This study seeks to determine whether audit committee compositional features are associated with the timeliness of financial reporting by Australian firms. Timeliness of financial reporting by firms, of which the length of an audit is a fundamental component, adds information content and impacts firm value, making an examination of audit report lag determinants important. Results indicate that audit committee members with financial expertise, prior audit committee experience and those who are independent are associated with shorter audit report lag. Results suggest that legislation mandating audit committee financial expertise and independence are effective also in improving the timeliness of financial reporting. More importantly, our results suggest that there may be benefits in constituting audit committees with other compositional features such as prior committee experience in overall efforts to improve the timeliness, and therefore quality, of financial reporting by firms.

No abstract

PurposeThe paper aims to examine the direction of the relationship between a firm's internal audit function and its external audit fees, extending a previous study by Goodwin‐Stewart and Kent, which used data from 2000.Design/methodology/approachThe paper uses publicly available information to analyse the relationship between internal audit and audit fees.FindingsThe findings support Goodwin‐Stewart and Kent's result that the existence of an internal audit function in a firm has a significantly positive relationship with audit fees. In fact, the strength of this relationship has increased since 2000.Research limitations/implicationsThe study focuses on the top 300 public companies from a market capitalisation perspective and, therefore, the results may not be generalisable to other smaller public companies or to private firms. Second, the dichotomous experimental variable used in the study (existence of internal audit) might not be an ideal measure of internal audit usage since it may not be sensitive enough to capture all the variation in external audit fees. The findings suggest that companies use internal audit and audit fees in a complementary way to strengthen their overall control/operating environment.Originality/valueAlthough the study extends and validates work already completed by Goodwin‐Stewart and Kent, the true value of its result is that users can use publicly available information to determine that firms with an internal audit function are more likely to use it in a complementary way with audit fees, thereby potentially indicating a commitment by that firm to a stronger monitoring/control environment.

Studies examining the relationship between a firm's internal audit (IA) function and its audit fees have produced mixed results with suggestions of possible model mis‐specification in these studies. Our analysis reveals that differences in significance for IA with audit fees is driven by the choice of variables proxying for firm size and other firm characteristics, suggesting that prior results are entangled with model specification issues. Specifically, when the sales variable is used as a measure of firm size, IA is insignificant (in explaining variations in audit fees) but subsequently becomes significant when assets and employees are used. To overcome the conflicting results, subsequent factor analysis supported a positive relationship between IA and audit fees. The most significant implication from this study is that previously reported relationships involving audit fees may be the outcome of the model adopted rather than the underlying relationship between the variable of interest and audit fees

No abstract

This study seeks to answer the research question 'using reliance as the pivotal consideration, what factors determine the efficient and effective interrelationship between internal and external audit?', within the context of the Australian public sector. A qualitative approach, framed within agency theory, was adopted using a case study and structured interviews. Findings included factors supporting prior literature as well as some unique to the research described here. As a result, this article makes a contribution to the literature examining public sector internal and external audit interrelationships as well as the literature on police audit and performance. It also has practical implications for both the case study site and similar organisations throughout the world.

Purpose The purpose of this paper is to assess whether multiple directorships have an influence on earnings management for Australian publicly listed firms. This paper attempts to determine whether boards with multiple directorships are effective monitors and are able to constrain earnings management activities. Design/methodology/approach The study adopts resource dependency theory on the relationship between multiple directorships and the extent of earnings management. Data analysis is based on publicly listed firms on Australian Stock Exchange utilising SIRCA database with a final pooled sample of 1,815 firm-year observations from 2008 to 2012. Findings Using different measures of multiple directorships, it is found that firms having board of directors with multiple directorships exhibit lower levels of earnings management. The results validate the applicability of resource dependency theory on the relationship between multiple directorships and the extent of earnings management suggesting that directors with multiple board seats by sharing experiences, skills, information and other resources limit the extent of earnings management by firms. Evidence also suggests that earnings management behaviour is more pronounced in larger firms compared to smaller firms and as predicted, industry audit specialists restrain earnings management activities. Practical implications This study introduces methodological enhancements to the literature as it measures the multiple directorships in a number of different ways. Firms may be encouraged to actively seek board members with diverse backgrounds, international exposure/experience and pertinent skill-sets with multiple board memberships. These benefits will assist firms to determine the optimal board composition that will enable it to function effectively. Originality/value Empirical studies on the association between multiple directorships and earnings management in Australia are scarce and this paper provides an update of the effect of multiple directorships on earnings quality in Australia.

Purpose -The primary objective of this paper is to examine the association between the seven human-resource features (spanning three major themes: qualifications and credentials; business and initial public offering (IPO) launch experience; and diversity) of independent audit committee members and the level of underpricing. Design/methodology/approach -A sample of 410 Singapore IPOs listing on the stock exchange of Singapore from January 1, 1997 to December 31, 2006 was used. Findings -Empirical results overall suggest no overwhelming association between the human-resource features of IPO audit committees and underpricing. Rather, the findings suggest only some specific human-resource features (e.g. presence of an independent audit committee member with accounting qualifications and credentials) are of significance. Others (e.g. gender diversity of independent audit committee members) have little or no association. Also, results do not suggest a major category of human-resource features (i.e. qualifications and credentials, business and IPO launch experience, or diversity) is associated with underpricing. Time also does not appear to affect the results. Practical implications -As human-resource features tended to increase rather than lower an IPO's cost of capital, or had not influence at all, our findings generally do not support some policymakers' arguments for the introduction of mandated uniform audit committee structures. Rather, the results support flexibility to determine the properties of the audit committee. Originality/value -This study is one of the first (particularly outside the USA) to investigate linkages between audit committee human-resource features and underpricing. Whilst acknowledging some caveats associated with this study, such as focusing on a single nation, this paper contributes relevant insights to the debate about audit committee effectiveness.