because risk assessment results are very user-specific and depend on the user's selection of models, parameter values and uncertainty about important model parameters. Rankings obtained without an uncertainty analysis are unreliable because of large inconsistencies in the amount of conservatism used to quantify model parameters for specific contaminant and exposure pathways. Through the use of uncertainty analyses on the risk assessment of the waste sites, it was possible to rank the waste areas in a more reliable manner. The WAGs are ranked based on potential human health risk in the following order: (1) WAG 1; (2) WAG 2, 6, and 7, and WAG 4; (3) WAG 5; (4) WAG 9; (5) WAG 3; and (6) WAG 8. The dominant pathway contributing to human health risks is through fish ingestion, while the contaminant contributing the greatest risk over all exposure path- ways considered is 137Cs.

Application of Statistical Combination of Uncertainties to the Three Mile Island Unit 1 Flux/Flow Reactor Trip Setpoint

This paper reports on typical reactor trip setpoints which established for the reactor protection system may be unduly restrictive, depending on how the uncertainties are handled in the plant safety analyses. The current deterministic approaches to establishing specific setpoints contain a substantial amount of conservatism, which can be reduced through the use of a statistical combination of uncertainties process. Using this approach for Three Mile Island Unit 1 indicates that the flux/flow trip setpoint can be relaxed to 1.1 from the existing technical specification value of 1.08. This provides an increased plant operating margin and reduction in the probability of spurious scrams.

Developing RETRAN Input for Redundant Networks

Complex valve and instrument networks are frequently found in nuclear power plants; the complexity of such networks is often due to built-in, safety-related redundance. When developing RETRAN input to model a redundant network, it is generally assumed that the performance of such a network can be accurately represented by the performance characteristics of its individual components. This approach, however, can introduce a substantial amount of conservatism into the RETRAN calculations because a redundant network tends to outperform its components. To help utility engineers evaluate the performance of redundant networks, the Electric Power Research Institute has sponsored the development of the Plant Network Simulation (PLANETS) computer program. The PLANETS code can be used to develop both conservative and best-estimate network characteristics for RETRAN input. This paper reports that analyses have shown that the use of network inputs can significantly reduce calculated event consequences as well as provide added safety or operating margin.

A note on the behaviour of the log rank permutation test under unequal censoring

This note studies the extent to which the type I error of the permutation test based on the log rank score departs from its nominal value in the presence of unequal right censoring. For the asymptotic case, situations are identified that lead to conservative and to nonconservative behaviour, and the amount of conservatism is computed for some specific constant hazard situations. A small Monte Carlo study is used to support the relevance of the asymptotic results in a finite sample setting. That the log rank permutation test is not exact in the presence of unequal right censoring is clearly indicated.

Eccentrically Loaded Weld Groups; AISC Design Tables

Historically the design tables for eccentric loads on weld groups presented by the American Institute of Steel Construction (AISC) in the Manual of Steel Construction have been based on the assumption that the bolt or weld element furthest from the group centroid controlled the design load of the total group. The remaining bolts or weld elements were assumed to carry a proportional amount of load depending on the relative distance from the centroid. The overall stiffness of the configuration was considered to be a function of the polar moment of inertia. This procedure was known to give a generally conservative solution to a complex problem. It was known that, with the exception of nearly square configurations and relatively low loads, the polar moment of inertia does not adequately represent the stiffness of a joint, especially if inelastic deformations are considered. The preceding discussion has explained how the design tables for eccentrically loaded weld groups have been developed for use in the new 8th Edition Manual.2 The tables result in substantially increased values, in some cases depending upon the group geometry and load eccentricity. However, because of the limited available research, which involved only A36 steel and E60 electrodes, a certain amount of conservatism had to be introduced to keep stresses within the Specification limits.

Prior Probability Bias in Information Seeking and Opinion Revision

In two experiments subjects successfully acquired probability biases, which they then used in an information-processing task. In general, their opinion revision in information processing at low levels of prior probability bias was conservative; they were sometimes risky at high levels. The amount of conservatism was related to the diagnostic impact of the data processed, and the prior probability bias affected the amount of information subjects bought for a decision favored by the bias.

Effects of diagnosticity and prior odds on conservatism in a bookbag-and-pokerchip situation

This bookbag-and-pokerchip experiment examined effects of prior odds (Ω 0), bag composition ( p r ), sample size ( r+ b), and the difference between red and blue chips in the sample ( r− b), on the deviation of the actual behavior from the prediction of Bayes' theorem. The responses of the Ss were transformed in such a way that if the Ss estimated as predicted by Bayes' theorem, their responses would equal 0.50. On these transformed responses — ψ ( T) — an analysis of variance was performed and the proportion of variance caused by each source was estimated. The results show (1) that the proportion of variance due to the Ss is small; (2) that ( r+ b) did not account for any variance; (3) that approximately 80 % of the variance can be ascribed to the sources ( r− b) and p r ×( r− b); (4) that the departure from the prediction, considered as conservatism, can be fitted well by log Φ( T)= A+ B( r− b), where Φ(T)= (ψ(T)) (1−ψ(T)) ; (5) that A is a function of Ω 0 and B a function of p r . It is suggested that the frequently found influence of ( r+ b) on the amount of conservatism is in fact a result of ( r− b). The results seem to support the misperception hypothesis and are incompatible with the misaggregation hypothesis and the response bias hypothesis.