Industry sign banking new jersey moving checklist online
I thought weeks ago in the break a class in Brazil electronically and I asked students and their executives couple of PhD students couple of AI master students they did it with ivy and was a is course and I asked them what are the unintended consequences of virus crisis on the virus crisis and the word unintended consequences is not very applicable is an economics term because unintended consequences when you create a rule to resolve a problem like sarbanes-oxley and then other things happen that you didn't expect the crisis is certainly a king is influencing what our lives is going to be I want you I want to tell you what they came up with and see if you have anything to add actually these were two weeks ago I change my mind a little bit thing is virtual education see we're having this class it's going on okay I would love to see you guys and have a real in class I would call on you and see everyone's eyes and see if anyone's playing with their computer or with a cell phone here I don't have that but eventually there be tools that will help to do that I already know there are but I think you know I've been predicting for him now 10 years that local person to person education is going to give way substantially well not fully of course to virtual education and I think I talked in the faculty retreat last year and I said that large number of universities are going go bankrupt in action the last two years around 200 entities of education went out of business and they have been the kind of a turn towards commercialization of education now I think with the coronavirus situation people are going to become much more comfortable with virtual education and they will understand that they can collapse from Rutgers in New Jersey it's pretty much the same thing as taking a class from Stanford in California or maybe one in France although there is a time difference and of course some of the village education is non synchronous so you don't have to even be in the same time connected I actually think that this education is a tremendous expansion and that's a democratizing effect because at the end you can provide if your audience is large you can provide education much cheaper I always say this eventual education is a luxury ok second thing I think it has been substantially increased in a remote work the thing that we didn't think at that time or maybe we did think at that time is that some people will stay remote organization you will discover they don't need officers organization will create new ethics of working for home I make set or eccentric set certain things not acceptable before you become acceptable businesses will pay for your connection for your computers at home except to accept which they were already starting to fail we have seen now much more than when this one discussed many countries taking advantage of data that is public or is not public that is considered private in the u.s. we are now doing these geolocation or stuff to basically understand contamination with the virus okay I think Google and with Google and Apple are associating themselves and they are using Bluetooth so they identify Bluetooth is this kind of short-range communication methodology we have you all of you know it and basically a Bluetooth can flag the Bluetooth close to you so you to telephones close to it and the other very can have that you opt in and of course some countries might not allow opt in may force you to opt in and therefore if you are close to a person that was contaminated before there be a flag that you could have been contaminated that's just one example of the manners many exogenous variables that you can capture some of the very visible privacy now some more personal things people are getting more used to the mode shopping and the costs of people remote shopping but the other side of the coin is there many organizations that didn't emphasize business remotely and now kind of saying that's the only way we can do business and they are learning how to do it and how to do it may be cheaper okay a business kind of story that they mentioned is their trading algorithms which have maybe 80 85 % of all stock trading basically don't work very well in the nonlinear part of the continuum and so rapidly mathematicians that work on Goldman Sachs and etc are thinking about how do we deal with reading in this environment remote socializing is happening people are lonely people to have to stay restricted to one room people sometimes are quarantined in their rooms and so they meet with the friends they meet with a girlfriend they meet with a dog remotely any way anything what they are a couple of things he thought was kind of cool that the people in Brazil said the students in Brazil said I'm doing a lot of housekeeping now that I never did his I ladies that wear that I'm in the workforce and in Brazil you get maids and so they say well no I don't have a maid I have to do thing is all kinds of new issues are coming up should there be substantial increase in be legislation dealing with work from home protecting people that work at home except are difficult to exactly think what's going to happen on that I actually predicted they actually predicted an increase in birth rate I think we knew things that happens then the last one is substantial increase its knowledge of how to work virtually and how to live with virtual component I'm stopping here I just want to see if any of one of you have any other effects that you think are going to happen thinking that if all the schools are teaching what is the privilege for universities and colleges compared to all the online free resources like you can you can just learn machine learning from Jose around from him so forth for those that they have difficulty to pay for the tuition I I think at that time if we all shift our university resources into remote learning I think these are very very insightful comments and they're very parallel to what I said I think I think prentice-hall and now we are all macro here the publishers have an advantage on preparing educational materials because they can allocate that cost over 100 universities not over one I think that certain basic generic education you can just work out of a textbook and you can get Tom Cruise to teach it you know get someone very charismatic as the best first get professor Alex to develop the materials and Tom Cruise 2-digit you know professor sanella is very charismatic have him do the teaching okay so and and I think the question is what's a role of the university has to be raised I think you are you're totally right raising and I think was going to happen cost anything subjects that just say that intermediate accounting these kind of stuff that can be learned what you've mentioned that that can be there from textbooks those can be actually I'm substituted by these context providers or of Coursera online zone providers but let's just say that more it kind of like creative stuff that's just a there when we talk about a continuous auditing these kind of stuff cannot be actually I'm discussing textbook there should be experience there should be some kind of deep thoughts about these things I think that the university rule would change I should teach about these sophisticated stuffs they said up those things that can be learned simply by just audio materials yeah I I agree with that thought and I always say the basic repeatable you know professor teachers in one of the state colleges they teach four courses a semester when you take a job if you take a job here in the US you're going to ask your department chairman I want to teach introductory accounting and I would like to put all my courses in one semester so I can do research on the other semester that's terribly petty thieves not a lot of attention to the student acceptor stuff now research type of things all advanced courses like this one really a very difficult to package except for one thing that I would like to bring up mr. Guber is there is a rule for groups or see I am NOT being very successful on getting you guys to speak up you did but etc but if everyone gives an opinion then you have a lot of permeation or expansion of ideas but you can't do that with a course with a category of knowledge I let me just say one more thing I did there be an other category of knowledge that are going to be benefited in a different way I think if it's a narrow domain knowledge is that knowledge that not too many people are interested but you can find one in the soul born one in England one in here that thing so you find the people of the same interests those things are going to benefit tremendously on a kind of different way of Education okaythat's was that you and the other points education oh sorry just say about conferences is he much easier to actually access to other conferences these days just they're opening up they are actually making people to join from any other places so that to say that for triple a so if you want to join the triple a conference you have to register and you have to come to United States to join the meeting but now that to say that if they're actually providing these kind of conferences on like WebEx then anyone can actually join there and it's gonna be more expensive discussion I also saw the I'm cyber security conference from New Jersey State and New Jersey actually they're almost like more than like thousands of people actually joining that conference because they just can access it much easier to actually had this kind of discussion with other people yeah I think that's a good very good point conferences meaning I have been last two years traveling one third of my time talking in comfort very often repeating a particular lecture that I gave with different angle and etc virtual conferences are going to change a different antenna but conferences more even the diffusion of knowledge served to meet friends and to make relationships and that will be more difficult correct area no it's like uh it's like or uh I did like there is some like other side so now I can make more friend because because it's a virtual I don't need to actually go to somewhere to me people but I can just check with them during the meeting and they say that why don't I just email you so I can just like have a conversation with that but under the other side make a meeting and person is really also important so there could be different kind of consequences I guess so I think that it can be hybrid so people who can actually come to that conference if they don't have more benefit let's just say that people in India is really hard to come to United States but if they can actually have this kind of like a virtual conference with lower cost to join the meeting then it's gonna like make it more expensive discussion I guess yeah actually that's a good point I think just the nature of conferences are going to change a little bit you know with this course and this course when before my sabbatical I made it open and some people in other countries have listened or are listening it's little bit different I actually I will you gave me an idea I think we should invent the course like three credit course at Rutgers which entails attending virtual conference and you would go to Professor Alec so to me and say I want to attend the cybersecurity conference and today when you I was talking about about the system dynamics society and I don't know if their conference is free or not actually I know it is it's not free you pay according to your means register if you are in you declare your income if your income is up to $30,000 registration is $30 if your income is higher than I don't know what top registration is 140 it's a different model correct interesting model maybe I should give win drew three credits attending that conference always maybe give a little exam to Andrew or ask the instructors on that conference to give give an exam or something like that it's again it's a different form of learning it just occurred to me interesting meaning the whole reason why we act we create our digital library is we ten years ago saw that this is going to be a means of learning now how how far this is going to walk it's strange I want I need to stop here because I want to cover some other papers and can I ask every one of you to think that following put it on a paper you don't need to send it to me maybe a discuss it next time can you think about how is your life going to change in consequence of this I actually in the last month change my thinking a lot about the consequences I think the consequences before I just thought well you spend a month insulated then go back to the old behavior and now I hear the conference's being rescheduled and business is going down I start thinking maybe the consequences there is going to be some larger not going back to the normal just one more comment and I have been saying for a little while that the economy was over pumped up President Trump is I mean to have a good economy when he comes up for election have a decrease interest rates increased substantial support to business eliminate the business taxes it all kind of things the column is like a balloon has been ballooned ever I have been saying one of these days something is going to happen and we will have another 2008 or maybe not as deep but something like that what I didn't expect at all that this would be a pandemic not I thought maybe Italy is going to go bankrupt or some industry is going to take a big a big hit or accept accepted so that has been kind of my thought but this I want all of you to think what is the going be the longer term effect on your behavior your choices in your personal life of something like this okay let's stop here and started can you talking about fair value measurement hi can you hear me yeah you and I can see those lines okay so let's start so today we are going to talk about the fair value measurement in Odyssey evidence from the banking industry II so this paper is motivated by the claims that fair-weathered answers are usually difficult to audit and studies of Odysseys routinely exclude financial companies there is a lot of existing evidence regarding the effect of industrial specialization and bank Odysseys inland on the interaction between auditor industry expertise and fair-weathered assets and it is effects oddities so this paper explores first whether all the fees are positively associated with the portions of bank assets that are fair well owed second whether this relation is more evidence where the lists verifiable cerebellar assets third whether auditors who are bank industry specialists charge more or less than other auditors to other banks and in particular two other farewell rock bank assets the the author's use publicly treat treated bank holding companies data from 2008 through 2011 and document that yes to the first and second question and for the third research question they found that whereas Bank specialists auditors define as in Veneto charge lower total fee to bank coins on average compared to non specialists they charge more for auditing less verifiable fairweather assets and we have to learn that the three levels of includes used in fair value measurements you better understand this paper so that a level one as a list subjective in most preferred well the level three is the most subjective and list preferred access values obtained using level three improves incorporate little or no market-based information such as observed training prices for a similar or identical assets if that lower three input typically consist of models incorporating projected cash flows discounted as assumed rate but now let's look at the first hypothesis robbing at all argue that fear valued data are more difficult to audit than many other types of data first they argue that generational farewells involve considerable measurement uncertainty managers must not only provide assumptions or estimate they must also choose an RS Tamizh estimation porches and difficulties are less substantial with farewell OSS based on level 1 inputs and I'm most pronounced for fair value obtained using a level 3 includes the second is that all are compare values arguably poses greater task difficulty relative to many other types of efforts there this farewell lakh objective there's t
e verifiability so that auditing Fiorello data is less structured than many other tasks so therefore auditors respond to greater difficulty in auditing fair values by devoting greater resources such as x air force to others resulting in higher observes other fees so the hypothesis - all else being equal proportions of bank total assets that our farewells are positively associated with banks are the fees so the difficult is in auditing farewell is increase when farewell is are based on level 3 includes this is this is due to the subjective nature of value valuation models used for level 3 fear value as we have discussed the PCAOB also states that improves based on company's own data may be more such as susceptible to prepare a buyers because they may not be based on observable market inputs so others should be aware of the increased risk of management bias and address their related risk of material misstatement so we can con sekinchan 1 second you all know what level 1 level 2 level 3 is she talked about 1 & 3 she didn't talk about 2 or in-betweening right yeah I think you could understand it here in this way moving from one two three one two three is that from the list of subjective to the most objective I think this is a most important the key point you have to notice to understand this paper okay do you know any examples you give of level 1 and level 3 I can I want you to example that level 1 the assets that you can look up the market value versus level 3 there's no market for that the prices can be very volatile wine temp of the level 1 can be let's say like assets traded on the market stock traded in the market but level 3 can be lets say goodwill there is no market for that and it's all subjective judgment stocks that are not public 8 hidden that they did private placement company buys a piece of a start-up decides to pay 20 million dollars so that one year later they want to value that asset the only way they can really do it is historical cost that's the startup had another issuance of stock oil and there was a valuation of the share value of that and - is something like thinly traded so thinly traded stocks bye-bye the stock great but doesn't spread very much as we stick I just thought was important to clarify here the second hypothesis is that all else equals a positive association between the other fee in the proportion of banks and total assets that are fair railroad is strongest for as is fair well as using the level three inputs the examining the effect of the bank specialist auditors are all the fees we considered two competing scenarios the first is product differentiation scenario in which industry specialists auditors receives enhanced all the fees compared to non specialist auditors second is the shared efficacy scenario in which they charge reduced fees so in we come both scenarios enjoy some empirical support but I didn't live here the given the contradictory pricing scenarios restate our hypothesis in the now form that is or else being equal there is no association between banks oddities and auditors banks and industry expertise in addition we also explore the bank industry specialist auditors whether this specialist auditors charge more or less for auditing farewell assets again given the contradictory pricing scenarios we state the hypothesis in a now form which is all else being a causal association between the auditing be in proportion of that are fair well it is not associate it was the banks with auditors Bank industry expertise so theta the table one represents details of sample selection the data covers years from 2008 through 2011 and the selection procedures leaves us with 1022 each firm year observations with 299 unique firms for our level test this paper employs the banking industry audit fee model employed by fuse at all the baseline model for analysis the dependent variable is a long Odyssey which is a natural log transformed value of all the other thieves and the valuable variables of interest are fair value SS 1 2 3 which are defined as a farewell SS amounts measured using level 1 2 and 3 inches respectively deflected by total asses there are also some control variables as listed so to test hypothesis one we should aggregate the level 1 to 3 to form the variable karela asset total and test whether the coefficient farewell asset toto differs from Liril the hypothesis 2 should pass to whether the beta 3 differs from beta 1 and beta 2 the second in order to test hypotheses 3 as well as four we employ two what we use industry specialist measures the first measure is a continuous measure captures the magnitude of clients asset in a specific industry relative to the audit firms total effort audited it equals the sum of the square root of the total asset of coins that auditors have in a banking industry each year deflated by the sum of square root of the total assets of all coins of the auditors you I cannot hear you I touch his quiet I didn't see her mouth moving oh go ahead chan we can't heal she's trying to call him again yeah she was she was a she couldn't do communications okay she's getting yeah I caught a link so it's yes yeah I'll continue so this higher values of the is PC one suggests greater industry expertise the second one is I of T C 2 which is which measures both national firm national firm and local office bank industry expertise it equals one if the auditor is relating firm low-level auditor in the financial industry given or if the audit and if the audit office is also the living Audit Office in the financial industry in a specific city and a specific fiscal year so to test hypotheses free we did add these two versions of is PC to the equation one above individually to examine how all the first expertise affects the total of the fee charged to banks as in equation two and based on the product differentiation enhanced narrow the Phi one should be positive two based on shared efficiency scenario implies that Phi one should be negative to investigate hypothesis work we should we at the fair value as a proportion variables and the interaction terms of each such variables with is PC - explore whether Bank industry specialists auditors charge more or less for all the team's aerial assets the coefficients of the interaction terms it could be either positive or negative based on these choose Muriel's so the table three represents a result were of the estimation of equation one the model two of Table three tests hypothesis one and that is whether the coefficient on the proportion of fair value access to total SS differs from 0 the coefficient is positive and the typically significant thus rejecting the now say without therefore it's consistently the scenario in which various measurements increased risk and auditors correspond lying increased efforts reflected in higher feed pricing the right column test the rightmost result column test hypothesis to unravel it at F test reject the null hypothesis that the three variables have equal coefficients and furthermore the reduction that both the coefficient and the Associated T statistics increase as increase use for fair value measurement become less reliable the coefficient of fair will load 1 2 & 3 are 0.5 0.5 1 and 7.48 respectively whereas the coefficient on the fair value 1f evolute you are not distinguishable from each other using in ante and an tabulated F test and the coefficient on fair value 3 is greater than either of the other two overall this results in the second and third set of results column provide evidence consistent with the hypothesis 2 in the table 3 I'll present the result of the estimation of our change maldo derived from increasing one to overcome the correlated omitted variable problem and the results from the change analysis is consist in supporting hypothesis one but it's weaker in supporting hypothesis two so we look at the table file which provides test of hypothesis free the variables of interest is is PC which is proxy for auditor specialization in Bank industry clients the is PC one captures the importance of being industry clients relative to the audit firms overall client base under this definition server Mumba confirms qualify as bank industry specialist law is PC two is coded as one as the bank employs a big in auditors that is both city level and national level bank industry specialist based on industry market share the model one includes only ISPs u1 the mother to includes only is PC two and the model three includes both the coefficient on is PC one in both model one and three are negative and significant this is consistent with their shared increasing efficiency scenario in contrast the coefficient on is PC QE model two and three are positive and significant consistent with the big in banks specialist harsh the premiums so are just you contradictory the answer is no because big and auditors are not bank industry specialists when specialization is measured by ICC one note that all the equation tier models in Table five include a separate variable that is big in so as VC 2 does not proxy for the auditors speaking status the resulting table file suggest that number and others that our bank specialist based on the portfolio measure of expertise achieve cost savings that are at least partially passed on to their bank wants as lower fees however they can't auditors that are both office level and national level bank industry specialists based on bank industry market share are able to command premium fees even beyond the fee premiums charged by nan specialist big and auditors the results suggest that industries market living bigan auditors are able to capture fee premium so we look at table 6 which for what test of hypothesis for in panel a we explore whether the bank industry specialist auditors charge more or less auditing farewell assets using is Dec 1 the model 1 test hypothesis for using the fair weather assess proportion as a whole lot multitude tests using this aggregated fair value asset proportions the values of interest in model 1 is the interaction term also estimated coefficient as positive and significant which means although industry specialists measured as a specie 1 charge their bank wines lower Toto a disease those fees are increasing in proportions of fair value assets in model to the the variables of entries are also the interaction terms the coefficient and the second interaction term is positive and significant the other two are not significant this suggests that IFC see one bank industry auditors charge more for auditing larger portions of Louisville to several assets this might because the level to assess constitute the overwhelming type of fair value access held by the sample banks so we look at a panel B which represents test of hypothesis for using is PC to the model one chips that ICC to loses its explainer explanatory power as a standalone variable when it also is interacted with with the Fairweather asset and the interaction term is the and the interaction terms coefficient also is insignificant the mother to result columns are similar so panel B suggests that result they're fail to reject the hypothesis for now when auditor industry specialists are defined as per is PC to overall the table five and table six results just that given that is PC one Bank specialist alters charge lower fee to Bank lines on average they charge more for auditing higher portions of less verifiable fair value assets in particular level two assets we could speculate that ICC one Bank specialist they will more effort to auditing less verifiable verella assets and achieve the cost living in other aspects of audit to offset these incremental cost the SEC to Bank specialist auditors charge higher fees to Bank lines our average but the data did not suggest that they charge more or less for auditing higher portions of less verifiable farewell assets the latter result should be due to a local that has portion that banks audited by SPC to specialist auditors is only four percent so the although the IFC CTU has explanatory power as a standalone variable in that table size its explanatory power appear student I lose it when they disclose used as a standalone wearable and interactors with the farewell proportions so in summary this the port proportion of variable access held by banks are positively associated with all the fees this relations more evident for the list verifiable which is the loved three favorable assets Bank specialists auditors the fundamental charge lower audits the average but they but that there are the fees increase o with the portion of assets that are fair well is especially those based on level to increase banks specialist auditors if I'm in friendship at all charge higher fees to bank clients are average but the data do not support a suggest that they charge more or less for auditing higher portions of less verifiable Fairweather acid finally there are several common stew there are several points to be mentioned first I think that they're of the most learning there is a need to notice that routinely excludes the financial companies and the second is that despite the lower power of the tasking we end the result provides some explore exploratory evidence of the evidence of the effect of auditor expertise on the relation between audit piece and gear value measured assets and third it that is there a more a pro create auditors expertise measure for use in the banking industry if we can't find one then we could provide better evidence for whether auditors who are bank industry specialists charge more or less than auditors to banks audit banks and in particular to obviously irrelevant assets and the finally took a careful discussion of the causal relationship via future research topic now we could only say that there is a relation between the affair well SSLC however the firm's with higher portions of level 3 might also be the ones that are more likely to manipulate earnings so that this will attenuate the effectiveness of the idea that greater difficulty in the auditing farewell is by devoting we're resources to you are they result in higher service auditing the other piece so guys that you comment survey and be very something like effect size so wonder if you look at the results of Table three there is no improvement in our skirt so ting can you say that research is statistically significant but can you say that having some impact I'm not like I'm not sure if I understood the effect size right but look at the table 3 there are squares point nine one still that although you add more variables such as like FB a so with level 1 and level 1 to 3 or just any like very value measure so the r-squared dozen in the original model so not sure if this is like like has a great impact or what do you think Chen what do you think Chandler I didn't quite get the question actually yeah there is not a lot of impact shown into the table to be correct you me but if you look at the it's actually I mean this is significantly different but does it really have the impact on the Odyssey I can help answer this question so I Square reported in this table it's adjusted R square which into consideration the number of variables you include so if you want to look at the so the impact that you mention is that to actually the economical impacts right so in that case we actually looked at the coefficient and see whether the change in the coefficient is considered as potential or economically valuable in change so in this case you focus more on statistical significance as well as the coefficient so actually here the R square is already pretty high but nowadays people actually so you focus on R square when you want to see whether the variables you include can explain like a lot of the changes in the dependent variable and it depending on the situation you may or may not focus on the square and I think that in the situation just they can just look at the efficient and statistical significance to make the conclusion that's why the r-square is not the key where you draw the conclusion from
