Reviewed by Arthur R. Wyatt Arthur Andersen & Co.
Gary Previts and Barbara Merino have written a noteworthy book that will prove to be a permanent enrichment of the accounting lit erature in their A History of Accounting in America. The task they set for themselves was a formidable one—to consider the social, political, economic, and personal elements of eight significant eras in the evolution of accounting, from the time that Columbus first planted the seed of European culture in America to the present. A reader who expects to find only a scholarly recitation of facts will be surprised and delighted with the manner in which the authors have woven together a story of accounting in America in a fashion that is both scholarly in nature and a delight to read.
The authors have achieved a successful balance in each of the eight chapters, each covering a reasonably well-defined era in the evolution of accounting. Rather than concentrating on one or two facets of the accounting scene, the authors have dealt in a comprehensive way with the various institutional aspects of accounting, the evolution of accounting and auditing standards, the changing role of the educator in accounting, and the increasingly important contributions of accounting to our economic society.
Many will find the last chapter to be the most interesting, dealing as it does with “the age of political accountancy: accounting faces an identity crisis.” Unquestionably the most difficult area to deal with because of the inability to place the fast moving developments in perspective, the authors have succeeded both in capturing the turmoil of the period and in providing clues to the challenges that the profession will need to face in the coming era.
Others will find other chapters to be of prime interest depending upon their individual backgrounds and areas of principal interest. For example, Chapter 5 concerns “The Formation of an Accounting Profession (1897-1918).” We find in this chapter a major section on accounting and auditing theory, a section that contains a fascinating discussion of the controversies of the period, controversies that in many cases remain either unresolved or under reconsideration more than sixty years later. After reflecting on the discussions and controversies of that earlier time on such matters as whether market appreciation should properly be recognized in an income statement, whether the balance sheet or the income statement should have relatively greater significance, and whether accounting should view the accounting unit from the perspective of the proprietors or from the perspective of the entity, one has to question seriously whether the evolution of accounting theory over the last sixty years has kept pace with the enormous increase in demands made upon the accounting mechanism to deal adequately with an increasingly complex political and economic society. In many respects the progress of accounting has kept remarkable pace with the demands made upon it. In other respects, those responsible for the establishment of accounting standards have to question seriously wheth er performance in the intervening period has been adequate to meet the expectations of those who use the results of accounting activity.
The History of Accounting in America will be particularly valuable to teachers and graduate students who are interested in placing the frustrating issues of the day in a suitable perspective. The book should also be required reading for standard setters in accounting and auditing including those in the larger accounting firms most re-sponsible for technical policy formation. Other practitioners who have the time and inclination to gain insight into their profession will find the book to be refreshing and enlightening. Those of us in practice today as well as those who will join the profession in years to come will benefit greatly from the perspective of the profession provided by the authors.
