The article discuss recent developments in the statistical utilization of accounting data by the federal government. In particular, attention will be focused on the statistical utilization of accounting information for what may be called top-policy purposes. Most accountants are familiar to some extent with the utilization of accounting data by various federal agencies for direct administrative purposes. In the administration of tax laws and for regulatory bodies, accounting data have proved indispensable for handling individual cases. Moreover, most accountants are probably familiar with the fact that individual case information is frequently compiled into statistical information as a means of orienting agency policy, setting standards, and serving as a basis for recommendations to the U.S. Congress. In a sense various recent developments in business financial statistics represent extensions of accounting to new areas of great importance. These extensions require the development of new techniques and point of view, and it is hoped that the instrumentalities of classification and analysis made possible by accounting will gain in the process. Full utilization of the potentialities of accounting will occur, however, only if accountants can be persuaded to take a continuing interest in these developments and to acquire the necessary familiarity with the problems involved to adapt their techniques to the requirements.

The article presents results of a field inquiry directed to ascertaining some of the perceptions of internal auditing held by persons who have been subjected to one or more phases of an audit process. It is part of an extensive research effort into the control functions of management, as distinguished from planning and decision making, and more particularly, into auditing as a major instrument of organizational control. The laboratory experiments on audit effects indicate that an audit can exert its influence through an audit report whose preparation is a focus toward which audits are customarily pointed, and through an auditor's actions as seen or heard about by those audited, for example, what the auditor looks at, what he ignores, what be pursues vigorously, how he behaves, etc. The interviews with 52 of the 54 individuals included in this study produced reports that allowed the content coder to classify the extent of each respondent's contact with internal auditors. Almost 75% of the respondents indicated either a neutral or a positive attitude toward the internal auditor and the internal audit.

Reviews the book "The Functions of the Executive," by Chester I. Barnard.

[According to the December 1991 issue of the Survey of Current Business, expenditures of state and local governments account for more than 11 percent of the U.S. gross domestic product. Moody's 1991 Municipal Manual indicates that these governmental entities have an outstanding debt now approaching $800 billion, and a report by the Public Securities Association (1987) indicates that this debt grew at a compound annual rate of 12 percent from 1966 to 1986. State and local governmental activities continue to increase in magnitude, and evidently form an important part of the political and economic environment in which accounting operates. Important accountability issues distinctive to these organizations need accounting research attention. The articles by Feroz and Wilson and Deis and Giroux in this issue, which we have been invited to review, address some of these topics. The study by Feroz and Wilson can be regarded as an extension to the public sector of capital-market-based research that examines the effects of financial-accounting disclosures on security prices and returns. They hypothesize segmentation of the market for municipal obligations along national and regional lines and study the effects of differential information disclosure on borrowing costs. In the other study, Deis and Giroux utilize quality reviews that were conducted by the Texas Education Agency to evaluate and rate the audits (by public accountants) of public schools' financial reports. They test hypotheses about audit quality that were originally developed in the context of commercial firms. Both studies thus represent extensions of theories and methods used in research of private-sector accounting and auditing issues. The contributions of the two articles are discussed, and modifications that consider the unique aspects of governmental accounting are presented in sections I and II. Other possible avenues for research are discussed in section III.]

According to the December 1991 issue of the Survey of Current Business, expenditures of state and local governments account for more than 11 percent of the U.S. gross domestic product. Moody's 1991 Municipal Manual indicates that these govern- mental entities have an outstanding debt now approaching $800 billion, and a report by the Public Securities Association (1987) indicates that this debt grew at a compound annual rate of 12 percent from 1966 to 1986. State and local governmental activities continue to increase in magnitude, and evidently form an important part of the political and economic environment in which accounting operates. Important accountability issues distinctive to these organizations need accounting research attention. The articles by Feroz and Wilson and Deis and Giroux in this issue, which we have been invited to review, address some of these topics. The study by Feroz and Wilson can be regarded as an extension to the public sector of capital-market-based research that examines the effects of financial-accounting disclosures on security prices and returns. They hypothesize segmentation of the market for municipal obligations along national and regional lines and study the effects of differential information disclosure on borrowing costs. In the other study, Deis and Giroux utilize quality reviews that were conducted by the Texas Education Agency to evaluate and rate the audits (by public accountants) of public schools' financial reports. They test hypotheses about audit quality that were originally developed in the context of commercial firms. Both studies thus represent extensions of theories and methods used in research of private- sector accounting and auditing issues. The contributions of the two articles are discussed, and modifications that consider the unique aspects of governmental accounting are presented in sections I and II. Other possible avenues for research are discussed in section III.