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This paper reports on auditors' experience with material irregularities. It is based on a survey of audit partners of one Big Eight accounting firm. The paper considers the requirements of Statement on Auditing Standards No. 53, "The Auditor's Responsibility to Detect and Report Errors and Irregularities," and the use of an audit planning model developed by the authors for assessing the likelihood of material management fraud. The paper concludes that encountering a material irregularity should be considered a rare event, that the auditor should make separate assessments of material errors, material defalcations, and material management fraud during audit planning, and that the authors' model for assessing material management fraud holds promise as an engagement tool. [ABSTRACT FROM AUTHOR]

This study investigates the empirical relationship between actual financial statement errors detected by external auditors for accounts receivable and inventory and internal control effectiveness judgments. Also considered are the effects of relatively large vs. small firms, and alternative degrees of reliance on the applicable controls. The data reported here indicate no empirical association between errors detected by the audit process and judgments of internal control effectiveness. The results hold when relatively small and large firms, and alternative degrees of reliance on controls, are considered. [ABSTRACT FROM AUTHOR]

This paper reports the results of a study to examine the effects of certain situational variables on auditor judgments about the proper nature and extent of analytical review procedures in the payroll audit area. Forty-four management and senior-level auditors participated in a controlled experiment using simulated audit cases. Two independent variables were examined: a checklist of suggested analytical review procedures, and the scope of work done in the prior year's audit program. Dependent variables were the choices that auditors make in completing an audit program and the related time budget (planning variables), and the choices they make in applying analytical review (usage variables). Significant variability of judgments among auditors appeared throughout the findings for all planning variables, though not for the usage variables. The checklist treatment had a weak and unexpected effect on planning judgments, while the results for the audit program treatment were mixed. [ABSTRACT FROM AUTHOR]

This article reports on the research, development, and implementation of SEADOC, a system for documenting internal accounting controls and a decision aid for evaluating accounting control systems. Field test results indicate that SEADOC is more efficient than traditional approaches to documenting and evaluating accounting control systems. This article summarizes both the conceptual development and the basic and applied research which underlies SEADOC. [ABSTRACT FROM AUTHOR]

This article focuses on the general purpose of financial reporting for business entities in the U.S. The inductive approach in accounting is based on basic form of empirical research. The observed business practices into a coherent, comprehensive theory of accounting. Study of accounting phenomena is enriched by examination of environmental data such as current market prices, net realizable value, and changes in discount rates and expectations of future cash flows. Observations about operations performed on financial accounting data by accountants.

This article introduces some central concepts in the discipline of sociology and relates these concepts to the field of auditing. Specifically, the subculture of the auditing profession in the U.S. is explained and the problems of entrance to the profession, departures from the profession, and conflicts between small and large practitioners are briefly explored. The subculture of auditing profession is composed of all the norms and values which guide the behavior of individuals acting in the capacity of independent auditors. These norms are: accounting norm complexes, auditing norm complexes and relational norms. To succeed in the profession of public accounting the novice must assimilate this normative structure.