Small Audit Research Articles

Acute Urinary Retention Guidelines – are they Worth it?

Objective Many district general hospitals in the UK do not have 24-hour urology cover and the junior doctors admit almost all patients with acute urinary retention (AUR) unnecessarily. A small retrospective audit involving a random selection of 17 patients who initially presented with AUR to accident and emergency (A&E) and eventually underwent transurethral resection of the prostate (TURP) between January 2002 and May 2002 showed that four (23%) were admitted unnecessarily and only a few patients had digital rectal examination and antibiotic prophylaxis. Guidelines were prepared to assist the junior doctors in managing patients with AUR. The guidelines were audited to assess how they worked. Methods A total of 32 patients with AUR were managed using the guideline from June 2002 to December 2002 and the details were collected prospectively from A&E referral letters; three patients were excluded. Results After implementation of the guideline, the majority of patients went home with a catheter (86%), and the number of digital rectal examinations had not increased but antibiotic prophylaxis had improved from 11 to 38%. The number of records of residual urine remained unchanged and residual urine was not documented in seven patients. Therefore, it was not known whether they had very high residual urine needing admission. More patients received alpha-blockers (27%). There were no inappropriate admissions. Conclusion Patients with uncomplicated urinary retention can be managed without admission. Development of guidelines avoids inappropriate admissions and improves efficiency. Education and training of junior doctors in the management of AUR is an absolute necessity to implement these guidelines.

Acute urinary retention guidelines - are they worth it?

ObjectiveMany district general hospitals in the UK do not have 24-hour urology cover and the junior doctors admit almost all patients with acute urinary retention (AUR) unnecessarily. A small retrospective audit involving a random selection of 17 patients who initially presented with AUR to accident and emergency (AE three patients were excluded.ResultsAfter implementation of the guideline, the majority of patients went home with a catheter (86%), and the num...

Perceptions of auditor independence in Barbados

PurposeThe study investigates the perceptions of auditor independence (PAI) between auditors and users in Barbados.Design/methodology/approachA self‐administered questionnaire was adapted and modified from Beattie et al.'s study in the UK the sample included 66 auditors and 148 users. Factors relating to the size and closeness of Barbadian society, lengthy tenure and being a sole audit practitioner, small audit firm, provision of non‐audit services (NAS) among others, were investigated.FindingsEconomic dependence of auditor on the client, the provision of NAS, high competition, small firm size, being a sole practitioner, lengthy tenure and the size and closeness of Barbadian society were found to negatively affect PAI. Auditor independence was perceived to be enhanced by the existence of audit committees, rotation of audit partners, risks to auditor arising from poor quality, regulatory rights and requirements surrounding auditor change and an auditor's right to attend and be heard at the company's annual general meetings.Research limitations/implicationsOwing to the relatively small sample size and small emerging market, these findings should be interpreted with caution.Practical implicationsThis research serves to inform audit related policies and regulation on the potential threats to auditor independence.Originality/valueThis paper contributes to the limited body of research on auditor independence in small developing countries.

Pricing of Initial Audit Engagements by Large and Small Audit Firms*

AbstractWe investigate the extent to which auditors of U.S. companies reduce fees on initial audit engagements (“fee discounting”). We hypothesize that rivalries among sellers, in terms of client turnover and price competition, are more intense among small audit firms. The data support this hypothesis. New clients account for 34 percent of all clients for small audit firms, but only 9 percent of all clients for large audit firms. We theorize that differences in client turnover rates between large and small audit firms can be explained by the market structure of the audit industry, which consists of an oligopolistic segment dominated by a few large audit firms and an atomistic segment composed of many small audit firms. We further hypothesize and confirm that fee discounting is more extensive in the atomistic sector, and our results confirm this hypothesis. Our analysis of audit fee changes indicates that clients who switch auditors within the atomistic sector receive on average a discount of 24 percent over the prior auditor's fee. However, clients who switch auditors within the oligopolistic sector receive on average a discount of only 4 percent. Given that price competition is known to be less intense in oligopolistic markets than in atomistic markets, we believe that market structure theory can explain why fee discounting is lower when larger audit firms compete for clients.

On optimal cartel deterrence policies

This paper studies audit policies designed to deter explicit cartels in the most effective way. We first compare a standard random and stationary audit strategy with a simple deterministic but non stationary strategy; we show that the certainty of an ulterior control may better deter collusion than the recurrent threat of a sword of Damocles that would lead on average to same frequency of audit. We then explore more complex non stationary strategies and show that it is theoretically possible to deter collusion in the whole economy, even with a small audit budget.

Pricing of Initial Audit Engagements by Large and Small Audit Firms

We investigate the extent to which auditors of U.S. companies reduce fees on initial audit engagements (termed 'fee discounting'). We hypothesize that rivalry among sellers, in terms of client turnover and price competition, is more intense among smaller audit firms. The data support this hypothesis. New clients account for 34% of all clients for small audit firms, but only 9% of all clients of larger audit firms. We theorize that the different client turnover rates between large and small audit firms can be explained by the market structure of the audit industry, which consists of an oligopolistic segment dominated by a few large audit firms and an atomistic segment comprised of many small audit firms. Further, we hypothesize and confirm that fee discounting is more extensive in the atomistic sector. The analysis of audit fee changes indicates that clients switching auditors within the atomistic sector get a 24% average discount over the prior auditor's fee. However, clients switching within the oligopolistic sector, receive a discount of only 4%. Since price competition is known to be less intense in oligopolistic compared to atomistic markets, we believe that market structure theory can explain why fee discounting is lower when larger audit firms compete for clients.

Auditor Size, Market Segmentation and Litigation Patterns: A Theoretical Analysis

We provide a theoretical rationale for the observed audit industry structure where well-capitalized auditors hold an extremely large market share. Our analysis focuses on the economics of trading in an adverse selection market where audit quality is unobservable. We show that concentration of market share can arise even if well-capitalized auditors have no relative advantage with regard to supplying high-quality audits, and that the strategy of attracting a narrow base of high-margin clients is typically unsustainable in rational expectations equilibrium. Other results derived from our analysis of strategic competition for clients also conform (qualitatively) with empirical findings regarding audit fee structures and litigation rates. In particular, we show that better-capitalized auditors get a dominant market share, produce more accurate reports and are more profitable. In addition, we show that the imposition of high minimum standards increases the market power of wealthy auditors, even though smaller auditors can potentially provide the same level of audit quality at lower fees. All these results are demonstrated within a framework that endogenizes both a securities trading market and profit-maximizing auditors who strategically compete for clients.

Spinal Cord Stimulation Significantly Improves Refractory Angina Pectoris-A Local Experience: Spinal Cord Stimulation in Refractory Angina

Severe refractory angina pectoris can occur in end-stage coronary artery disease despite maximal medical and revascularization therapy. Spinal cord stimulation is an under-utilized but well-established modality for the treatment of intractable angina pain.To illustrate the practical, beneficial and effective use of spinal cord stimulation as a treatment option for refractory angina in a local context.A case series clinical audit of 11 patients with refractory angina treated with spinal cord stimulation over a one-year period was carried out. Baseline, three-month, six-month and two-year functional assessment data and subjective patient reports on their symptoms were evaluated.Spinal cord stimulation improves six-minute walk distance, exercise duration, New York Heart Association functional class, Likert score, and number of angina free days per week for at least one year over two years of follow-up.Spinal cord stimulation is an effective medium-term treatment option for refractory angina pectoris with significant benefits to functional parameters and patient symptoms. Spinal cord stimulation is an under-utilized but well-established modality for the treatment of intractable angina pain. We report a small case series clinical audit of patients who gained significant functional and symptomatic benefits from this treatment.

The Impact of Enterprise Systems on Audits of Small Entities

Small business integration of enterprise systems affects risks and internal control. Ideally, the use of enterprise systems should enhance internal control. However, enterprise systems can introduce new risks that may go undetected if the auditor does not adequately test system processes. Small audit firms appear more likely than large to place too much reliance on the untested accuracy of computer generated data. To identify trends we have interviewed three independent auditors of small audit firms that audit small businesses that use enterprise systems. We found that none of the firms have formal policies for auditing such company environments.

SOX 404: Unintended Consequences

Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) requires that the management of each public company assess the adequacy of internal controls, and that public accountants issue an attestation report. The framers intended to increase public confidence and reduce accounting misstatements through stronger internal controls and enhanced management and auditor accountability. Recent evidence also indicates significant unintended consequences from SOX, including higher costs than originally anticipated and a negative effect on auditor-client relationships including auditor resignations and dismissals. In this paper, data relating to auditor changes in September 2003 and September 2004 are compared, finding that audit relationships terminated in 2004 are for significantly larger and more widely-traded companies, and that companies now tend to switch to significantly smaller audit firms, or fail to find an immediate replacement for a departing auditor.

Local and Regional Audit Firms and the Market for SEC Audits

The period after the demise of Enron and Andersen has been tumultuous for the accounting profession. In congressional hearings and in responses to the SEC and GAO, auditors have stated that provisions of the Sarbanes-Oxley Act of 2002 (SOA) and related SEC rules changes would cause many local and regional audit firms to terminate audit work for SEC registrants. In this study, we provide empirical evidence about small audit firms and recent changes in the market for SEC audits. After examining all auditor resignations during 2000–2003, we find that 47 local and regional audit firms disclosed in Form 8-Ks filed in 2002–2003 that they were ceasing all SEC audits; only eight such firms that made this disclosure in 2000–2001. From interviews with audit partners of such firms, we find that the primary reasons for ceasing SEC audits is the perception of a more stringent oversight by the recently created Public Company Accounting Oversight Board (PCAOB), increased professional liability insurance costs, and increased scrutiny of SEC registrants. We also find that many local and regional audit firms that had no SEC audit clients in 2002 voluntarily registered with the PCAOB. Interviews with partners of such audit firms indicate that the primary reason for voluntarily registering with the PCAOB is to signal their audit quality to non-SEC registrants (private companies, nonprofits, etc.) and their stakeholders.

Deep vein thrombosis: are postnatal women aware?

Thromboembolism is the leading direct cause of maternal deaths (Confidential Enquiry into Maternal Deaths, CEMD, 2001). Although there has been a reduction in the number of deaths from thromboembolic disease (TED), women seem to have little knowledge about the disease and the importance of recognising the symptoms and seeking medical aid. Midwives are in a prime position to inform women regarding this issue. This article explores the lack of client understanding of TED through a small personal audit of a community midwife's routine postnatal visits.

P0239* IMPROVING ACCESSIBILITY OF INFORMATION TO CHILDREN AND FAMILIES AT THE LIVER UNIT

Introduction: A number of United Kingdom Department of Health initiatives have been published which support accessibility of information for children and families. 1,2,3 In order to empower them to make informed decisions regarding their child’s or their own care.4 We evaluated the accessibility of information for children and families in a specialist Liver Unit. Methods: A multidisciplinary interest group was formed which evaluated all information available to children and families within the Liver unit. A small audit of families and children was conducted as to how they gather information. An audit of the new systems is planned for January to March 2004. Results: A poster was designed with user participation to help children and families know where to access information. All information boards and welcome packs were updated. Initial feedback from families suggests that the information has improved their experience Conclusion: Early results show that systematic review and user participation can improve accessibility of information to families and children. We await the results of a further audit

Acquirers' Abnormal Returns, Audit Firm Size, and the Small Auditor Clientele Effect

I analyze the effect of auditor choice on acquirers' market values around merger announcements and the factors affecting the interaction between auditor size and the market reaction to the merger announcements. Surprisingly, I find that acquirers audited by the largest accounting firms significantly under-perform those audited by smaller firms at merger announcements. The results indicate that the clients of the major firms under-perform the clients of the smaller firms significantly more at merger announcements if the targets are privately-held companies. There is also some indication that the small audit firm effect is more pronounced as the likelihood that the auditors play a prominent advising role in the merger process increases. These effects are significantly stronger in cash acquisitions as opposed to stock swaps and are robust to controlling for the usual factors affecting the market reaction to merger announcements and potential self-selection biases. While the major auditing firms are usually assumed to offer better services than the smaller ones, the study suggests that small audit firms have a comparative advantage in serving their clientele. The study also has implications for the small audit firms' arguments for an exemption of their merger consulting activities from the provision of Section 201 of the Sarbanes-Oxley Act that prohibits auditing firms from providing clients appraisals, valuations and fairness opinions.

A descriptive analysis of audit price changes in the UK 1991–95

This paper examines changes in the audit fees of quoted public limited companies in the UK during the period from 1991 to 1995. After controlling for changes in the size, complexity and risk of auditees, it is shown (based on a logarithm audit fee model) that the audit market experienced a 9.7% reduction in inflation-adjusted fees over this five-year period. The results also provide evidence of overall fee reductions by each of the Big Six. On closer examination, a mixture of fee increases, decreases and no changes were observed for auditees of the Big Six and for the groups of medium-sized and small audit firms investigated. These results, which pertain to a period when market concentration increased markedly (Beattie and Fearnley, 1994; Peel, 1997; Pong, 1999), offer some amelioration of the concerns of the purchasers of audit services that, in general, audit fees will rise in response to an increase in dominance by a few large firms.

Evaluating selection and efficacy of pressure-relieving equipment.

The drive towards evidence-based practice has highlighted the lack of randomized controlled trials that compare interventions such as pressure-relieving medical devices. This may influence practitioners, particularly purchasing practitioners, to consider other types of evidence when appraising literature to determine clinical practice and support recommendations and local guidelines. This article will illustrate the development of an audit tool used to evaluate nurses' knowledge and skills in patient assessment, selection and installation of appropriate pressure-relieving equipment. The tool also assists in assessing clinical effectiveness and user satisfaction of equipment. This article focuses on a small audit of the Karomed Ltd Transair 1500 (also known as the 3-Comm) mattress replacement system.

Refusing analgesics: using continuous improvement to improve pain management on a surgical ward.

Despite advances in pain control many patients experience moderate to severe pain whilst in hospital. Contributory factors include inadequate assessment and documentation of pain, as well as patient and professional misconceptions. A 28-bedded surgical ward in a District General Hospital in the South of England was the setting for the project. A small preliminary audit of pain on this ward indicated that some patients experienced postoperative pain, which was not effectively controlled. A 'continuous improvement' framework was used to increase understanding of the problem and identify an aim for the project, which was to reduce the number of patients refusing analgesics when offered by nurses. An audit to ascertain how many patients refused analgesia revealed that, of 133 patients offered, 93 (70%) refused. Using the 'Model for Improvement' (Langley et al., 1996) a number of changes were introduced, including a patient information sheet, regular documented pain assessment and an innovative staff education programme. To evaluate if the changes in practice had been successful, further audit data were collected from 167 patients. Sixty-three (44%) accepted analgesics, indicating a significant decrease in the number refusing (P = 0.005). This small project demonstrated that continuous improvement methodology can improve the management of pain and quality of care for patients. Such an approach brings practitioner and patient into meaningful understanding and offers solutions which are realistic, achievable and sustainable over time. Despite finite resources and increased pressure on staff it is possible to motivate people when they feel they have ownership and change is meaningful. Continuous improvement methods offer an exciting, feasible, patient-centred approach to improving care.

Risk assessment and prevention audit project.

This article describes the aims and objectives of a small pilot audit project to evaluate the impact of guideline recommendations to reduce pressure ulcer development on practice and patient care.

The Large Audit Firm Fee Premium: A Case of Selectivity Bias?

Audit fee studies often find large (Big 5) audit firms earn significantly higher fees than small (non-Big 5) firms, but they treat auditor choice as exogenous. In contrast, this paper takes into account that companies are not randomly assigned to audit firms. We find the effects of auditor selection bias on audit fees are statistically and economically significant. Consistent with the predictions of analytical research, our results suggest large (small) audit firms experience advantageous (adverse) selection in attracting high (low) quality companies. Our results indicate the premium earned by large audit firms is more than twice as large when selectivity effects are taken into account (53.4% compared to 19.2%).

The Small Business Audit: Problems Faced by Auditors in Selected SADC Countries

Auditing lends credibility to financial statements of enterprises. The Southern African Development Community (SADC) has committed itself to the promotion of Small Businesses in member countries. This implies that auditors will become more involved with Small Businesses as a result of their expected growth and expansion. However, small businesses are said to have characteristics that cause difficulties to their auditors. This study investigates the characteristics of small businesses in three SADC countries, problems auditors of small businesses in those countries face, frequency of occurrence of those problems, and their impact on auditing. The findings suggest that characteristics of small businesses in the selected SADC countries are similar to those of small businesses in other countries. Many of twenty‐three problems suggested to auditors rarely occurred, or occurred only occasionally. However, some problems are considered to have an important effect on auditing.