Balancing the Odds : Stochastic Accounting

The use of a deterministic numeric paradigm in auditing and accounting may well be the root cause of many current problems. This paper argues that risk-based accounting methods should start using probabilistic inputs which would show resultant distributions as output. “Stochastic accounting” would better inform users of financial information. Although this recommendation would change the way accounts were produced and presented, it would lead to more usable financial information