Opinion Shopping to Avoid a Going Concern Audit Opinion and Subsequent Audit Quality

SUMMARY Despite regulatory concerns over opinion shopping (OS) behavior, there exists little systematic evidence on the prevalence and consequences of OS to avoid a going concern opinion (GCO). Using Lennox's (2000) framework to identify OS, we find that distressed firms successfully engage in OS to avoid a GCO. Moreover, clients engaging in OS exhibit a higher ex post Type II error rate in audit opinions than clients that do not, and the higher Type II error rate is salient for clients switching auditors for OS but not for clients retaining auditors for OS. We continue to find this asymmetric effect of the two types of OS on audit quality measured by restatements. These results indicate that auditor switching for OS not only results in a higher likelihood of audit reporting failures but also impairs other dimensions of audit quality, while auditor retaining for OS has little adverse effect on audit quality.

DOUBLE BOOTSTRAP CONTROL CHART FOR MONITORING SUKUK VOLATILITY AT BURSA MALAYSIA

The bootstrap approach on control limit has provided a solution in solving uncertainty estimation problem in control chart performance. However, the limitation of this standard chart has shown to be less efficient and invalidation at certain magnitude shift, especially the monitored sample data is assumed from skewed family distribution. Thus, in this study, a double bootstrap base-model and its control limit is developed in order to improve the efficiency and decrease the invalidation chart performance. In order to test the performance of proposed model, a simulation study using Average Run Length (ARL) and Type II Error rate were implemented. The result has shown that the proposed chart is sensitive and effective in detecting the shift process for small and medium size of skewed sample data. Also, it has found that the proposed chart shown to has better performance on large magnitude shift. The performance of the proposed model was investigated further using sukuk volatility data at Bursa Malaysia. The result revealed that the double bootstrap control chart is sensitive to small shifts process when it can detect changes in the volatility faster. In other words, it is efficient in monitoring the shifts process. Thus, the proposed model could help the traders in making a new decision, for example, either save/hold for a certain period, sell or buy the sukuk certificate.

STRUCTURAL INTERPRETATION OF HANDWRITTEN SIGNATURE IMAGES

The interpretation of handwritten signature images should be closely related to the writer’s identity. The representation and analysis of the handwritten signature is the major challenge in the field of automatic signature verification. A new concept of representation and interpretation of handwritten signature images is advocated. The segmentation process breaks up the signature into a collection of arbitrarily-shaped primitives. In the next step, a local interpretation process serves as a sophisticated template matching, permitting the labeling of all primitives from the test primitive set. This is followed by the global interpretation process, which permits the evaluation of a similarity measure between two structural graphs. Experimental results obtained from a database of 800 handwritten signature images from 20 writers show a performance with a type I error rate of ∈1=1.50%, a type II error rate of ∈2=1.37% and a total error rate ∈t=1.43% in the best strategy proposed using a minimum-distance classifier and two reference signatures. A complete description of this novel automatic handwritten signature verification system is presented in this paper.