Knowledge that Transforms

Reviews the book, "Accounting Practices in Japan," by Gerhard G. Mueller and Hiroshi Yoshida.

Reviews the book, "Accounting, Computers, Management Information Systems," by David H. Li.

Reviews the book, "Methodological Presuppositions in Financial Accounting Models," by Harvey T. Deinzer.

Auditing undoubtedly appeared shortly after man began to record governmental and commercial transactions for you have evidence that even the earliest records were audited. The first attempts to reduce transactions to some medium more permanent than memory probably took a semi-mechanical form. Man probably began a more formal recording of transactions in the dim past when trade between tribes increased. At first, pictures of the objects traded may have been used but by 5,000 B.C. symbols, mutually intelligible to tribes of diverse languages, had been developed. An early Mesopotamian civilization, the Sumerian, recorded commercial transactions on stone dating back to 3,600 B.C. and on day tablets beginning about 3,200 B.C. It is here that the auditor first gives concrete evidence of his existence and that you find the first examples of internal control. In ancient Egypt in the Pharaoh's central finance department, the "house of silver of the treasury," internal control and auditing were In use. Scribes prepared records of receipts and disbursements of silver, corn and other commodities. One recorded on papyrus the amount brought to the warehouse and another checked the emptying of the containers on the roof as It was poured into the storage building.

The article presents information towards a multi-level, multi-goal information system. Work in industrial operations research has been proceeding now for twenty years. A major by-product of this work is the concept of the firm as a complex total system, resembling a living organism rather than a machine. The relationship between firms and biological systems can, of course, be pushed too far. Transfer of theory from one discipline to another may provide nothing more than superficial analogies. The total system concept, however, is at least a picturesque way of saying that a firm is a set of activities that must be coordinated. A firm certainly is not alive, but it has to behave like a living organism. This desirable result will not be achieved without a great deal of work, unlike the situation in a living organism with its ready-made organization structure. Embedded in the organization structure of a living organism is its information system this too must be designed for the man-made firm. Investigation into productivity in British firms concluded that the most important determinant of a firm's potential for growth and improved efficiency is the ability of its management to lean about its environment. Like the operation of the thalamus, the accounting function both assists and controls the management group through the information it selects and transmits to it.

The central purpose of accounting is to provide information, a few would disagree with the statement, yet many would disagree about the nature of the information that can and should be provided by the accounting process. The purpose of this paper is to create an awareness that at least two definite lines of thought exist and to encourage accountants to give explicit recognition to these lines of thought in their research endeavors. Each line of thought is considered in terms of one, the primary goal of accounting, two, the approach to definition and measurement, and three, the nature of associations. The primary lines of accounting thought with which this paper is concerned are labeled pragmatic and empirical. They are related to the accounting goal of providing information and they have substantially influenced the development of accounting theory. The role of the two lines of accounting thought are similar in many respects. Because of this similarity, the fundamental differences in the goals have often been obscured and many conflicting and incompatible concepts in accounting have not been exposed.

Reviews the book "Decision Analysis: Introductory Lectures on Choices Under Uncertainty," by Howard Raiffa.