Financial reporting and auditing under alternative damage apportionment rules

Article Abstract:

The consequences of three alternative damage apportionment rules on an owner's financial-reporting decision, an auditor's audit-quality choice and investors' pricing decisions assuming a perfectly competitive securities market and owner solvency limitations were investigated. The strategic interactions between the players' strategies were examined within a setting where payoffs are endogenously determined and vary with the damage apportionment rule. The primary finding is that the audit failure rate can decline when there is a shift from a joint-and-several to a proportional liability rule even though audit quality has also degenerated. This result occurs when there are strategic interactions between the owner's reporting strategy and the auditor's quality decision.

Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Corporation reports, Company reports

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Measurement error and statistical sampling in auditing: the potential effects

Article Abstract:

Auditors' use of modern statistical techniques and statistical estimators will center on the effect of nonsampling error when these techniques and estimators are negligible. The study presented centers on the examination of the possible effect of one type of nonsampling error, the auditor's measurement errors, and the repercussions of alternative estimators and statistical sampling methods for the Monte Carlo simulation review. The results show that the auditor's statistical results can be much lower than the optimal level of confidence.

Models, Usage, Statistics, Statistics (Data), Statistical sampling, Sampling (Statistics)

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Radical developments in accounting thought

Article Abstract:

Conventional accounting is based on a standard set of philosophical assumptions on knowledge, the relationship between practice and theory, and the empirical environment. There are some advantages to the traditional accounting world-view but problems restrict the study and use of research materials. New assumptions will allow for breakthroughs in research. Possible innovations in accounting theory are suggested and discussed.

History

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