H. Fenwick Huss

Ethics in accounting: Values education without indoctrination

The integration of ethics into accounting curricula is a critical challenge facing accounting educators. The ethical subject matter to be covered and the role of the professor in ethical debates in the classroom are important unresolved issues. In this paper, we explore teaching basic values as an integral part of ethics education. Concern about indoctrination of students is addressed and the consistency of values education with the goals of ethics education is examined. A role for ethics researchers in identifying and clarifying the basic values that define our profession is recommended, and suggestions for implementing values education in accounting ethics are provided.

An Investigation of Alternative Treatments of Deferred Taxes in Bond Raters' Judgments

Deferred income taxes are currently reported in financial statements of corporations as a result of interperiod income tax allocations. The Financial Accounting Standards Board (FASB) recently issued Statement No. 96 [ l ] that requires the asset-liability method. Unlike the current deferred method, reported amounts will be adjusted for enacted changes in the income tax rates. The deferred income tax credits currently reported may receive varied treatments in the decision-making processes of users of financial statements [2,3]. This research explores the possible user treatments of the financial disclosures of deferred taxes. Each of the alternative user treatments is related to a possible treatment of deferred income taxes in the decision-making processes of financial statement users. The alternative treatments are based on assumptions (1) that the deferred income taxes represent obligations of the corporation, or (2) that increases in deferred taxes are defucto earnings, or (3) that tax deductibility and taxability are factors in the valuation of assets. In this exploratory study, ex post discriminant models are developed with Moody’s bond rating [4] as the dependent variable. Financial ratios are calculated based on the possible user treatments of deferred taxes, and the differences in discriminant accuracy of the ratios are examined. Higher discriminant accuracy from ratios calculated under a particular assumed user treatment of deferred taxes would suggest use of that treatment in decision making. Unlike much antecedent research involving so-called prediction models (see Eisenbeis [5] and Mensah [6] for summaries and criticisms), no claim of ex unte prediction is needed or made. The concern is only with

Prediction in the presence of imperfect inspections

An examination of the effects of inspection error on Bayesian predictive distributions is provided. Binomial and hypergeometric sampling models are considered, and predictive distributions for the number of observed defectives are derived. These predictive probabilities are tabulated for illustrative cases, and their impact on acceptance sampling is considered.

Bernoulli processes interrelated by constrain

Inferences for two Bernoulli processes related through their parameters are considered, A family of prior distributions is introduced, for which prior inferences on common ratios are discussed. Implications for posterior distributions are also described.