nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒06‒30
three papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Reforming the Form of the Auditors’ Report: The Case of Building Societies, 1956-1960 By Noguchi, Masayoshi; Batiz-Lazo, Bernardo
  2. Corporate asset purchases and sales: theory and evidence By Missaka Warusawitharana
  3. Compiling the national accounts demystified By Bos, Frits

  1. By: Noguchi, Masayoshi; Batiz-Lazo, Bernardo
    Abstract: The purpose of this study is to explore how the audit of building societies changed in the late 1950s in a reversion of audit objective from ‘fraud detection’ to ‘statement verification’ (Chandler et al., 1993: 452). Of particular interest is the analysis of the extended negotiations between the ICAEW and the Treasury over the reform of the form of the auditors’ report for building societies, which was implemented through the enactment of the Building Societies Act 1960 (BSA60) We show how change implemented through the BSA60 relieved chartered accountants from ‘out of tune’ (T233/1652) practice established by nineteenth century legislation, but to do so required them to take an alternative duty to report on internal control.
    Keywords: building societies; the form of the auditors’ report; the auditors’ reporting duty on internal control; the ICAEW; Building Societies Act 1960 (BSA60)
    JEL: M42 N24
    Date: 2007–06
  2. By: Missaka Warusawitharana
    Abstract: Purchases and sales of operating assets by firms generated $162 billion for shareholders over the past 20 years. This contrasts sharply with the evidence on mergers. This paper characterizes the behavior of value-maximizing firms, which may grow organically, purchase existing assets or sell assets. The approach yields an endogenous selection model that links asset purchases and sales to fundamental properties of the firm. Empirical tests confirm the predictions of the model. In particular, return on assets and size strongly predict when firms purchase or sell assets, and the transaction size covaries with the value of capital employed by the firm. These findings indicate that corporate asset purchases and sales are consistent with efficient investment decisions.
    Date: 2007
  3. By: Bos, Frits
    Abstract: This paper unveils the mystery of national accounts statistics. National accounts statistics are not facts. They are estimates of a universal accounting model (SNA93) for describing, analyzing and managing national economies. The operational versions of the universal model decide what is actually estimated. They are estimated by expanding and transforming the available data with accounting identities, tested and untested assumptions and previous estimates. The estimates reflect skills, resources and compilation policy. The resulting differences in the reliability of the national accounts statistics are to a great extent the price to be paid for a miracle come true: all over the world, very incomplete, imperfect, heterogeneous and partly outdated data are to be transformed into complete, consistent, internationally standardized and up-to-date overviews of the national economies and their major components. Nevertheless, compiling the national accounts can be improved in various ways, but this requires an international long-term strategy.
    Keywords: National accounts; data compilation; reliability of national accounts statistics; measurement in economics
    JEL: E60 C82
    Date: 2007

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