Knowledge that Transforms

Reviews the book "Decision Making and Accounting: Current Research," edited by Shane Moriarity and Edward Joyce.

Reviews the book "International Auditing: A Comparative Survey of Professional Requirements in Australia, Canada, France, West Germany, Japan, the Netherlands, the UK and the USA," by Leslie G. Campbell.

Reviews the book "Industrial Bonds and the Rating Process," by Ahmed Belkaoui.

Authoritarianism has been the most widely studied personality variable in management accounting research. One important line of research has been the role of authoritarianism as a moderating variable in studies which examine the effectiveness of budgetary participation. Results from these studies have been equivocal. In this paper it is argued that the lack of consensus in this research may be a consequence of examining the personality of only one member of the group involved in the participative process, usually the subordinate. It is claimed that Improved understanding of the influence of authoritarianism on subordinate attitudes to the job and budgets can be expected if both subordinate and superior authoritarianism are considered together. The results indicate that budgetary participation is important in its own right and the homogeneous authoritarian dyads are positively associated with subordinate outcomes. Moreover, participation is more strongly associated with subordinate job satisfaction and budgetary .attitudes in the homogeneous than in the heterogeneous dyad.

Reviews the book "Bank Funds Management: Text and Readings," by John A. Haslem.

Test results are presented on the relative performance of two new auditing procedures for dollar-unit sampling--the quasi-Bayesian method developed by McCray [1984] and a slightly modified version of the moment method developed by Dworin and Grimlund [1984]. Extensive simulation studies of 96 representative accounts receivable and inventory populations were conducted. Both methods were found to be reliable over the tested range, and both provided tighter confidence bounds than those provided by the Stringer bound. This is the first study that has been made of the reliability of the quasi-Bayesian bound and of the comparative performance of the quasi-Bayesian and the moment methods. The moment method provided a tighter confidence bound at low error rates. For populations with high error rates, for which the true mean error was either very nearly zero or very large, the quasi-Bayesian method provided a tighter bound. Both bounds provided comparable results for the remaining intermediate cases. While either can be successfully used in these cases, the moment method appears to be easier to implement on currently available personal computers.

Revenues of hospitals in the state of Washington are constrained by an upper bound that is a function of budgeted costs, budgeted volume, and actual volume. Basically, allowable revenue is the hospital's total budgeted cost, with an adjustment for the difference between actual and budgeted volume. A hospital can increase its allowable revenue by biasing the budget data reported to the Washington State Hospital Commission. For example, when a hospital budgets for an increase in volume, it is to the hospital's advantage to overstate the impact of the increase in volume on the hospital's total budgeted cost. Conversely, when a hospital budgets for a decrease in volume, the constraint on revenues can be relaxed by understating the impact: of the decrease in volume on the hospital's total budgeted cost. Empirical evidence is consistent with hospitals biasing, in certain predictable ways, budget data reported to the regulatory commission.

This article reviews and evaluates the financial reporting of the federal income taxes of General Dynamics Corporation. Such a review illustrates the material discrepancies that can result between book income and tax return income using generally accepted accounting principles. It also raises doubts as to (1) the relevance of the current disclosure of "effective tax rates" in the income tax note to the financial statements, and (2) whether General Dynamics has fully reported its tax status in its annual reports. We believe that the FASB should require a more complete articulation of a corporation's tax status in its annual reports.

Reviews the book "Advanced Accounting," by Andrew A. Haried, Leroy F. Imdieke and Ralph E. Smith.

Reviews the book "Auditing: Integrated Concepts and Procedures," 3rd ed., by Donald H. Taylor and G. William Glezen.