OUT OF THE PAST

Timeless Thoughts on Accounting

—”With the widespread recognition of the importance of account-ing in solving present day problems of government and industry, practitioners and teachers of accounting have an unparalleled opportunity to make a constructive contribution. If we do not, the lawyers of the Securities and Exchange Commission and other Governmental agencies will do it for us.” Andrew Barr, “Com-ments on ‘A Statement of Accounting Principles,'” Journal of Accountancy, April, 1938,

—”Accountancy . . . is a science, and erudition; and not, as some have seemed to suppose, a mere collection of approximative and hardly certain rules indicated by observation and intuition, and to be applied with tact and wariness.” Charles Waldo Haskins, May 1, 1900, as quoted in The American Accountant, August, 1929, p. 15.

—”The Income Tax had widespread attention in the week before March 1, when well nigh everyone discovered he had forgotten to make a return of the gains, profits and income which had accrued to him in 1916.” The Nation’s Business, March, 1917, p. 45.

—”No accountant should attempt the work of a professional auditor unless he is able to take such a broad view of a balance sheet that he can see not only what it contains but what it should con tain.” R. H. Montgomery, “Professional Ethics,” Journal of Ac countancy, December, 1913, p. 96.

—”Accountants are frequently asked to prepare estimates of future earnings for the purpose of publication in the prospectus and it would be well to consider whether such a request should or should not in general be complied with.” Arthur Lowes Dickinson, “Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds,” Journal of Accountancy, November, 1905, p. 24.

—”The use of arithmetical illustrations to prove or even to explain an economic theorem is fraught with danger.” Henry Rand Hat-field, “On the Unreliability of Arithmetic,” Journal of Accountancy, October, 1942, p. 355.

—”Time was,two or three decades ago, when secretiveness in the nth degree was preserved in corporate affairs. Publicity of finan cial statements was shunned, lest it give aid and comfort—am munition even—to the enemy.” “Then and Now,” Haskins & Sells Bulletin, November, 1926.
(Vol. 1, No. 2, p. 5, 1974)

—”As I have looked over the history of accounting and read the textbooks and compared what they said with my own experiences, I have felt that the accounting profession has not had a very accurate idea of the history of its own thinking. in 1902, when I became a partner in Price, Waterhouse & Co., business income was a concept that was of interest to very few except those en gaged in business or finance. That being so, the accountant could probably take his concept from business and the businessman.” George 0. May, Memoirs and Accounting Thought of George 0. May, Ronald Press, 1962, p. 234.

—”The development of financial statements has essentially been by trial and error. Statements have been evolved by observing the best current practice and innovations, and imitating them. At cer tain key points in accounting history the courts, or more recently, regulatory commissions, have made pronouncements; or new stat utory provisions have been introduced-but such court decisions and new legislation have simply followed and codified developing practice.” Howard Ross, C.A., The Elusive Art of Accounting, Ronald Press, 1966, p. 19.

—”Nowadays not many railroad systems have sinking funds on their bonds, and those that still have such are usually carrying along unmatured issues which were created twenty-five or more years ago. The theory in the early days of railroad financing was that bond issues should gradually be retired through future earnings, but as, in later years, the growing earning power of the American railroads became more and more the basis of capitalization, the sinking fund idea was gradually abandoned. Today, a ‘perma nent debt’ is regarded as the normal thing for the railroad corpo ration, just as it has become in modern times the normal thing for governments to have permanent debts. This process results, of course, in capitalizing the earning power of future generations, a custom which has become a cardinal principal of all modem corporate enterprise.” John Moody, How to Analyze Railroad Reports, Moody’s Investor Service, 1916, pp. 187-188.

—”. . . [T]he use of history is to give value to the present hour and its duty.” Ralph Waldo Emerson, quoted by Maurice Stans, “The Profession of Accounting,” CPA Handbook, Al(CP)A, 1952, p. 1.

—”Arithmetical gymnastics have their proper place, but they should not be found among the requirements for entrance to the accoun tancy profession.” Jos. E. Sterrett, “Education and Training of a Certified Public Accountant,” Journal of Accountancy, November, 1905, p. 7.
(Vol. 1, No. 3, p. 3, 1974)

—”The fact that the work of the Accountant is not undertaken with a philanthropic motive does not prevent it from promoting a phi-lanthropic result. Good accountancy is the beginning of busi-ness justice, and business justice, fairness in the transactions of business, is a very important factor in social and economic jus-tice.” James A. Maclean, “Commercial Education,” The Canadian Chartered Accountant, Vol. Ill (1913-1914), p. 229.

—”Whether business is public, semi-public or private, it has come to hinge on accounts. The most significant thing in current insti-tutional development relative to the adjustment of economic in-terest is not a shifting of responsibility from economic to govern-mental machinery. It is rather a shifting of responsibility to accounting processes of adjustment and an organization of eco-nomic control about accounts . . .” DR Scott, The Cultural Sig-nificance of Accounts, p. 236.

—”In process of time, no doubt, as the truly professional character of an accountant’s services become better known the courts will give to accountancy the recognition of courtesy, but it is much to be doubted if there will be at any time such legal protection for the accountant as there is for the lawyer. Accountants do not make the laws.” “Editorial,” Journal of Accountancy, June, 1916, p. 445.

(Vol. 1, No. 4, p. 5, 1974)