An assessment of the effective annual rate method as a basis for making accounting allocations

Article Abstract:

There have been some disagreements as to whether the effective annual rate method is an appropriate basis for the allocation of costs to accounting periods. It has been argued by those who are against the use of the method that it does not give a true reflection of the economic substance of transactions. A case study of British Telecom bonds proves this contention. The study further recommends that forward rates method in making accounting allocations is more effective than either the effective annual rate method or the straight-line method.

Return on investment, Rate of return, Cost accounting, Allocation (Accounting)

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The auditor's going concern decision: some UK evidence concerning independence and competence

Article Abstract:

Auditors in the UK were criticized for failing to indicate in their audit reports the financial status of their client firms during the recent recessionthat hit the country. A case study of a UK-based company confirmed the reported reluctance of auditors to correctly qualify the status of their clients. Evidence indicate that external factors, although not important in the assessment of auditors' competence, exert tremendous influenceon the independence of auditors.

Malpractice

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Auditor choice and audit fee determinants

Article Abstract:

A model describing auditor choice and audit fee variables is presented and analyzed. The model predicts an inverse relation between client company's internal control and auditor quality's marginal cost. Although firms with better internal control often hire higher quality auditors,service fees are not necessarily high. Thus, risk and complexity affect fees onan indeterminate basis.

Services, Prices and rates

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