Knowledge that Transforms

Abstract ABSTRACT: A certificate or license defining professional status implies that the holder has a certain minimum level of professional competence. Until recently, little attention has been directed by the public accounting profession toward whether a CPA maintains professional competence throughout his or her career. This study was designed to accomplish two objectives: (1) to measure the reaction of CPAs and users of CRA services to the structure of programs for upgrading CPA audit competence and (2) to measure CPA and user reaction to the effectiveness of eight specific competence-upgrading programs. Empirical evidence needed to answer the two objectives was collected by a mailed questionnaire sent to selected members of the American Institute of Certified Public Accountants, Financial Executives Institute, Institute of Chartered Financial Analysts and Robert Morris Associates. All responses were examined for statistically significant differences in the distribution of responses within and between groups. The empirical evidence collected in this study indicated a significant difference in the frequency of expressed opinion between CPAs and users of CPA services regarding the most effective, and also the least effective, competence-upgrading program. Additional research evidence was collected which dealt with the structure of competence-upgrading programs.

Abstract Reviews the book 'A Reference Chronology of Events Significant to the Development of Accountancy in the United States,' by C.L. Knight, G.J. Previts and T.A. Ratcliffe.

Abstract This article presents the text of a report by a subcommittee of the Committee on Financial Accounting Standards of the American Accounting Association which commented on a proposed accounting standard from the International Accounting Standards Committee in the U.S. as of October 2, 1977. The American Accounting Association is composed primarily of accounting educators and researchers in the United States and Canada. This objective of working towards an increasing degree of uniformity and, presumably, comparability among founder and associate member countries is difficult to associate with ED6 in any but a very long run context, if at all. While experimentation with the three alternatives mentioned in ED6 might eventually lead to the presentation of more uniform financial statements, a diversity of approaches are encouraged in the short run. Moreover, it is not clear that the IASC sees ED6 as an interim step on the road to a uniform current value and/or general price-level restated system. The IASC has set out, more clearly than many accountancy bodies, the dual problems that can arise under conditions of changing prices, the problem of taking into account the changing value of the monetary unit during inflation or deflation and the separate problem of allowing for changes in the prices of particular assets and liabilities! while they are held.

Abstract ABSTRACT: This paper reports on the technique of Probabilistically Answered Examinations (PAE) as applied to objective tests. The purpose is to establish the relevance of PAE in measuring student performance. A substantive, rather than normative, viewpoint is superimposed, that is, probability assessments are evaluated exclusively within the subject-matter domain in which they are made. After reviewing concepts underlying PAE, it is demonstrated that the methodology is likely to provide more complete information about test scores and the traits measured by the test than that provided by conventional procedures. Examples of performance measures and how they may be applied to PAE are provided.

Abstract Reviews the book "Financial Aspects of Private Pension Plans," by Mario Leo, Preston C. Bassett and Ernest S. Kachline.

Abstract Reviews the book "Theory of Accounting Measurement," by Yuji Ijiri.

Abstract Reviews the book 'The Concept of Materiality in Financial Reporting,' by James W. Pattillo.

Abstract This article presents the text of a report by an American Accounting Association subcommittee on accounting by debtors and creditors during cases of debt restructuring in the U.S. as of October 2, 1977. The subcommittee believes that statement users must compare statement data with similar data from several prior periods and with similar data from the reports of other firms of the current and several prior periods to make rational decisions related to firm valuation and/or management evaluation. Thus, statement data from period to period and from firm to firm must be comparable. Data are comparable when their rational use yields decisions in accord with reality. The mere use of identical accounting procedures from period to period or firm to firm does not assure comparable data. The subcommittee believes that explicit recognition of at least certain characteristics of the appropriate concept of net income is crucial to the resolution of the problems resulting from debt restructuring. It is apparent that, over the life of a firm, accounting statements report and statement users believe that net income results whenever more cash is received than is disbursed after adjusting for investments and disinvestments of the firm owners.

Abstract Reviews the book "Montgomery's Auditing," by Philip L. Defliese, Kenneth P. Johnson and Roderick K. Macleod.

Abstract Reviews two books on tax policy in the United States. 'Statement of Tax Policy No. 3, Elimination of the Double Tax on Dividends'; 'Statement of Tax Policy No. 4, Estate and Gift Tax Reform.'