Accounting research, Citations, Contemporary accounting research

Accounting systems, Incomplete information, Accounting techniques

Auditing, Substantive test, Sampling, Sampling plan

Accounting information, Comparative judgement, Numerical information, Decision making

Financial ratios, Descriptive power, Industry level, Macro outcomes

A mail questionnaire was sent to random samples of members of the Institute of Chartered Financial Analysts, the American Institute of Certified Public Accountants, and the American Accounting Association. The questionnaire asked the respondent to rank the three alternatives in their order of preference. The results of the study show that a majority of the respondents in each group preferred the Arthur Andersen & Co. proposal3

Auditing, Job satisfaction, Maslow's theory, Motivation

ABSTRACT We examine management discretion to decide when and how much to write down an asset, in a unique case where a tracking stock provides an observable market value for the asset. We find that, despite market evidence that Inco Ltd.'s financial statements substantially overvalued the Voisey's Bay nickel mine throughout 1997 to 2000, management chose not to write down the mine until 2002. Inco management used an independent fairness opinion to justify its December 2000 redemption of the tracking stock at 25% of its initial value, indicating almost surely that Inco management was aware of the generally accepted accounting principles (GAAP) impairment. This case illustrates that GAAP's reliance on undiscounted cash flows for impairment decisions allows huge unrecorded disparities between book and market value. The management discretion exercised in this case provides a concrete example of the subjectivity inherent in fair valuation.