[Auditors are charged with the responsibility of evaluating internal control systems. Recent advances in decision support systems indicate that the speed, accuracy, and memory capacity of computers may be used to aid auditors in this task. To test this proposition, a computer-assisted method of designing, analyzing, and evaluating internal control systems, called The Internal Control Model or TICOM, was designed and implemented. The technical manual and the TICOM software are available from the authors. This paper presents the results and conclusions of that project. TICOM is a computer-based analytic tool that aids the auditor first to model the internal control system and then to query the model in order to aid the auditor in evaluating the internal control system. TICOM is based on concepts in artificial intelligence such as knowledge representation and graph simplification. It serves (1) to describe office information systems while emphasizing internal accounting controls and (2) as an aid in control evaluation. It was found that the advantages of TICOM over traditional evaluation methods are that (1) the evaluation can be more rigorous and exhaustive, (2) the documentation of the system can be more thorough because of automated completeness and consistency tests, and (3) the modeler may probe and test controls by using the query-processing portion of TICOM.]

This paper presents a theoretically consistent and tractable two-stage decision-making model that does not rely on the restrictive assumption that group aggregator functions are homothetic. By assuming that within-group cost functions satisfy the almost ideal demand system form, the model incorporates flexible expenditure effects, yet allows within-group prices to be aggregated into two indices that fully capture movements in those prices that are relevant for determining group demands. Thus, the model provides a more flexible alternative to the standard two-stage budgeting models. An empirical application to U.S. manufacturing demands, including an energy aggregate, is provided.

C. Edward Arrington, Charles D. Bailey, William S. Hopwood, An Attribution Analysis of Responsibility Assessment for Audit Performance, Journal of Accounting Research, Vol. 23, No. 1 (Spring, 1985), pp. 1-20

This paper examines the welfare economics of producer behavior under risk aversion. Hicksian, Marshallian, and money equivalent measures are explored. It is found that under decreasing absolute risk aversion, compensating variation is less than the ordinary Marshallian surplus, which is less than the money equivalent measure. Under constant absolute risk aversion all measures coincide. Finally, bounds on compensating and equivalent variations using ordinary producer surplus in a manner analogous to Willige approach in consumer theory under certainty are studied. Similar results hold, mutatis mutandis, for input demands.

Recent developments in monetary economics stress the nature of monetary injections, emphasizing that they have implications for the relationship between money and prices. In contrast, traditional approaches posit stable money demand functions that are independent of how money is injected. The former approach implies that certain proportionality relations between money and prices need not obtain. This permits the two approaches to be empirically distinguished, but only if an appropriate "experiment" is conducted. The colonial period is one such experiment. Colonial evidence suggests that the nature of injections is crucial to the effect on prices of changes in the money supply.

This paper analyzes the potential market power of western states in setting coal severance taxes and the emphasis placed by these states on the development of their coal resources vs. obtaining tax revenues. Three market structures are analyzed. One involves a western regional cartel, setting taxes collectively. The other cases are noncooperative tax equilibria with Montana and Wyoming competing against each other. We conclude that the western states seem to be primarily concerned with revenue collection and are very efficient extractors of economic rent.