Local Audit Research Articles

Karakteristik Pemerintah Daerah, Opini dan Ketepatwaktuan Laporan Keuangan di Indonesia

This research is aimed to examine the impact of local governmental characteristics and audit opinion on the timeliness of local governmental financial statement. The characteristics of local governmental will be measured by using the size of the area, regional wealth (PAD), status and governmental spending. All of the samples are 453 City across Indonesia that has profile report as regulated by BPK database. The results showed the size of local governmental had positive effect totimeliness but the governmental revenue had negative effect. The others variables, governmental status, governmental spending and audit opinion, had no significant effect to timeliness

A new Chapter for the Association of Coloproctology of Great Britain and Ireland

The Coronavirus pandemic has significantly impacted on the practice of colorectal surgery and other branches of medicine. In addition to disrupting patient care at every level, it has also decimated the normal business and structures that maintain the high quality of care that our patients expect. These vary from local departmental audits to the function of learned societies such as the Association of Coloproctology of Great Britain and Ireland. During this challenging and rapidly evolving era, clinicians crave communication and being connected to their peers.

Are Measures of an Audit Firm's Competitive Position in Local Markets Robust?

Recent studies determining the effect of audit market competition on firm level audit fees have developed novel measures of an audit firm’s relative competitive position. Numan and Willekens (2012) find a relationship between audit fees and the ‘industry market share distance to the closest competitor’. Chu et al. (2018) provide evidence that suggests smaller incumbent auditors are pressured into offering lower fees when competing against a large local audit firm. These results are important to regulators and antitrust authorities that seek to understand the implications of a market dominated by a few large audit firms. We demonstrate that competition measures employed in these audit pricing studies are endogenous by construction and that their relationship with audit fees is due to ‘mathematical coupling’. A series of simulations demonstrate that the coefficients of local competitive position measures are subject to simultaneity bias. We employ the instrumental variable (IV) regression method to account for simultaneity bias. Using ‘strong’ instruments, our IV regression results indicate that local competition measures are unrelated to audit fees after controlling for simultaneity bias. Our findings have import for audit pricing studies where explanatory variables are constructed which contain contemporaneous audit fee components.

Office-Client Balance and Metro Area Audit Market Competition

SUMMARYWe propose a new audit supplier competition construct, the Office-Client Balance (OCB), which consists of the relative abundance of competing audit offices and audit clients in a metropolitan (metro) area. From this construct, we derive a metro level audit competition proxy reflecting surpluses or shortfalls of total metro audit office numbers relative to the national metro OCB norm: the OCB_TOT. Consistent with the predictions of Porter's Five Forces theory, we find that OCB_TOT is associated with lower fees, more auditor turnover, and more (less) office exits (entrances) in metro audit markets. These findings validate OCB_TOT as a proxy for audit market competition. Our results indicate that greater metro level competition among auditors (more positive OCB_TOT) is associated with higher audit quality, proxied by fewer financial statement misstatements. Several additional analyses suggest that OCB_TOT is useful in explaining clients' choices of local (versus remote) audit offices and Big 4 (versus non-Big 4) offices.Data Availability: Data used in this study are available from public sources.JEL Classifications: G18; L10; M42.

Colles’ type distal radial fractures undergoing manipulation in the ED: a multicentre observational cohort study

BackgroundColles’ type fractures of the distal radius are one of the most commonly manipulated fractures in the ED. Local audit data suggest that a high proportion of these injuries undergo...

Predicting auditors' opinions using financial ratios and non-financial metrics: evidence from Iran

PurposeThe purpose of the paper is to investigate the extent to which a model based on financial and non-financial variables predicts auditors' decisions to issue qualified audit reports in the case of companies listed on the Tehran Stock Exchange (TSE).Design/methodology/approachThe authors utilized data from the financial statements of 96 Iranian firms as the sample over a period of five years (2012–2016). A total of 480 observations were analysed using a probit model through 11 primary financial ratios accompanying non-financial variables, including the type of audit firm, auditor turnover and corporate performance, which affect the issuance of audit reports.FindingsThe results demonstrated high explanatory power of financial ratios and type of audit firm (the national audit organization vs other local audit firms) in explaining qualifications through audit reports. The predictive accuracy of the estimated model is evaluated using a regression model for the probabilities of qualified and clean opinions. The model is reliable, with 72.9% accuracy in classifying the total sample correctly to explain changes in the auditor's opinion.Research limitations/implicationsThis study contains some limitations. First, it is likely that similar researches in developed countries set a large sample (e.g. over 1,000 firms) including more years, but the authors cannot follow such a trend due to data access restrictions. Second, banks and financial institutions, investment and holding firms are removed from the sample, because their financial structure is diverse. The third limitation of the study represents the different economic and cultural conditions of Iran compared to other countries. Future studies could focus on internal control material weaknesses or earnings management to predict audit opinion in emerging economies including Iran.Practical implicationsThe paper has practical implications and can assist auditors in identifying factors motivating audit report qualifications, mainly in emerging economies.Originality/valueThe paper contributes to auditing research, since very little is known about the determinants of audit opinion in emerging markets including Iran; it also constitutes an addition to previous knowledge about audit opinion in the context of TSE. The paper is one of the rare studies predicting auditor opinions using both financial variables and non-financial metrics.

SO016SPREAD OF ACUTE KIDNEY INJURY IMPROVEMENT PROGAMME ACROSS A LARGE MULTI SITED NHS HOSPITAL

Abstract Background and Aims Acute kidney injury (AKI) is a widely recognised serious health care issue. Up to 25% of hospital patients can develop it, with worse outcomes compared non AKI. A UK–wide audit in 2009 and our local audit in 2014 showed consistently poor AKI care including delays in detection and inconsistent management of cases. The trust set up the AKI Team in 2014 to improve AKI detection, care and outcomes. Successful implementation of a Multifaceted Quality Improvement (QI) Programme for AKI across the main hospital campus since 2015 saw significant improvement in AKI care and outcomes; recognition within 24hrs improved from 52% to 100% since 2016; there has been a 34% reduction in AKI incidence, 26% reduction in AKI length of stay (LoS) ,42% reduction in AKI days (time to recovery) and 10% less AKI associated mortality. The Trust being one of the largest acute trusts in the UK (10 hospitals across 6 sites, over 2000 beds), the QI spread represented a formidable challenge. We describe the methodology and outcomes of AKI QI spread across the trust. Method Central Campus Hospitals Improvement on this site involved setting a bespoke electronic alert coupled with education, key stake holder engagement, gradual culture change and AKI Priority Care Checklist (PCC) and use of change agent (AKI Clinical Nurse Specialist-CNS) visiting local teams and empowering them to manage AKI using Demming’s Model for Improvement A stepwise staggered similar approach was implemented first in the Women’s and Eye Hospitals followed by Children’s Hospital after a local adaptation and testing of algorithm, PCC and appointment of local change agent, a Paediatric AKI CNS. West Campus Hospital A DGH with 230 beds, 1-2 incident cases of AKI/day required a bespoke approach. The central AKI team runs an AKI alerts report and remotely alert the local multidisciplinary teams and empowering them to implement the PCC. South Campus Hospitals A large tertiary hospital merged in 2018 with an existing AKI CNS team. Detection algorithms, education material, PCC, reporting, and approach have been progressively harmonized using the Central Campus model. Data is expressed using SPC charts and analysed by t-test. Results Care process and outcome measures have seen a consistent improvement across all sites. As reported in the Central Campus, recognition of AKI within 24hrs has improved from 52% to 100% since 2016; there has been a 34% reduction in AKI incidence (p<0.00001), 26% reduction in AKI LoS and a 42% reduction in AKI days (time to recovery). The Children’s Hospital had 24% reduction (p<0.0001) in AKI incidence and a 34% reduction in hospital acquired AKI. Recognition of AKI has improved from 42% to 100%; 15% reduction in AKI LoS and 22% reduction in AKI days. In the South Campus recognition of AKI has improved from 67% to 100% and 19% reduction (p<0.0015) in AKI incidence. LoS and AKI days data yet to be reported whilst IT systems are been harmonised. In West Campus recognition is 100% but the small numbers prevent any meaningful analysis of other outcomes. Conclusion This study demonstrates how a cluster of simple interventions and approach to AKI detection and care were successfully rolled out across a multisite large complex acute care organization taking into account the local realities of each site/Hospitals whilst maintaining the core interventions.

P046: Breast patients aged 30 years and under: Are we over investigating?

Introduction: Current guidelines advise biopsy of lumps in women under 25 years of age are not indicated if benign criteria are met. Robust local audit may allow for an increase in age cut-off. A retrospective review of patients aged 25-30 years undergoing biopsy to see if a new local protocol with a biopsy cut-off age of 30 years would be safe. A reduction in performing invasive procedures offers benefits of timesaving, reduced patient anxiety and cost savings.

P036: Local audit of clinical outcomes of new symptom referrals from primary care to park centre for breast care in June 2019

Introduction: Park Centre for Breast Care in Brighton provides triple assessment for East Sussex. The service is burdened but close to complying with 2WW performance standards. In Nottingham, a successful audit (Nottingham Breast Institute, 2019) and creation of a new GP referral proforma reduced the number of referrals by half over a sustained period.

A Machine Learning Approach to Analyzing Corruption in Local Public Finances

Can machine learning support better governance? In the context of Brazilian municipalities, 2001-2012, we have access to detailed accounts of local budgets and audit data on the associated fiscal corruption. Using the budget variables as predictors, we train a tree-based gradient-boosted classifier to predict the presence of corruption in held-out test data. The trained model, when applied to new data, provides a prediction-based measure of corruption that can be used for new empirical analysis or to support policy responses. We validate the empirical usefulness of this measure by replicating and extending some previous empirical evidence on corruption issues in Brazil. We then explore how the predictions can be used to support policies toward corruption. Our policy simulations show that, relative to the status quo policy of random audits, a targeted policy guided by the machine predictions could detect almost twice as many corrupt municipalities for the same audit rate. Similar gains can be achieved for a politically neutral targeting policy that equalizes audit rates across political parties.

The Consequences of Allowing Home Country Auditors to Audit Cross-listed Firms: Evidence from Hong Kong-listed H Share Firms

We examine the consequences of a 2010 Hong Kong regulation that allows Hong Kong-listed H share firms to hire mainland Chinese audit firms to audit their financial reports. The H share firms whose audits require greater local knowledge and whose management and controlling shareholders benefit less from perceived auditor independence are more likely to switch to mainland Chinese auditors after the regulation. Following the regulation, the H share firms experience a reduction in audit fees and frequency of modified audit opinions but there is no evidence of a reduction in financial reporting quality. Further analyses show that the H share firms’ reduced frequency of modified audit opinions is likely a correction of Hong Kong auditors’ conservatism bias rather than a reduction in audit quality. Our results highlight the importance of auditors’ local knowledge and audit market competition in affecting the audit fees and audit quality of cross-listed firms.

Affiliation of local audit firms with Big4 auditors and capital structure: evidence from Indonesia

PurposeThis paper aims to investigate whether the choice for a Big4-affiliated local audit firm affects the capital structure of listed companies in Indonesia, a fast-growing emerging country that is characterized by high information asymmetry and low litigation risk. A unique characteristic of the Indonesian audit environment is that Big4 auditors can only enter the market indirectly through affiliation with a local audit firm.Design/methodology/approachA sample of Indonesian listed companies between 2008 and 2015 is used to investigate this relation using ordinary least squares (OLS). To address the concern that the choice for Big4-affiliated auditors might reflect client characteristics, the authors also perform OLS on a matched sample, using both propensity-score and entropy-balance matching.FindingsAcross all three samples, the authors document that companies audited by a Big4-affiliated local audit firm display lower debt ratios. The authors find no such effect for affiliation with second-tier audit firms. Surprisingly, they find that the negative effect of Big4 affiliation is increasing in client size.Research limitations/implicationsThis study provides evidence of the consequences of hiring Big4 auditors on the perceived information asymmetry by financial markets under extreme conditions: in an environment characterized by low litigation risk and where Big4 auditors can operate only indirectly through affiliation.Practical implicationsThe results of this study are of interest to policymakers, managers and financial stakeholders in emerging countries where external financing is important yet difficult to obtain because of severe information asymmetry. Hiring a Big4 auditor, even only through affiliation, might reduce perceived information asymmetry and increase the access to external equity financing.Originality/valueTo the best of the authors’ knowledge, this study is the first to provide evidence of the effect of Big4 auditors on their clients’ capital structure when they can operate only indirectly through affiliation with a local auditor.

What antimicrobial stewardship strategies do NHS commissioning organizations implement in primary care in England?

To identify and explore strategies that English NHS commissioning organizations implemented to improve antimicrobial stewardship (AMS) within primary care. Questionnaire sent to the medicines management teams (MMTs) of all 209 clinical commissioning groups (CCGs) in England, in 2017. A total of 89% (187/209) of all English CCGs responded to the questionnaire; 74% of responding CCGs (123/167) had a prescribing incentive/engagement scheme, with MMTs representing 88% (90/102) considering incentive schemes successful or very successful for prioritizing AMS in primary care, especially when linked to prescribing NHS Quality Premium indicators. AMS audits were considered successful or very successful by 91% (126/138) of responding CCGs, as they identify reasons for inappropriate prescribing and opportunities for future improvement. All responding MMTs (169/169 CCGs) reported feeding back local/national antimicrobial prescribing data to the general practices they commission, 85% (142/168) to their CCG/Commissioning Support Unit (CSU) board and only 33% (56/169) to out-of-hours services. Benchmarking prescribing data was reported as a powerful tool to engage practices, facilitating an element of competition and peer pressure. National antimicrobial resistance improvement schemes, in particular the NHS England Quality Premium, have influenced CCG improvement priorities. Most CCGs now report successful improvement strategies including the use of both local and national antibiotic prescribing data to motivate improvements; these should be continued and extended to out-of-hours providers. As local audit data have helped to identify reasons for inappropriate prescribing and inform improvement planning, all organizations should adopt this strategy and include it in local quality improvement schemes, ensuring performance reporting to organizational board level.

Pathways to Improve Pediatric Asthma Care: A Multisite, National Study of Emergency Department Asthma Pathway Implementation

To determine the effects of pediatric asthma pathway implementation in a diverse, national sample of emergency departments (EDs). In this quality improvement study, a national sample of EDs were provided pathways to tailor to local needs. Implementation strategies included local champions, external facilitators/mentors, educational seminars, and audit and feedback. Outcomes included systemic corticosteroid administration within 60minutes (primary), assessment of severity at ED triage, chest radiograph use, hospital admission or transfer for higher level of care, and ED length of stay (balancing). Each month, EDs reviewed all charts (to a maximum of 20) of children ages 2-17years with a primary diagnosis of asthma. Analyses were done using multilevel regression models with an interrupted time-series approach, adjusting for patient characteristics. We enrolled 83 EDs (37 in children's hospitals, 46 in community hospitals) and 61 (73%) completed the study (n=22 963 visits). Pathway implementation was associated with significantly increased odds of systemic corticosteroid administration within 60minutes of arrival (aOR, 1.26; 95% CI, 1.02-1.55), increased odds of severity assessment at triage (aOR, 1.88; 95% CI, 1.22-2.90), and decreased rate of change in odds of hospital admission/transfer (aOR, 0.97; 95% CI, 0.95-0.99). Pathway implementation was not associated with chest radiograph use or ED length of stay. Pathway implementation was associated with improved quality of care for children with asthma in a diverse, national group of EDs.

A Dual-Center Observational Review of Hospital-Based Palliative Care in Patients Dying With COVID-19

The current coronavirus disease 2019 (COVID-19) pandemic has put significant strain on all aspects of health care delivery, including palliative care services. Given the high mortality from this disease, particularly in the more vulnerable members of society, it is important to examine how best to deliver a high standard of end-of-life care during this crisis. This case series collected data from two acute hospitals examining the management of patients diagnosed with COVID-19 who subsequently died (n = 36) and compared this with national and local end-of-life audit data for all other deaths. Our results demonstrated a shorter dying phase (38.25 hours vs. 74 hours) and higher rates of syringe driver use (72% vs. 33% in local audits), although with similar average mediation doses. Of note was the significant heterogeneity in the phenotype of deterioration in the dying phase, two distinct patterns emerged, with one group demonstrating severe illness with a short interval between symptom onset and death and another group presenting with a more protracted deterioration. This brief report suggests a spectrum of mode of dying. Overall, the cohort reflects previously described experiences, with increased frailty (median Clinical Frailty Scale score of 5) and extensive comorbidity burden. This brief report provides clinicians with a contemporaneous overview of our experience, knowledge, and pattern recognition when caring for people with COVID-19 and highlights the value of proactive identification of patients and risk of deterioration and palliation.

Joint audits and mutual ties of audit firm networks

There has been a lively debate following the 2007 financial crisis regarding the role of joint audits. Prior research argues that joint audits may improve audit quality because of shared audit efforts. However, empirical evidence has been inconclusive. To gain insight into how Big 4 audit firm imprimaturs have become a source of legitimacy in the audit industry, this article investigates how audit networks drive the audit industry in Saudi Arabia. Based on the application of quantitative and qualitative research methods, we conclude that the Big 4 audit firms have strong mutual ties, but ties with other local and international audit firms are weak. We also find the oligopolistic nature of the Big 4 audit firms and international audit firms. Specifically, Ernst & Young, KPMG, PwC, and PKF are controlling over 68% of the audit market. Interviews with accounting professionals suggest that several benefits of joint audits exist, but certain additional costs are also implicated. Our findings are particularly relevant for regulators and local and international policymakers in rethinking and evaluating the appropriateness of either the mandatory or voluntary nature of joint audits in developing countries.

LO33: Sharing and teaching electrocardiograms to minimize infarction

Background: Every 30-minute delay to ST-Elevation Myocardial Infarction (STEMI) reperfusion increases one-year mortality by 7.5%. A local audit found that the third of patient electrocardiograms (ECGs) not initially meeting classic STEMI criteria had an ECG-to-Activation (ETA) time of over 90 minutes, more than five times that of classic STEMIs. However, three quarters of “STEMI negative” ECGs met STEMI-equivalent patterns or rules for subtle occlusion, uncovering an opportunity for improvement. Aim Statement: We aimed to reduce ETA time, from initial emergency department (ED) ECG to activation of the cath lab, for patients whose ECGs did not meet classic STEMI criteria, by 30 minutes within one year (i.e. by Dec 2019). Measures & Design: We reviewed all ED Code STEMIs over a 35-month pre-intervention period. Root Cause analyses, including Ishikawa diagram and Pareto chart, led to our Plan-Do-Study-Act cycles: 1) a survey to engage our team; 2) a Grand Rounds presentation as an educational strategy; and 3) weekly web-based feedback to all ED physicians on STEMI-equivalents and subtle occlusions, using recent local cases. Our outcome measures were ETA times, stratified by ECGs not initially meeting STEMI criteria (primary) and those that did (secondary). Our process measures were the number of website visits and page views. Our balancing measure was the proportion of Code STEMIs without culprit lesion. We used Statistical Process Control (SPC) charts with usual special cause variation rules. Evaluation/Results: ETA time for the 37.5% of 56 ECGs that did not meet classic STEMI criteria decreased from 97.5 to 53.7 minutes (min), a 43.8-min absolute decrease (p = 0.037), while those meeting STEMI criteria remained the same (16.5 to 18.2min, p = 0.75). SPC charts did not show special cause variation. There were 2,634 page views (65.9/week) and 1,092 visits (27.3/week), in a group of 80 physicians—i.e. a third of the group each week. There was no change in Code STEMIs without culprit lesions (28.0 % to 23.3%, p = 0.41). Discussion/Impact: We reduced ETA time by 43.8min for the one third of patients with culprit lesions not initially meeting classic STEMI criteria, a magnitude associated with mortality impact. To do so, we used a multi-modal educational strategy including a novel web-based feedback approach to all ED physicians. Local feedback and education on this challenging-to-diagnose subgroup, guided by ETA time as a quality metric, could be replicated in other centres.

FAKTOR-FAKTOR YANG MEMPENGARUHI KINERJA KEUANGAN PEMERINTAH DAERAH: STUDI META-ANALISIS

The purpose of this study is to identify the determinants of local government’s financial performance. This research employsa meta-analysis technique with a sample consisting of 33 articles from academic journals, graduate and undergraduate students’ theses reporting on local government’s financial performances in Indonesia published from 2006 to 2016. The results of the study demonstrate that there are five factors affecting local government’s financial performance, that isthe level of the region’s wealth, the size of the local government, leverage, local tax revenue and audit findings. On the other hand, the dependence level,capital expenditure, and legislative size are not shown to be factors local government’s financial performance.

Dynamic Auditor Competition and Audit Quality in the United States

Regulators and audit market participants have concerned that less competitive audit market makes auditors to reduce the incentives to conduct high-quality audits. While a few studies examine the effect of competition in the U.S. local audit markets, they report conflicting evidence using the static Herfindahl index which is arguably noisy in capturing the intensity of competition. The purpose of this paper is to provide evidence on the effect of dynamic auditor competition in local audit markets on audit quality. For this purpose, we employ a measure to capture the dynamic nature of audit market competition: the proportion of clients switching auditors in the local market. Employing this measure, we find evidence suggesting a positive relation between auditor competition and audit quality and that the relation is stronger in large MSAs and for clients whose relative importance to audit office is smaller. This paper adds to the competition-audit quality literature by utilizing dynamic measures of audit market structure. In addition, the findings in this paper provide important evidence in response to the regulatory concerns that low competition is harmful to audit quality in a sense that it can cause auditor complacency and less rigorous audit procedures.

AUDIT QUALITY, GOVERNANCE MECHANISMS AND EARNINGS MANAGEMENT OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

Corporate failures across the globe have become an issue of concern for stakeholders andregulators. Financial reporting scandals that occurred in oceanic bank, intercontinental bank andthe recent bank crises of Skye Bank in 2016 really motivated the need for this study. The studyexamines audit quality, governance mechanism and earnings management of listed deposit moneybanks in Nigeria for the period of eleven years from 2009-2019. The population of the study consistsof all the 14 listed deposit money banks in Nigeria as at 31st December, 2019. The study adoptedexpo-factor and correlation research designs, and multiple regression was employed as techniqueof data analysis. The findings of the study revealed that audit independence, managerial ownershipand board independent have significant negative impact on earnings management of quotedNigerian banks while auditor size and audit tenure have insignificant influence on earningsmanagement of listed deposit money banks in Nigeria. In line with the findings, the study thereforeconcluded that audit independence, managerial ownership and board independence havesignificant negative impact on earnings management of banks in Nigeria while audit firm size andaudit tenure have no significant impact on earnings management of listed deposit money banks inNigeria. It is therefore recommended that Nigeria listed deposit money banks should maintain theaudit fees they are paying to the audit firm or increase it as any attempt to reduce the audit fees canincrease earnings management. However managerial shareholding should be increase as it willreduce earnings management and also board independent directors on the board should beincreased from minimum of two as it will reduce earnings management of listed deposit moneybanks in Nigeria on the other hand there is no significant impact between audit firm tenure andaudit firm size on earnings management of listed deposit money banks in Nigeria. For audit firmsize the study recommended that local audit firms should be used instead of the Big 4 as the size have no effect on earnings management. Also the study recommended that for audit tenure the bankshould maintain its audit tenure as it does not have any influence on earnings management.