In this paper I describe two research papers that I use when I teach financial auditing. The first paper requires students to critique articles from a practitioner journal and an academic journal. The second paper requires that students interview an accounting practitioner using questions they developed from the first paper. I describe why I believe these papers are an innovation, what their ed...

Sampling items using probability proportional to a bound on the possible error in the item (PPEB) has a long history in financial auditing, but has only recently been suggested for auditing elections. How large a PPEB sample should be drawn to have confidence 1− α that the election outcome is correct if the sample includes only “small” errors? What is the confidence that the outcome of the elec...

Abusive tax shelters implemented through partnerships and S corporations have become increasingly popular amongst tax planners, helping high-income taxpayers to underreport an estimated $91 billion of income annually in the US alone. The most challenging problems for tax collection agencies in this respect are a) the recent upswing in large, tiered partnership structures and b) the evolving nat...

This article analyzes the impacts that three alternative damage apportionment rules have on an owner’s financial-reporting decision, an auditor’s audit-quality choice, and investors’ pricing decisions within the context of a perfectly competitive securities market and owner solvency constraints. The strategic interactions between the players’ strategies are analyzed within a setting where payof...

This paper develops an adaptive ensemble Genetic Algorithm (GA) model for bankruptcy classification of firms cited in the SEC’s Accounting and Auditing Enforcement Release (AAER). Our research contributes to the bankruptcy literature in several ways. First of all, it fills a gap in bankruptcy classification by developing a domain specific model for AAER firms. Secondly, by using financial and n...

The innovative idea of introducing a third party (Ronen,2002) into the agency relationship has motivated our proposal of a co-payment scheme as a solution to financial misreporting. In the co-payment scheme, both the client firm and a third party such as FASB are asked to share the auditing fee. We will demonstrate that the participation of a third party can create an endogenous collusion cost ...