Reviewed by James D. Blum American Institute of Certified Public Accountants

Auditing Symposium III includes eight invited papers and seven discussants’ responses presented at the Touche Ross/University of Kansas third biennial auditing symposia for practitioners and educators. The objective of the symposium is to bring practitioners and educators together to discuss contemporary auditing issues. The papers are not rigorous research reports, but rather descriptive reports of the state of the art as practiced or presented in the literature, and/or opinions of the practitioners as to what constitutes the state of the art. Thus, the proceedings via the papers and discussants’ responses probably assisted both academicians and practitioners in gaining insight into the literature and practice relating to contemporary auditing issues.

As in past symposia, the first paper, “An Auditing Perspective of the Historical Development of Internal Control,” is a part of Professor Stettler’s attempt to assemble a series of papers that might eventually provide a comprehensive dissertation on the development and heritage of auditing. In this first paper, Willie Hackett and Sybil C. Mobley review the findings of accounting historians that have studied the historical development of internal control. They start with the Mesopotamian civilization, revealing how separation of duties existed, and how tiny tick marks, etc. at the side of figures indicated that checking of transactions had been performed. Hackett and Mobley rapidly summarize the historical development of internal control and then focus on the conceptual development of internal control by tracing terminology and descriptions of internal control and auditing in the various editions (first through the ninth) of Montgomery’s Auditing. As the discussant, Rodney J. Anderson, correctly concludes:

In summary, I thought the paper gave an interesting overview of the historical development. As in all overviews, it is something that could also be expanded—and indeed, might be of considerable interest in a more expanded form, (page 15)

In “Management Behavior — An Auditing Horizon,” W. Donald Georgen provides an excellent insight into the auditor’s problems and the audit approach of his firm, Touche Ross & Co., in coping with the detection of management fraud.

The next two papers presented at the proceedings involve the auditor’s report. Lee J. Seidler’s paper, “Symbolism and Commu-nication in the Auditor’s Report,” discusses the auditor’s report as a symbol; how symbols are used in communication; and some of the communication problems with the auditor’s report as a symbol carrying a complex message to the user. D. R. Carmichael’s paper questions the need for, and usefulness of, the “subject to” qualifi-cation in the auditor’s report.

In “Status Report on Auditing in the European Economic Community,” Richard L. Kramer gives a comparison of accounting and auditing practices in the European Economic Community and in the U.S. Boyd Randall and Paul Frishkoff in “An Examination of the Status of Probability Sampling in the Courts” examined past court decisions in which probability sampling was used in order to gain insight into whether the use of statistical sampling in auditing would be a better defense in the courts than judgment sampling.

“Use of Decision Theory in Auditing — A Practitioner’s View,” by James K. Loebbecke, probably best brings the practicing auditor’s world and the academic world together by discussing and attempting to demonstrate how decision theory might be used by auditors in controlling audit risk.

Finally, “Capital Investment and U.S. Accounting and Tax Policies,” the evening address by Richard D. Fitzgerald warns of the future undercapitalization of American businesses. Fitzgerald points out some of the U.S. income tax policies that hinder capital formation and how the burden of additional disclosure requirements sometimes can dampen capital formation.

Symposium III should be of interest to auditors interested in con-temporary auditing problems. Auditing historians will probably find the historical development of internal control paper a quick over-view and, if coupled with the other Symposia historical development papers, an interesting and quick review of the literature.