One of the tasks of this paper is to draw attention to Fritz Schmidt and his pioneering work in current value accounting which anticipated essential features of both Edwards and Bell's (1961) work by 40 years, and the current cost legislations and standards of the United Kingdom, the United States, and Canada by roughly six decades. Above all, I am trying to relate Schmidt's work to that of Edwards and Bell, thereby clarifying some misunderstandings that still surround this relationship. Schmidt needs a champion on the North American continent, and I have tried to assume this often misunderstood task. By direct reference to and translations from Schmidt's magnum opus , I attempt to demonstrate that Schmidt's theory possesses the following qualities: It distinguishes clearly between general purchasing power adjustments and current value adjustments. It does eliminate realized holding gains (cost savings) from the operating section, and presents an income concept equivalent to the “Current Operating Profit” of Edwards and Bell. It clearly separates operating gains from holding gains (though rarely endeavors to separate real from fictional holding gains, since it favors the physical capital maintenance basis of income measurement). It applies current costs also to manufacturing operations. It does not fail to deal with the current costs of other inputs, and generally abandons the historical cost basis. Résumé. Un des objectifs de cet article, est de faire ressortir le travail de pionier de Fritz Schmidt sur la comptabilité à la valeur actuelle qui anticipa les caractéristiques essentielles des travaux de Edwards et Bell (1961) de 40 ans et les lois et normes sur le coût actuel du Royaume‐Uni, des Etats‐Unis et du Canada d'approximativement six décades. Avant tout, j'essaie de relier les travaux de Schmidt à ceux de Edwards et Bell, afin de clarifier certaines méprises qui existent toujours relatives à cette relation. Schmidt a besoin d'un champion sur le continent nord américain et j'ai essayé d'assumer cette tâche souvent mal comprise. En me référant aux travaux de Schmidt et à certaines traductions, j'essaie de démontrer que la théorie de Schmidt possède les qualités suivantes: Elle distingue clairement les ajustements du pouvoir général d'achat des ajustements de la valeur actuelle. Elle élimine les gains de détention réalisés (économies de coûts) de la section exploitation et présente un concept de revenu équivalent au “Bénéfice hors postes non courants” de Edwards et Bell. Elle sépare clairement les gains d'exploitation des gains de détention (quoiqu'elle ne s'efforce pas de séparer les gains de détention réels des fictifs, puisqu'elle favorise la base de la préservation de la capacité de production pour mesurer le revenu). Elle utilise les coûts actuels aussi pour les exploitations manufacturières. Elle n'oublie pas de traiter des coûts actuels des autres intrants et abandonne de façon générale la base du coût historique.

The paper discusses the findings reported by Smieliauskas (1986) and expands on them. It focuses on the dominance criterion for cost efficiency and on the usefulness of power curves for stratified mean‐per‐unit estimators. The analyses lead to the conclusions that: (1) while an audit plan which dominates another is associated with lower cost, a plan with lower cost does not necessarily dominate: (2) the distribution function of the t statistic becomes normal for sufficiently large samples, but the approach to normality is not necessarily uniform as sample size increases; (3) large sample size is required for nominal confidence levels to be a good approximation to the true confidence level, and the true confidence level can move temporarily farther from the nominal level as the sample size increases; and (4) the lack of reliability of ex ante power curves for the stratified mean‐per‐unit estimator makes it difficult to decide which power curve dominates. Résumé. Cet article discute des résultats publiés par Smielauskas (1986) et les extrapole. Il met l'accent sur le critère de dominance pour l'efficacité des coûts et sur l'efficacité des courbes de puissance pour les estimateurs de moyenne‐par‐unité stratifiée. Les analyses portent à conclure que: (1) même si un programme de vérification dominant par rapport à un autre est associé à un coût inférieur, un programme à coût inférieur n'est pas nécessairement dominant; (2) la fonction de distribution de la statistique t tend vers la normale pour des échantillons suffisamment grands, mais ce rapprochement vers la normalité n'est pas nécessairement uniforme à mesure que la taille de l‘échantillon devient plus grande; (3) un échantillon de grande taille est requis afin que les seuils de confiance “nominaux” constituent une bonne approximation du seuil de confiance “réel”, et le seuil de confiance “réel” peut s’éloigner temporairement du seuil de confiance “nominal” à mesure que s'accroît la taille de l‘échantillon; et (4) l'absence de fiabilité des courbes de puissance ex ante pour l'estimateur de moyenne‐par‐unité stratifiée rend ardue la sélection de la courbe de puissance dominante.

This paper analyzes the incentive effects of alternative legal systems on the auditor's decision making process. The first system, termed strict liability, holds the auditor liable whenever there is a loss, and the second system, termed negligence, holds the auditor liable for losses arising from the auditor's deviation from a prescribed due care standard. The auditor is assumed to have ex ante limited knowledge of the financial state of the client and the standard setting process. He revises his beliefs on the client's financial state based on a costless signal that may be interpreted as an internal audit report. The analysis shows that signal “quality” and auditor's perception of the client's financial state jointly determine the level of liability required to induce the auditor to adopt a socially optimal due care level. As in Simon's (1982) Model, negligence with supplementary insurance is preferred to strict liability. Further, negligence is shown to operate with less information than strict liability, in contrast to models such as Green (1978) and Shavell (1978). Résumé. Cet article analyse les effets incitatifs de systèmes juridiques alternatifs sur le processus décisionnel du vérificateur. Le premier système, dit de responsabilité stricte, considère le vérificateur responsable à chaque fois qu'il y a une perte, et le deuxième système, dit de négligence, considère le vérificateur responsable des pertes résultant de sa déviance d'une norme prescrite. Le vérificateur est supposé posséder ex ante une connaissance limitée de la situation financière du client ainsi que du processus de normalisation. Il révise ses opinions portant sur la situation financière du client à la lumière d'un signal sans frais qui peut être assimilé à un rapport de vérification interne. L'analyse montre qu'un signal «qualité» ainsi que la perception du vérificateur quant à la situation financière du client déterminent conjointement le niveau de responsabilité requis pour inciter le vérificateur à retenir un niveau de soin raisonnable socialement optimal. De même que le modèle de Simon (1982), le système de négligence avec assurances additionnelles est préféré à la responsabilité stricte. De plus, il est montré que le système de négligence fonctionne avec moins d'information que le système de responsabilité stricte, par opposition à d'autres modèles tels Green (1978) et Shavell (1978).

This paper develops and estimates a demand model to describe a household's demand for distance from a landfill with hazardous wastes. This model provides one basis for gauging the intensity of a household's desire to avoid living near this type of facility. Using the conceptual framework of a hedonic property value model to provide the basis for demand for distance questions, a survey in suburban Boston elicited this information from 609 households. The demand estimates imply that the average household would realize a consumer surplus between $330 to $495 annually for each mile between its residence and a landfill containing hazardous waste.

Recently several economists (Richard Thaler, 1980; Jack Knetsch and J. A. Sinden, 1984), following suggestions of psychologists (Daniel Kahneman and Amos Tversky, 1979), have argued that current economic models of consumer behavior fail to explain observed asymmetries in how individuals respond to gain vs. losses in perceived entitlements. Attention to their arguments is increasing because they relate to many current policy issues-especially those associated with undesirable land uses. Most of the papers suggesting this limitation with the conventional economic framework have been motivated by the large differences between the estimates of willingness to pay vs. willingness to accept as measures of the change in individual well-being that would result from a change in the conditions of access to (or the quality of) a commodity.' In this paper we report the first evidence of a sizable property rights effect using only willingness-to-pay measures. This change is potentially important because both the recent appraisal of contingent valuation surveys (see Ronald Cummings et al.. 1986), an important source of the available empirical evidence, and laboratory experiments suggest that individuals may have difficulty in dealing with the concept of compensation. This is especially true when there is no opportunity for individuals to learn about transactions that involve compensation through experience. Based on a contingent valuation survey of households in suburban Boston, we found that respondents bid significantly more to reduce risk than they indicated they were willing to pay to avoid an equivalent risk increase. While our findings support suggestions that changes in the implied entitlements (to safety) can lead to large differences in welfare measures for risk changes, several of these earlier arguments would have implied that individuals were willing to pay more to avoid a risk increase-the opposite to our results. Thus, these differences imply that the determinants of individuals' valuations for risk changes are more complex than past studies have acknowledged.