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<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-outline-level: 1;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">The purpose of this project is to model municipal audit fees using an audit economics framework and then analyze this conceptual framework empirically using structural equation modeling, because structural equation models are excellent for examining complex and interdependent environments.<span style="mso-spacerun: yes;">&nbsp; </span>The sample is large cities using 1996 data.<span style="mso-spacerun: yes;">&nbsp; </span>The theoretical model uses five constructs to explain audit fees:<span style="mso-spacerun: yes;">&nbsp; </span>(1) client size, (2) complexity of client operations, (3) financial risks including demographic characteristics, (4) auditing factors, and (5) governance structure.<span style="mso-spacerun: yes;">&nbsp; </span>The final model includes six variables directly related to audit fee plus five mediating variables.<span style="mso-spacerun: yes;">&nbsp; </span>The results demonstrate that SEM modeling can explain audit fees and provides more information on how the highly correlated independent variables are interrelated in the context of explaining audit fee levels.</span></span></p>

In recent years, the Securities and Exchange Commission (SEC) has grown in size and scope. The implementation of Sarbanes-Oxley (SOX) and the globalization of accounting standards have increased the SEC's workload and brought forth important questions regarding the development and application of accounting and auditing standard setting and regulation. This paper identifies key issues of importance to the SEC including record levels of restatements, SOX implementation, the backdating of stock options, increased use of fair-values in financial reporting, adoption of IFRS by numerous non-U.S. registrants, and foreign deregistration. The article highlights the contribution of academic research as it relates to SEC speeches and rulemaking, drawing upon experience of 2005–2006 SEC academic fellows.

Purpose-This study investigates the influence of the Securities and Exchange Commission (SEC) on the interpretation and application of International Financial Reporting Standards (IFRS) by examining a group of SEC-selected foreign private issuers filing 2005 annual reports in the USA and reporting using IFRS for the first time. Design/methodology/approach-This paper uses hand-collected information from SEC comment letters to analyze IFRS topics and documents the ultimate resolution of each SEC comment (no change to filing, current change to filing or prospective change to future filing). The authors use descriptive statistical analyses, as well as a logistic regression model involving the resolution of each SEC comment, to examine the SEC's influence on the interpretation of IFRS. Findings-The study finds both higher comment totals, and higher numbers of required filing modifications, for those IFRS pronouncements which were identified as needing improvement during the 2006-2008 convergence efforts by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB). Additionally, the study documents a decreasing likelihood of a filing modification when US generally accepted accounting principles (US GAAP) guidance is referenced in comment letter correspondence involving IFRS topics. Originality/value-The study extends the IFRS literature and the SEC comment letter literature by focusing on the resolution of comments directed at IFRS disclosures, as well as exploring the factors which influence whether a comment ultimately requires a filing modification.