Reviewed by James J. Tucker, III Pennsylvania State University
During the period 1962-1967, Hayden, Stone & Co. (HS), a promi-nent investment house, sponsored six annual accounting forums that were hosted by New York University (NYU). This book consists of four pages of introduction by the editor, followed by verbatim transcripts of the proceedings of all six seminars.
HS regularly conducted “off-the-record forums” in which corporate executives “appeared before institutional investors to discuss the current operations and prospects for their companies.” How-ever, in 1962 it became apparent to the research department of HS that their clients had a strong interest in certain accounting issues currently before the Accounting Principles Board (APB). Consequently, HS requested the assistance of Professor Michael Schiff in organizing an accounting forum to be held at NYU; this arrangement continued for the next five years.
A typical forum convened with a “welcome” address delivered by Professor Schiff, followed by introductory remarks by the president of Hayden, Stone. Three formal presentations were then made by the keynote speakers who the editor describes as “primarily managing partners of ‘Big Eight’ professional accounting firms.” Some of the speakers served on the Accounting Principles Board and as presidents of the AICPA. Other speakers were corporation executives, lawyers, an SEC Commissioner and a member of the academic community. In addition, “the audience of several hundred persons consisted of senior financial officers of large corporations, financial analysts, officers of large investment houses, professional accountants and a very small representation from academe. The entire membership of the APB was in the audience at one of the sessions.” Upon completion of all presentations, the speakers en-tertained questions for the audience. The presentations are sum-marized below, preceded by the theme of each seminar:
1962: Impact of Accounting Changes on Corporate Earnings
John W. Queenan, “Depreciation Guide Lines and Rules,” 7 pages (p.); Herman W. Bevis, “Accounting for Leases,” 4 p.; and Thomas G. Higgins, “Price Level Depreciation,” 8 p., Questions & Answer session, (Q & A), 2 p.
1963: The Impact on Business of Self-Regulation in the Accounting
Profession
Robert E. Witschey, “The Business Need for Better Accounting Principles,” 5 p.; Alvin R. Jennings, “The Accounting Profession’s Responsibility in Determining Accounting Principles,” 5 p.; and Leonard Spacek, “The Treatment of Goodwill in the Corporate Balance Sheet,” 7 p.; Q & A, 4 p.
1964: How the Tax Rules Invade Accounting Principles and Affect
Reported Earnings
David B. Chase, “Tax Accounting and Financial Reporting,” 4 p.; Donald C. Cook, “Depreciation, the Investment Tax Credit and Leases—Tax vs. Accounting,” 8 p.; and J. S. Seidman, “Tax Practice vs. Accounting Practice,” 3 p.; Q & A, 6 p.
1965: Improving Financial Accounting and Reporting
Herman W. Bevis, “Earnings per Share and the Need for Full Disclosure,” 7 p.; Clifford J. Heimbucher, “Current Developments at the APB,” 5 p.; and Byron D. Woodside, “The SEC’s Administrative Policies and Financial Reporting,” 8 p., and Q & A, 7 p.
1966: Why Worry About Accounting?
Raymond J. Chambers, “Why Worry About Accounting?,” 10 p.; L. T. Moate, “The Financial Reporting Controversy” (Product Line Disclosure), 6 p.; and Robert M. Trueblood, “A Season for Head-Hunting,” 7 p.; Q & A, 4 p.
1967: Accounting is Being Challenged—Do We Have the Solution?
Richard T. Baker, “Accounting is Being Challenged—Do We
Have a Solution?,” 7 p.; George P. Hitchings, “The Investment
Credit Controversy,” 5 p.; and Leonard Spacek, “A Report By a
Critic of the Profession,” 15 p.; Q & A, 5 p.
An examination of the above topics reinforces the adage “the more things change, the more they stay the same”; current controversies including accounting for leases, deferred taxes, the effects of inflation and self regulation of the profession were directly addressed during these forums some 20 years ago.
In reviewing the transcripts, one frequently observes the speakers grasping for conceptual tools with which to resolve the technical aspects of specific reporting problems. Repeatedly, panel members struggle to resolve fundamental questions concerning the nature and the function of accounting numbers. A comment from Leonard Spacek (1963) is illustrative:
We must must decide what we are trying to do before we can do it. We have not defined the objectives of our financial statements. Why do we have a balance sheet? What is it supposed to show, and to whom? Similarly, what is the purpose of the income statement? Are we trying to show venture results? Or, are we trying to show the earning power of a company’s productive facilities so that those who trade in the company’s securities can arrive at a trading price? It is incredible that these objectives were not clearly determined and agreed upon long ago.
With respect to accounting issues, the transcripts portray a pro-fession deeply concerned and fully questioning its role in a contem-porary capitalist society. Particular attention is focused upon the role of financial reporting in resource allocation and on the profes-sion’s ability to sustain self regulation. These records also capture the reaction of the profession in an era that witnessed escalating litigation and severe criticism of corporate integrity. This reaction offers the reader a glimpse of the profession re-evaluating the propriety of its interaction with the investment community, the securities exchanges, the SEC and the IRS. In brief, the Hayden Stone seminars provided a public forum for the examination of traditional practices, relationships and values, the spirit of which was characteristic of the socially chaotic decade in which they took place. This is particularly evident in the presentation made in 1966 and 1967 when the APB was the target of increasing criticism (True-blood, 1966, Baker, 1967, and Spacek, 1967).
This book would have significantly benefited from a more extensive discussion of the economic and political environment that characterized the decade of the 1960s. Since the editor was the central figure in these seminars, he appears to have been in a unique position to provide this background information. The book consists principally of uninterpreted transcripts of presentations and questions and answer sessions; unless one already possesses an understanding of the related economic, political, and reporting en-vironment, one is left to reconstruct or to pursue elsewhere the evolutionary context of these forums. The introduction is helpful but additional background would have contributed significantly.
On the lighter side, over 80 pictures of individual speakers, entire panels and the audience are presented. Pictures of the audience provide a source of humor as they often reveal one or two audience members whose eyes are securely closed. (This finding is consistent with this writer’s personal observations concerning large accounting seminars).
Schiff has successfully preserved and made available a raw, un-interpreted view of the accounting profession struggling with myriad technical and philosophical problems. This book will be especially attractive to those interested in observing the profession grapple with a variety of issues, many of which are with us today.
