What is the difference between absolute discretionary accruals and signed discretionary accruals in terms of auditing?
What absolute and signed means in these expressions? Is there any reference about?
First, let's define Discretionary Accrual. It is the amount of asset or liability that is not mandatory but is recorded in the system and that would be realized later when settled. On the other hand, Abnormal Accrual (or any other abnormal amount) should be examined fully. Now, the meaning of the two words: Absolute and Signed should be clear as regards their relationships with Discretionary Accrual, and thereafter as regards auditing.
Unfortunely, I don't understand these two last as regards auditing... Sorry...
Exactly. That's what I stated above. We need to know the meaning of Absolute and Signed Discretionary Accruals in order to see whether, and in what way, they are related to auditing.
If in the course of your analysis you ignore the signs (Positive or Negative) of the discretionary accruals it means you are using the absolute value of the discretionary accruals. However, where you take the signs into cognizance in the course of your analysis, you are using signed discretionary accruals. I hope you can relate it to the aspect of auditing you are interested in.
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