Knowledge that Transforms

The article highlights the report of the Committee on Application of Learning and Communications Theories to Accounting Instruction of the American Accounting Association (AAA). The charge to this committee is to study and report upon the applicability of learning and communication theories to accounting instruction, to provide general guidelines for developing and testing alternative approaches or methods of utilizing these concepts in the teaching of accounting subjects, and to recommend ways in which the AAA can encourage and support improvements in this area. Instructors in higher education tend to concentrate on the content of their fields while paying less attention to instructional techniques, the communication process, and learning theory. The medium includes the combination of devices, techniques, and senses used to transmit the message. In addition to compatibility with the message, consideration must be given in medium selection to possible encoding, reception, and decoding difficulties. Accounting education which consists of teaching the student the thrill of discovery, self-reliance, and the tools that are necessary for continuing his education. Accounting would simply be the subject matter that was used to accomplish the above purposes. This would hopefully prepare the future accountant for a changing role in a fluid society which would be making increased demands upon him.

The article highlights the report of the Committee on Concepts of Accounting Applicable to the Public Sector, 1970-71 of the American Accounting Association. The charge to this committee is to prepare a report that identifies the accounting concepts and standards applicable to public sector programs and organizations, including those related to internal management as well as to external reporting. There are many characteristics of public-sector organizations that distinguish them from business enterprises. Governments are often granted power to tax the earnings of those whose employment is within their jurisdiction. Appropriations may be made for specific amounts of money, or they may be in unspecified amounts. The reconciling difference between accrued expenditures and accrued cost is the amount recorded as assets having some future service potential. As long as the public sector was considered to be a necessary evil and government outputs were deemed to be of limited value, it may have made sense to emphasize control over inputs only. In conclusion, it would appear that the greatest challenges for accountants in the public sector lie in finding ways to implement the concepts of effort and accomplishment so that meaningful relationships may be disclosed for managerial decision-making as well as for public accountability on the part of all public officials.

Reviews the book "Financial Accounting: Basic Concepts," by Earl A. Spiller.

Reviews the book "The Auditor's Report," by J. Herman Brasseaux and Francis L. Miles.

The purpose of this article is to demonstrate that accountants may have some notion of the complexity of the external reporting environment before they conduct rigorous empirical tests. The financial reporting environment appears to be complex since the financial decision-maker must consider the many dimensions of a single bit of information. Conceptual structure refers to an individual's potential to generate new attributes of information and discriminate between stimuli as the number of dimensions he perceives increases. Conceptual level varies for processors in their roles as financial statement users. The financial analyst who can integrate many of the diverse dimensions of financial information demonstrates an abstract conceptual structure while the investor who makes decisions by evaluating only price-earnings ratios demonstrates a relatively concrete conceptual structure. the point of maximum abstractness is constant for all conceptual structures, including the most abstract and the most concrete processors, within the same environment. If this relationship exists for financial reporting as well, the problem of finding the optimal information load appears possible.

Reviews the book "Proceedings Second International Conference on Accounting Education," by E.F. Castle.

The article presents a number of news items regarding accounting from different states of the United States. In California George Gibbs testified before the Wheat Committee hearings in New York on the Establishment of the Accounting Principles. In the District of Columbia, Everett J. Mann has been appointed to the International Audit Committee of the Organization for Economic Cooperation and Development. In Illinois, Robert M. Trueblood, a professional lecturer, has been appointed chairman of the AICPA Commission to study the objectives of accounting. In Iowa, Drake University, Harry I. Wolk has been promoted to professor of accounting. In Kentucky, Bellarmine College, Windell Bowles taught a ten-week workshop on accounting and financial management to black business owners, managers and their employees. In Louisiana, Tulane University, David W. Harvey, who is completing work on his dissertation at the University of Minnesota, became assistant professor of accounting in January, 1972. In Massachusetts, University of Massachusetts at Amherst, Martin L. Gosman received a Ph.D. from the University of Wisconsin and Ula K. Motekat received a DBA from the University of Colorado.

Reviews the book "Advanced Accounting," by Charles H. Griffin, Thomas H. Williams and Kermit D. Larson.

The article highlights the report of the Committee on Corporate Financial Reporting of the American Accounting Association. The charge of this committee is to identify, examine, and report contemporary problems in financial reporting; to recommend appropriate research projects as well as to critically evaluate both organized and individual proposals for research on financial reporting, and to issue broad position statements in specific areas when appropriate. In this approach, accounting data are used to attach subjective probabilities to previously developed quantitative estimates of relevant variables. For example, past turnover data, gross margin percentages, or rates of return on investment are calculated because they are thought to reflect managerial efficiency. Some take the position that changes in value of bonds held as long-term investments are irrelevant to the income of the holder of the bond if the changes are caused by changes in market interest rates. They point out that although the changes in interest rates affect the current market price of the bond, they do not affect the amounts or the timing of the future cash flows expected by the bond holder. Meaningfulness, like relevance, is difficult to define in specific terms for all readers of financial statements. Nevertheless, notes deserve careful screening by management to assure that they contain informative material.

The article discusses methodological preconditions and problems of a general theory of accounting. The last fifteen years of accounting history seem to be part of a transition period replacing the loose traditional approach by more rigorous methods. Although spanning over considerable time this transition continues, most likely transgressing into the eighties, and promises to cause a major break in the evolution of our discipline. From time to time, the need arises to look at past research activity from the bird's perspective with the aim of an overall survey. Such is the intent of the following investigation which tries to fit recent research efforts into this five-point pattern, and which examines major methodological and related problems still to be solved before this phase of transition is completed. Prior to such an investigation it may be opportune to avoid some misunderstandings. The ultimate purpose of accounting is to provide managerial information systems satisfactory or even optimal for specific needs. That this should be done through systematic testing and by means of an instrumental theory commensurate to needs as well as scientific means at our disposal, hardly appears to be an unreasonable quest.