RESPONSE
by
Robert T. Sprouse

I have often day-dreamed about an opportunity some day, somehow to be able to pay public tribute to certain individuals who have played a special role in my most rewarding career. This is the opportunity that I have been waiting for. I shall appreciate your indulgence and I do apologize in advance if I should embarrass anyone here.
Charles W. Laniden:

When I left the army in 1949 with the intention of attempt-ing to establish an academic record at San Diego State College that would permit me to enter a law school, Charles W. Lamden was a full professor of accounting there and, simultaneously, a full partner in the largest public accounting firm in San Diego. None of the big-eight firms had an office in San Diego at that time.

Charles Lamden was the consummate professional, both as a teacher and as a practitioner. From him I learned much more than the subject matter — I learned a great deal about ethics, personal values, personal conduct, and teacher/student relation-ships. To him, accounting was the most important activity in the world. He simply exuded integrity, and his enthusiasm and high standards were contagious. It was his energy and example that inspired me to embark on a career in accounting.

Carl L. Nelson:

My exposure to Carl L. Nelson at the University of Minne-sota was responsible for my deciding to pursue a doctoral de-gree and a teaching career rather than a career as an accounting practitioner. The classes that I took from him were the most challenging, the most valuable, and the most stimulating that I had ever taken or observed. His personal interest and encour-agement outside the classroom were even more important. Striving to cope with his constantly probing inquiries was an exciting experience. He alone was responsible for my first academic appointment a the University of California at Berkeley and his influence throughout my academic and professional careers has been unmistakable.
Maurice Moonitz:

At the University of California at Berkeley, technically Maurice Moonitz was a colleague but, of far greater significance, he was in fact my mentor. A scholar in the most literal sense of that term, Maurice was always willing, if not anxious, to join me and other colleagues for a coffee break to discuss economics, world events, baseball, music (he himself is an ac-complished violinist), Greek mythology, or you name it. His in-terests and his knowledge are both boundless.

Moonitz has little patience for mediocrity or sloppy think-ing, but at the same time he has a remarkable talent for- identifying positive contributions or possibilities in the works of others. He was immensely helpful to me in my earliest efforts for publication. As the first AICPA Director of Accounting Research, he invited me to assist him in the preparation of two research studies that were commissioned at the time the AICPA’s Accounting Principles Board was created. We ended up as co-authors of the second of the two, Accounting Research Study No. 3. In spite of the reception given that study — or perhaps because of it — my academic career seemed to “take off.” I shall ever be indebted to Maurice for his confidence and friendship.

Colleagues:

In addition to Lamden, Nelson, and Moonitz who played such vital roles in the development of my career. I have been blessed with extraordinary colleagues wherever I was. I cannot acknowledge all those great colleagues here, but I particularly want to mention a few.

During my three years at the Harvard Business School, I benefited from an especially valuable working and social rela-tionship with Bob Anthony. Bob not only was an interested and constructive colleague at Harvard but he continued to be after my moves to Stanford and to the FASB. I learned a lot from Bob but, unfortunately, he was never able to teach me how to write those short, direct sentences he uses so effectively.

In arriving at Stanford in 1965, I joined Bob Jaedicke whom I had first come to know and respect when we overlapped in the doctoral program at Minnesota. He was one reason that I decided to move from Harvard to Stanford. Arriving at Stanford at the same time as a visiting professor was Chuck Horngren, on leave from the University of Chicago. Those of you who know Bob Jaedicke and Chuck Horngren personally will have no trouble appreciating what capable, collegial, and constructive colleagues they are — never too busy to be helpful and never a disagreeable exchange among the three of us.

Accounting Standards Board. Marshall Armstrong, the first Chairman, would be the first to admit that he was quite appre-hensive about an academic’s membership on the Board. Hap-pily, that apprehension dissipated fairly quickly, enough so that he recommended me to replace John Queenan when John retired as Vice Chairman. That appointment bolstered my confidence as an accepted member of the Board. Probably only a few of us will ever fully understand and appreciate Marshall’s effec-tiveness in launching the FASB. Without the dignity, good hu-mor, unruffled demeanor, and dedication that characterized his unique leadership style, those first few standards might never have seen the light of day.

For me, Don Kirk’s facility for mastering the most complex accounting issues was a constant source of amazement and admiration. During my tenure, foreign currency translation, accounting for oil and gas producing companies, and pension accounting probably were the most intellectually challenging. Don was in command of the intricacies of each of these before anyone else. Assuming the responsibilities of Chairman had no effect on his leadership in addressing accounting issues. His intellectual capability, personal integrity, poise and self-confidence, dedication to the Board and its mission, effectiveness as a spokesman, and remarkable capacity for work served him and the Board well. It was indeed a privilege and a joy to work closely with Don for nearly thirteen years, eight of those years as his vice-chairman. Don has been a faithful, highly valued friend.

Oscar Gellein is something special. In addition to being highly intelligent and always having done his homework, Oscar is an especially affable and reasonable guy. His thought pro-cesses are invariably logical. Especially noteworthy among board members, he had the unique talent for being able to dis-agree with you and making you enjoy it. I certainly was never able to emulate that talent, but Oscar’s presence on the Board meant a lot to me.

A number of long-time members of the FASB technical staff were especially willing and helpful to me — in particular, J. T. Ball, Paul Pacter, Jules Cassell, and Reed Storey. I am indebted to them for their assistance, their patience, and their friendship. During my later years at the FASB, it was a joy to work with Jim Leisenring. With his energy, mental quickness and, usually, good humor, Jim was an incredible Director of Technical Activities. He and Don Kirk were some combination.

FASB Independence

Within financial reporting circles, certain concerns about independence seem to be on the front burner these days. As I look back on my experience on the FASB, I am singularly impressed with the importance of individual board members’ independence. The Wheat Commission proposed specific safeguards to insure that independence. The Rules of Procedure governing the Board’s activities that were adopted by the Board of Trustees of the Financial Accounting Foundation implemented those proposals, and include the following statement:
A principal factor in determining the organization of the FASB was the need to establish to public satisfaction the independence and objectivity of those responsible for establishing and improving standards of financial accounting and reporting. To this end, the Foundation’s Trustees have adopted policies in respect of personal investments and other personal activities of FASB members and staff designed to prevent potential conflicts of interest. Among other things, the policies applicable to FASB members restrict financial and other obligations being owed by or to former employers or clients and arrangements or understandings for future employment, and restrict investments or other financial involvement or personal activities that might affect or reasonably create the appearance of affecting a member’s independence or objectivity or that might create or reasonably create the appearance of a conflict or potential conflict of interest.

Over the years, among the most common questions I have been asked both by individuals and in meetings with groups is the extent to which the Board’s decisions are affected by pres-sures from outside special interests, especially, but not exclu-sively, pressures from business enterprises. Based on my own experience and observation, I am aware of no instance in which the Board has taken a decision based on anything other than a consensus of Board members’ individual conscientious conclu-sions. How else could one possibly explain the Board’s decisions on some of its most significant and controversial projects, such as eliminating contingency reserves and catastrophe reserves, employers’ accounting for pensions, and employers’ accounting for postretirement benefits other than pensions. To some, strong opposition by affected parties may be bad news, but the good news is that the greater amount of controversy, the greater the amount of information made available to the Board, and the less likely that the consensus of the Board members cannot be effectively defended.

FAF Independence

I my opinion, if there is a legitimate concern about indepen-dence in the standard setting organization, it is not about the FASB and its decisions, but about the Board of Trustees of the Financial Accounting Foundation and its responsibility for rais-ing funds and appointing board members. Occasionally, a con-tributor of funds has notified the Trustees that, because of cer-tain actions by the FASB, no further funds will be forthcoming. As far as I know, that has not become serious but the threat is always lurking in the background. The method of funding has never been completely satisfactory.

A mixture of trustees who are professionals and trustees who are clients of professionals is certainly not ideal. If the chief executive officer of a large contributor of funds were to insist on the ability to veto candidates for the next board member appointment, what might happen? The reality is that members of sponsoring organizations that are expected to foot the bill are bound to strive for some influence, no matter how circumscribed. I readily recognize that it is easier to identify problems than to offer constructive solutions. I do think the AICPA’s Public Oversight Board and the independence it enjoys might be an adaptable model for the Board of Trustees.

Acceptance:

Finally, since my part of this morning’s program is billed as “acceptance,” now that I may have bitten the hand that fed me, let me assure you that I do accept induction into The Account-ing Hall of Fame with unbridled enthusiasm and great pride, but also with sincere humility. I am sure than you can appreciate how rewarding recognition of this kind can be following more than 45 years of studying and writing about accounting, teaching accounting and, although I never managed to achieve the status of CPA or to practice accounting as a management employee, practicing accounting in my own way consulting, standard setting, and testifying.

I am deeply appreciative of the signal honor of being in-cluded in the Accounting Hall of Fame.

THE ACCOUNTING HALL OF FAME MEMBERSHIP

Year Member
1950 George Oliver May*
Robert Hiester Montgomery
William Andrew Paton*
1951 Arthur Lowes Dickinson*
Henry Rand Hatfield*
1952 Elijah Watt Sells*
Victor Hermann Stempf*
1953 Arthur Edward Andersen*
Thomas Coleman Andrews*
Charles Ezra Sprague*
Joseph Edmund Sterett*
1954 Carman George Blough*
Samuel John Broad*
Thomas Henry Sanders*
Hiram Thompson Scovill*
1955 Percival Flack Brundage*
1956 Ananias Charles Littleton*
1957 Roy Bernard Kester*
Hermann Clinton Miller*
1958 Harry Anson Finney*
Arthur Bevins Foye*
Donald Putman Perry*
1959 Marquis George Eaton*
1960 Maurice Hubert Stans*
1961 Eric Louis Kohler*
1963 Andrew Barr
Lloyd Morey*
1964 Paul Franklin Grady*
Perry Empey Mason*
1965 James Loring Peirce
1968 George Davis Bailey*
John Lansing Carey*
William Welling Werntz*
1974 Robert Martin Trueblood*
1975 Leonard Paul Spacek
1976 John William Queenan*
1977 Howard Irwin Ross*
1978 Robert Kuhn Mautz
1979 Maurice Moonitz
1980 Marshall Smith Armstrong
1981 Elmer Boyd Staats
1982 Herbert Elmer Miller
1983 Sidney Davidson
1984 Henry Alexander Benson
1985 Oscar Strand Gellein
1986 Robert Newton Anthony
1987 Philip Leroy Defliese
1988 Norton Moore Bedford
1989 Yuri Ijiri
1990 Charles Thomas Horngren
1991 Raymond John Chambers
1992 David Solomons
1993 Richard Thomas Baker
* Deceased