Hierarchical Differences in Audit Workpaper Review Performance*

This paper investigates the performance of senior and staff auditors in the identification of conceptual and mechanical errors during workpaper review. In this study, we begin to examine the potential for effectiveness and efficiency gains by involving staff (assistant) auditors in the review process. We find that senior auditors were more accurate than staff auditors in identifying conceptual errors contained in a hypothetical set of workpapers just reviewed. However, staff auditors were more accurate than senior auditors in identifying mechanical errors. Highlighting the benefits of a hierarchical review, composite groups consisting of a staff auditor and a senior outperformed composite groups consisting of two seniors or two staff auditors. The study finds that the differences in review performance between managers and seniors found in Ramsay 1994 generalize to lower levels of experience. Considering our results in conjunction with Ramsay 1994, we show a progression to a more conceptual review template as the rank of the reviewer moves from staff to senior to manager. The paper provides some guidance to audit firms that are presently introducing major changes to the way in which the review process is carried out, including the inclusion of reviews by staff auditors.     

ACCRUAL MANAGEMENT TO MEET EARNINGS TARGETS: UK EVIDENCE PRE- AND POST-CADBURY

Central to both the Cadbury Committee’s initial remit and its subsequent recommendations is the view that director integrity and board effectiveness play key roles in ensuring the quality and reliability of published financial statements. Using a constant sample, this paper tests whether the association between board composition and earnings management activity differs between the pre- and post-Cadbury periods. Earnings management is measured by the use of income-increasing abnormal accruals when unmanaged earnings undershoot target earnings. Results provide evidence of accrual management to meet earnings targets in both periods. However, while we find no evidence of an association between the degree of accrual management and the composition of the board of directors in the pre-Cadbury period, results for the post-Cadbury period indicate less income-increasing accrual management to avoid earnings losses or earnings declines when the proportion of non-executive directors is high. These results are consistent with the view that appropriately structured boards are discharging their financial reporting duties more effectively post-Cadbury.     

The CCA Depreciation Problem — An Analysis and Proposal*

The question of Depreciation is one upon which so many articles have been written, and so many opinions expressed, that there would not appear to be much more which could profitably be said upon the subject. (John H. Armstrong, The Accountant, 8 August 1903.)     

LONG-RUN IMPACTS OF AIDS

Over the next century, the impact of the AIDS epidemic on the supply of and returns to factors of production may be significant. Public policies might offset some of the long run impacts, especially if initiated early in the epidemic. History suggests the types of economic effects that can occur in the long run and the limits of public policies' effectiveness in controlling diseases of this type. The models developed here to show possible long run time paths for the epidemic also imply a long-run equilibrium, a concept not appreciated in most disciplines. Because data defciencies make long run numerical forecasting highly controversial, this paper uses history and modeling to emphasize qualitative understanding of the epidemic.     

财务会计与税务会计公允价值的比较及其相互借鉴

公允价值的计量一直是困扰着财务会计与税务会计的一大难题。本文比较了财务会计与税务会计在公允价值计量上的差异,分析两者在公允价值计量上的缺陷,并就两者在使用范围、确定技术、操作指引、内部控制程序及信息披露上的相互借鉴作了一初步思考。