The article discusses interrelationships in governmental accounting theory. In governmental accounting, a fund is composed of a group of related assets and equities. The relationship between the items in the grouping is the common purpose for which the assets are destined. The fact that many of the assets which governmental units come into possession of can and must be used for various specific purposes makes it desirable to administer, expend and receive as revenue the assets dedicated to one purpose separately from the assets dedicated to all others. In governmental accounting, accrual accounting has made it possible to record and thereby report on liabilities and other assets in addition to cash. This was felt to be desirable in order to make it possible to administer and control in a more satisfactory manner such items as permanent property, inventories, taxes and other receivables and liabilities, particularly funded debt. The use of budgetary accounts makes this comparison automatic and almost inescapable. Also, due to the legal significance of the budgetary appropriations, budgetary controls necessary to prevent illegal acts as well as to help coordinate governmental operations and make them more efficient.

This article discusses aspects of a governmental audit. Probably the principal purpose of a governmental audit is to prepare a report containing an opinion of the independent auditor on the financial statements of the governmental unit as presented by its officials. This is a culmination of the other two purposes which are to be mentioned below in that the opinion expressed in the report of the auditor is based upon the results of the investigation by the auditor of the reliability and reasonableness of the records and acts which they record. The first purpose is to appraise the judgments and decisions made by responsible officials concerning accounting matters and to prepare information to assist others in appraising all of their judgments. This appraisal is made from the point of view of determining whether or not the judgments of responsible officials as reflected in the records are justifiable, reasonable, adequately supported, representation of the best alternative if other possibilities were present, etc.

A study of the development and progress of governmental accounting theory in the U.S. indicates that there are three important concepts upon which it is based. These concepts are fund accounting, accrual accounting and budgetary accounting. Almost without exception, when individuals or organizations consider governmental accounting theory, their consideration centers around one or more of these concepts. In as much as these three concepts have such an important position in governmental accounting, it would seem to be worth while to look at them more carefully. As additional control becomes desirable, accounting theory must be considering constantly the ways and means by which accounting practice can be changed in order to provide better control. Before intelligent changes can be proposed, the present technique used in governmental accounting must be thoroughly understood. The purposes of this study are to present some ideas about the theory of governmental accounting and to provoke additional discussion out of which understanding may be advanced.

While economic forecasting is ubiquitous within the industry, its role in the trading process has received little attention in the literature. We examine how economist forecasts are related to trading activity in the OTC treasury bond market at the participant level. Consistent with models of heterogeneous opinions, we show that the forecasting economists employing institution places a disproportionately large reliance on the forecast. There is pervasive evidence that this reliance is asymmetric. Only forecasts which imply a fall in future treasury bond prices are associated with an abnormal trading reaction consistent with the forecast. Reference dependence and loss aversion offer one possible explanation for this asymmetric trading response.

Les études précédentes indiquent que les analystes n’ajustent pas totalement leurs évaluations en fonction du biais général à la baisse des annonces de résultats prévisionnels faites par les directions d’entreprises. Les auteurs rapportent les résultats de deux expériences visant à déterminer comment la feuille de route des entreprises en ce qui a trait à la publication de résultats prévisionnels et les enjeux motivant les analystes expliquent de concert la mesure dans laquelle ces derniers ajustent leurs évaluations en fonction du biais des annonces de résultats prévisionnels. Ces résultats d’expérience semblent indiquer que les analystes pour qui l’enjeu est celui de l’exactitude ajustent leurs évaluations selon la feuille de route de la direction en ce qui a trait à la publication de résultats prévisionnels biaisés à la baisse lorsque le biais est relativement modeste (un cent), mais que les analystes pour qui l’enjeu est celui de leur relation avec la direction s’en abstiennent. Au surplus, la différence dans l’ajustement est plus importante lorsque la feuille de route de l’entreprise en matière de biais est irrégulière que lorsqu’elle est régulière. Aussi, lorsque le biais des annonces de résultats prévisionnels est plus important que moins (deux cents par rapport à un cent), les analystes pour qui l’enjeu est celui de la relation avec la direction procèdent à un ajustement partiel, paraissant ainsi rechercher un équilibre entre exactitude et volonté de plaire à la direction. Ces constatations ont des répercussions pour les investisseurs, les autorités de réglementation et l’interprétation des études précédentes.

The audit risk model was used to generate hypotheses concerning the effect that internal control evaluation exerts on audit planning decisions. Specifically, directional predictions concerning the contingent nature of the effects of the susceptibility of accounting processes to error, the strength of the internal control design, and the strength of the related compliance tests were developed. These hypotheses were then compared to the behavior exhibited by a group of experienced auditors who completed a highly realistic series of case studies. The auditors' decisions were consistent with the predictions developed from the audit risk model. In addition, the paper introduces a modification of the standard policy-capturing method that allows the use of complex realistic case materials in a powerful, internally valid experimental design which decreases problems with experimental demand. It also provides initial evidence on experts' perceptions of the effectiveness of different approaches to compliance testing and further evidence on auditor consensus in a more structured audit environment.

We design an adaptive framework for the detection of illegal trading behavior. Its key component is an extension of a pattern recognition tool, originating from the field of signal processing and adapted to modern electronic systems of securities trading. The new method combines the flexibility of dynamic time warping with contemporary approaches from extreme value theory to explore large-scale transaction data and accurately identify illegal trading patterns. Importantly, our method does not need access to any confirmed illegal transactions for training. We use a high-frequency order book dataset provided by an international investment firm to show that the method achieves remarkable improvements over alternative approaches in the identification of suspected illegal insider trading cases.