Joint Provision Research Articles

Excluded from the institutional habitus: the joint student experience

This article examines the student experience for a particular cohort, namely the joint honours students, at a post-1992 university in the United Kingdom. These students are enrolled in degree courses that combine two subjects at one university. Little attention has so far been given to such students whose experience is decidedly different from that of single honours students. By using a mixed methodology including quantitative and qualitative questionnaires, focus groups, individual interview and ethnography, the article attempts to highlight elements of the student experience that are unique to the joint provision. It will draw on the concept of ‘institutional habitus’ to argue that joint honours students experience their time at university often in isolation and as excluded from the institutional norm.

DISCUSSION OF Do Auditor-Provided Tax Services Enhance or Impair the Value Relevance of Earnings?

K rishnan, Visvanathan, and Yu (2013) (hereafter, KVY) fill a relevant gap in the burgeoning auditor-provided tax services (ATS) literature by examining investor perception of the costs and benefits of ATS. Prior and contemporaneous studies have investigated the influence of ATS on tax avoidance, financial statement quality, and creditor perception, but a study of the influence of ATS on value relevance was missing from the literature until now. KVY provide evidence that the value relevance of earnings is positively associated with the ratio of tax fees to total fees paid to auditors.

Case analysis of simultaneous concessions of parking meters and underground parking facilities

The ongoing discussions of a city, where potential bidders for the concessions of on-street and off-street parking questioned separate bids procedures recalled our attention; in addition, willing to satisfy public demands the municipality planed to keep free spaces in the same area. In this article we assess the impact of joint concessions of parking meters and underground parking facilities, firstly by considering a radial pattern around the location of the underground facility, and secondly by proposing GA which analyzes different patterns. The results corroborate that providing free parking generates excess demand and high cruising for parking. Furthermore, they support joint provision of above ground and underground parking concessions because otherwise there can be too high level of competition in a small area, which may erode potential bidders incentives -specially when local authorities expect that the concession rights be reinvested into social needs.

Earnings Management around Large Equity Increases: Do Audit Firm Size and Non-Audit Services Matter?

We investigate how audit firm size and large auditor-provided non-audit services (NAS) affect accruals quality around large equity issues and acquisitions for Norwegian public companies from 1999-2013. We find poorer accruals quality around large equity increases. Big 4 audit firms mitigate adverse accruals quality but only if the provision of NAS is moderate or low. In contrast, non-Big 4 audit firms are associated with lower accruals quality around large equity increases, but this effect is moderated if the provision of NAS is high. The findings are consistent with joint provision of audit and NAS as an effective learning mechanism to mitigate earnings management for smaller audit firms and a lesser willingness of larger audit firms to protect earnings when the provision of NAS is high. The evidence contrasts with the notion of large audit firms as universally superior audit quality suppliers and establishes new evidence on how knowledge spillovers from NAS may improve audit quality.

Joint provision of external audit and non-audit services: empirical test of alternative hypotheses

Providing jointly external audit and non-audit services to the same client-company remains a major dilemma for the accounting profession. However, recent professional ethics reforms by the IFAC and the AICPA on networks of firms may have offered a new solution to the problem. However, in search for the best solution to the problem, we test the following three alternative hypotheses: 1) a same CPA firm provides jointly both services by using separate personnel teams; 2) a same CPA firm provides jointly both services by using two separate specialised divisions; 3) two legally distinct CPA firms, both members of the same network of CPA firms, provide one the external audit and the other the non-audit services. Dependent variables of interest are: 1) perceived audit firm’s independence; 2) perceived firm’s external audit quality, while the independent variable is the type of solution tested: solution 1, solution 2, or solution 3. The empirical results revealed, as hypothesised, the two-network firms arrangeme...

Contraception and Clean Needles: Feasibility of Combining Mobile Reproductive Health and Needle Exchange Services for Female Exotic Dancers

Young women engaged in exotic dancing have a higher need for reproductive health services than women not in this profession, and many also use drugs or exchange sex for money or drugs. Few report receiving reproductive health services. We describe a public health, academic, and community partnership that provided reproductive health services on needle exchange mobile vans in the "red light district" in downtown Baltimore, Maryland. Women made 220 visits to the vans in the first 21 months of the program's operation, and 65% of these visits involved provision of contraception. Programmatic costs were feasible. Joint provision of needle exchange and reproductive health services targeting exotic dancers has the potential to reduce unintended pregnancies and link pregnant, substance-abusing women to reproductive care, and such programs should be implemented more widely.

Non‐Audit Service Fees and Financial Reporting Quality: A Meta‐Analysis

Auditing as a corporate governance mechanism has attracted considerable research attention. Because of the information asymmetry between corporate managers and outside shareholders, auditors are hired to provide independent assurance that financial statements are prepared following generally accepted accounting principles. The credibility of such assurance depends on the independence, both in fact and in appearance, of the auditor. Over the years, however, the independence of auditors has come under increased scrutiny because of their joint provision of both audit and non‐audit services. A sizable literature on the impact of non‐audit fees on financial reporting quality has developed. The evidence from this literature, however, remains inconclusive. This paper provides a meta‐analysis of the available literature by assessing (a) the net effect of non‐audit fees on financial reporting quality, and (b) whether there is homogeneity in the financial reporting quality proxies used in the extant literature. Findings suggest that the level of client‐specific non‐audit fees is associated with reduced financial reporting quality. However, the underlying studies used to conduct this meta‐analysis are not homogenous.

Consulting revenue sharing, auditor effort and independence, and the regulation of auditor compensation

The joint provision of audit and non-audit services by audit firms to their audit clients has posed a threat to auditor independence. To mitigate the independence problem, the US Securities and Exchange Commission (SEC) issued a regulation (SEC, 2003) that prohibits audit partners from receiving compensation for the sale of non-audit services to their audit clients. This study examines the effects of this regulatory change on the effort and reporting decisions of audit partners. We show that partners in an audit firm strategically change the firm’s liability-sharing rule. As a consequence, the regulation restores truthful reporting but has an undesirable negative effect on audit effort. The effect of the regulation on the welfare of the economy (defined as the total payoff to both audit firms and their clients) hinges on the tradeoff between the benefit of the regulation, which is derived from the inducement of truthful reporting, and the cost of the regulation, which results from less diligent audit work. We show that the regulation is more likely to increase the welfare in a strong legal regime (where the legal liability cost of auditor litigation is high) than in a weak legal regime.

Reexamining the Relationship Between Audit and Nonaudit Fees

The authors introduce some new econometric tests and techniques for identifying and overcoming the problem of weak instruments in the context of joint provision of audit and nonaudit fees. The authors use this context because identifying appropriate instruments is difficult due to the lack of theoretical guidance as well as due to the difficulty in intuitively identifying instruments that satisfy the econometric requirements. The authors introduce a battery of empirical tests based on recent developments in econometrics to test for the appropriateness of the instruments. The authors then illustrate two approaches of using instruments from existing data: the size industry average portfolio approach and the synthetic-instrument approach. Although the approach using synthetic instruments sidesteps issues of identifying proxies with desirable properties, it requires some stringent assumptions that cannot be directly tested. However, as a methodological alternative, this approach can be used for robustness tests. The authors find that when the instruments are not weak, audit and nonaudit fees are positively associated. This relationship holds for audit and tax-related nonaudit fees as well. Overall, the evidence suggests the existence of economies of scope benefits from the joint supply of audit and nonaudit services. Methodologically, the authors illustrate the importance of testing the appropriateness of the instruments utilized when accounting for endogeneity.

The Demand for Non‐Audit Services and Auditor‐Client Relationships: Evidence from Swedish Small and Medium‐Sized Enterprises

The joint provision of audit and non‐audit services by incumbent auditors has been intensively debated in the literature. The basic issue is that, while non‐audit services can impair auditor independence, knowledge spillovers from these services can reduce the audit cost. This is an important trade‐off for small and medium‐sized enterprises (SMEs) that depend on their auditors for non‐audit services. Using data from 322 Swedish SMEs, this study investigates the choice of purchasing non‐audit services from the incumbent auditor and other audit firms. We hypothesize, and find, that the length of the auditor‐client relationship is positively related to the purchase of non‐audit services from incumbent auditors. Also, we find a positive association between perceived quality of audit services and the likelihood of a client purchasing non‐audit services from the auditor. However, unlike studies of publicly traded companies, agency variables do not drive the purchase of non‐audit services by SMEs.

Auditor independence

PurposeThe purpose of the paper is to examine the extent to which there is shared meaning of the concept of auditor independence between the three major groups of parties on the demand and supply sides of the audit services market – auditors, financial report preparers and financial report users.Design/methodology/approachThe paper utilises the measurement of meaning framework (semantic differential analysis) originally proposed by Osgood et al. in 1957. The framework is used to investigate the extent to which there is shared meaning (agreement in interpretations) of the independence concept, in response to alternative audit engagement case contexts, between key parties to the financial reporting communication process. The study's research data was collected in the period March 2004‐May 2005.FindingsFindings indicate a robust and stable single‐factor cognitive structure within which the research participants interpret the connotative meaning of the auditor independence concept. An analysis of the experimental cases finds similarities in connotations (interpretations) of an audit firm's independence for the participant groups for most cases, with the exception of cases involving the joint provision of audit and non‐audit (taxation) services.Research limitations/implicationsThe usual external validity threat that applies to experimental research generally applies to the study. That is, the results may not be generalisable to settings beyond those examined in the study. An important implication of the study is that it emphasises the continuing problematic nature of the joint provision of audit and non‐audit services, even in situations where the non‐audit services comprise only traditional taxation services.Originality/valueThe study is the first to examine the concept of auditor independence by means of the Osgood et al. measurement of meaning research framework using, as research participants, the three major groups on the demand and supply sides of the audit services market.

UK investors’ perceptions of auditor independence

The auditor’s role in society is that of validating the truth and fairness of financial statements. If owners of organisations doubt the auditor’s independence, financial statements will lack credibility. This questionnaire-based study investigated how investors perceive three potentially independence-impairing auditor–client relationships: the joint provision of audit and non-audit services, an audit firm’s economic dependence upon a client and long-term relationships between auditor and client. The objective was to determine whether, after a series of high-profile corporate collapses, owners retain faith in the integrity of the auditor. The results suggest that economic dependence and the provision of non-audit services are perceived as greater threats to auditor independence than long-term relationships between the auditor and client.

Non‐audit services and knowledge spillovers

PurposeThe accounting profession has argued strongly against claims that the provision of non‐audit services to audit clients leads to impaired auditor independence, instead claiming that the joint provision of non‐audit services and audit services creates knowledge spillovers that lead to a more efficient audit. This paper seeks to provide evidence concerning knowledge spillovers by examining the association between the audit report lag and non‐audit services.Design/methodology/approachThe authors obtained a sample of 260 firm‐year observations from the financial reports of New Zealand public companies over the period 2004‐2005 and tested for associations between non‐audit services and audit report lag, controlling for other variables.FindingsThe paper finds evidence that non‐audit services are associated with a shorter audit report lag, but that this occurs in a subsequent period, not in the year in which the services are provided.Practical implicationsThe results suggest that firms purchasing non‐audit services from their incumbent auditors benefit from knowledge spillovers by achieving a shorter audit report lag, but not immediately.Originality/valuePrevious studies have examined whether there is a relationship between non‐audit services and audit report lag in the concurrent period. This paper extends tests to also examine the relationship between NAS in one year and the audit in a subsequent year. These results are more consistent with knowledge spillovers that allow a more efficient audit than they are with loss of independence by the auditor, because loss of independence would take effect immediately, while knowledge spillovers might take time.

Further evidence on knowledge spillover and the joint determination of audit and non‐audit fees

PurposeFor more than 25 years auditing research has examined whether knowledge spillovers or synergies exist from the joint provision of audit and non‐audit services as well as whether the audit client benefits from knowledge spillovers. However, empirical evidence on knowledge spillover remains mixed and elusive. This article seeks to contribute to this debate, using a large sample covering both the pre‐ and the post‐Sarbanes‐Oxley Act (SOX) era. A post‐SOX focus can be potentially informative because SOX has fundamentally changed the mix of audit and non‐audit services that can be offered to audit clients.Design/methodology/approachA two‐stage least squares regression model is used to control for simultaneous bias due to the joint determination of audit and non‐audit fees. A panel dataset is also used.FindingsA strong and significant negative relationship is found between audit fees and non‐audit fees. The results suggest that knowledge spillover flows from non‐audit to the audit side, as well as from the audit side to the non‐audit side. For the overall sample, a 1 percent increase in non‐audit fees is associated with a 0.59 percent decrease in audit fees. Similarly, a 1 percent increase in audit fees is associated with a 0.49 percent decrease in non‐audit fees.Research limitations/implicationsThough a comprehensive set of determinants of audit and non‐audit fees is used, it is possible that the model may not include some other unknown determinants of fees paid to auditors.Practical implicationsThe study contributes to the debate on whether regulators should ban all non‐audit services. It is found that when the same audit firm performs both audit and non‐audit services, there are synergies, i.e. insight learned from performing one function helps the other.Social implicationsAt the economy level, the findings suggest that cost savings, due to knowledge spillover, are partly passed on to the clients, particularly by Big 4 auditors.Originality/valueThe findings on the existence of knowledge spillover in the post‐SOX era are potentially informative to regulators, auditors, audit clients, and audit committee members.

Non-Audit Services and Knowledge Spillovers: An Investigation of the Audit Report Lag

The accounting profession has argued strongly against claims that the provision of non-audit services to audit clients leads to impaired auditor independence, instead claiming that the joint provision of non-audit services and audit services creates knowledge spillovers that lead to a more efficient audit. In this paper, we seek to provide evidence concerning knowledge spillovers by examining the association between the audit report lag and non-audit services. We obtain a sample of 260 firm-year observations from the financial reports of New Zealand public companies over the period 2004-2005 and test for associations between non-audit services and audit report lag, controlling for other variables. We find evidence that non-audit services are associated with a shorter audit report lag, but that this occurs in a subsequent period, not in the year in which the services are provided. The results suggest that firms purchasing non-audit services from their incumbent auditors benefit from knowledge spillovers in the form of a shorter audit report lag, but not immediately. Previous studies have examined whether there is a relationship between non-audit services and audit report lag in the concurrent period. We extend tests to also examine the relationship between NAS in one year and the audit in a subsequent year. These results are more consistent with knowledge spillovers (that allow a more efficient audit) than they are with loss of independence by the auditor, because loss of independence would take effect immediately, while knowledge spillovers might take time.

Non-audit services and perceived auditor's independence: empirical evidence from an emerging market

This study examines the impact of joint provision of audit and non-audit services on investors' perceptions of auditor independence in Egypt as one of emerging markets. The findings of the study reveal that investors' perceptions of auditor independence, reliability of financial statements and investment decision are lower when auditor provides both audit and non-audit services compared to the situation in which auditor provides audit service only. The findings also reveal that investors' perceptions of auditor independence, reliability of financial statements and investment decision are lower when non-audit services are provided by the same staff performing financial statements audit.

Nonaudit services provided by incumbent auditors and earnings management: Evidence of auditor independence from an EU country

ABSTRACTThis paper examines whether the joint provision of audit and non-audit services undermines auditor independence by testing for an association between the provision of consulting services and auditor independence measured by discretionary accruals. For the most part, previous literature has studied the issue in countries with an Anglo-American business environment. This study analyzes the possible impairment of auditor independence in the context of a continental European Union country (Spain). A cross-sectional regression is estimated to test the relationship between non-audit fees and reporting quality. Based on publicly available information for Spanish listed companies, the evidence suggests that there is no statistically significant association between non-audit fees and earnings management. These findings are consistent with the idea that auditors' objectivity is not impaired by the joint provision of audit and non-audit services.

Improving long-term care provision: towards demand-based care by means of modularity.

BackgroundAs in most fields of health care, societal and political changes encourage suppliers of long-term care to put their clients at the center of care and service provision and become more responsive towards client needs and requirements. However, the diverse, multiple and dynamic nature of demand for long-term care complicates the movement towards demand-based care provision. This paper aims to advance long-term care practice and, to that end, examines the application of modularity. This concept is recognized in a wide range of product and service settings for its ability to design demand-based products and processes.MethodsStarting from the basic dimensions of modularity, we use qualitative research to explore the use and application of modularity principles in the current working practices and processes of four organizations in the field of long-term care for the elderly. In-depth semi-structured interviews were conducted with 38 key informants and triangulated with document research and observation. Data was analyzed thematically by means of coding and subsequent exploration of patterns. Data analysis was facilitated by qualitative analysis software.ResultsOur data suggest that a modular setup of supply is employed in the arrangement of care and service supply and assists providers of long-term care in providing their clients with choice options and variation. In addition, modularization of the needs assessment and package specification process allows the case organizations to manage client involvement but still provide customized packages of care and services.ConclusionThe adequate setup of an organization's supply and its specification phase activities are indispensible for long-term care providers who aim to do better in terms of quality and efficiency. Moreover, long-term care providers could benefit from joint provision of care and services by means of modular working teams. Based upon our findings, we are able to elaborate on how to further enable demand-based provision of long-term care by means of modularity.

Reexamining the Relation Between Audit and Non-Audit Fees: Dealing with Weak Instruments in Two-Stage Least Squares Estimation

We introduce some new econometric tests and techniques for identifying and overcoming the problem of weak instruments in the context of joint provision of audit and non-audit fees. We use this context because identifying appropriate instruments is difficult due to the lack of theoretical guidance as well as the difficulty in intuitively identifying instruments that satisfy the econometric requirements. We introduce a battery of empirical tests based on recent developments in econometrics to test for the appropriateness of the instruments. We then illustrate two approaches of using instruments from existing data: the size-industry average portfolio approach and the synthetic instrument approach. While the approach using synthetic instruments side-steps issues of identifying proxies with desirable properties, it requires some stringent assumptions that cannot be directly tested. However, as a methodological alternative, this approach can be used for robustness tests. We find that when the instruments are not weak, audit and non-audit fees are positively associated. This relationship holds for audit and tax-related non-audit fees as well. Overall, the evidence suggests the existence of economies of scope benefits from the joint supply of audit and non-audit services. Methodologically, we illustrate the importance of testing the appropriateness of the instruments utilized when accounting for endogeneity.

Corporate Criminal Liability and Guilt Principle - a landmark ruling on joint provision and review on guilt principle -

Corporate Criminal Liability and Guilt Principle - a landmark ruling on joint provision and review on guilt principle -