JOSEPH E. STERRETT
(1870 – 1934)

By Barbara Dubis Merino The University of Alabama

Joseph Edmund Sterrett was among accountancy’s most active pioneers. Asked by contemporaries to define or to elucidate positions on ethical, technical and educational issues, he responded competently and progressively. An original and creative thinker, Sterrett focused on the broad social vision accountancy might adopt. In his address opening the 1904 International Congress of Accountants, held at St. Louis, he rejected the notion of an accountant as a “. . . detective whose chief function is to show how a thief tapped the till.” He expected accountancy to become the profession of business advice, adding that if “our work is to be strictly confined to the construction and auditing of accounts, our calling can never be a profession.” Accountants must foster the highest ideals within the business community “for the slow but sure evolution of society.” Professionalization required that the accountant embrace the attest rather than the audit function as his major responsibility and accept the general public as his ultimate “true” client.

Sterrett, born in Brockwayville, Pennsylvania in 1870, entered public accounting in 1891 when he joined the staff of John Francis in Philadelphia. Two years later, at 23, Sterrett became a partner in the firm. Francis and Sterrett led the drive to organize Philadelphia accountants and in 1897 their efforts culminated in the formation of the Pennsylvania Society of Public Accountants. Sterrett was extremely active in the state society serving as Secretary from 1897 to 1901 and as President in 1904-1906. As Chairman of the Committee on Education, he organized the Evening School of Accounts in 1902 and is credited with persuading Wharton School of Finance to assume responsibility for the program two years later. From 1905 through 1916, Sterrett was a member of the State Board of Examiners and he had a pervasive impact on the development of educational standards in that state.

Sterrett’s firm merged with Price Waterhouse in 1907 and he became its first American born senior partner. The following year, at 38, he was elected President of the American Association of Public Accountants, which commenced his service in various capacities in the national organization. He served on several committees; his most important work was accomplished as Chairman of the Committee on the Journal (1912-1924) and on the Special Committee on the Form of the Organization (1916).

Among his major aims was to publicize the role of accountants and Sterrett became a respected and effective spokesman for the profession throughout his career. Economists, social scientists, and municipal officers and leaders recognized his abilities; his was a major role in cementing accountants’ relations with those groups. He joined the American Economic Association in 1909 and was one of the original directors of the National Bureau of Economic Research in 1919. Sterrett’s work for the National Civic Federation enhanced the image of accountants as professionals interested in the public welfare.

Within the profession, he was a progressive and authoritative voice defining conceptual parameters for ethical and educational standards. Sterrett’s article, “Education and Training of a Certified Public Accountant,” which appeared.in the first issue of The Journal of Accountancy, clearly outlined the broad liberal base which he felt was essential as a foundation for accounting study. He did not believe that a profession could be established on the basis of a single technical examination for admission.

Sterrett was a strong advocate of the need for practical experience as a prerequisite for obtaining a CPA certificate. His rationale for this requirement was that since much of the accountant’s work was based on opinion it was necessary that the young person be exposed to the conditioning environment of actual practice if he were to develop the judicial attitude which he must possess. “The decline of the old preceptor-and-student system is a misfortune and accountancy should revive and insist on it as an essential co-adjutor to the college,” he wrote, adding, “It is this way that the young practitioner can best acquire a knowledge of human nature and most of all of the intimate and confidential nature of his relations to his clients.”

Sterrett was convinced that the abstract concepts of truth, honor and justice formed the strongest base for professional ethical conduct. “The culture of justice is the accountant’s first duty and in it all others are comprehended.” If the accountant recognized his duty to all segments of society he must behave ethically. Absolute impartiality and independence were basic prerequisites for public practice. Pragmatically, Sterrett agreed that the Association must adopt certain rules which would insure that certain minimum standards were upheld. In 1907, he acceded to the request of the leadership of the national body and prepared a paper, “Professional Ethics,” which was presented at the annual convention. Although he codified certain rules some of which were adopted by the con-

vention, he warned that mere compliance with specific written rules did not guarantee conduct of the highest order. Sterrett noted that “. . . the word ‘professional,’ when used in conjunction with ‘ethics’ does not imply any modification or even limitation of moral principles.’’
Sterrett believed that an accountant’s training and experience qualified him for public service; indeed, to Sterrett public service was part of the practitioner’s duties and his own career reflected his convictions almost perfectly.

In 1911 he served on the Board of Consulting Accountants for the President’s Committee on Economy and Efficiency in Government; in 1917 he was an advisor to the Treasury Department on the ad-ministration of the Excess Profits Tax; in 1920 he journeyed to Paris, France to set up the administration of the Reparations Commission; from 1924 to 1926 he spent two years in Europe as the American member of the Transfer Committee to manage reparations payments under the Dawes Plan. That work earned him international prominence and he was decorated by the governments of France, Germany, Belgium and Italy. In 1928 the International Committee of Bankers on Mexico asked him to investigate the financial condition of Mexico and he co-authored a 274-page report on ‘Mexico’s situation. The following year the German Railways Company asked Sterrett to study the management and financial administration of Germany’s railroads and to prepare a report recommending necessary changes and reorganization.

By the time of his death in 1934, Sterrett had become an inter-national figure and in 1953 his service to society was recognized by accountants with his election to the Accounting Hall of Fame.

(Vol. 2, No. 2, p. 8, 1975)