Reviewed by Thomas Tyson St. John Fisher College
Recently educated accounting academicians may not be familiar with William Vatter or his 1950 textbook, Managerial Accounting, now published in reprint form by Garland. Profes-sor Vatter received the 1984 AAA Outstanding Educator Award and served on the faculties of the University of Chicago (1936-57) and California-Berkeley (1957-72). He is perhaps best known for the “fund theory” of accounting and the concept of “service potential” as the key attribute of assets.
Professor Vatter produced eleven books, monographs, or handbook contributions and over fifty articles. He developed Managerial Accounting for his University of Chicago managerial accounting course and it was reprinted 18 times by Prentice-Hall until 1962. Charles Horngren, one of Vatter’s students and colleagues at Chicago, has dedicated every edition of Cost Accounting to Professor Vatter.
Managerial Accounting differs in many ways from today’s accounting textbooks. The book contains 36 chapters that are divided among five topic areas: Accounting Concepts, Budgeting and Managerial Control, Elements of Accounting System, Accounting for Unit Product Cost, and Problems of Cost Interpretation. Vatter unites these disparate topics through his consistent interpretation of accounting. For Vatter, “the fundamental and most important uses of accounting are bound up with the operations of management” [p. 2], and accounting is “a means of getting at the facts with which management is concerned” [p. 15]. Throughout the text, accounting procedures are explained and assessed in relation to their usefulness to management.
Vatter focuses much more on the conceptual rather than the factual-recall level of learning. Each chapter contains one or two detailed, challenging problems, rather than the innumerable review questions, exercises, problems, etc., that appear in many modern texts. Accounting procedures are often described narratively rather than in debit/credit form, and these procedures are carefully reported and thoughtfully reasoned. As a result, the book has a distinct and personal flavor to it.
Perhaps it goes without saying, that Managerial Account-ing is clearly not suitable for use in today’s managerial accounting courses. Too much of its procedural content is out-dated and none of the most current managerial accounting issues (e.g., JIT, quality costs, activity accounting) are explicitly addressed. If the book is read as accounting literature, however, it is far more satisfying. Chapter 1, “Introduction”, and Chapter 20, “The Problem of Cost-Finding” are finely written and especially stand out. For example, Vatter writes:
“The cost unit may be a function, a process, an activity, a method of doing something, or one of the available alternatives in a problem of choice or deci-sion; … or it may represent a hope, a plan, an event, or any other item or conception about which question of cost significance may arise” [p. 330].
Professor Vatter provides a unique perspective on account-ing terms, concepts, and procedures. His style is lucid and personal, but never opinionated. The book does require selective reading and should be of interest to those that appreciate a literary approach to basic accounting concepts and principles.
