Abstract This article presents comments of the author on the article "Present Value Models and the Multi-Asset Problem," by Richard P. Brief and Joel Owen, published in the October 1973 issue of the journal "The Accounting Review." The main conclusion of the article was that the internal rate of return (IRR) is essentially a firm model, not a single-asset model. A corollary of this conclusion is that the appropriate discount rate to use in present-value depreciation models is not the IRR on each individual asset, but the overall IRR on a firm's total portfolio of assets, even where the returns on a particular asset are independent of the firm's other assets. The basic premise implicit in Brief and Owen's analysis is that the accounting model should generate expected periodic income figures that would enable firms to report periodic rates of return on book value equal to the expected IRR on the firm's total portfolio of assets at any point in time. The internal rate of return is commonly defined as the discount rate that causes the present value of cash receipts from an investment over its life to equal the present value of cash outlays related to the investment. Present value methods, in general, are designed as direct valuation models, while the accounting model explicitly recognizes only values that have been verified by exchange transactions.

Abstract This article presents a study on selected items of information and their disclosure in annual reports in accounting in the U.S. This study has presented the results of a mailed questionnaire survey of financial analysts which sought to determine the relative importance of 38 selected items of information. The extent of disclosure of the 38 items was then measured for a sample of annual reports from 88 small and medium size companies. The results indicated that many of the items were inadequately disclosed in the sample and that the correlation between the relative importance of the items and the extent of their disclosure was small. On the basis of these results, the writer has concluded that an opportunity exists for an expansion of the extent of disclosure in the annual reports of small and medium size companies.

Abstract The article focuses on the book "Effect of Circumstances on the Application of Accounting Principles," by R.K. Mautz. The degree of formalization in accounting is quite high, but perhaps it is becoming less so. Increasingly complex economic activity and organizational arrangements, as well as social and political pressures, are making it less possible to clothe all potential accounting situations with preprogrammed solutions. Though accounting remains predominantly governed by rules and procedures, and thus provides Simon-type "programmed decisions," relatively more and more accounting may call for what author James D. Thompson has labeled "judgmental strategies." Alienation, a word which has received considerable attention in the organizational behavior literature of late, has also been linked to formalization, especially where professionals are concerned. There are various stages at which performance may be influenced. It may be through selective recruitment, suitable training and socialization, or control of one's actions on the job. Recruitment into the profession is important and deserves attention.

Abstract This article presents a reply to a comment on the study of the audit staff assignment in accounting in the U.S. There are no actual implementations of linear programming in audit staff scheduling. There are lamentably few implementations of linear programming or other quantitative decision models. There is a report of an application of linear or goal programming to audit staff scheduling or other problem. As accounting professionals the responsibility to encourage applications of the proposed models is the priority.

I. The state variables: balance sheets and information, 279. — II. The model, 284. — III. Numerical illustrations of monetary control, 290. — IV. Conclusions, 301. — Appendix: Derivation of Figure I, 303.

I shall begin this brief discussion of the policy issues of the 1970's by taking a look backward, rather than forward, reviewing some of the major issues of the I should have raised were I speaking in the early 1950's instead of the early 1970's. With perfect foresight, I would, of course, have mentioned the issue of economic growth, clearly visible as the central thrust of all the advanced industrial societies; the recalcitrant problem of inflation; the constraint of the environment as a wholly new and important element for both micro and macro policy; the difficulties implicit in Japan's remarkable reentry into the world economy; the emergence of the multinational corporation as a new agency for the conduct of international economic relationships; the problem of economic development, stubbornly resisting attempts to move traditional societies off dead center by the application of standard economic nostrums; and the problem of the dollar and what to do about it. Three aspects are common to all these future problems of the past. First, these are unmistakably economic, rather than political or sociological. Second, they are all deep-seated rather than accidental or superficial economic problems. Last, and most important, every one of these problems was invisible in the 1950's. In point of fact, had I really been holding forth on the outlook in the early 1950's, I doubt that I would have mentioned a single one of them. For in those earlier years, it was not growth but the threat of chronic recession that still absorbed the attention of the profession. Inflation was a matter on which no sessions were organized, because we knew that it could not occur as long as unemployment was 4 or 5 percent of the labor force. The Sierra Club may have been exercised over the deterioration of the environment, but not the American Economic Association. No one had heard of the multinational corporation. Japan was considered by all to be a hopeless economic invalid. The prevailing attitude toward economic growth in the less-developed countries was one of encouragement, not to say enthusiasm: I believe the 1950's were officially dubbed the Decade of Development. The problem of the dollar, you will remember, was that it was deemed to be in more or less permanent short supply. Now I do not mention this extraordinary myopia to take the profession to task. I raise it, rather, to inject a cautionary note in making our projections and predictions today. Like everyone else, I have my list of expected policy issues of the 1970's-a surprise-free list, in Herman Kahn's terminology. It includes the very problems I have just enumerated: growth, inflation, the environment, the multinationals, the failure of development, the international monetary situation. But I am moved to ask, reflecting on the past, whether this list of problems is likely to be as miscon* Norman Thomas Professor, New School for Social Research.