Features the accounting profession, Modern Internal Auditing. Signs which herald the advent of the profession; Analysis of the fields covered by Modern Internal Auditing; Career opportunities for Business Administration graduates; Pressures for formal education in Modern Internal Auditing.
This article presents a study on the discriminant analysis as an aid to employee selection in public accounting in the U.S. The employment function of large certified public accounting firms statistically assists the employment manager by predictively eliminating unacceptable applicants from his consideration. In so doing the analysis allows a larger number of the applicants' qualities to be evaluated simultaneously than are possible through the mental processes alone. Consequently, the manager is able, on the average, to hire a larger proportion of superior applicants who will work harder and remain with the firm longer. The level of experience and abilities for the firm's personnel increases in each functional area within the firm, thereby increasing the quality and quantity of the firm's output.
Discusses how computer simulation could be used to provide management with a measure of the risk on a capital investment project. Simulation procedure; Details on the computer program used by managerial accounting students.
The article presents the author's views on the concepts of information value, in reference to an article written by Theodore J. Mock for the October 1971 issue of the periodical "The Accounting Review." The author says that Mock attempted to extend the theoretical work of information economics from a decision value focus into model and feedback information value. The author adds that Mock's definitions of information value add nothing new to the theoretical work of information economics. Furthermore, the measure of information value that has been previously developed in information economics subsumes the measures of Mock.
The article focuses on the use of computer as a teaching tool in accounting. Using the computer as a problem-solving, teaching tool benefits the process of learning in a variety of ways. The successful utilization of analytical techniques comes only when one understands the synthesis of the technique. Using the computer as a teaching tool has the potential for reducing computational burdens involved in analysis and thereby increasing the range of approaches that may be made to a problem. As a result, the student is able to spend more time on substantial issues and less on the detail work involved in many cases. It is then possible for a better understanding of the analytical and theoretical aspects of the problem. Essentially, the computer in its role as a teacher creates and controls an environment in which two kinds of learning may occur. At an early level in their college program, accounting students should complete coursework in basic computer programming. There should be coverage of the capabilities and limitations of electronic data processing systems.
This article presents information on cost coefficients in a linear programming model. The discussion indicates that opportunity cost is not necessarily the appropriate definition. A product mix linear programming (LP) model is used to illustrate ideas. In considering what definition of input prices is relevant in LP, other researchers have concluded that input quantities should be prices using an opportunity cost per unit of input, which is the highest return foregone because the input is used in the system modeled. Researcher H.G. Jensen assumes that the best alternative foregone from which these opportunity costs are derived is either the alternative of not acquiring the inputs or the sacrificed alternative of selling the inputs if they are on hand. If opportunity costs per unit are used to price inputs on hand, then the optimal solution indicates the excess profit obtained by using these inputs in the system modeled over what could be obtained by immediately liquidating them. This profit measure, therefore, reflects a short-run view of the firm.
The article critically analyzes the method for calculating the cost of a lease given by economist Thomas H. Beechy. His method involves finding that rate of discount that would make the present value of the cash flows resulting from the decision to lease equal to the cost of the asset being leased. In other words, this discount rate is an internal rate of return, as such and it suffers from some defects of that concept. The rate of discount is supposed to represent the cost of the lease in a form that is comparable with other forms of financing. But Beechy added a non-cash element into his analysis, resulting in his lease interest rate being analogous to the gross, or before-tax, interest rate on debt. An adjustment to Beechy's rate is required to obtain the rate that is directly comparable with the after-tax cost of debt. A more direct way of calculating the after-tax interest rate implicit in a lease is also given. Beechy's implicit lease interest rate suffers from the defects that multiple solutions may exist, no real solution may exist and each solution is consistent with an assumption that surpluses are reinvested at the internal rate of return, and accordingly, if this assumption is not valid, an improper ranking of mutually exclusive relationships may occur.
The article seeks to illustrate a functional approach to those relationships with which accounting is involved. One application of functionalism as a theoretical and analytical approach is that which has been utilized mainly by certain influential sociologists. A wide range of data has been subjected to functional analysis. A basic requirement is that the object of analysis stand for a standardized feature of a social system or subsystem, such as roles, institutions, norms, and organizations. The properties that receive emphasis when systems are viewed functionally are integration, adaptation, contribution, and maintenance. The parts of the system must be aligned with each other and with their goals or ends, and the variables must be adjusted towards the maintenance of the system, even in a changing environment. A measure of the importance of a part, as well as a means of identifying it, is the contribution that it makes to the total of system activities. Functional analysis bears on the structural activities within a system. This being the case, a functional approach to accounting should provide an understanding and improvement in the relationships among accounting and other information or facilitative agencies.
The problem of interperiod income tax allocation is not a new one. As early as 1944, the Committee on Accounting Procedure of the American Institute of Accountants recommended that, "where an item resulting in a material reduction in income taxes is charged to or carried forward in a deferred charge account, or to a reserve account, it is desirable to include a charge in the income statement of an amount equal to the tax reduction." In the intervening two decades of discussion and debate no clear consensus has emerged regarding the "fundamental questions about the nature of income tax and the validity of the concept of interperiod income tax allocation." When income tax is allocated today, it is current practice to approach the problem on an asset by asset basis. Tax deferments arising from the difference between the accelerated depreciation claimed as a deduction for tax purposes and the amount of depreciation charged for accounting purposes in the income statement are recorded at their current nominal amount. Accountants generally have rejected the idea of discounting deferred tax liabilities, usually on the grounds that it is not current accounting practice to record present values; an exception should not be made in the case of deferred taxes.