Knowledge that Transforms

Reviews the book "Segment Reporting for Managers and Investors," by Alfred Rappaport and Eugene M. Lerner.

Reviews the book "Accounting Principles: A Canadian Viewpoint," by R.M. Skinner.

Reviews the book "Taxation of the Closely Held Corporation," by Theodore Ness and Eugene L. Vogel.

This article empirically examines the motivations that management of a firm might pursue in making accounting changes. The 100 sample firms selected for the study were stratified according to whether or not they had received at least one consistency qualification during the ten-year period of 1959-68. Implicit in the use of size as the variable in the testing of the foregoing hypothesis is the assumption that larger firms have their financial performance subject to greater scrutiny in the financial press. Such an assumption seems realistic in view of the fact that larger firms generally have more stock outstanding and more stockholders, thus making news about those companies of interest to more persons. Data on industry classification were gathered so that it could be determined whether this characteristic had any effect on the number of consistency qualifications received. Firms receiving at least one consistency qualification were found to differ from firms that received no such qualifications with respect to both size and auditor.

Comments on the research paper entitled "The Need for and Scope of the Audit of Management: A Survey of Attitudes," which was published in the April 1972 issue of the journal "The Accounting Review." Opinion on the work of independent certified public accountants who are engaged by clients to perform audit work; Expansion of the work of the auditor in government operations beyond fiscal and accounting matters; Information on the importance of reliable financial records and reports on the handling of public funds in assuring compliance with applicable laws and regulations.

Presents a reply to a comments made on the article "The Need for and Scope of the Audit of Management: A Survey of Attitudes," which was published in the April 1972 issue of the journal "The Accounting Review." Lack of understanding on the objective of the survey; Difficulty in implementing an audit of management; Involvement of a subjective judgment in any internal control evaluation.

Comments on the article "Socio-Economic Accounting and External Diseconomies," by Ralph W. Estes, published in an earlier issue of the journal "The Accounting Review." Requirement of a Pareto optimal allocation of resources; Need to develop the necessary methodology and a consistent set of standards which may be applied more or less uniformly in the measurement of social costs; Fact that ignoring social benefits may actually result in a less efficient allocation of resources than existed when social costs were disregarded.

Reviews the book "Disclosure by Australian Companies," by Robert William Gibson.

Presents a reply to a comments made on the article "A Problem in Discounted Cash Flow," published in an earlier issue of the journal "The Accounting Review." Problem of the precision required in the tables one uses to expedite his calculations; Improbability of the instances predicting losses in some periods, to secure the alternating signs that signal the possibility of multiple interest rates; Statement that using one year as a period length is arbitrary.

The article presents information on a grading guide developed for use in a basic auditing course. The grading guide shown in the article was developed for use in a basic auditing course in which the satisfactory completion of an audit practice case was required. In the initial use of the guide a more objective basis existed for the assigned grade than was available by the use of prior methods. In the following semester, the guide was distributed to the students as a part of the assignment materials for the course. During the semester the quality of the students' work appeared to improve due to a better understanding of the grading process between student and teacher. In addition, the checklist added to the professional aspects of the practice set by placing emphasis on audit documentation and review of working papers. Repeated use of the guide has confirmed the early impressions.