Internal audit function quality and financial reporting: results of a survey on German listed companies

Most prior studies on internal audit function (IAF) quality and financial reporting have focused on the US setting and have found a positive association between IAF quality proxies and both financial reporting quality and audit efficiency. In this study, we apply the German setting that is characterized by a two-tier board system of corporate governance and different prerequisites for the serving-two-masters problem. This might weaken the IAF’s ability to monitor financial reporting-related processes. To analyze this, we use survey data to measure IAF quality in the German setting and run multiple regressions to examine the association of several IAF quality characteristics and a self-developed IAF quality score with financial reporting quality and audit efficiency. The results show that also in a two-tier system, a high-quality IAF is able to contribute to both financial reporting quality and audit efficiency. Our findings support the notion that the IAF serves as an essential element of effective corporate governance and plays an important role in financial reporting. Moreover, as a practical implication of interest to regulators and managers, we identify that the external certification of the IAF and internal audit-related certifications of IAF employees may contribute to higher financial reporting quality and lower audit fees.     

Integrating Household Risk Mitigation Behavior in Flood Risk Analysis: An Agent‐Based Model Approach

Recent studies showed that climate change and socioeconomic trends are expected to increase flood risks in many regions. However, in these studies, human behavior is commonly assumed to be constant, which neglects interaction and feedback loops between human and environmental systems. This neglect of human adaptation leads to a misrepresentation of flood risk. This article presents an agent‐based model that incorporates human decision making in flood risk analysis. In particular, household investments in loss‐reducing measures are examined under three economic decision models: (1) expected utility theory, which is the traditional economic model of rational agents; (2) prospect theory, which takes account of bounded rationality; and (3) a prospect theory model, which accounts for changing risk perceptions and social interactions through a process of Bayesian updating. We show that neglecting human behavior in flood risk assessment studies can result in a considerable misestimation of future flood risk, which is in our case study an overestimation of a factor two. Furthermore, we show how behavior models can support flood risk analysis under different behavioral assumptions, illustrating the need to include the dynamic adaptive human behavior of, for instance, households, insurers, and governments. The method presented here provides a solid basis for exploring human behavior and the resulting flood risk with respect to low‐probability/high‐impact risks.     

Tobacco use in the treatment trenches

As reported here (see “Dirty Words: Smoker, Vaper, Harm Reductionist?” ADAW, Oct. 14, 2019; https://onlinelibrary.wiley.com/doi/10.1002/adaw.32509 ), recently I have focused much of my time on raising alarms about the very high rates of smoking among addiction treatment and recovery populations. In addition to archival research, I have conducted a series of key informant interviews to better understand the roots of our field's ongoing reluctance to address this issue. These interviews with national leaders in the alcohol and drug field confirmed that when presented with statistics about the very high rates of cigarette smoking among treatment and recovery populations, there is widespread consternation about the resulting tobacco‐related mortality and morbidity. Paradoxically, however, this concern has not translated into strong remedial action.     

Hypothesis testing for the dispersion parameter of the hyper-Poisson regression model

The Poisson distribution is widely used to deal with count data, however, it is unable to capture the dispersion problems. The hyper-Poisson distribution is a particular case of the extended Conway–Maxwell distribution which takes into account the dispersion phenomena of the count data. The main motivation to consider this model is the possibility to link the mean to the regressor variables in very natural way to solve testing problems. So, this paper will be focalized in the gradient statistics to detect dispersions and to compare with the classical likelihood ratio statistic. Two illustrative applications are considered.     

Nicotine addiction and substance use disorder treatment: The Philadelphia story

The Philadelphia Department of Behavioral Health and its leadership have a well‐deserved reputation for pioneering recovery‐oriented systems of care. Effective Jan. 1, 2019, the agency initiated an aggressive policy to address the problem of nicotine addiction among those receiving substance use disorder (SUD) services in contracted facilities. The policy covers nine detox facilities, 32 short‐term rehabilitation programs, 31 long‐term rehabilitation programs and eight halfway houses.     

E-social work and at-risk populations: technology and robotics in social intervention with elders. The case of Spain

Information and communication technologies are increasingly relevant. Finding a sphere of activity that is isolated from technological advancement proves increasingly difficult, and social work is no exception. Therefore, given the socio-demographic and technological context for this sector in Spain, we must face and tackle new challenges. Focusing exclusively on the elderly, e-social work highlights new skills and abilities that can be developed by means of Information and Communication Technologies (ICTs), which are viewed as powerful tools that can guarantee egalitarian access to an improved life standard. Nevertheless, despite the digital divide growing smaller, its impact on people over 75 is still significant; hence, we need to use every tool at our disposal to reduce it to the bare minimum. With that purpose in mind, this article discusses usability, the causes of unequal access to ICTs, technological gerontological pedagogy and robotics as forward-looking technology. The aim is to technologically enable the senior population by adapting the necessary interfaces for an easier interaction; likewise, online intervention also aims for the utilization of alternative technologies. Technology has completely changed the world we live in pushing us to a new approach towards old age, fragility and chronicity. ICTs in social intervention must be a true source of opportunities to further social cohesion.     

Pension Schemes Comparison between EEC Countries*

Abstract. A lot of research has been made on macroeconomic spending on the financing of retirement, most of it taking into account demographic evolution. On the other hand, little research has gone into international comparisons that shed more light on the standards of living that are guaranteed after retirement, and on the flexibility and accessibility of public pension schemes. It is a study of this type that we have carried out for 11 member-states of the EEC (Greece having been left out because of its lack of statistics). In this article, we construct an index that reflects the levels of protection that are offered to the aged by the “first pillar” and under the most general conditions. On the basis of a series of important criteria (conditions for access, flexibility, intervention levels, etc.), we calculated an average of the scores for each criterion. These averages are then used to obtain a general score for each country, ranking them against each other relative to the quality of their respective pension schemes.     

Unemployment and the Composition of Labour Slack: An International Comparison

The present statistical apparatus allows us to construct a single indicator of the degree of non-utilisation of labour resources that mitigates the shortcomings of the traditional unemployment rate. This paper defines a method to measure aggregate labour slack, and applies it to post-1973 data for four countries: Canada, the Netherlands, Sweden and the U.S.A. The estimates take into account non-utilised labour resources due to unemployment, to changes in the number of hours actually worked and to changes in registered labour force participation. Since changes in and the manipulation of working time schedules on the one hand, and of labour supply on the other, have become more frequent over the last few decades, it is highly relevant to investigate international and intertemporal differences in the non-utilisation of labour resources by means of a ratio that accounts for these changes. Unemployment is ill-suited for this purpose, and therefore a labour slack estimate is constructed, which takes working time developments and changes in labour force participation into consideration. The estimate is cyclically more sensitive and more internationally comparable than the traditional unemployment rate.