公司特征与自愿性内部控制管理报告.doc

本科毕业论文（设计）外 文 翻 译外文出处 Auditing 外文作者 Scott N.Bronson，Joseph V.Carcello，K.Raghunandan原文：Firm Characteristics and Voluntary Management Reports on Internal ControlSUMMARY:This study provides evidence on the nature of voluntary management reports on internal control (MRIC), and on the characteristics of firms issuing suchreports, before internal control reports were mandated under Section 404 of theSarbanes-Oxley Act. We examine the association between firm characteristics and the voluntary inclusion of an MRIC in the firms annual report.Our analysis of 397 midsizedfirms in 1998 indicates that a voluntary MRIC is more likely for firms that are larger, have an audit committee that meets more often, have a greater level of institutional ownership, and have more rapid income growth. We find that a voluntary MRIC is less likely for companies with more rapid sales growth. Slightly more than one-third of our sample issues an MRIC. None of the voluntary MRICs mention any material weaknesses; no reports include an auditor attestation;less than half (41 percent) of the reports include a statement that controls were effective;and only three of these reports include the criteria used to assess control effectiveness.Keywords:management reports on internal control; firm characteristics; corporate Governance.INTRODUCTIONSection 404 of the Sarbanes-Oxley Act of 2002 (SOX) requires Securities and Exchange Commission (SEC) registrants to include in their annual report a management report on the effectiveness of internal control over financial reporting (404 Report) and auditor attestation on this management report. Section 404 has become arguably the most controversial element of SOX.Many SEC registrants and business associations have complained about the costs associated with the internal control reporting requirement and have called for the revision (if not repeal) of Section 404 (e.g., American Electronics Association AEA 2005; Advisory Committee on Smaller Public Companies 2006).While SOX made 404 Reports mandatory, management reports on internal control (MRIC) were voluntarily included in corporate annual reports prior to SOX. Since including an MRIC in the annual report potentially increased managements liability exposure under both Rules 10b-5 and 14a-9 of the securities laws, MRICs were presumably included to signal differences in internal control quality across companies. In this paper, we examine the relation between firm characteristics and the voluntary inclusion of an MRIC in 1998 annual reports.Prior literature suggests that a high proportion of Fortune 100 companies report on controls in their annual reports (Raghunandan and Rama 1994), while a low proportion of smaller companies report on controls (McMullen et al. 1996). Hence, we examine the relation between firm characteristics and the inclusion of a voluntary MRIC for mid-sized companies because we are looking for a sample that will provide us with reasonable variation with respect to internal control reporting. We also provide descriptive information about the nature and content of these voluntary reports, and we compare and contrast them with the 404 reports.Our analysis includes 397 annual reports led by rms with total assets between $250 million and $5 billion. We nd that 36 percent of mid-sized companies include an MRIC in their 1998 annual report, and that the likelihood of an MRIC(1) increases with rm size, audit committee meeting frequency, institutional ownership, and income growth, and(2) decreases with sales growth. None of the reports mention any reportable conditions or material weaknesses; no reports include an auditor attestation; less than half (41 percent) of the reports include a statement that controls were effective; and only three of these reports include the criteria used to assess control effectiveness. Our results illustrate the nature of internal control reporting that was provided under a voluntary system along with the rm characteristics associated with this reporting.The rest of the paper is organized as follows. The next section discusses the institutional background and develops the hypotheses. Our research design and sample selection process follow. Results are then presented, followed by a summary and conclusions.INSTITUTIONAL BACKGROUND AND HYPOTHESESSection 404 of SOX requires all public companies to include an internal control report indicating managements responsibility for establishing and maintaining an adequate internal control structure, and managements assessment as to the effectiveness of the entitys internal control over financial reporting. Although mandatory internal control reporting for all public companies is new, many public companies had voluntarily included an MRIC in their annual reports prior to SOX. For example, McMullen et al. (1996) report that the annual reports for approximately one-third of companies listed on National Automated Accounting Research System (NAARS) in 1993 included an MRIC.Benefits and Costs Associated with MRICsA firm might include an MRIC for a number of reasonsto explicitly state managements responsibility for internal control,to state the objectives of the companys internal control system including describing various components of that system (e.g., an independent audit committee, an internal audit function, etc.), and/or to indicate that management believes that internal controls are effective. All of these reasons are designed to reduce financial statement users uncertainty as to the quality of the companys financial reporting. Prior research indicates that financial statement users view voluntary MRICs as improving internal controls, enhancing the oversight of controls, and adding information for decision making(Hermanson 2000).Although firms expect to benefit by issuing an MRIC, there are costs associated with this disclosure. Under Rule 10b-5 it is unlawful“to make any untrue statement of a material factin order to make the statements made, in light of the circumstances under which they were made, not misleading”(SEC 2005a). In addition, since the MRICs examined were included in annual reports distributed to shareholders, the statements made in these reports are subject to the SECs proxy disclosure rules. Under Rule 14a-9 it is unlawful to makeany statement which . is false or misleading with respect to a material fact(SEC 2005b). In comparison to Rule 10b-5, the applicability of Rule 14a-9 relating to the issuance of an MRIC is interesting because a plaintiff must only prove that the issuer was negligent in its disclosure under Rule 14a-9, whereas a plaintiff must prove scienter under Rule 10b-5 (Brown and Detore 1989). A statement by management that internal controls are effective when they are not would expose management and the entity to additional legal liability; even the inclusion of an MRIC without an explicit effectiveness statement increases the firms exposure to legal liability. For example, MRICs without an effectiveness statement often contained a statement that thecorporation maintains a system of internal accounting controls designed to provide reasonable assurance that financial records are reliable for purposes of preparing financial statements.”If management knew or should have known that the entity did not maintain such controls, or there was no reasonable basis for management to believe that the controls would result in reliable financial statements,its exposure to legal liability would have increased.Hypothesis DevelopmentWe examine firm characteristics associated with the decision to voluntarily include an MRIC. We rely on the work of Healy and Palepu (2001) who argue that the demand for disclosure arises from information asymmetry and agency costs between firm managers and outside investors. A naturally occurring research question arising from this theoretical framework involves examining the factors affecting managements disclosure choices. Voluntary disclosures are likely to be related to economic and governance characteristics of firms (Healy and Palepu 2001). In this study, we examine the relation between voluntary inclusion of an MRIC in the annual report and firm economic and governance characteristics.Firm CharacteristicsFirm size is positively related to lawsuits alleging financial reporting and disclosure problems (e.g., Carcello and Palmrose 1994; Palmrose and Scholz 2004). Since the potential litigation-related exposure from issuing a misleading MRIC is greater for larger firms, the issuance of an MRIC for larger firms is a more credible signal. We therefore expect a positive relation between firm size and an MRIC.Prior research finds that fraudulent financial reporting is more likely when controls are weak (Beasley 1996; Beasley et al. 1999). An MRIC provides a means by which firms with strong internal control, but with other firm characteristics that are associated with a higher incidence of fraud, can signal to external parties their financial reporting quality. Firms with greater leverage and firms that issue securities are more likely to commit fraud (Dechow et al. 1996). Thus, including an MRIC provides companies with such characteristics a way to communicate information about the reliability of their financial information. We therefore expect a positive relation between firm leverage and the issuance of securities and an MRIC.There is increasing evidence that audit committee characteristics are related to better financial reporting and auditing quality (e.g., Carcello and Neal 2000; Klein 2002; Abbott et al. 2004). Since strong internal controls are expected to improve the reliability of financial reporting (Public Oversight Board POB 1993; Nicolaisen 2004), better governed firms are likely to have better internal controls and these firms may seek to signal this fact to the capital markets by voluntarily issuing an MRIC. We measure audit committee independence,financial expertise, and diligence, and we expect independent audit committees, audit committees with higher proportions of financial experts, and audit committees that meet more frequently to be more concerned about the quality of the firms internal control system.As a result, we expect a positive relation between these three governance factors and the inclusion of an MRIC.SAMPLEOur sample is from the period preceding both SOX and the Report of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (BRC 1999). The BRC Report spurred a heightened interest in corporate governance and might have precipitated companies to include an MRIC in their annual reports due to external pressures. The reaction of registrants to SEC and other quasi-regulatory initiatives is interesting but differs from the focus of this paper. We are interested in the relation between firm characteristics and voluntary disclosure that existed before the issuance of the BRC Report.We select our sample from the population of firms with 1998 fiscal year-end data included on the July 1999 Compact D/SEC disc. There are approximately 11,900 companies included on this disc that have a 1998 year-end. We exclude companies with over $5 billion in total assets because prior research indicates that a substantial majority of very large companies include an MRIC in their annual report (Raghunandan and Rama 1994). We also exclude companies with less than $250 million in assets as prior research indicates that very small companies rarely include an MRIC (McMullen et al. 1996). We are seeking a sample with reasonable variation in whether or not an MRIC is included in the annual report; very large and small companies do not offer this reasonable variation. Finally, we exclude financial institutions and foreign companies because of their unique characteristics.Our adjusted population includes 1,771 companies.SUMMARY AND CONCLUSIONSThis paper examines firm characteristics associated with an internal control related disclosurewhether management voluntarily chose to issue an MRICbefore such reports were made mandatory by SOX. We add to the growing literature that examines the relation between economic and governance characteristics of firms and voluntary corporate disclosures.Our sample is from 1998 when such reports were issued on a voluntary basis. Slightly more than one-third of our mid-sized sample firms issued MRICs. We document a positive relation between the likelihood of an MRIC and firm size, the number of audit committee meetings, the percentage of institutional shareholders, and income growth; in addition, we find that MRICs are negatively related to sales growth. None of the voluntary MRICs disclose any control weaknesses and none have auditor attestation. An important caveat is that we do not provide evidence on whether MRIC disclosures are informative or useful to financial statement users.The primary contribution of this paper is that we provide evidence on the type of internal control disclosure provided pre-SOX. The empirical evidence in this paper provides a baseline (for mid-sized companies) of the type and nature of internal control disclosures under the voluntary system, and can thus aid policy-makers in future debate about voluntary versus mandatory internal control reporting. Furthermore, our study provides some insight into the nature of firms that provide any internal control related disclosures. The results also suggest that under a voluntary regime, a substantial proportion of firms (in the midsized range of listed firms) will not provide internal control disclosures, while those firms that do make disclosures will not say anything about the effectiveness of internal controlsinformation that can be useful to financial statement users.SOX itself and the ensuing SEC rule both permit considerable flexibility with respect to the contents of the 404 Report. The factors that are shown in this paper to be associated with the voluntary issuance of an MRIC may also be associated with the contents of the 404 Report, but this is an empirical issue to be tested in the future.Source: Scott N. Bronson;Joseph V. Carcello;K. Raghunandan. Firm Characteristics and Voluntary Management Reports on Internal Control J. Auditing, 2006,NO.2 Vol.25:25-39.译文：公司特征与自愿性内部控制管理报告摘要：这项研究关于公司提供内部控制管理报告(MRIC) 的自愿性，在内部控制报告被强制实行萨班斯法案404条款之前，就发行了有关公司特征的报告声明。我们调查了公司特征与公司在年度报告中主动提供内部控制管理报告的自愿性之间的联系。我们对在1998年的397家中型企业研究分析表明，自愿提供内部控制管理报告的公司更有希望变强大，更符合审计委员会的要求，而且有一个更高层次的机构投资人持股，并且收入方面也有更高的快速增长。我们发现，销售额快速增长的公司都不太愿意提供内部控制管理报告。略多于三分之一的样本有内部控制管理报告方面的问题。没有一个自愿提供内部控制管理报告的公司，会在其报告中提到重大的公司缺陷；没有一个报告包含审计认证；少于一半(41%)公司会在报告中提到有效控制的声明；只有其中3个样本报告中包括了用于评估控制方法有效性的标准。关键词：内部控制管理报告；公司特征；公司治理介绍2002年颁布的萨班斯-奥克斯利法案(SOX)第404条款，要求证券及交易委员会(SEC)注册人在年度报告中，应该在财务报表中披露内部控制的有效性（404条款）以及在管理报告中包含审计认证。第404条款已成为最有争议的萨班斯法案元素。许多美国证券交易委员会和一些商业协会都在抱怨与内部控制管理报告相关的成本费用，并呼吁修改（如果不废除）404条款中的一些内容。（例如，美国电子协会AEA，2005年；小型上市公司的咨询委员会，2006年）。尽管萨班斯法案404条款对报告作出强制性规定，但在萨班斯法案之前，内部控制管理报告(MRIC)就已经自愿列入在公司年度报告中。由于证券法10b-5规则和14a-9规则，如果在年度报告中包括内部控制管理报告可能增加管理层的披露责任，各个公司的内部控制管理报告可能在内部控制质量方面有较大的信号差异。在本文中,我们探讨了公司特征和在1998年年度报告中主动披露内部控制管理报告的自愿性之间的关系。在此之前的文献表明，在财富百强公司中有较高的比例会在年度报告中披露企业内部控制(瑞戈乎南丹与拉玛1994),而在小型公司中，在年度报告中披露内部控制的则只是占了很少一部分（麦克马伦等1996)。因此,我们研究了公司特征和中型企业自愿披露内部控制管理报告之间的关系，因为我们正在寻找一个能够为我们提供有关内部控制管理报告的合理解决方案的样本。我们还将提供有关这些有关自愿报告本质和内容方面的的描述信息,我们还会用404条款和它们进行比较。我们的分析包括了397份年度报告，这些年度报告是由总资产在500亿美元和2.5亿美元之间的企业所提供的。我们发现，百分之三十六的中型企业在其1998年的年度报告中披露了内部控制管理报告，而提供这些内部控制管理报告的可能性会随着企业规模，审计委员会会议的频率，机构投资人持股份额，收入以及销售额的增长而增长。在这些报告中，在这些报告中，没有任何一份报告提及到有关报告的情况或重大的缺陷；没有任何报告包括审计认证;不到一半（百分之四十）的报告包括了关于有效控制的声明，并且只有三个样本报告中包括了用于评估控制方法有效性的标准。我们的研究结果表明，内部控制报告是在一个自愿报告系统下生成，而且会跟随企业性质与报告的密切程度来提供的。本文的其余部分组织如下。下一节我们将讨论制度背景和一些假说的发展。我们的研究设计和抽样过程如下：对样本进行分析、研究和总结之后，提出结论。制度背景和假说萨班斯法案的第404条款要求所有上市公司在财务报告中必须披露管理者对建立和维护适当的内部控制结构的责任，以及对本单位内部控制有效的管理评估。虽然强制性的内部控制报告对所有上市公司来说都是新的,但也有许多上市公司在萨班斯法案之前就自愿在他们的年度报告中包括内部控制管理报告，例如,麦克马伦等，(1996)的一份报告声称,在1993年，大约三分之一登记了全国自动化会计研究系统（NAARS）的上市公司都发布了内部控制管理报告。内部控制管理报告的收益和相关费用一个公司的年度报告中是否包括内部控制管理报告可能有许多原因,为了明确说明管理层对内部控制的责任和公司的内部控制制度目标,包括描述系统各组成部分(例如一个独立审计委员会,一个内部审计部等),或表明管理层对内部控制有效性的信任。所有这些原因是旨在减少财务报表使用者对公司财务报告质量中的不确定性。此前的研究表明，自愿披露内部控制管理报告的财务报表使用者，可改善内部控制，加强监督控制，并增加决策信息。虽然企业预期受益于发布的内部控制管理报告，但成本费用与此披露程度相关联。根据规则10b-5，此属违法现象，如“做出任何不真实的重要事实声明为了使报数据所依据，在他们所提供的数据情况下，严禁误导”（SEC 2005a）。此外，由于内部控制管理报告审查包含在发给股东的年度报告中，在这发表的声明报告必须遵守美国证券交易委员会的代理披露规则。根据规则14a-9，作出此声明是非法的如“任何申明是虚假的或对关键事实的误导”（SEC 2005b）。相对于规则10b-5，规则14a-9的适用性与所发布内部控制管理报告准则更令人关注，因为原告必须证明发行人在规则14a-9下由于疏忽而未披露，然而原告必须证明发行人在10b-5规则下故意不披露（布朗和特托1989年）。有关没有揭露管理控制有效性和企业管理层责任的内部控制声明；甚至内部控制管理报告没有明确声明该公司所面临的法律责任。例如，在内部控制管理报告的声明中经常包含一项没有效力的声明“公司保持的内部会计制度是旨在合理保证财务记录的可靠性，保证编制的财务报表的合理性。”如果管理层知道或者应当知道该企业没有保持这种控制，或没有合理的依据使管理层相信该控制制度会生成可靠的财务报表，其法律责任的曝光将有所增加。假说发展我们研究公司特征与决定自愿披露内部控制管理报告之间的关系。根据希利和勃莱普的工作(2001),他们认为信息披露需求源自于信息的不对称，公司管理层和外部投资者之间的代理成本。这是自然形成的研究课题，从这个理论框架中分析影响管理信息披露选择的因素。自愿性信息披露可能会涉及到企业（希利和勃莱普2001年）经济和治理的特征。在这项研究中，我们研究了内部控制管理报告、列入年度报告的自愿性与公司经济和管理特征之间的关系。公司特征企业规模与财务报告的诉讼指控和信息披露的问题成正相关(例如卡赛罗和保罗斯1994；保罗斯和肖尔茨2004)。由于被诉讼揭露发布误导内部控制管