Do the unusual resignations of independent directors affect auditors' professional judgment?

In Kangmei's first trial judgment, where the independent directors faced significant joint and several liabilities, it triggered a "wave" of resignations among independent directors of listed companies. Auditors auditing financial reports of these companies might consider this a significant signal, raising the question: does this signal influence their professional judgment? The study examines the relationship between the resignation of independent directors and auditors' professional judgment in A-share listed companies, following Kangmei's initial trial. This examination is conducted across three dimensions: audit pricing, audit input, and audit opinion.The findings indicate that the unusual resignations of independent directors prompt uditors to pay increased attention to the risk of material misstatements by clients, primarily reflected in audit pricing. However, these resignations do not significantly impact audit input or the judgment of audit opinions. Furthermore, this research enriches the existing literature on audit pricing and the role of independent directors, while also unveiling the specific pathways through which the departure of independent directors impacts auditors' professional judgment.

The effect of auditor's cooperation with independent financial advisors on the reliability of performance commitment-Based on the moderating effect of managerial overconfidence.

Based on the sample of major asset restructuring transactions of Shanghai and Shenzhen A-share listed companies from 2009 to 2018, this paper uses Logit model to examine the impact of auditors ' cooperation experience with independent financial advisors on the reliability of performance commitments, and to examine the moderating effect of management overconfidence on the relationship between the two. The results show that the cooperation experience between auditors and independent financial advisors is significantly positively correlated with the reliability of performance commitment, and the closer the cooperation experience is, the easier the performance commitment will be realized, this has played a financial intermediary team effect. Further analysis shows that in the context of management overconfidence, the positive relationship between financial intermediaries ' cooperation experience and the reliability of performance commitment is stronger. The research results enrich the research on the influencing factors of M & A performance commitment and the economic consequences of financial intermediaries ' cooperation, and help the transaction subjects to rationally view performance commitment and regulators to improve policies and regulations.

Intelligent Financial Auditing Model Based on Deep Learning.

The entire auditing process is complicated and tedious and requires a lot of human resources. Therefore, the intelligent development of auditing is the general trend. In order to improve the audit quality, this paper establishes an intelligent financial audit model that can predict the audit opinion of the consolidated financial statements. This paper proposes an audit opinion prediction model based on the fusion of deep belief neural network (DBN) and long-short term memory (LSTM). First, an indicator system is established for audit opinions, and multiple financial parameters are used to describe possible audit opinions. On this basis, a DBN network is designed to complete deep feature extraction and used for LSTM training. According to the prediction model obtained by training, the subsequent audit opinion can be scientifically predicted. In the experiment, the method in this paper is tested based on financial audit related data sets and compared with the prediction results of traditional multilayer perceptron (MLP), convolutional neural network (CNN), and LSTM models. The results verify the validity and reliability of the model in this paper.

Does Signing Auditor's Reputational Promotion Ease the Financing Constraints of Audited Firms?

Based on the senior certified public accountants selected by the Chinese Institute of Certified Public Accountants and data drawn from China's A-share listed companies from 2014 to 2019, this study studies the influence mechanism of signing auditors' personal reputational promotion on corporate financing constraints. The results show that the improved reputation of signing auditors will help ease the financing constraints faced by companies. Moreover, compared with that of signing auditors from Big Four accounting firms, the improved reputation of signing auditors from non-Big Four firms has a more significant effect on alleviating the financing constraints of enterprises. In addition, private enterprises and small and medium-sized enterprises face more severe financing constraints than state-owned enterprises and large enterprises, and the reputational promotion of signing auditors can better alleviate the financing constraints of the former two types of enterprises. The research conclusions provide theoretical and data-driven support for constructing audit reputation mechanisms in China and improving the financing capabilities of enterprises.

Bayesian inference of local government audit outcomes.

The scandals in publicly listed companies have highlighted the large losses that can result from financial statement fraud and weak corporate governance. Machine learning techniques have been applied to automatically detect financial statement fraud with great success. This work presents the first application of a Bayesian inference approach to the problem of predicting the audit outcomes of financial statements of local government entities using financial ratios. Bayesian logistic regression (BLR) with automatic relevance determination (BLR-ARD) is applied to predict audit outcomes. The benefit of using BLR-ARD, instead of BLR without ARD, is that it allows one to automatically determine which input features are the most relevant for the task at hand, which is a critical aspect to consider when designing decision support systems. This work presents the first implementation of BLR-ARD trained with Separable Shadow Hamiltonian Hybrid Monte Carlo, No-U-Turn sampler, Metropolis Adjusted Langevin Algorithm and Metropolis-Hasting algorithms. Unlike the Gibbs sampling procedure that is typically employed in sampling from ARD models, in this work we jointly sample the parameters and the hyperparameters by putting a log normal prior on the hyperparameters. The analysis also shows that the repairs and maintenance as a percentage of total assets ratio, current ratio, debt to total operating revenue, net operating surplus margin and capital cost to total operating expenditure ratio are the important features when predicting local government audit outcomes using financial ratios. These results could be of use for auditors as focusing on these ratios could potentially speed up the detection of fraudulent behaviour in municipal entities, and improve the speed and quality of the overall audit.

Audit Data Analysis and Application Based on Correlation Analysis Algorithm.

Traditional audit data analysis algorithms have many shortcomings, such as the lack of means to mine the hidden audit clues behind the data, the difficulty of finding increasingly hidden cheating techniques caused by the electronic and networked environment, and the inability to solve the quality defects of the audited data. Correlation analysis algorithm in data mining technology is an effective means to obtain knowledge from massive data, which can complete, muffle, clean, and reduce defective data and then can analyze massive data and obtain audit trails under the guidance of expert experience or analysts. Therefore, on the basis of summarizing and analyzing previous research works, this paper expounds the research status and significance of audit data analysis and application; elaborates the development background, current status, and future challenges of correlation analysis algorithm; introduces the methods and principles of data model and its conversion and audit model construction; conducts audit data collection and cleaning; implements audit data preprocessing and its algorithm description; performs audit data analysis based on correlation analysis algorithm; analyzes the hidden node activation value and audit rule extraction in correlation analysis algorithm; proposes the application of audit data based on correlation analysis algorithm; discusses the relationship between audit data quality and audit risk; and finally compares different data mining algorithms in audit data analysis. The findings demonstrate that by analyzing association rules, the correlation analysis algorithm can determine the significance of a huge quantity of audit data and characterise the degree to which linked events would occur concurrently or sequentially in a probabilistic manner. The correlation analysis algorithm first inputs the collected audit data through preprocessing module to filter out useless data and then organizes the obtained data into a format that can be recognized by data mining algorithm and executes the correlation analysis algorithm on the sorted data; finally, the obtained hidden data is divided into normal data and suspicious data by comparing it with the pattern in the rule base. The algorithm can conduct in-depth analysis and research on the company's accounting vouchers, account books, and a large number of financial accounting data and other data of various natures in the company's accounting vouchers; reveal its original characteristics and internal connections; and turn it into an audit. People need more direct and useful information. The study results of this paper provide a reference for further researches on audit data analysis and application based on correlation analysis algorithm.

Construction and Simulation of Financial Audit Model Based on Convolutional Neural Network.

Big data has brought a new round of information revolution. Faced with the goal of full coverage of audit and supervision, making full use of big data is the main method to promote the realization of the goal of full coverage of audit and supervision. Data analysis and utilization is an indispensable task of auditing. Actively exploring multidimensional and intelligent data analysis methods and developing big data audit cases are the new development direction of auditing. The convolutional neural network's excellent ability to extract data features well meets the relevant requirements of financial auditing. However, in practical applications, convolutional neural networks often encounter various problems such as disappearance of gradients and difficulty in convergence, which reduces its expected performance in financial audit applications. In order to make the performance of the financial audit model based on convolutional neural network more excellent, after summarizing the characteristics of genetic algorithm, this article applies genetic algorithm to the optimization of the convolutional neural network model. We applied genetic algorithm to optimize the initial weights of the convolutional neural network. The error sensitivity and learning rate changes of different hidden layers are discussed, the influence of different learning rates on the convergence speed of convolutional neural networks is analyzed, and the recognition performance of other algorithms on financial audit data sets is simulated and compared. We conducted experiments on the network structure and parameter optimization on the financial audit database. The results show that the recognition error rate of the convolutional neural network model with improved learning rate algorithm in the financial audit data set is lower than that of the multilayer feedforward network, so it has better performance.

The role of internal auditing in promoting accountability in Higher Education Institutions / El papel de la auditoría interna en la promoción de la accountability en las Instituciones de Educación Superior / O papel da auditoria interna na promoção da accountability nas Instituições de Ensino Superior

Abstract This paper discusses the link between accountability and internal auditing, particularly analyzing the extent to which the latter contributes to improve the former, in Higher Education Institutions (HEIs). This study applied a questionnaire to the management boards of a sample of HEIs, to empirical analyze the relationship between internal auditing and accountability. The main focus was on internal auditing carried out by the offices or departments in those institutions. The paper contributes to understand how management boards perceive internal auditing to foster transparency and accountability in HEIs, allowing to corroborate that auditing, and particularly internal auditing, favors the institutions' accountability. In effect, it promotes the principles underlying accountability practices. The information provided in the scope of internal audits is acknowledged as contributing to improve management effectiveness and helping in decision-making. HEIs wanting to create an internal auditing office or to enhance the role of an existing one, should develop this office's activities so that it becomes an instrument to support accountability and good governance of the organization. The sample consisted of Portuguese public HEIs, universities and polytechnics. Despite a certain international convergence regarding this type of public sector organizations, and regarding their purposes and governance, certain contextual specificities might limit the generalization of the findings for other jurisdictions.

Resumen Este artículo discute la asociación entre la accountability y la auditoría interna, en particular analizando hasta qué punto esta última contribuye a mejorar la primera, en las Instituciones de Educación Superior (IES). Para analizar empíricamente la relación entre la auditoría interna y la accountability, el estudio se basa en los resultados de una encuesta enviada a los consejos de administración de una muestra de IES, con el enfoque principal en la auditoría interna realizada por las oficinas o departamentos en esas instituciones. El artículo contribuye a comprender cómo los consejos de administración perciben la auditoría interna para fomentar la transparencia y accountability en las IES, lo que permite corroborar que la auditoría, y particularmente la auditoría interna, sirve a la accountability. De hecho, ella promueve los principios subyacentes a las prácticas de accountability. Se reconoce que la información proporcionada en el ámbito de las auditorías internas contribuye a mejorar la efectividad de la gestión y ayuda en la toma de decisiones. Las IES que desean crear una oficina de auditoría interna o mejorar el papel de una existente, deben desarrollar las actividades de esta oficina para que se convierta en un instrumento de apoyo a la accountability y al buen gobierno de la organización. La muestra consistió en IES públicas portuguesas, universidades y politécnicos. A pesar de una cierta convergencia internacional con respecto a este tipo de organizaciones, así como con respecto a sus propósitos y gobernanza, ciertas especificidades contextuales pueden limitar la generalización de los resultados a otras jurisdicciones.

Resumo Este artigo discute a associação entre accountability e auditoria interna, analisando particularmente até que ponto a última contribui para melhorias na primeira, nas Instituições de Ensino Superior (IES). Para analisar empiricamente a relação entre auditoria interna e accountability, o estudo baseia-se nos resultados de um questionário enviado aos órgãos de gestão de uma amostra de IES, com o foco principal na auditoria interna desenvolvida pelos gabinetes ou departamentos nessas instituições. O artigo contribui para entender como os órgãos de gestão percebem a auditoria interna para promover a transparência e a accountability nas IES, permitindo corroborar que a auditoria e, principalmente, a auditoria interna, serve a accountability. Com efeito, ela promove os princípios subjacentes às práticas de accountability. A informação proporcionada no âmbito das auditorias internas é reconhecida como contribuindo para melhorar a eficácia da gestão e ajudar na tomada de decisões. As IES que desejem criar um gabinete de auditoria interna ou aprimorar o papel de um gabinete já existente, devem desenvolver as atividades desse serviço de modo a que se torne um instrumento para apoiar a accountability e a boa governança da organização. A amostra foi constituída por IES públicas portuguesas, universidades e institutos politécnicos. Apesar de existir uma certa convergência internacional em relação a este tipo de organizações do setor público, bem como em relação aos seus propósitos e governança, certas especificidades contextuais podem limitar a generalização dos resultados desta pesquisa, para outras jurisdições.

Práticas não adequadas nos tribunais de contas / Prácticas inadecuadas en los tribunales de cuentas / Organizational wrongdoing in courts of accounts

Resumo Os tribunais de contas brasileiros como organizações de auditoria governamental têm sido historicamente questionados pela continua revelação de práticas socialmente contestadas atribuídas aos conselheiros. Este artigo analisa a manutenção dessas más práticas (organizational wrongdoing), sustentadas e apoiadas pela atuação de conselheiros, assessores, diretores de auditoria e apoiadores do escalão técnico, os quais detém maior influência e poder em uma organização tipicamente permeada por lógicas institucionais incompatíveis e conflitantes. Utilizou-se o caso do Tribunal de Contas do Estado do Rio de Janeiro para analisar as práticas ilegítimas largamente utilizadas que se tornaram públicas recentemente. O caso foi analisado em uma abordagem qualitativa, a partir de entrevistas (com auditores e conselheiros da organização) trianguladas com documentos públicos. A análise conclui que a lógica institucional elite-patrimonialista que opera naquela organização induziu o amplo uso de más práticas naquele tribunal, as quais foram legitimadas por estratégias de poder (episódico e sistêmico) e por trocas recíprocas em todos os níveis organizacionais. Ainda, a análise identificou más práticas de suporte que surgem ao longo da hierarquia, operadas sob influência de poder sistêmico em geral, que são desdobramentos de estratégias para sustentar as más práticas embrionárias.

Resumen Históricamente, los tribunales de cuentas brasileños como organizaciones de auditoría del gobierno han sido cuestionados por la divulgación continua de prácticas socialmente censuradas atribuidas a los consejeros. Este artículo analiza el mantenimiento de esas malas prácticas (organizational wrongdoing), sostenidas y respaldadas por las acciones de consejeros, asesores, directores de auditoría y miembros del cuerpo técnico de auditoría, que tienen una mayor influencia y poder en una organización típicamente impregnada de lógicas institucionales incompatibles y conflictivas. Se utilizó el caso del Tribunal de Cuentas del Estado de Río de Janeiro para analizar las prácticas ilegítimas ampliamente utilizadas que recientemente se han hecho públicas. El caso fue analizado desde un enfoque cualitativo, basado en entrevistas (con auditores y consejeros de la organización) trianguladas con documentos públicos. El análisis concluye que la lógica institucional de élite patrimonialista que opera en esa organización indujo al uso generalizado de prácticas inapropiadas en esa corte, que fueron legitimadas por estrategias de poder (episódico y sistémico) y por intercambios recíprocos en todos los niveles organizacionales. Aun, el análisis identificó malas prácticas de soporte que surgen a lo largo de la jerarquía, operadas bajo la influencia del poder sistémico en general, que son estrategias que se desarrollan para sostener malas prácticas embrionarias.

Abstract Historically, the Brazilian Courts of Accounts have been questioned over the frequent misconduct of magistrates. This article analyzed how organizational wrongdoing is sustained and preserved by magistrates, their cabinet members, audit directors and technical body members, who hold influence and power in this type of organization typically permeated by multiple incompatible and conflicting institutional logics. The case of the Rio de Janeiro State Court of Accounts was analyzed to discover the socially illegitimate practices widely adopted in the organization and which recently became public. A qualitative approach was used based on interviews (with auditors and magistrates) and public documents. The analysis indicates that an elite-patrimonial institutional logic was operating at the Rio de Janeiro State Court of Accounts, which induced organizational wrongdoing, based on the use of episodic and systemic power strategies and reciprocity norms. Finally, the findings point out that supportive wrongdoing is seen in the hierarchy, operating under the influence of systemic power in general, applied to sustain the embryonic strategies of wrongdoing.

Corruption in public health and its effects on the economic growth of Brazilian municipalities.

This study's objective is to estimate the effects of corruption in the public health sector on the economic growth of Brazilian municipalities. To build three corruption measures, data from audits conducted by the office of the comptroller general (Controladoria Geral da Uniao, CGU henceforth) in 2009 and 2010 in the health and sanitation sectors were used. Two analysis steps were performed. The first verified the relationship between the performance of the audit and the economic growth rate of the municipalities, using the Ordinary Least Squares (OLS); the second analyses the effects of corruption on public health on the economic growth of the audited municipalities, using OLS and Quantile Regressions. First, in a sample of 5547 municipalities, the evidence indicates that being audited is related to slower economic growth. From this, when the sample is restricted to the 180 municipalities audited in 2009 and the corruption variables constructed from the audit reports conducted in the year, the results indicate negative effects of corruption on economic growth. The results show that in the larger quantiles of economic growth, the adverse effects of corruption are felt more significantly. Both methods tested with the three corruption variables created provide similar evidence, showing robustness of results. Therefore, the study allowed us to conclude that corruption in the public health sector hampered the economic growth of Brazilian municipalities, which is a delayed effect: Corruption in 2009 had negative effects on growth in 2011.

Atribuições da auditoria do SUS / SUS audit assignments

O Sistema Nacional de Auditoria (SNA) foi criado pela Lei nº 8.689/93, ao qual "compete a avaliação técnico-científica, contábil, financeira e patrimonial do Sistema Único de Saúde, que será realizada de forma descentralizada." Tal descentralização ocorre "através dos órgãos estaduais e municipais e de representação do Ministério da Saúde em cada Estado da Federação e no Distrito Federal". O SNA obedece à regulamentação disposta no Decreto n.º 1.651/95, em todos os níveis de governo.

The National Audit System (SNA) was created by Law No. 8,689/93, which "competes for the technical-scientific, accounting, financial and patrimonial evaluation of the Unified Health System, which will be carried out in a decentralized manner." Such decentralization occurs "through state and municipal agencies and representation of the Ministry of Health in each State of the Federation and in the Federal District". The SNA complies with the regulations set out in Decree No. 1,651/95, at all levels of government.

Financial audit of wastage of anticancer drugs: Pilot study from a tertiary care center in India.

PURPOSE: Drug wastage is a major concern in oncology where costs of antineoplastic drugs are exorbitant, and the disposal of toxic drugs increases the chances of occupational hazards to healthcare and sanitary workers and environmental pollution at the site of disposal. The principal objective of this study was to ascertain the extent of drug wastage and calculate its financial costs. MATERIALS AND METHODS: This was a prospective pilot study conducted to ascertain the quantity of drug wastage in a tertiary care hospital. This pilot study was conducted in day care and inpatient facilities in February 2016. The prescription of cytotoxic drugs, recommended dose, the quantity used, and remainder (waste) left were recorded from the nurses and pharmacy files of the hospital. Cost evaluation of the actual use and the waste was undertaken and an audit was conducted to understand in which anticancer drug the maximum wastage was generated. RESULTS: The results of this study indicated that 6.1% of the total amount of reconstituted drugs was wasted. The highest drug wastage was observed in trastuzumab (29.55%), followed by etoposide (20.4%), dacarbazine (17.14%), daunorubicin (16.67%), and carboplatin (11.29%). Cost analysis showed that the total cost of the drug issued during the study period was Rs. 1,294,975 and the cost of drug wastage amounted to Rs. 143,820 (11.1%). CONCLUSION: To the best of authors' knowledge, this is the first study from India and the results indicate that the financial impact of anticancer drug wastage was substantial. Attempts should be directed at minimizing the wastage and cost savings without risking patients' treatment regimen and administering effective dose schedule.

Social frame and tax compliance modulate electrophysiological and autonomic responses following tax-related decisions.

Given the intrinsic complexity of cognitive and affective processes affecting how people reason about taxes and their decisions to be compliant with such social duty, we aimed at exploring those latent processes by combining the analysis of their central and peripheral physiological correlates. We asked participants to make realistic economic decisions concerning tax-payment and manipulated the social vs. individual decisional frame. In addition, we took into account the potential role of tax-compliance trait. Thirty self-employed professionals took part in the study and completed a public good game while their autonomic (skin conductance - SC - and heart rate - HR) and neural brain (electroencephalography - EEG) activities were recorded. The analysis of physiological responses during the feedback phase - where participants could be presented or not with a fiscal audit - highlighted: (i) increased tonic SC levels and theta activity in the social condition than in the individual one; (ii) increased HR values when a fiscal audit did not take place, especially in participants who presented an enforced tax-compliance trait. Present findings support the idea that classic economic theories of tax behaviour developed under the assumption that taxpayers act as rational and individualist agents do not provide a comprehensive account for the decision-making process. They add to available evidence highlighting the contribution of psychological and social-affective variables to individuals' decision-making processes to pay or evade taxes and to their appraisal of the consequences of such choice, as suggested by the 'slippery slope' framework.