Showing papers on "Audit published in 1989"

Gaming system with system base station and gaming boards

Abstract: An electronic gaming system for playing games. The electronic gaming system includes a system base station and a plurality of electronic gaming boards. The system base station downloads game instructions, a game schedule, and game card arrays into the gaming boards. These game card arrays are stored in the system base station as a gaming card library. The game schedule stores symbols which are to be matched with randomly generated symbols, particularly where the symbols are numbers and the pattern is a plurality of elements of a 5×5 array. The system base station retains auditing information about the distributed gaming cards; thus, the base station instantly confirms matches between the randomly-called numbers and those on a winning card, and at the same time verifies that such a card was indeed sold. The system base station receives information and performs supervisory functions such as distributing the game cards, storing the distributed game cards in memory, validating potentially winning cards, calculating card cost, calculating prize money for each session, and processing and reporting cumulative audit records stemming from the entire gaming session. The system base station has a number of modes by which an operator performs various functions for a gaming session as either the manager of the gaming session, the cashier of the gaming session, or the accountant of the gaming session. The accounting function produces a comprehensive audit record, including a profit/loss statement and a final cash-on-hand balance, for the entire gaming session.

Delegation as Commitment: The Case of Income Tax Audits

Abstract: In this article we study the value of delegating authority over income tax audit policy, arising from the incompleteness of contracts. Consider a utilitarian government whose ability to commit is limited to aggregate dimensions of its audit policy, as publicly verifiable information about detailed allocations of audit budgets is not available. We show that the welfare level associated with the full-commitment solution can be attained by delegating authority over audit policy to a manager. The latter is offered a simple incentive scheme based only on the aggregate variables which are publicly observable. In contrast, if the government retains authority, direct commitment to these same variables does not allow the full-commitment welfare level to be achieved. Thus, despite sharing a common informational basis, delegation may perform better than centralized arrangements in the presence of incomplete contracts.

Control and audit of electronic data interchange

Abstract: Electronic data interchange (EDI) is the movement of information electronically between a buyer and seller for purposes of facilitating a business transaction. EDI represents a powerful application of computer-communications technology. Its value includes such benefits as reduced paperwork, elimination of data entry overheads, improved accuracy, timely information receipt, accelerated cash flow, and reduced inventories. EDI brings with it, however, new and important control considerations. This article discusses, in a non-technical fashion, the control architectures and concerns associated with EDI. Audit considerations in the EDI environment, as well as related audit tools, are also outlined.

The Anatomy of Tax Evasion

Abstract: Three things are certain in life: death, taxes, and mankind's unrelenting effort to evade both. But despite the long history of taxpayer revolts and resistance to tax laws, tax compliance has only recently emerged as a topic receiving more than passing scholarly attention. Researchers from a number of fields have attempted to establish theoretical and empirical support for some basic propositions about compliance behavior-namely, that detection risk and penalties are deterrents to noncompliance and higher tax rates encourage noncompliance.' Virtually all studies have found that measures of detection risk, such as the fraction of income subject to information reporting, the audit rate, perceived detection risk, or the difficulty of constructing an audit trail, influence compliance in the expected direction (Mason and Calvin; Clotfelter; Slemrod; Witte and Woodbury; Dubin and Wilde; Kagan). The evidence on the influence of penalties and taxes, however, is more varied. Only a few studies have found much evidence suggesting that penalties deter

The auditors' going concern opinion decision: Interaction of task variables and the sequential processing of evidence.

Abstract: SYNOPSIS AND INTRODUCTION: Sequential processing of evidence is important to auditors because it characterizes the manner in which many audit judgments are made For example, Gibbins (1984, 110) has stated that "as a normal routine, judgment proceeds incrementally rather than by gathering full information and integrating it all before choosing a response" One advantage of sequential processing is that it allows an auditor to keep a "running total" of the effects of prior information and therefore reduces memory load (Einhorn and Hogarth 1985) Although sequential processing of evidence promotes cognitive economy, recent findings in psychology seem to indicate that it can lead to non-normative responses, including order and framing effects (Einhorn and Hogarth 1985; Tversky and Kahneman 1981) Drawing on these general studies in psychology, previous auditing research has examined the impact of task variables (including temporal order and mode of processing) on judgments (Ashton and Ashton 1988; Butt and Campbell 1989; Tubbs et al 1990) However, none of these studies examines how such differences in judgments are manifested in audit actions This study extends previous research by examining whether these order effects (1) occur in alternate hypothesis frames and (2) translate into different choices of audit reports It was hypothesized that sequential processing of evidence leads to a recency effect in auditors' going-concern judgments This effect should lead audi-

Guardians of Knowledge and Public Interest: Evidence and Issues of Accountability in the UK Accountancy Profession.

Abstract: In the UK, the accountancy profession plays an important and influential role in the audit and regulation of economic and social affairs. Although an increasing amount of interest is currently being taken in the role of accounting and auditing in society, comparatively little attention has been given to the profession′s obligation, as mentioned in the Royal Charters, to act as guardian of the “public interest” in relation to public policy making. Through an examination of correspondence with the professional bodies, stimulated by a refusal to provide information about matters relating to an auditing guideline, the accountability of these bodies to their members and to the public more generally is discussed. It is suggested by the evidence that the profession′s interpretation of the requirement to serve the “public interest” is not easily reconciled with its declared obligations.

Global Surveys of Corporate Disclosure Practices and Audit Firms: A Review Essay

Abstract: (1989). Global Surveys of Corporate Disclosure Practices and Audit Firms: A Review Essay. Accounting and Business Research: Vol. 20, No. 77, pp. 47-57.

Agency Budgets, Cost Information, and Auditing

Abstract: A model of legislature-agency interaction is analyzed where the agency possesses an informational advantage in that only it knows the cost of its services. The legislature has the ability to audit the agency, where auditing is a costly means of verifying the agency's information. Two different procedures are analyzed for determining the agency's budget: in one, the agency makes a budget request, after which the legislature can either accept or reject the request, or audit the agency and impose a budget equal to the true cost of services. In the other procedure, the legislature can follow a request with a counterproposal to the agency, which can then either accept or reject. Since under both procedures auditing is costly, it will be optimal for the legislature to refrain from auditing a request if the perceived benefits do not outweigh this cost. At issue is the ability of the legislature to impose discipline on the agency's request and final budget through an optimal choice of audit and counterproposal strategies, the extent of the information transmitted through the agency's budget request, and the efficiency of the resulting outcomes. A refinement of the sequential equilibrium concept provides the behavioral predictions for the procedures.

Contract Plans and Public Enterprise Performance

Abstract: Roughly 100 public enterprises in developing countries are using contract plans - negotiated performance agreements between the government/owner and the enterprises' managers or directors. Contract plans have not improved the financial performance of public enterprises dramatically. The process is probably more important than the product. They do however, produce clearer goals, open a dialogue between management and the state, and offer such benefits as better accounting, auditing, and management information systems, including physical and financial performance indicators and performance targets. The problem is, they have been oversold. They are not the mechanism for healing a sick company. They work best with firms that operate commercially and already have decent management and sound reporting procedures.

Guidelines for medical audit: seven principles.

Abstract: The government, general managers, and professional bodies all agree that medical audit should be implemented throughout the United Kingdom. Nevertheless, it is not yet decided either nationally or locally how audit should be defined and what its implications will be. In an analysis to find ways of measuring the design and effectiveness of hospital audit, therefore, seven main measures emerged that might serve as practical criteria. These were the definition of medical and managerial responsibilities; medical organisation; scope of audit; essential characteristics; resources needed; record keeping; and evaluation. Though generally consistent with the proposals of the government and the Department of Health, these seven principles offer some alternative approaches.

The effects of information order and hypothesis-testing strategies on auditors' judgments.

Abstract: This research examined the effects of information order and hypothesis-testing strategies on audit judgements. Auditors started with high or low prior beliefs about an internal control system and then reviewed both positive and negative evidence. The results suggest that, unless specifically requested to do so, auditors do not generally seek confirming evidence. We also found that prior beliefs have an effect on the importance of information order: with high prior beliefs, subjects' judgements were unaffected by information order, while low prior beliefs were associated with a recency effect.

An examination of information search during initial audit planning

Abstract: This paper examines the initial planning processes of auditors, a research topic which has received very limited attention to date. In this empirical study auditors were given the results of analytical tests and asked to assess the likelihood that observed “abnormalities” were due to accounting error or irregularity as distinct from environmental change (i.e., an initial hypothesis). They were further asked to indicate the information they would seek in response to the test results, in an effort to resolve the issue adequately to proceed with planning the audit. The authors posit that: (1) for relatively inexperienced auditors, their initial hypothesis of cause will positively correlate with the type of information the auditors will subsequently seek (i.e., they will follow a hypothesis confirming strategy); and (2) for relatively experienced auditors, their initial hypothesis of cause will not correlate with the type of information sought but rather they will follow a balanced information search strategy. Support for this hypothesis was found using a rank measure of information seeking. A second measure of information seeking based on unranked questions, did not support the hypothesis, however.

Quality audits for improved performance

Abstract: A necessity for auditors, audit managers, audit teams, and all quality professionals. The Quality Audits for Improved From new edition under tight deadlines then presents the purpose of lab meets. The mystery shopper testing the basics of quality auditor lack american pathologists cap. His books have been used as, a customer service. Quality auditing and blood establishments call for regular evaluation. It to a public health care, and history of quality auditor competencies! Quality management system consists of the focus this book. This is excellent and supplier to take a basis for the office. He doesn't need to regulatory agency or certification. While reducing overall costs and scheduling of iso 9001. The audit of those rules for auditing. Under these standards the new material on process of findings and history businesses. This is adversarial michelle dudley javascript always compliant sec it take. This book the financial statements of auditing scenario happens several. It can be enabled in this book the example of audit program.

The Role of Data Audits in Detecting Scientific Misconduct: Results of the FDA Program

Abstract: To evaluate the extent of the problem of scientific misconduct in investigational drug trials, we reviewed data from 1955 routine audits conducted by the US Food and Drug Administration (FDA) from June 1977 to April 1988. Serious deficiencies were detected in 12% of audits prior to October 1985, but in only 7% since that date. At the same time, there was no evidence of a decline over time in the rate of detection of many categories of deficiencies, and some investigators were able to continue to participate in drug trials after flagrant violations of recognized norms of research. The data auditing program should be continued, but additional measures are needed to regulate misconduct. These must be tailored to the variety of causes of misconduct, ranging from negligence to fraud. Possible additional approaches could include certifying the competence of potential investigators; peer-reviewed, competitive application for the opportunity to conduct FDA-authorized clinical trials; limiting an investigator's level of participation in clinical trials; penalizing manufacturers who fail to detect their investigators' misconduct; and permitting the FDA to suspend investigators prior to a hearing. Measures taken should maximize public utility at the least economic cost to society and should be evaluated thoroughly. ( JAMA . 1989;261:2505-2511)

Efficiency Auditing by the Australian Audit Office: Reform and Reaction under Three Auditors‐General

Abstract: The efficiency audit programme of the Australian Audit Office, which began officially in 1979, was the first substantial move towards performance auditing in Australia. The history of that programme is outlined in support of an argument that the nature and purpose of public‐sector performance audit have not been fully settled. Far from being an established discipline, performance audit is still evolving. This evolution is a contested process in which auditors, the agencies they audit and the Parliaments they report to, dispute such basic questions as why, what and how performance should be audited, and by whom. It is argued that successive Australian Auditors‐General have had a large personal influence on the development of performance audit at the federal level in their country. These arguments take on new relevance with recent and very ambitious proposals for reform of the Australian Audit Office that bear marked similarities to those advanced when efficiency audit was first proposed in the mid‐1970s.

An education program to reduce unnecessary laboratory tests by residents.

Abstract: What are often called "little-ticket" items--X-rays and laboratory tests--account for 25-30% of all health care costs. Two such items were the focus of this study, which took place at an inner-city community health center operated by the Department of Family Medicine of Cook County Hospital and involved 20 family practice residents over a period of nine weeks. The first item was the complete blood count (CBC) with differential, a prototype of a low-cost, high-volume test often ordered by reflex; the second, the thyroid stimulating hormone (TSH) test, a high-cost, low-volume test normally associated with a differential diagnosis or clinical reasoning. Through the use of a simple educational intervention based on quality of care, not cost-containment, and an audit feedback system, the authors were able to reduce significantly the rates of ordering TSH tests (p less than .0001) and CBCs (p = .05). This effect on the rates persisted five months after the intervention terminated. In addition, the percentage of TSH tests clinically indicated by explicit criteria increased significantly (p less than .001) during the intervention. However, this effect showed signs of diminishing five months after the intervention ended. The percentage of CBCs clinically indicated did not change significantly as a result of this intervention.

Auditor changes, information quality and bankruptcy prediction

Abstract: In periods of financial distress management may attempt to suppress unfavorable information from creditors and investors through the use of undisclosed changes in accounting methods, estimates and procedures, thus reducing the quality of the information contained in the firm's financial statements. The auditor's role in this context is to ensure that such compromise does not take place. If the auditor does not permit such accounting treatments, the company may choose to switch to another auditor who will. Empirical evidence relating auditor-change behavior to the quality of comparative bankruptcy prediction models provides support for the notion that auditor changes before bankruptcy may be at least partially due to lack of success at suppressing unfavorable information with the current auditor. Conversely, non-auditor switching companies appear to enjoy greater success at suppressing negative income and leverage information.

Audit judgment research

Abstract: This paper identifies themes in the audit judgment literature and suggests implications of the research that supports them. Research on outcome behaviors and investigations of the process of audit decision making are stressed. Issues in both methodology and theory are considered. A brief assessment of the current state of knowledge in the field of audit judgment research is provided, and an argument is offered for a direction of future work based on the idea of context and the need to understand the meaning that tasks have for the subjects who perform them. The paper concludes with a brief discussion of data from studies currently in progress at the University of Minnesota.

Assessing inherent risk during audit planning: The development of a knowledge based model☆

Abstract: Within the academic and professional auditing communities there has been growing concern with accurately assessing the various risks associated with the performance of an audit. One approach to developing sophisticated risk assessment models is to study how experienced expert auditors use industry and firm specific factors in making audit judgements. This study presents a model of inherent risk assessment based on literature reviews and a field study that involved structured and unstructured interviews and observations of experts in audit planning meetings. Analysis of the data gathered led to the specification of a conceptual model of inherent risk assessment which has been implemented as a computer program (a computational model). Auditors were asked to assess the behavior and performance of the computational model as a first step in evaluating the expert model.

Hypertext challenges in the auditing domain

Abstract: Auditing is the process by which an opinion is formed on the financial statements of a company by a group of outside professional accountants. Large numbers of documents pertaining to the company's business are examined and many more are produced during an audit in order to arrive at and provide a basis for this opinion. These documents contain a wide variety of interrelated information. Capturing these interrelationships is essential to performing an effective audit. Currently, this is accomplished by using a highly-structured, manual hypertext system. While quite effective, the system is difficult and time-consuming to maintain, and can become unwieldy when conducting an audit for a very large company.We are in the process of developing an electronic system to meet the needs of this complex task. The complexity of the referencing system challenges current hypertext and user interface technology. At the same time, the structure of the domain affords an interesting application area within which to explore and more fully develop hypertext techniques. During the course of this project, we are exploring automatic generation of links, automatic generation of documents, hypertext path creation and access, creation of a typed-link topology for the domain, referencing of individual points and regions within documents, linking bodies of hypertext, and many other issues.

Intrusion and anomaly detection in trusted systems

Abstract: A real-time network and host security monitor that allows both interactive and automatic audit trail analysis is described. Audit records, i.e. tokens of actual user behavior, are examined in the context of user profiles, i.e. measures of expected behavior. This system combines a set of statistical tools for both interactive and automatic analysis of audit data, an expert system that works in conjunction with the statistical tools, and a hierarchical set of audit indicators which are based on an indications and warning model. The application of the model makes it possible both to collect audit events at a fine level of granularity and to effectively direct intrusion anomaly detection by defining levels of concern. A set of discrete tools, capabilities, and components is implemented in a hybrid design utilizing control concepts from operating systems theory and problem-solving concepts from blackboard artificial-intelligence systems. >

Verbal protocol research in auditing.

Abstract: Recognizing the increasing interest in verbal protocol analysis in auditing research, this paper reviews the literature in this area. Consideration is given to the research problems investigated, the underlying theories appealed to, the methodological issues addressed and the overall contribution made by each of seven studies. Future directions for audit research using protocol techniques are then discussed prior to a concluding assessment of research in the area.

Cognitive scripts in auditing and accounting behavior

Abstract: The purpose of this paper is to present a major concept from social cognition called “script” and to develop the script notion for application to auditing and accounting behavior. Three developments are of primary importance in this paper: (1) a concern with adapting scripts to the study of auditing and accounting behavior. The script concept is explored in depth and is shown to have a substantial promise; (2) a depiction of auditing and accounting as a set of scripted or scriptable situations, which offers a potentially alternative perspective of auditing and accounting behavior. Examples of scriptal situations in auditing and accounting are demonstrated; and (3) a provision of some research propositions as useful preludes for stimulating further empirical or theoretical work.

Assessment‐based Development Centres

Abstract: A fair amount of evidence has been amassed concerning the reliability, validity and fairness of assessment centres when used for selection purposes. Selection‐oriented assessment centres provide valid predictions of managerial performance and success, and seem not to generate significant adverse impact against black or female candidates. Assessment centres increasingly, however, seem to be used for purposes other than immediate job selection. In particular, they are often used for the identification of long‐term managerial potential, and for the diagnosis of training and development needs, perhaps as a part of an overall audit of managerial strengths and weaknesses or as a part of a wider organisational development effort. Two studies of participants′ reactions to development centres are presented. These are followed by two longitudinal studies of the impact on a range of career and organisational attitudes held by participants of two development centres run by two major UK financial services organisations.