Knowledge that Transforms

In their comment, Professors Daniel W. Collins and Melvin C. O'Connor have criticized some portions of the conceptual and methodological development of the author's earlier work. The purpose of this reply is to respond to their criticisms and to extend slightly one portion of his original work. This reply is organized into two sections, conceptual and methodological, that parallel the organization of the Collins and O'Connor comment. Collins and O'Connor question whether the primary null hypothesis of the author's study is consistent with the methodology used. Specifically, they contend that the primary null hypothesis should have been stated in terms of information content. The attributes of the sample and the effect of the choice of accounting method on the accounting risk measures are examined in the methodological section of this reply. One of the major points in the Collins and O'Connor analysis is the separation of the sample into producing and integrated oil firms. On the basis of their resuits, they conclude that none of the associations between the accounting risk measures for the field cost producing firms and beta are significant, but that nearly all are significant for the integrated sample for both the full and field cost groups.

The article presents information about the book "Zero-Base Budgeting: A Planning, Resource Allocation and Control Tool," by James W. Pattillo. The book is about a budgeting technique recently popularized by a former Governor of Georgia. Since it is an evolving technique, the study reflects knowledge and experience about it at what could be an early stage of development. The book is developed largely around identifying "decision units" and developing "decision packages." A decision package describes an incremental level of effort performed to meet the objectives of a decision unit.

Reviews the book "Integrated Economic Accounting," by Hector Correa.

Reviews the book "Accounting Goes Public: A New Role for Accountants in Deciding Social Issues," by Morton Levy.

Reviews the book "Introduction to Modern Accounting," 3rd ed., by Ronald J. Thacker.

Reviews the book "Accounting for Nonprofit Organizations," by Ernest O. Henke.

Reviews the book "Accounting Education: New Horizons for the Profession," edited by Donald H. Skadden.

This article presents the results of a simulation designed to examine the behavior of five procedures for computing a combined attributes and variables bound from a dollar unit sample. The behavior of five computational methods is simulated for three population error direction conditions, seven error rate conditions, and five sample size conditions. The study population is generated from summary data provided in Auditing Research Monograph No. 2 (ARM #2). Results are analyzed according to reliability, accuracy, and consistency criteria. In addition, results are compared to the classical estimators examined in ARM #2, applied to a very similar population. The results suggest that certain CAV bounds are unreliable, while others are preferable to classical estimators for relatively low error rates in this population. The CAV bound used in ARM #2 is shown to be inferior to two alternatives based upon accuracy and consistency criteria.

Reviews the book "Computer Control and Audit," by William C. Mair, Donald R. Wood and Keagle W. Davis.

Reviews the book "Accounting: The Basis for Business Decisions," by Walter B. Meigs, Charles E. Johnson and Robert F. Meigs.