The article presents a review of the document "Statement on Accounting Theory and Theory Acceptance," published in the 1977 issue of the journal "The Accounting Review." Beginning with the 1930's, the American Accounting Association (AAA) has endeavored to publish at least one comprehensive statement in the area of accounting theory each decade. Logistically, this enterprise has been carried out by a series of committees drawn from the Association's more prominent members. During this same period, the Committee on Accounting Procedure, the Accounting Principles Board, and the Financial Accounting Standards Board, in turn, have formally represented the much larger practicing arm of the profession in its self-regulatory determination of standards governing accounting practice. It is clearly not that membership in academia and/or the AAA has precluded one from an active role in accounting rule making, professors of accounting have regularly been called on to serve in this capacity. A more likely reason is that the AAA, through its collective membership, is, from the inside at least, viewed as being in a unique position to give advice on practical accounting theory, whether that advice is solicited or not.'

The article presents a new series designed to highlight accounting firms' publications of possible interest to academics. In recent years the largest public accounting firms have increased both the quantity and the quality of their accounting publications. Since such publications are ordinarily on topical subjects, they can be helpful to both the educator and the researcher. A Guide for Studying and Evaluating Internal Accounting Controls, published by Arthur Andersen & Co., uses five interrelated business cycles: treasury, expenditure, conversion, revenue and financial reporting, and a financial planning and control function to structure a framework based upon transactions for studying and evaluating internal control. Financial Statement Disclosure Checklist-1978 is designed to serve as a "memory jogger" for preparing and/or reviewing financial statements. Corporate Audit Committees: Policies and Practices reports the results of a survey of almost 1000 chief executive officers, internal auditors, independent CPAs, and non-officer directors and an examination of other publicly available information.

Reviews several books. "A Manual on Continuously Contemporary Accounting," by Allen Craswell; "A Manual on Current Purchasing Power Accounting," by David Emanuel; "A Manual on Current Cost Accounting," by Alan Hume; "Work Manual: Continuously Contemporary Accounting and "Work Manual: A Manual on Current Cost Accounting," by C.J. Warrell.

This paper develops an (equilibrium) model of financial markets in which investors have only imperfect information about each other and hence can only make imperfect inferences (of what others know) from price changes. Search for (undisclosed) interim information about firms is time-consuming (costly); moreover, abilities to conduct fruitful search differ among investor groups. Under a "market" solution it is shown that there are clear incentives for search by those with unusual detective abilities and/or large resources. Offsetting this are strong incentives for voluntary disclosure by firms, but it is noted that these need not result in socially desirable disclosure decisions. A natural "cost-benefit" criterion for deciding whether required disclosure would be beneficial is identified which, in may cases, can be applied on the basis of very little information. The economic inefficiencies that may result from the use of "incorrect" criteria in establishing disclosure requirements, such as "full disclosure" or majority rule, are also identified.

This article presents the consensus concept of objectivity and two problems of the concept which never have been addressed adequately: (1) observed objectivity (agreement among different measurers applying the same measurement system) may be spuriously inflated by the consensus inherent on various other combinations of rules and measurers; (2) suggestions for improving objectivity typically focus entirely upon measurement systems and virtually ignore the impact of measurers on objectivity. A framework which enables the investigation of these problems is presented. The suggested framework, a multirule-multimeasurer matrix, is an adaptation of the multitrait-multimethod matrix often used to assess the validity of psychological tests and enables investigation of these problems.

The article presents a response by the author on comments made by scholar Cornelius J. Casey on his article "The Predictive Ability Criterion and User Prediction Models," published in the October 1974 issue of the periodical "The Accounting Review." Cassey addresses three areas contained in my previous article. My response, which is intended to be constructive and elaborative, considers these areas in the order adopted by Casey. Casey's major contribution lies in his discussion of the severity of criterion problems in accounting contexts. For example. in commenting on my discussion of the imprecision of criterion values, he correctly observes that decision makers act on the basis of criterion values whether they are precise or not. Further, he recognizes that consistent measurement of criterion values is a possible means of minimizing imprecision. These points are well-taken. In fact, research and study subsequent to my original article have led me to question whether criterion problems in accounting contexts are more severe than similar problems in other contexts, for example, the criterion of hospital staff diagnosis, in psychology, or grade point average in education, as I previously had believed. On the other hand, much of Casey's concern apparently arises from misinterpretation of my position.

This article discusses the role of accounting history in the study of modern business enterprise. It is well known, of course, that typical manufacturing firms of the mid-nineteenth century specialized mainly in one activity: that of transforming raw materials into finished products. These manufacturing firms necessarily relied for non-manufacturing services upon outside companies that specialized, as did they, primarily in one operation. For example, the manufacturer depended upon wholesale suppliers and commission merchants to provide raw materials and to sell finished goods to the final customer. One new method for controlling and coordinating company procedure was an innovation commonly called "the unitary form of organization." The unitary form of organization also involved the design of complex accounting systems to carry out assessment, operations, and planning throughout the firm. Du Pont Powder Co. exemplifies the early use of accounting data for management control in vertically integrated industrial firms.

Presents a commentary on a study by John C. Corless which addressed how the Bayesian evaluation of audit evidence compares with the auditors' intuitive evaluations of the same evidence using prior distributions. Cases reviewed by auditors in the study; Skepticism on the conclusion of the study; Commendation for Corless.

Reviews the book "Organizing, Operating, and Terminating Subchapter S Corporations," by D. Larry Crumbley and P. Michael Davis.

The article is concerned with improving the utilization of accounting information in prediction situations. In this context improvement is defined in terms of an increase in prediction accuracy. If adequate criterion information is available, increase in prediction accuracy may be "directly" assessed by measuring the correspondence between criterion values and predictions of those values. The article recognizes that there are at least two approaches to improving prediction accuracy. The first approach is to improve the data which are supplied to decision-makers and used as a basis for predictions. The second approach is to improve the way that predictions are made on the basis of whatever data are used. The author presents evidence from the psychology literature that individuals may usefully be replaced by their models in prediction tasks, and he also discusses the reasons for this situation. He presents evidence from the management literature which leads to the same conclusion and discusses implications for accounting of these findings.