On assessing a firm's cash generating ability

Article Abstract:

Financial analysts can use currently disclosed accounting information to assess a company's ability to generate cash flow by focusing on the flow of funds from operations. A method based on Hunt's concept of a funds position allows analysts to properly define, classify, and present funds flows to understand a company's financing and operating activities and maximize their insight into cash flow statements. The method, which focuses on the difference between operating funds and capital investment funds generated internally in a specific period, has been modified to distinguish between capital investments for the purposes of either maintenance or expansion. Applying the method to funds flow statements yields superior results to applying the traditional cash flow statement treatments under Accounting Principles Board Opinion #19 and Statement of Financial Accounting Statement 95.

Research, Cash flow

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Determinants of audit quality in the public sector

Article Abstract:

Audit quality refers to the probability of irregularities in clients' accounting systems being detected and reported by their auditors. The determinants of audit quality in the public sector were investigated using the results of 308 quality control reviews conducted by the Texas Education Agency's Audit Division from 1984 to 1989. It was hypothesized that audit quality is affected by the number or audit clients, auditor tenure, the client's size and financial health, and the knowledge that a third party will review the audit. Results show audit quality to be significantly influenced by the auditing firm's concern for reputation and power conflicts between the auditing firm and its client. Findings further show audit quality to be related to audit hours and audit report timeliness.

Accounting and auditing, Public sector

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Pre-trial settlement and the value of audits

Article Abstract:

Research presented concerns the value of an audit, auditor liability, and pre-trial settlements between auditors and investors. Topics addressed include avoiding the cost of trials, and maintaining auditing effort and standards in the market.

United States, Statistical Data Included, Compromise and settlement, Settlements (Law), Laws, regulations and rules, Auditors

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