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Economic Models of the Labor Market and Pension Accounting: An Exploratory Analysis.

James E. Pesando; Carol K. Clarke
The Accounting Review 1983 58(4), 733-748
Abstract ABSTRACT: This paper argues that the analysis of the tradeoff between current wages and pension benefits offers key insights into the problem of pension accounting. The paper examines this tradeoff under two "polar" models of the labor market, a spot model and a lifetime contract model. Using the matching principle, the paper then examines--for each model--three important issues in pension accounting. They are: (1) the use of accrued versus projected benefit valuation methods; (2) the distinction between vested and non-vested pension benefits; and (3) the treatment of pension liabilities created through retroactive plan amendments. The models differ in their implications for (1) and (2), Both models suggest that the extended amortization of liabilities created through retroactive plan amendments may be inappropriate.

The Auditor's Report: An Analysis of Opinion.

Jesse F. Dillard; Daniel L. Jensen
The Accounting Review 1983 58(4), 787-798
Abstract ABSTRACT: Recently the Auditing Standards Board withdrew its proposal to clarify the language of the standard short-form audit report. This paper examines the responses by preparers, auditors, and users of financial statements that precipitated the withdrawal. Although the extent of unfavorable general reaction does not provide a complete explanation for the withdrawal, the differing reactions of various groups to its specific proposals suggest that a less ambiguous report may require a broader consensus concerning the functions and responsibilities of auditors.