Ernst & Young Center for Auditing Research and Advanced Technology (E&Y CARAT)
Division of Accounting and Information Systems, School of Business
The University of Kansas, Lawrence, KS 66045
No. 3, Nov. 7, 1996
Ernst & Young Center for Auditing Research and Advanced Technology (E&Y
CARAT)
Division of Accounting and Information Systems, School of Business
The University of Kansas, Lawrence, KS 66045
No. 3, Nov. 7, 1996
With the generous support of the E&Y Foundation and the members of the
"E&Y Family,"
we continue to make progress towards our goals and objectives. We are proud to host
distinguished visiting scholars from various professional and educational institutions.
Professor
Mark Nigrini of St. Mary’s University in Halifax, Canada visited KU during the period
of
Nov. 13-15. For those who do not know Professor Nigrini, he has worked on detecting
fraud and other irregularities in accounting data using Benford’s Law (distribution
of digits).
Additionally, Professor Theodore Mock, Arthur Andersen Alumni Professor, University of
Southern California, and Professor Arnold Wright, Arthur Andersen Professor, Boston
College, visited the E&Y CARAT last year. Both of these distinguished scholars have
been
working with the Center on several research projects that deal with audit decision making
using uncertain items evidence. The E&Y Distinguished Visiting Scholar Program is
working
very well and it is helping us meet our objectives and mission. I would like to thank the
E&Y
Foundation and individual donors for their support.
Additional E&Y CARAT activities include the awarding of six fellowships, under the
E&Y
Student Fellowship and Faculty Mentor Program. These fellowships provide financial support
of $2,500 per year to undergraduate and graduate students and allow them to work alongside
E&Y Faculty Mentors. This is a special year for the fellowship program. In addition to
two
fellowships from the E&Y CARAT budget, we have created two new fellowships, resulting
from direct donor contributions. Furthermore, two additional fellowships have been made
possible as a result of last year's surplus. Again, I would like to thank the E&Y
Foundation
and the individual donors for their support of the fellowship program. It is helping all
of the
parties involved: the students, the faculty mentors, and the Center.
1996-97 E&Y Student Fellows were selected in October. New Fellows include Justin
Johnson, Michael Lechshiner, Lisa Xun Lu, (Fellow for Fall '96 semester) , Michael
Roessler,
Amy Shiraki, and Ruben Sigala. Students are pursuing various research and work activities
with E&Y Fellow Mentors which include Prof. Joe Coate, Prof. Ken Cogger, Prof. Mike
Ettredge, Prof. Allen Ford, and Prof. Kay Nelson, and myself.
Recognizing the past, present, and future E&Y Faculty Mentors and Student Fellows is
very
important to us. For the 1995-96 academic year, William Lewis, Jr. and Ashok Fichadia
were selected as E&Y MS Research Assistants. Will Lewis worked with Faculty Mentor
Prof. Kay Nelson and Ashok Fichadia worked with Faculty Mentor Ken Cogger.
Additionally, Peter Gillett was awarded the E&Y Doctoral Fellowship for the 1995-96
academic year.
Justin Johnson, a second-year MBA student, is working with Prof. Kay Nelson. Justin
received his undergraduate degree (B.B.A.) from Fort Hays State University, where he
played varsity basketball. Currently, he is in the last year of the M.B.A. program,
obtaining a
concentration in Finance and Information Technology. His E&Y project consists of
research
and teaching. He is presently researching the viability of forming a neural network and
adapting it to the University's system. In the Spring, Justin will help teach a section of
BUS
706, Management Information Systems.
Michael Leshchiner is a second-year MBA student majoring in Information Systems, with a
minor in Finance and International Business. He graduated from Kiev Polytechnical
Institute
in1994 with a degree in Metallurgical Sciences. Mike is working with Prof. Mike Ettredge.
His research includes constructing a mathematical model and a user interface for detecting
biases and irregularities in auditee data with the use of Benford's Law. With the use of
this
model, auditors will be able to confirm or reject the reasonableness of the data.
Furthermore,
this model will direct the auditor's attention to transactions or group transactions that
merit
further audit attention. This tool will facilitate the detection of fraudulent
transactions that are
the subject of many lawsuits. Using the latest technology to audit large volumes of data
will
prove to be highly cost effective and efficient.
Lisa Xun Lu is in the Accounting and Information Systems Program at the University of
Kansas. She will graduate in December, 1996, with a Master's Degree in Accounting. Lisa
has been working with Professor Allen Ford at the School of Business for one year as a
teaching assistant for BUS 609 (Individual Income Taxation). After graduation, Lisa will
join
the tax consulting group of Ernst & Young LLP in Kansas City in January, 1997.
Michael Roessler is pursuing a Master in Accounting and Information Systems. He graduated
from the University of Missouri with a Bachelor of Science degree in Accountancy.
Presently,
he is assisting Prof. Ken Cogger with an Internet page that page will use statistical
techniques
and analyses to help auditors determine if the managers of a company being audited are
providing auditors with accurate and honest information.
Amy Shiraki is working with Prof. Rajendra Srivastava, the Director of the E&Y CARAT.
Amy graduated from Cornell University in 1994. Now, she is in the second year of the KU
M.B.A. program and she is pursuing a concentration in Management Information Systems.
Upon graduation from the MBA program in May of 1997, Amy be an Information
Technology Consultant for the Deloitte & Touche Management Consulting Group in Kansas
City. Presently, she is designing the E&Y CARAT homepage and all related pages. Please
visit our homepage at : http://lark.cc.ukans.edu/~srivasta/ . Increasing the visibility of
the
E&Y CARAT organization is critical. An Internet homepage that contains the most
up-to-date information and announcements is an effective way to communicate our activities
and remain connected to professionals and scholars who are interested in our organization.
In
addition, Amy hopes to manage and update an additional Internet homepage -- the Auditing
section of the American Auditing Association.
Ruben Sigala, a senior Business Administrations major, is working with Prof. Joe Coate. In
addition to his Business Administration major, Ruben will have a concentration in Spanish
and
French. Currently, he is researching personality traits of accountants. Their research
includes
an extensive study to determine whether there are definite personality differences between
individuals in accounting occupations, employees in different accounting firms (i.e. Big
Six vs.
non-Big Six), and accountants in different career categories (partner to staff
accountants).
This analysis involves statistical regressions and interpretations, which may be useful to
Human
Resource Managers in determining the kinds of individuals that should be hired to their
firm.
E&Y CARAT’s Research Workshop Activities: The Ernst & Young
Center for Auditing
Research and Advanced Technology has been arranging two research workshops for sharing
and exchanging research ideas amongst the faculty and Ph. D. students. One research
workshop meets from 8:30-10:0 a.m. or Fridays, 10:30AM-12:00 Noon and is conducted in
conjunction with Artificial Intelligence Seminar and the other meets from 1:30-3:20 p.m.
(please note that the 11/13 presentation is on a Wed. At 4:30PM) in conjunction with
Accounting and Finance Workshop. The details of the seminars are given below:
Weds. , 8:30 - 10:00 AM or Fridays,
10:30AM-12 Noon in 320 Summerfield Hall
Aug. 28: Prakash Shenoy: Computing Marginals Using Local Computation
Sept. 4: Prakash Shenoy: A Primer on Influence Diagrams
11: Ken Cogger: Multiple Regression Using Adaptive Logic Networks
Sept. 20: Dennis Nilsson: Probabilities of Future Actions
27: Dianne Lander: Real Option Valuation Using Influence Diagrams
Oct. 4: John Charnes: On Sampling Methods for Solving Influence Diagrams
11: Raj Srivastava: An Expert System Approach to Audit Planning
18: Sucheta Nadkarni: Scenario-Based Study of Revealed Causal Maps: Linkages to
Selected Demographics & Personality Variables & Mode of Instruction
25: Prakash Shenoy: A Combination of Graphical Methods for Asymmetric Decision
Problems
Nov.1: Marge Bott: Health Care Decision Making Model
8: Ken Cogger: General Statistical Theory of Adaptive Logic Networks
15: Mark Nigrini: Digital Analysis
20: Kay Nelson: Confirmatory Models with Adaptive Logic Networks
Dec. 6: Mike Ettredge: Fraud Detection Models
1:30 - 3:20 PM in 426 Summerfield Hall
Aug. 30: Margaret Reed, University of Kansas, "The Interaction of Tax Incentives
and
Earnings Management: An Empirical Analysis of the Determinants of R&D."
Sept. 13: Mike Ettredge, University of Kansas, "An Analysis of the Theoretical and
Empirical
Relation between Internal and External Audit Expenditures."
27: Paul Koch and Diane Docking, "The Robustness of Event Study Methodology When
Accounting for Market Direction and Volatility."
Oct 4: Kissan Joseph, University of Kansas, "Monitoring & Incentives in Sales
Organizations:
An Agency-Theoretical Perspective."
18: Catherine Shenoy, University of Kansas, "An Empirical Investigation of Capital
Expenditure Changes."
Nov. 1: Mark Hirschey and Geoff Lysaught, University of Kansas, Title to be announced.
8: Catherine Schwoerer and Joe Coate, "Career Management in Accounting
Profession."
Wed. 13: Dave Stretson, Boeing, "University/Industry Research," at 4-6PM (424
SU)
15: Professor Merle Ericson, University of Chicago, "Earnings Management by Acquiring
Firms in Stock for Stock Mergers."
Dec. 6: Jim Waegelin, University of Kansas, "Characteristics of Firms Adopting
Short-Term
Bonus Plans."
