Abstract: The standard theory of measurement that evolved from Johann von Neumann idea of the first kind of dynamics (state reduction) contains two errors. First, it disregards the disturbance of measurement due to particles in the environment that are indistinguishable from the measured system S. Correction of this error leads to a new theory of observables, to the definition of the so-called separation status of S and to the hypothesis that Schroedinger equation must be modified for changes of separation status. Second, it does not distinguish between ancilla A (microscopic) and detector D (macroscopic) in the measurement apparatus. It seems that any measurement includes detectors (even ancillas must be detected). In this case, the interaction of D with S or A changes separation status of S or A and justifies the state reduction. Moreover, the state reduction has then a definite preferred frame, place and time.