We use a long time-series from Australia to investigate the determinants and (to a lesser extent) consequences of audit market concentration. We show that increasing skewness in the size of public companies is associated with increased audit market concentration, and that the growth of the large audit firms is largely due increases in the size of a small number of their public company clients rather than to mergers and acquisitions. Our evidence also shows that a simple growth/economies of scale argument cannot fully explain market concentration: median audit firm size, a common measure of minimum efficient scale, is flat to declining as the size of the market increases. The emergence of the Big N is also associated with a number of differences (relative to non-Big N firms) that occur around the time the profession first allowed audit firms to advertise and promote their services. These differences include increases in staff-to-partner ratios, lower ratios of audit fees to client assets, industry specialization, and growth in the provision of nonaudit services, all of which suggests that Big N firms made sunk cost investments that helped them to differentiate their services and expand. We also show that the change in regulation of advertising led to increased client switching and realignment. We find no evidence that the audit market became less competitive as concentration increased; for example, audit fees decline for both Big N and non-Big N firms during economic downturns. While largely descriptive, our evidence offers important new insights into what led to audit market concentration and the differentiating characteristics of Big N firms.

We use a long time-series from Australia to investigate the determinants and (to a lesser extent) consequences of audit market concentration. We show that increasing skewness in the size of public companies is associated with increased audit market concentration, and that the growth of the large audit firms is largely due increases in the size of a small number of their public company clients rather than to mergers and acquisitions. Our evidence also shows that a simple growth/economies of scale argument cannot fully explain market concentration: median audit firm size, a common measure of minimum efficient scale, is flat to declining as the size of the market increases. The emergence of the Big N is also associated with a number of differences (relative to non-Big N firms) that occur around the time the profession first allowed audit firms to advertise and promote their services. These differences include increases in staff-to-partner ratios, lower ratios of audit fees to client assets, industry specialization, and growth in the provision of nonaudit services, all of which suggests that Big N firms made sunk cost investments that helped them to differentiate their services and expand. We also show that the change in regulation of advertising led to increased client switching and realignment. We find no evidence that the audit market became less competitive as concentration increased; for example, audit fees decline for both Big N and non-Big N firms during economic downturns. While largely descriptive, our evidence offers important new insights into what led to audit market concentration and the differentiating characteristics of Big N firms.

This study provides evidence of a directly observable and significant cost of International Financial Reporting Standards (IFRS) adoption, by examining the fees incurred by firms for the statutory audit of their financial statements at the time of transition. Using a comprehensive dataset of all publicly traded Australian companies, we quantify an economy-wide increase in the mean level of audit costs of 23 percent in the year of IFRS transition. We estimate an abnormal IFRS-related increase in audit costs in excess of 8 percent, beyond the normal yearly fee increases in the pre-IFRS period. Further analysis provides evidence that small firms incur disproportionately higher IFRS-related audit fees. We then survey auditors to construct a firm-specific measure of IFRS audit complexity. Empirical findings suggest that firms with greater exposure to audit complexity exhibit greater increases in compliance costs for the transition to IFRS. Given the renewed debate about whether the Securities and Exchange Commission (SEC) should mandate IFRS for U. S. firms, our results are of timely importance.

Public accounting firms provide a necessary and important service for rural and regional areas. However, the provision of high-quality services is hindered by a number of factors. This paper reports the findings from a large-scale survey of professional accounting firm practitioners located in rural and regional Australia, identifying factors causing concerns and tensions and quantifying their scope and importance. Prominent concerns and tensions identified include adverse effects arising from the employment market, communications technology developments and legislation such as the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 and the Financial Services Reform Act 2001.

This study examines relations between the overall level of effective information technology (IT) governance and five commonly advocated individual mechanisms of IT governance. It extends the examination of individual IT governance mechanisms to include a widernumberof mechanisms, justifies the mechanisms investigated via agency theory, seeks to relate these mechanisms specifically to a perceived overall level of effective IT governance in organizations, and attempts to mitigate the problems of limited generalizability and selection bias by employing a survey and generalized sampling research methodology. The results from a survey of professional auditors reveal significant positive relations between the overall level of effective IT governance and three IT governance mechanisms: IT steering committees, senior management involvement in IT, and corporate performance measurement systems. Ex-post sensitivity analyses reveal that the primary findings are qualitatively similar across internal auditors and external auditors, as well as information systems auditors (IS) and non-IS auditors.

This article reviews the extant accounting information systems (AIS) literature by conducting an analysis of AIS articles published in 18 leading accounting, management information systems, and computer science journals from 1999 to 2009 with a view to identifying whether or not the focus of AIS research has changed, and if so how it has changed, since the Poston and Grabski's (2000) review of AIS research from 1982 to 1998. We also report our insights into where AIS research is likely to be heading in the future. We analyse each of the 395 articles identified as reporting AIS research to identify their underlying theory, research method and research topic. Our results confirm the continuing decline in analytical and model-building research in AIS-related research and this decline is associated with a similar decline in the use of computer science theory to motivate this research. We also find that two theoretical platforms, in particular, now account for almost half (48 per cent) of all AIS research: cognitive psychology and economics. Experimental research methods and archival studies continue to grow as the preferred methods for testing the AIS-related theories derived from these theory domains.

[Extract] Good practice in assessment feedback is a process in which students are actively involved and where teacher/peer dialogue is encouraged (Juwah, Macfarlane & Nicol, 2004). Clear, constructive feedback reduces the gap between present and desired performance and is considered to be a jointly owned system that is reflexive, flexible and dynamic. Results of Course Experience Questionnaires show that Australian university accounting students are generally very dissatisfied with the feedback they receive in their courses. The findings of the present study reveal that many accounting students feel that they receive poor quality feedback on their assessment, as evidenced by the most typical form of feedback being only the mark. Moreover, this feedback is often provided too late to be useful to them. A lack of adequate feedback leads to students feeling disempowered. They consider feedback to sometimes be de-motivating and intimidating. These findings point to something of a crisis in feedback quality in the discipline that needs urgent attention.

This monograph presents an analysis of the assessments of SMEs located in rural and regional Australia of the services provided to them by public accountants. For the purpose of the study, and consistent with the first research monograph, ‘rural and regional’ is defined as encompassing those geographical areas outside the greater metropolitan areas of Melbourne, Sydney, Brisbane, Adelaide and Perth.

Over the past 25years, the development of electronic commerce (e-commerce) has challenged and threatened firms to adapt their business models and processes. Successful adaptation can lead to improved efficiencies, growth in market share, expansion into new markets, or simply survival in competitive markets. Short-window event studies provide evidence that the market places significant value on investments in e-commerce. However, if the market misunderstands how these projects add value, value measurement based on short-run returns could be misleading. We address this possibility by examining the market reaction to e-commerce investment announcements by a sample of mining companies. We argue that this group of companies represents a sample for which, a priori, there is no expected value added to the firm from the type of investment they announce. We find strong evidence that the market reacts positively to these announcements in the days surrounding the information release. However, we find that in the three-year period subsequent to the announcement the firms realize long-run negative abnormal returns. Significant share-price rises leading up to and immediately subsequent to the announcement dates were completely reversed over the subsequent three years. We interpret this result as being consistent with the market not always understanding when e-commerce adds value. While our result is only applicable to equity investments in small, speculative ventures, it suggests some caution in the use of short-run market value changes as a measure of the value added to firms by an e-commerce investment.

Prior studies measuring the impact of corporate governance mechanisms have focussed on global-type issues such as the impact of governance on firm performance and firm value (see Denis and McConnell, 2003). However, governance mechanisms can also be used to examine the quality of the firm’s financial reporting, for example, the propensity of the firm to manage earnings (Xie, Davidson, Dadalt, 2003) or the occurrence of financial statement fraud (Dunn, 2004; Rezaee, 2005; Farber 2005). At the transactional level, within-firm fraud, that is, the misappropriation of assets, funds or property, perpetrated by employees and managers is of concern. Given the magnitude of economic loss associated with fraud (Apostolou and Crumbley, 2005), evidence of the effectiveness of mechanisms to reduce its occurrence is likely to provide firms with the ability to improve their financial performance through the reduction in this fraudulent behaviour.

In recent years, the importance of good corporate governance has received significant public and regulatory attention. A crucial part of an entity's corporate governance is its internal audit function. At the same time, there has been significant public concern about the level of fraud within organizations. The purpose of this study is to assess whether organizations with an internal audit function are more likely to detect and self-report fraud than those without. In this study, we use a unique self-reported measure of misappropriation of assets fraud for the first time. The fraud data are from the 2004 KPMG Fraud Survey, which reported fraud from 491 organizations in the private and public sector across Australia and New Zealand. The internal audit data are from a separate mail survey sent to the respondents of the KPMG Fraud Survey. We find that organizations with an internal audit function are more likely than those without such a function to detect and self-report fraud. Furthermore, organizations that rely solely on outsourcing for their internal audit function are less likely to detect and self-report fraud than those that undertake at least part of their internal audit function themselves. These findings suggest that internal audit adds value through improving the control and monitoring environment within organizations to detect and self-report fraud. These results also suggest that keeping the internal audit function within the organization is more effective than completely outsourcing that function.

The bursting of the dot com bubble in March 2000 caused firms to be wary about investment in, and the use of, information technologies. Consequently, demand in technology-related jobs dropped significantly. This drop in demand has had a profound negative impact on the demand for information systems (IS) courses in the tertiary education sector. Some IS departments suffered badly, and some were forced to downsize their faculty through attrition, giving back faculty lines, freezing hiring, or releasing faculty. At the same time, there has been significant and sustained growth in demand for accounting programs. Professional accounting bodies have introduced technologies to accountants and auditors, and technologies have gained its significance in the accounting discipline. With such an observation, this paper explores whether accounting students see IS courses as a complement to their program and the chance to offer IS-related courses to accounting students. We administrated a survey to explore accounting students' preferences for accounting-related disciplines. We then conducted a number of focus groups to gain an understanding of their expectations and interest in technology-related courses. We found that although accounting students preferred finance courses to IS courses, they were interested in IS and considered IS to be useful to their long-term career. We then proposed several IS courses customized for accounting students. This will open up more teaching opportunities for IS academics, and strengthens the IS programs by providing stability in an otherwise unstable environment. After the rationale for a list of proposed IS-related courses for accounting students, we discussed some issues that IS academics should pay attention to before launching these courses.