The article presents a reply to comments made by Professors, Kung H. Chen and S.J. Lambert on a study related to disclosure among public accountants and security analysts. The author states that the principal null hypothesis of the study was that there is no difference between the value of information to security analysts as perceived by account-ants and the value of information to security analysts for equity investment decisions. Chen and Lambert have noted that the calculated mean response of Group A subjects was numerically higher than that of Group C for 11 out of 58 information items, while Group C had higher mean values compared to Group A for 47 out of 58 items. They also noted a difference in the patterns of dispersion. The author agrees to their observation but stated that the objective of the study was to examine whether users and preparers of the corporate annual reports agree on the value of various information items for equity investment decisions. Differences in the value ratings were to be expected, however, the direction of the differences could not be predicted.

A description was developed of external auditors' subjective decision environment in the case of a normal manufacturing company audit. Eighty partners and managers from six national public accounting firms in Canada responded to an extensive questionnaire asking them to evaluate potential environmental components at several stages in the audit engagement: (1) before the beginning of the work, (2) at several operational stages and (3) after the audit's completion. The audit environment was revealed to be complex: though some components were perceived to be consistently important throughout the audit, the importance of others waxed and waned as the audit progressed. A highly interdependent, client-oriented environment was portrayed by respondents.

Reviews the book "Canadian Financial Accounting: Principles and Issues," by I.S. Rosen and M.H. Granof.