As a background for the subject of this paper I will present several quotations from section 320 of the Statement on Auditing Standards No. 1 (henceforth SAS No. 1), which was issued in November 1972 by the Committee on Auditing Procedure of the American Institute of Certified Public Accountants. This Committee was the predecessor of the present Auditing Standards Executive Committee and SAS No. 1 was its final pronouncement. SAS No. 1 is a codification of previous Statements on Auditing Procedure (SAPs) Nos. 33 through 54, and No. 33 in turn was a codification of prior Statements. Section 320 of SAS No. 1 is primarily a codification of SAP No. 54, which included as an appendix a report issued by the AICPA Committee on Statistical Sampling in July 1964.1 subject of section 320 is The Auditor's Study and Evaluation of Internal Control, but the last major topic in the section deals with the correlation of such evaluation with other auditing procedures. I believe that section, together with the two related appendixes, provides the most concise but complete statement of the broad conceptual framework for auditing that is presently available in official pronouncements. Many of the concepts expressed in that section are readily adaptable to restatement in the form of partial or complete mathematical models and to application by means of statistical methodology, which is the general theme of this conference. It is for these reasons that I draw on this source to provide perspective for the subject of this paper.

Auditing, Internal control, Auditing procedures, Analytical review

Over the past fifteen years we have seen an enormous increase in the theoretical and empirical literature in the field of finance. This outpouring of academic research has had a substantial impact on the content of finance courses including the introductory course. However, the changes in content at the introductory level appear to me to have been evolutionary rather than revolutionary. Textbooks contain more analytical and theoretical material, but this material is provided within traditional structures. The contents of the chapters have changed but not the titles of chapters nor the sequencing. With minor changes in wording I would guess that course outlines of today appear little different from those of ten years ago. I am not particularly disturbed by these observations, but I believe it is time to take a close look at what we are doing to our students, and I would like to explore the possibilities of a more coherent approach to the introductory course.

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Professor Jennings, in his recent article [2], developed a model to estimate convertible bond premiums. The model incorporates the capital asset pricing model to evaluate convertible bonds. The purpose of this comment is not to criticize the general development of the model but to point out flaws in its implementation which influence Jennings' empirical results.

Journal Article Cost-benefit Rules in General Equilibrium Get access Robin W. Boadway Robin W. Boadway Queen's University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 42, Issue 3, July 1975, Pages 361–374, https://doi.org/10.2307/2296850 Published: 01 July 1975

[Changes in asset prices are shown to produce only substitution effects in a broad class of portfolio-choice models. Wealth effects are identically zero unless the individual's stocks of assets are subject to unanticipated changes.]