Journal Article Jobs as Dam Sites Get access George A. Akerlof George A. Akerlof London School of Economics Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 48, Issue 1, January 1981, Pages 37–49, https://doi.org/10.2307/2297119 Published: 01 January 1981 Article history Received: 01 July 1978 Accepted: 01 August 1980 Published: 01 January 1981
[A conceptual framework is suggested for integrating fixed effects and random effects models into one framework. In that framework, the pertinent distribution is a convolution of two distributions; one is a degenerate distribution. A method is suggested and analyzed for separating between the two distributions when the second distribution is normal.]
Recently, there have been many pronouncements and proposals concerning the evaluation and maintenance of internal control systems and related reports by management and by auditors. Some municipal government units already publish the type of internal control information being proposed. This article critically analyzes the internal control reporting practices of municipalities. A content analysis of a sample of municipal reports suggests that existing disclosures do not answer questions of risk exposure, costs and benefits, and the meaning of the diversity of report forms. Further, the municipal sector's experience implies that control disclosures will affect cost/benefit evaluations by management and the auditors' ability to persuade management to implement controls. Some controls which were previously unacceptable can be expected to be implemented due to the perceived benefit of avoiding public reports of management's inaction with regard to auditors' control suggestions.
This paper describes an incident process case which has been used effectively as a teaching medium for a capital expenditure decision. Typically, capital budgeting problems require students only to classify data given to them as relevant or irrelevant and to manipulate data to reach an accept or reject decision. In the incident process case, however, students must (1) decide what information might be relevant, (2) present formal and informal requests to the instructor for specific data, and (3) develop these data into useful information. The decision context is the replacement of a company airplane. The case comes from a real-world situation, and the data set reflects current economic conditions. The problem encompasses relevant concepts of capital expenditure analysis and cost-volume-profit analysis. It also employs the distinction between investment and financing decisions. The unstructured setting and requirements require careful and creative thinking by students. The article contains a statement of the case, a basic data set, and a description of how the author conducts the case.
This article comments on the research paper "The Nature of Managerial Work," by Frank M. Wolf. The author says that there is no doubt that the descriptive study of what auditors are indeed doing in their formal work roles is a non-trivial issue. The search for alternatives to self-report directly joins unobtrusive measures to current issues in organizational inquiry. The self-reports represent rather sensitive issues of individual managers' self-concepts and their perceptions of the generalized expectations of others around them about appropriate behaviors for them to display. Critical incidents purporting to capture the nature of auditing work are generated in relation to behaviors that enhance or detract from promotional outcomes in audit firms. The emphasis on promotional decisions in firms could conceivably influence results, and an alternative interpretation of them can be presented which suggests that this indeed may be the case. In setting raters the task of classifying incidents to categories, there is not high levels of consensus in evidence among the judges, which would indicate difficulties in their application.
For some ten years after the death of the great English naturalist Francis Willughby, F.R.S. (1635-1672), his executors and trustees kept the estate accounts by double entry, with increasing sophistication and accuracy. These accounts are probably the earliest surviving example in England of the use of this technique for noncommercial purposes. The principal trustee, Sir Henry Barnard, was responsible for installing the system in 1673, possibly on the model of the specimen accounts in Abraham Liset's Amphithalami, or, The Accomptants Closet (1660). In 1676, the bookkeeping was extensively remodeled and improved by an accountant named Thomas Godfrey in a manner calculated to strengthen financial control and administrative oversight by the trustees. After the death of Sir Henry Barnard in 1680 the estates came into the hands of Francis Willughby's widow, Emma, by then remarried to the immensely wealthy merchant Sir Josiah Child, and she abandoned the double-entry system after 1681.
Before a Bayesian or decision-theoretic model can be utilized in actual audit practice, methods must be developed which allow auditors to make their beliefs explicit in the form of a probability distribution. This paper compares the probability distributions obtained from a group of audit seniors using the cumulative distribution function and equivalent prior sample elicitation techniques. Comparison of the probability distributions which resulted from use of the two elicitation techniques showed no statistically significant differences in either means or medians. Although measures of overall variability were not statistically different, some differences were found when the interquartile range was examined. Since this latter result is consistent with previous findings in the psychological literature, the failure to find differences in overall variability measures may be attributed to the unique nature of auditing populations.
Recent challenges of the audit independence assumption have impelled the accounting profession to consider ways of improving the credibility of audit reports. This study examines the perceived effects of competition, MAS, audit-firm size, and tenure on the risk that audit Independence may become impaired. Factorial analysis of variance techniques are used to analyze judgments obtained in an experimental task from four subject groups (a) Big Eight partners, (2) partners from local and regional CPA firms, (3) commercial loan officers, and (4) financial analysts Results indicate that audit firms operating in highly competitive environments, firms providing MAS, and smaller audit firms are perceived as having a higher risk of losing independence. An audit firm's tenure with a given client is not significant. Though perceptual differences exist between the groups, an overall analysis ranks competition as the most important factor, followed by audit-firm size and MAS.