Abstract The article discusses the advantages of using Bayesian statistical methods in audit tests. Bayesian methods accept the "subjective" nature of experience and other collateral evidence and blend it with the "objective" nature of actual sample test results. The auditor is constantly faced with a decision situation common to most economic problems-resource allocation to achieve optimal results. Bayesian statistics are decision oriented, concerned in particular with the economic consequences of making right or wrong decisions based on probabilities. The auditor invariably has a good deal of historical and current collateral audit evidence about the expected characteristics of audit test areas. The auditor should integrate this evidence into the statistical analysis of sample results. Bayesian statistics is the method that integrates such evidence in the form of a priori probabilities. The auditor thus gains the maximum value from the audit sample. The auditor is less likely to over-extend or under-extend audit procedures.

Abstract This paper is an attempt to discredit the general price-level adjustment proposal on theoretical grounds. It is argued below that general price-level adjustments are inconsistent with the nature of the business enterprise and the function of financial statements of the business enterprise. They are used to measure the comparative value of the monetary unit at different dates. A dollar at one date may be a larger or smaller percent of a dollar at another date in terms of value represented. The same value at two points in time may cost different amounts of money. For example, $1.00 one year ago is the value equivalent of $1.05 today if the general level of prices has increased live percent during the year. The essence of the general price-level adjustment process is to restate the $1.00 entry of one year ago to $1.05. In this manner the chronological series of original dollar amount entries to the accounts of the firm are converted into value quantities of a unit equal to the current value-size of one dollar. Most explanations for this serious breach between accounting theory and accounting practice stress the many practical problems of making and reporting general price-level adjustments.

Thomas A. Buchman, John A. Tracy, Obtaining Responses to Sensitive Questions: Conventional Questionnaire versus Randomized Response Technique, Journal of Accounting Research, Vol. 20, No. 1 (Spring, 1982), pp. 263-271

Abstract Reviews the book " Accountants' Handbook," 6th ed., edited by Lee J. Seidler and D.R. Carmichael.

Abstract This article examines a proposed model for accounting flexibility. Mathematical models have been constructed to characterize many accounting problems. No less susceptible to modeling is the well-known phenomenon of flexibility of choice in the application of generally acceptable deterministic models to income measurement in identical or similar circumstances. Borrowing from the mathematics of combinatorics, one can calculate the congeries of different ways to determine net income implicit in the inventory of deterministic models available to a given entity. There are as many possible combination of income figures as there are different ways of applying the different deterministic models to the given measurement problems. One assumption interposed is that judgmental estimates of data, where applicable, would not vary among models. For example, estimate of useful life for fixed assets would not vary among different models. Only different mathematical operations are performed on the same data. Accounting flexibility represents the number of different ways to net income that the number of net income combinations equally competent accountants could take working with the same data for a given entity.

Abstract This article proposes an approach to a second or intermediate accounting information systems course, presuming that the students have had a broadly oriented introductory course in accounting information systems plus introductory courses in quantitative analysis and statistics, managerial accounting and data processing. These prerequisites should not provide any obstacle to the currently enrolled or future senior and graduate accounting majors for whom the course is primarily designed. The major requirement of this proposed course is to design an overall integrated computer-based information system for a hypothetical business firm that is highly simplified but typical. Students are formed into teams, and each student team concentrates on a major area of the firm that it is assigned. In conclusion, a course involving the design, implementation and evaluation of a computer-based information system is a logical addition to the accounting curriculum. It will help to fit the accountant for his future role in serving the business firms in several ways: by utilizing the computer to show how accounting provides data for a total management information and decision-making system, by integrating in a practical and realistic way many of the concepts and techniques that are taught in the present-day accounting and quantitative analysis curricula, and by building up the knowledge regarding computers and information systems to the level advocated by the recent major studies of education for the accounting profession.

Abstract This article presents a proposed auditing exercise which can be used in discussing a taxonomy of evidence and evidence-gathering techniques. This exercise involves the use of a view-graph slide showing a scene that contains qualitative as well as quantitative characteristics. The particular slide that the author uses shows a profile of people riding on a bus or street car. The scene is fairly typical in that some people are standing while others are sitting, and the vehicle is carrying men, women and children of different races, some of whom appear to be engaged in conversation. This exercise is built on the maxim that a picture is worth a thousand words. The auditing instructor can develop any number of taxonomies to discuss evidence and its reliability. However, many students will probably not get the message. The exercise is a symbolic rather than logical means of communicating the message. It does not have to replace the professor's scholarly and logical explanation, but it can reinforce it. Three specific and relevant points can be made to auditing students in the discussion following their participation in the exercise. First, the evidence-gathering technique of observation can be evaluated. A second pedagogical point for which this exercise can be used is to discuss the variations in the reliability of audit evidence, especially testimonial evidence. A final pedagogical benefit of this exercise centers on the communication skill needed by the auditor.

Abstract This paper summarizes the extent and types of coverage of cost accounting topics in the ten CPA exams during 1966-1970 inclusive. Comparisons are made to my earlier study covering the period 1956-1965.

Reviews the book "Basic Accounting for Managerial and Financial Control," by Albert Slavin, Isaac N. Reynolds and Lawrence H. Malchman.

Reviews the book "An Introduction to Corporate Financial Statements," by Robert W. Greenleaf.