AN ANALYSIS OF THE EXPERT OPINIONS AND EXPERIENCES OF AUDITORS ON THE TOPIC OF INCOME SMOOTHING.

摘要

A general review of the topic covers income smoothing definitions, smoothing instruments, motivations and firm-level identification of the smoother, and target income level. Of the three information sources about income smoothing--financial statements, management, and independent auditors--all previous studies used only one: financial statements. This study uses a questionnaire to draw information from auditors. Respondent selection was structured to maximize the level of respondent expertise. The questionnaire covered the material mentioned above, and added the respondents' personal opinions and experiences with smoothing.; All of the 18 suggested instruments were classed as feasible smoothing instruments. Twelve were classified as fairly easy to detect when used to smooth; the 6 instruments considered fairly hard to detect included the only 5 non-accounting instruments listed. All respondents indicated that they had been in situations where they felt income smoothing had taken place, some specifying fairly frequently. Managers had a higher frequency of encounters with smoothing than partners. All indicated they could generally find reasonable evidence of smoothing, and that given this evidence they would fairly often be able to attempt to have the smoothing removed. However, the obligation to have income smoothing removed was felt less strongly than was the ability to have it removed. One unexpected result was the fact that 15 respondents felt that such obligation would be only infrequently encountered; 3 felt that it would never be encountered. These 15 respondents included a significantly above-average proportion of partners.; All of the remaining variables were ranked by the respondents. The 6 listed motivations to smooth income were all considered relevant. Three related to the smoother's self-interest; all 3 self-interest motives were ranked as more relevant than any of the others. Tests on probable income smoothers produced an extremely clear ranking: senior management, middle management, the boards of directors, and junior management. The income targets reflected quite clearly the many choices present in the literature. There was little agreement as to a single income target level.