In recognition of the evolving body of knowledge in the accounting profession, the American Institute of Certified Public Accountants (AICPA 2010) highlights the importance of viewing learning as a lifelong process that requires self-awareness and extends beyond the academic setting. Metacognition, the assessment and regulation of one's own learning, is a crucial element in lifelong learning. We draw upon judgment of learning research and introduce mindset theory to explore the relationship among (1) exam performance, (2) calibration error, measured as expected minus actual exam scores, and (3) mindset, a person's basic beliefs about learning and ability (Dweck 2000, 2006) in the accounting classroom. We find strong evidence that exam performance is inversely related to calibration error (Kruger and Dunning 1999). We also find modest evidence that a growth mindset is associated with improved performance and decreased calibration error. While the mindset results were not entirely consistent with prior research in educational psychology, we explore possible reasons and future directions for accounting education research.

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Single audits provide critical accountability for federal grant awards. Our study comprehensively examines differences in single audit findings (related to both financial statements and major program compliance) by auditee type (state/local government and nonprofit) and across varying levels of auditor expertise. In a sample of 24,144 audit engagements over the period 2004 through 2010, nonprofit auditees report fewer internal control deficiencies than government auditees, but more instances of questioned costs related to major programs. Audits conducted by firms with lower single audit expertise are associated with fewer financial statement and major program compliance findings. The results by auditee type and auditor expertise are important to discussions of single audit quality.

We investigate the managerial incentives and debt cost effects associated with budget-to-actual variance disclosures required by the GASB No. 34 reporting model. Empirically, we document associations between variances and municipal bond ratings in a sample of large U.S. cities over the period 2003–2006. We find a disproportionate share of favorable variances for revenues, expenditures, and the net (i.e., surplus/deficit). Further, we show that revenue variances in either direction are associated with lower bond ratings, i.e., precision is important in predicting revenues. In contrast, favorable expenditure variances are associated with higher bond ratings, i.e., imprecision may be tolerated if the variance is favorable. These associations exist despite indirect evidence of managerial incentives to create budgetary slack for both revenues and expenditures. The findings suggest that these disclosures required in the GASB No. 34 financial reporting model indicate factors that influence municipal debt costs.