Reviewed by Howard F. Stettler University of Kansas (Emeritus)

These companion volumes offer an interesting insight into the early development of auditing in the cradle of professional, auditing — the United Kingdom. The period 18751900 was chosen for the more extensive volume, the earlier date marking the approximate commencement of publication of the weekly journal The Accountant, from which all 104 articles selected for Recurring Issues have been drawn. That journal provided a forum for discussion among practitioners of current accounting and auditing issues, often prompted by reprinting of critical articles, editorials, or correspondence from other periodicals, as for example, five from Vanity Fair, four from The Pall Mall Gazette, and eleven others from such notable publications as The Economist and Financial Times. The close of the period is marked by the adoption of the Companies Act of 1900. A key provision of that law required every registered company to have an auditor who is not a director or officer, the auditor to be appointed by the shareholders in general meeting with remuneration to be determined at that time. No qualifications were set for the appointed auditor, and it was not until later that the auditors of public companies were required to be members of the Institute of Chartered Accountants in England and Wales.

The importance of case law in establishing auditors’ liability and setting minimum audit requirements is evident in the various cases such as the landmark Kingston Cotton Mills and London and General Bank cases analyzed in articles in The Accountant. Reports on these two cases and twentyfive other leading cases form the content of the companion A Case Law Perspective. The reports are reproduced from either The Accountant or from The Accounting Law Reports, which is a supplement to the journal.

The selected articles from The Accountant are reproduced in chronological order with a few exceptions. The reduction of certain articles to permit direct reproduction for the 17×25 cm (63/4″ x 10″) page size of the book results in some instances in exceedingly small type that is difficult to read. The editors selected articles that dealt with major issues and concerns of the day that have maintained a continuing prominence as auditing has evolved. The nine issues are stated in the Introduction, and under each issue the editors refer to pertinent articles with comments, observations, or brief quotations on some key aspect. The topics are Independence, Audit Fees, Auditors’ Responsibilities, The Impact of Case Law, Extent of Audit Work, Manner of Audit Reporting, Code of Audit, Criticism of Auditing (prompted by public concern, often as a result of the failure of a wellknown company), and Government Auditors (dealing with proposals for direct assumption of the audit function by the government, or regulation or supervision of practicing auditors). This material in the Introduction is helpful to the reader in selecting articles of interest to be read, but of greater helpfulness would have been a comprehensive index of the subject matter found in the articles selected for the book.

Especially evident in the articles is the often perfunctory mechanical checking of figures and the preoccupation with the balance sheet. The detection of fraud in the accounts was of major importance, but all too frequently the effort was unsuccessful, leading to the all too familiar cry, “Where were the auditors?” That auditors were expected to be “flexible” can be noted in a lecture by Mr. O. Holt Caldicott, F.C.A. to the Birmingham Chartered Accountant Students’ Society where he states “… when profits are scanty, you will find a tendency to review the rates of depreciation, and to claim that certain assets have been written down quite enough for a time. Of course this is not a scientific treatment, but I think an auditor would be scarcely wise who refused to sanction a liberal writing off in good times, or to be a little tender in his dealings with assets during a temporary depression of trade” [p. 239]. Also noteworthy is the reticence of the auditing profession and its Institute of Chartered Accountants to prescribe auditing standards or audit procedures. Such matters and the attendant liability of auditors to injured parties were left almost entirely for the judicial system to decide.

Although a knowledge of presentday auditing demonstrates vividly how far the auditing profession has progressed since these articles from the last quarter of the nineteenth century, Recurring Issues also includes some visionary proposals, as for example a Communicated Article by “Z” that suggests “… what are the auditor’s duties? I think they ought to begin by the system on which the accounts are to be kept being submitted to and approved by him before opening the books, and if he be not satisfied that the system is one which will enable him to ascertain clearly the result of transactions at the end of the period, he should, in the event of opposition to his views for that purpose, at once resign” [pp. 1011],
In A Case Law Perspective, the editors’ Introduction points to the importance of case law in the development of audit practices, noting that the first edition of Dicksee’s Auditing contains an Appendix of thirtytwo pages that extracts from six cases decided between 1886 and 1891. A major purpose of the editors for this volume was to make more easily accessible to researchers the full report of important early cases, thereby conveying the flavor of the impact of the twentyseven reported case decisions on the development of the audit process. In addition to these reports, Appendix A lists twentytwo additional cases along with references to the publications in which the cases were reported.

The core reports are reproduced without comment, although the editors do provide in their Introduction a helpful explanation of the structure of the courts and the appeal system in England and Wales. They also indicate the general content of the reproduced case reports: bankruptcy, negligence against the auditor, or cases in which the auditor came under fire but was not the subject of legal attack. It would have been more helpful, however, if the Contents Table had included a brief statement of the subject matter involved in each of the cases.