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1942 Certified public Accountant, 1942 American Institute of Accountants

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This Book is brought to you for free and open access by the American Institute of Certified Public Accountants (AICPA) Historical Collection at eGrove. It has been accepted for inclusion in Newsletters by an authorized administrator of eGrove. For more information, please contact [email protected]. THE C ertified Pu b lic A c c o u n t a n t A Bulletin of The American Institute of Accountants

J a n u a r y 1 9 4 2

V o l. 22 • No. 1

Waiver of Dues

Examination Results

Annual Meeting Change

Activities of the Month

Election of Members ■ State Society News

Announcements

15¢ a Copy Published Monthly $1 a Year

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authorities, business­ men, and others. Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account (See page 2)...... per hundred—35¢ Auditing Examination of Financial Statements by Independent Public Accountants...... 15¢ Revised “ Extensions of Auditing Procedure” ...... 10¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢ Taxation Excess Profits Net Income and Exemptions under the Income Method — By Walter A. Cooper...... 10¢ Consolidated Excess Profits Tax Returns — By Walter A. Cooper...... 25¢ A Sound Basis for Taxation — By Walter A. Cooper...... 10¢ (Orders for more than 25 copies, 5¢ a copy) Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Refunded. 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢

Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination...... 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients' Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “ Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued).. 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies.. 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon...... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar In­ vestments under the Investment Company Act of 1940...... 10¢ American Institute of Accountants

Activities of the Month sult of over two months’ work by the sub­ committee and comprises a complete man­ In order that the Institute might aid the ual of accounts. Hermon F. Bell acted as War and Navy Departments in identifying chairman of the committee; J. P. Friedman well qualified public accountants in the and Fred M. Fisher are members. armed services who may be needed for im­ The budget and finance committee, upon portant accounting work, a questionnaire instructions of the executive committee, is was mailed on January 3rd to all firms undertaking a survey to determine how the represented in the membership of the In­ Institute may adapt itself to war conditions. stitute, asking for information concerning each partner or employee called to military service. Such information as length of ex­ perience, fields of specialization, and pro­ A n n u a l m e e t i n g C h a n g e fessional status will be of great assistance In view of the war, council of the in keeping the roster fully effective and up Institute recently voted by mail to date. Investigation is being made of op­ ballot to hold the annual meeting this portunities available for certified public ac­ year at the Palmer House, Chicago, countants to serve in Army, Navy, or civil­ September 28th through October 1st, ian war agencies. For example, in some instead of at Miami, Florida— the Naval districts, accountants may enlist as meeting place selected at the 1941 petty officers with the Bureau of Supplies annual meeting in Detroit. Factors and Accounts. On occasion, unusually well considered in making the change in­ qualified certified public accountants over cluded the likelihood of an unsatis­ thirty have obtained commissions. factory attendance in Miami in view At a meeting of the committee on ac­ of the fact that most accountants counting procedure at the Institute offices would be under heavy pressure of last month, the questions of special war re­ work and would be short-handed; the serves and accounting for U. S. Treasury psychological reaction of the general tax notes were discussed. Drafts of possible public to a meeting held in wartime bulletins are under consideration. A sub­ at a place distinguished as a pleasure committee on the former topic met seven resort; and the added significance of times in December to prepare a draft for the the expense to individual members in full committee’s study. view of the probability of increased A subcommittee of the committee on na­ personal taxes. tional defense continues to spend much Emphasis throughout the meeting time in Washington with officials of the will be placed upon topics related to Office of Production Management working taxes, accounting, and auditing in on forms related to priorities and allocation wartime. The Florida Institute has of raw materials. graciously recognized the reasons for On December 5th a subcommittee of the the change in location, with the gen­ committee on national defense delivered to eral understanding that the first an­ the Army Exchange Service a report on ac­ nual meeting after the war will be counting forms and procedures of Army held in Miami. Post Exchanges. The report, which is ap­ proximately 200 pages in length, is the re­

1 2 The Certified Public Accountant

the new law. The committee has kept in WAIVER OF DUES close touch with officials of the Treasury Department particularly on the subject of Attention of the membership is extensions of time for filing returns, which called to article III, section a, of the has come to the front again with the is­ by-laws which states in part: “ No suance of instructions to collectors to for­ dues shall be paid by members and ward all corporate requests, relating to associates of the Institute while they 1941 calendar-year returns, to Washington. are engaged in military or naval The committee intends to take action on service of the United States or its the matter but is temporarily awaiting allies during war.” further developments. Last month the chairman of the Insti­ tute’s committee on professional ethics met with the chief accountant of the Securities The results of the survey will be presented and Exchange Commission to discuss cases to council at its meeting in New York, May which had been referred to the Institute by 11th and 12th. the Commission. The committee on auditing procedure is The committee on education is communi­ planning to issue soon a bulletin which will cating with a number of educators to seek discuss the form of auditor’s report as a suggestions as to how the committee can be result of examinations required by the In­ most helpful as a liaison between practi­ vestment Company Act of 1940. tioners and teachers of accounting. Total distribution of the latest public- Proposed forms of financial statements information pamphlet, “Please Check Your for use under the Investment Company Act Account,” has now exceeded 437,000 copies. of 1940 have been received for review by a It is probable that half a million copies will subcommittee of the committee on coopera­ have been distributed by the end of Febru­ tion with S.E.C. ary. A general release is being sent this The committees on cooperation with month to financial editors and chamber of bankers and cooperation with credit men commerce publications describing the ear­ have prepared programs of activity for lier pamphlet, “ Financial Statements— similar committees of state societies, which What They Mean.” The staff of the Insti­ will soon be sent to the societies. tute cooperated with the American Ac­ The committee on state legislation is con­ counting Association in arrangements for sidering the few remaining questions of publicity during its meeting in New York principle on which there is diversity of opin­ December 29th and 30th. ion before beginning the drafting of a new Through arrangements made in coopera­ model C.P.A. bill. tion with the Institute’s speakers bureau, The committee on natural business year Arthur L. Baldwin, of Colorado, addressed plans to complete in the near future a pro­ the Mountain States Hardware and Imple­ gram of activity for 1942. ment Association at Denver, on recent tax legislation from the point of view of hard­ ware and implement dealers. John L. Carey, secretary of the American Institute of Ac­ Accountant Killed at countants, spoke before the Evening Ac­ Pearl Harbor counting Society, New York University, on December 19th; his topic was “Worth-while Among the fatalities resulting from the Publications and Organizations for Ac­ Japanese attack on Pearl Harbor, Decem­ counting Students.” ber 7th, was that of Walter S. Savage, Jr., Since issuing recommendations for modi­ a certified public accountant of Louisiana, fications of the Internal Revenue Code last and an associate of the American Institute September, the committee on federal taxa­ of Accountants, who had been commis­ tion has been considering amendments to sioned as Ensign in the Naval Reserve, and The Certified Public Accountant 3 had been called for duty in the Pacific. He was the son of Walter S, Savage of Monroe, MEETING OF COUNCIL Louisiana, also a member of the Institute. The spring meeting of council will The younger Savage had been educated be held in New York on May 11-12, at Louisiana State University and Colum­ 1942. Provision has been made to bia University, and had attended the Har­ continue the meeting for a third day vard University Naval Reserve School. He if the business to come before the was a member of the Society of Louisiana council demands it. As in the past, Certified Public Accountants, and had been the Advisory Council of State Society engaged in public practice in partnership Presidents and the chairmen of all with his father at Monroe, Louisiana. Institute committees will be invited Robert C. Lloyd, of New Orleans, La., to attend. died November 24, 1941. He was born in Chicago in 1872, and attended public Robert G. Sparrow & Co., and later became schools of that city and later Northwestern a partner of Sparrow, Waymouth & Co., University. Mr. Lloyd was instrumental in New York and Puerto Rico. He had been a bringing about the passage of the Louisiana member of the American Institute of Ac­ C.P.A. law in 1908, and became a charter countants since 1920. member of the Society of Louisiana Certi­ fied Public Accountants. He served the Director of Research Society in various capacities, and in 1915— W Last month James L. Dohr, associate pro­ 1916 was president. Mr. Lloyd had prac­ fessor of accounting at the School of Busi­ ticed under his own name since 1902, and ness, Columbia University, New York, was had been a member of the American Insti­ appointed director of research, the position tute of Accountants and predecessor organ­ formerly held by Dr. Thomas H. Sanders, izations since 1911. of Harvard, who entered the Office of Pro­ Robert G. Sparrow, of Wilton, Conn., duction Management last May. Mr. Dohr died January 2, 1942. Mr. Sparrow was is both a certified public accountant and a born in Brooklyn, New York, in 1892, and member of the bar; he has served on the attended Rutgers Preparatory School and committees on terminology and accounting Rutgers College, New Brunswick, N. J. procedure, and is at present chairman of the During the First World War he served committee on publication. He is a past abroad in the Ordnance Department of the president of the American Association of United States Army. In 1923 Mr. Sparrow University Instructors in Accounting, now began practice under his own name as the American Accounting Association.

Ex a m in a t io n Results The following tabulation of results of the November, 1941, C.P.A. examinations is based upon the 1,449 papers graded by the Institute’s board of examiners. The May, 1941, results are reprinted from the July, 1941, issue of this bulletin.

P e r C e n t P a s s e d Auditing Law Accounting November, 1941...... 45.2 4 9 . 5 May, 1941...... 53.5 52.7 18.3 The Institute examiners graded the papers of 648 candidates who sat for the Insti­ tute examinations in 30 states and before the Treasury Department also. Approxi­ mately 1,127 other candidates took the Institute’s examinations in 11 other states and the District of Columbia which do not submit papers to the Institute for grad­ ing. The total number of candidates was 1,775. 4 The Certified Public Accountant

Committee Appointment In addition to those listed in earlier issues POSTPONEMENT OF of this bulletin, the president has appointed Co r p o r a t e Meetin g s the following Institute committee to serve In view of the heavy pressure on for the fiscal year 1941-1942: the clerical staffs as well as the production staffs in war industries, Cooperation w i t h Controllers it has been suggested that annual I n s t i t u t e o f A m e r i c a meetings of companies producing war Victor H. Stempf, chairman, New York materials be postponed this year. C a rm a n G. Blough, Illin ois Adjournment of annual meetings for W illia m Eyre, New York even a month or two might spread the accounting and statistical work National Defense necessary in preparation for annual Supplementing the lists of members and meetings sufficiently so that it could associates serving in defense capacities be observed without dislocation of published in earlier issues of this bulletin the production schedule. are the following names: Accountants who have investi­ W. Ernest Seatree—Special assistant, pri­ gated the problem report that no orities division, Office of Production insurmountable barrier seems to Management and assistant to the execu­ stand in the way of any company tive director, Supply, Priorities, and Al­ which wishes to adjourn its annual locations Board. meeting to a later date. Abraham Kraditor—Lieutenant, United The Securities and Exchange Com­ States Naval Reserve. mission has recognized one aspect Daniel A. N. Pattarson—Resident auditor, of the same problem by indicating United States Army Air Corps, Mil­ waukee, Wisconsin. that in certain circumstances and C. A. Schommer—Resident auditor, United subject to certain conditions it may States Army Air Corps, South Bend, accept financial statements of com­ Indiana. panies producing war material in C. G. Thedieck—Lieutenant-commander, which the taking of inventory at the United States Naval Reserve. year end must be dispensed with be­ cause it would impede production. In The only source from which the Institute such cases, of course, appropriate ex­ receives this information are the members planation and qualification of the themselves. Please inform the Institute of auditor’s report would be required. appointments or enlistment.

American Accounting tees occupied prominent places on the As­ Association sociation’s program: Samuel J. Broad, Approximately 300 persons attended the committee on auditing procedure; James 26th annual meeting of the American Ac­ L. Dohr, committee on publication; Walter counting Association in New York Decem­ A. Staub, committee on accounting pro­ ber 29th and 30th. Topics discussed in the cedure; and John H. Zebley, Jr., board of course of the four sessions included ac­ examiners. counting principles underlying corporate Herbert F. Taggart, professor of ac­ financial statements, examinations, cost counting at the University of Michigan accounting problems arising out of the and now on leave of absence to serve with defense program, and federal accounting. the Office of Price Administration in Wash­ A detailed account of the topics and speak­ ington, was elected president of the Associ­ ers was published in the December issue of ation. George D. Bailey, Detroit, a member this bulletin. of the executive committee of the American The chairmen of four Institute commit­ Institute of Accountants; Daniel Borth, The Certified Public Accountant 5

Jr., professor of accounting at the Univer­ Edward J. McDevitt, Jr., Boston, Mass. sity of Louisiana and associate of the Walter A. Musgrave, Hartford, Conn. George E. Perrin, Greensboro, N. C. Institute; and Ira N. Frisbee, professor of Nicholas Picchione, Providence, R. I. accounting at the University of California C. J. Rowland, State College, Pa. and member of the Institute, were elected Daniel M. Sheehan, St. Louis, Mo. vice presidents. Robert L. Dixon, Jr., T. Dwight Williams, Oklahoma City, Okla. Howard Wright, Philadelphia, Pa. professor of accounting at the University of Chicago, was re-elected secretary-treas­ Herbert Temple Library urer of the Association. Re-elected as editor of The Accounting Review was Eric L. The Institute has recently been informed Kohler, now serving as chief of the tax that the late Herbert M. Temple, of St. amortization section, Advisory Commission Paul, bequeathed his extensive accountancy to the Council of National Defense. A. C. library, consisting of approximately 500 Littleton, professor of accounting at the volumes, to the James Jerome Hill reference University of Illinois, and Frank P. Smith, library in St. Paul. The collection includes professor of accounting from the University files of The Journal of Accountancy, T he of Rochester, were elected directors of Certified Public A ccountant, and other research. Professor Smith is now with the publications of the American Institute of Office of Price Administration in Washing­ Accountants. ton. Natural Business Year Study In October the research and statistical Visitors at Institute Offices division of Dun & Bradstreet, Inc., issued Cecil S. Ashdown, Barrule, Warwick East, bulletin No. 27, on beet sugar manufac­ Bermuda turers, of the series sponsored by The R. B. Brown, Fort Jackson, S. C. Natural Business Year Council. The bulle­ G. Stuart Bruder, Louisville, Ky. Alfred D’Alessandro, Boston, Mass. tin gives seasonal characteristics of sales, George P. Ellis, Chicago, Ill. inventories, receivables, and liabilities, and A. Karl Fischer, Philadelphia, Pa. the fiscal closing dates of the manufacturers P. W. Fisher, Jacksonville, Fla. engaged in this industry. Bulletin No. 26, Stanley G. H. Fitch, Boston, Mass. J. E. Hutchinson, Jr., Dallas, Texas issued in March, 1941, gave data on cane A. C. Littleton and Mrs. Littleton, Urbana, Ill. sugar refiners.

dum suggests activities which all state so­ STATE SOCIETY NEWS cieties might undertake as a basic program leading to higher professional standards and C oordination wider public understanding of the work of “There is unmistakably a growing desire the certified public accountant. among the state societies for increased The need for coördination is explained in coordination of the activities of the several the introduction to the memorandum: societies themselves and those of the Insti­ “Those contributions to business and gov­ tute. More uniform procedure, more benefit ernment have been possible only because from the experience of others, more general of the ability of individual certified public understanding of worth-while activities have accountants and the tools which their pro­ been requested in numerous meetings and fession was able to put into their hands. discussions.” The accounting profession in the United This paragraph appears near the begin­ States is better organized today than it ever ning of a memorandum on “ Coördination was before, but it is not nearly so well or­ of Activities of Societies of Certified Public ganized as it could be. Better organization Accountants in the United States” which would mean better coordination, more effec­ was mailed to the presidents of all state tive work by the societies, which in turn societies on December 31st. The memoran­ would produce better informed, better 6 The Certified Public Accountant trained members, equipped with better at the renewal period, under the rule three tools and enjoying a better standing in the options were provided as to the dates of community.” submission of such audits. The effective date of this order was August 1, 1940. In­ The proposals contained in the memoran­ dependent audits have been forthcoming dum were submitted to the presidents of from every registered dealer and it is be­ state societies with the approval of the lieved the requirement, accompanied by Institute’s executive committee. occasional spot checks by Commission investigators, will reduce to a minimum C o m m it t e e o n E m p l o y m e n t losses accruing to the public through in­ The newly appointed committee on em­ solvency of concerns who otherwise might ployment of the Los Angeles Chapter, Cali­ file false financial statements.’ fornia Society, mailed to the membership “A letter was written the Chairman of the Commission on the part of a member of the Chapter a notice to the effect that of the Pennsylvania Institute of Certified application blanks have been prepared and Public Accountants commending the Com­ that the committee plans to classify appli­ mission on the interesting and informative cants according to their apparent degree of report issued by it, and comment was made ability and training. The board of directors in the matter of audits by independent of the Chapter also recently approved the accountants to the effect that strange to say establishment of a speakers bureau. A the action taken by the Commission requir­ questionnaire has been prepared requesting ing annual audits had met with the full the members to give past speaking ex­ support of security dealers. “The following quotation from a reply perience, particular topics on which they received from the Chairman of the Com­ feel qualified to talk, advance notice re­ mission is pleasing and significant: quired, and other such information. “ ' I am rather of the opinion that one rea­ son at least for the willingness of securities A u d it s o f S e c u r i t y D e a l e r s dealers to meet the requirement of an inde­ The following item, by William R. Main, pendent audit is that experience has taught is reprinted from the December issue of them that it is to the advantage not only of their individual businesses to do so, but to The Spokesman, the official organ of the the advantage of the profession as a whole. Pennsylvania Institute: In these days when security markets are “The Pennsylvania Securities Commis­ not any too good, it is definitely detri­ sion in its report for the fiscal year ended mental to the business to have customers May 31, 1941, stated: lose money through a dealer who is finan­ ‘It was brought forcibly to the Commis­ cially unsound, and the dealers realize with sion’s attention that it could not depend in us that the independent audit is the best every instance upon the accuracy of finan­ means to reveal the true condition and cial statements accompanying original and prevent such losses. ’ ” renewal applications which were drawn up by the officers, partners, or other members O f f e r o f A s s is t a n c e of investment organizations and sworn to Included in the report of the resolutions by such persons. For instance, [three companies] submitted sworn financial state­ committee of the Montana Society was the ments reflecting a solvent condition which following resolution, adopted unanimously were palpably false at the time they were on October 31, 1941: drawn up. Loss to the public in each in­ “W h e r e a s the Montana Society of Cer­ stance was relatively heavy. That the tified Public Accountants and its members matter required attention was clearly are deeply interested in the tax problems, evident. In cooperation with the Pennsyl­ the accounting problems and the cost of vania Investment Bankers Association the government, and Commission drew up a rule which required “W h e r e a s a study is now being made future original and renewal applications looking toward reorganization of our state to be accompanied by independent audits. government, In order to prevent conflict between the “Now, t h e r e f o r e , b e i t r e s o l v e d that fiscal years of investment dealers and the this Society go on record as being at all Commission’s desire for independent audits times ready and willing to give assistance The Certified Public Accountant 7 to the State officers and to the legislature torical information of the Massachusetts in connection with such matters, and that Society recently sent a letter to the practic­ this resolution be spread upon the minutes ing public accountants of Massachusetts and a copy be sent to the Governor of the State of Montana.” asking them to furnish name of present firm and date of organization locally, names The secretary of the Montana Society re­ of local firm members with brief accounts ceived on December 2nd a letter of appre­ of their experiences in the Massachusetts ciation from Governor Sam C. Ford, of accounting field, and recitation of activities Montana, thanking the Society for their by firm members and employees in the “ splendid offer of assistance.” Massachusetts Society and in the Institute and its predecessors. The material will be H is t o r ic a l I n fo r m a t io n edited by the committee and sent to the The committee for the collection of his­ offices of the Institute in New York.

STATE SOCIETY ELECTIONS

South Carolina Utah December 12, 1941. Annual meeting. December 17, 1941. Annual meeting. President—C. C. McGregor, of Columbia. President—Lawrence S. Pinnock, of Salt Vice president—W. Judson Ready, of Lake City. Vice president—Donald A. Columbia. Secretary-Treasurer—Belton Miller, of Salt Lake City. Secretary- R. O’Neal, of Greenville. Treasurer—Wallace W. Dansie, of Salt Lake City.

Election of Members to Institute

Advanced to Membership Harold I. Schlenker, New York, N. Y. Sam Levin, Washington, D. C. Edward G. Sommer, Louisville, Ky. Clarence H. Richardson, Buffalo, N. Y. Bob William Vetter, Tulsa, Okla. Daniel G. Weinstein, New Haven, Conn. Robert L. Weller, Philadelphia, Pa. Oliver M. Williams, Colorado Springs, Colo. Admitted as Members Ralph W. Yoder, New York, N. Y. Joseph Bragin, Philadelphia, Pa. Maurice J. Dahlem, Los Angeles, Calif. Admitted as Associates Joseph H. Deeken, St. Louis, Mo. Lotus O. Bannard, San Francisco, Calif. Grace A. Dimmer, Detroit, Mich. John L. Bennett, Tacoma, Wash. John W. Dixon, Cleveland, Ohio S. Bertell Bunker, Salt Lake City, Utah Lloyd C. Douglass, Cleveland, Ohio Don B. Card, Portland, Ore. Charles J. Faunce, Philadelphia, Pa. Fred E. Carlin, Seattle, Wash. Francis O’C. Fletcher, Asheville, N. C. William H. Carnell, Phoenix, Ariz. William A. Gamber, Mt. Vernon, Ill. Roy M. Crabtree, Florence, Ala. Andrew Garbarini, New York, N. Y. Bernard H. Dwight, Manchester, N. H. T. Jack Gary, Jr., Richmond, Va. Wilbur L. Ellis, Shreveport, La. David Hartman, Grass Valley, Calif. Glenn W. Elsfelder, Beverly Hills, Calif. Frank F. Kufs, New York, N. Y. Howard S. Feige, Chicago, Ill. Morris Kurtz, New York, N. Y . Chester L. Greene, El Dorado, Ark. Julius Lefkowitz, New York, N. Y. Casper A. J. Gross, Baltimore, Md. Albert J. Levin, Philadelphia, Pa. John R. Harper, Sparrows Point, Md. Anthony A. Longarzo, New York, N. Y . Frank S. Hibner, Bartlesville, Okla. John H. Lumpkin, New York, N. Y. Edward W. Ifland, New York, N. Y. L. Wayne Lutyens, Chicago, Ill. Oscar T. Kiskila, San Francisco, Calif. Coleburke Lyons, Detroit, Mich. Fred R. Kohler, Albany, N. Y. Milton E. Mandel, Jersey City, N. J. William T. Lake, Philadelphia, Pa. Irving Milchman, New York, N. Y. Albert L. LeDeuc, Los Angeles, Calif. John W. F . Neill, New York, N. Y . W. W. Littlejohn, Hattiesburg, Miss. Jack E. O’Connell, Baltimore, Md. Robert E. McDavid, Rochester, N. Y. Edwin W. L. Page, Boston, Mass. James R. McGrath, Dallas, Texas Raymond J. Pusch, Appleton, Wis. Thomas W. Miller, Baltimore, Md. Announcements

The following firm announcements have recently Continent Oil & Gas Association, Fort Worth, been received from members of the Institute. Texas.

C. A. A n d r e w s , Seattle, Wash., announces H e n r y B. F e r n a l d , New York; “ The Rela­ opening of an additional office at 916 S. Oak St., tionship of Departmental and Central Account­ Port Angeles, Wash. ing”; American Public Welfare Association An­ nual Conference, Washington, D. C. Donlin, Rempert & Co. announce removal o f their offices to 100 W. Monroe St., Chicago, Ill. Lewis Gluick, Wisconsin; “ The Navy and S. Preston Douglas announces opening of an Safety”; Washington Junior High School, office in McLean Bldg., Lumberton, N. C., to Manitowoc, Wis. “ Feeding the Navy—with practice under his own name. Special Attention to Milk as a Ration Com­ ponent”; County Milk Producer’s Association, L. Leonard Drummond announces the open­ Manitowoc, Wis. ing of offices in Sunshine Bldg., Albuquerque, N.M. Frank Hawes, Michigan; “ Changes in 1941 Revenue Act”; Exchange Club, Flint, Mich. R o y M. S c o t t announces opening of offices at “ 1941 Income Tax A ct”; Optimist Club, Flint, 1106 Commerce Title Bldg., Memphis, Tenn., Mich. for the practice of public accounting and law. L e s l i e A. H e a t h , North Carolina; “ What N o r b e r t F. S ta n n y announces his withdrawal Accounting Students Should Know”; Southern from the firm of Bachrach, Sanderbeck & Co., Business Education Association, Greensboro, and the opening of offices in the Commonwealth N. C. Bldg., 316 Fourth Ave., Pittsburgh, Pa. Herman Jaffe, New York; “ Freedom in Accounting to the Federal Government”; The following addresses have been delivered re­ American Road Builders’ Association, New cently by members of the Institute before the or­ York, N. Y. ganizations mentioned. Jacob Bennett, New York; “ Tax Savings E r n e s t G. M a ih a c k , New Jersey; “Your Methods”; Credit Clearing House. 1941 Income Taxes” ; Rotary Club, Roselle, N.J. F . J. Blaise, Illinois; "Weighing the Advan­ tages and Disadvantages of Filing Consolidated H. G. M o u n t e e r , Michigan; “ Review of 1941 Returns”; Mid-Continent Oil & Gas Association, Revenue A ct” ; Riverside Kiwanis Club, Detroit, Fort Worth, Texas. Mich.

R a y m o n d S. B l u n t , Illinois; “ Foundation E d w in L. P e a r s o n , Minnesota; “ Accounting Stones for Business Success”; Wisconsin Upper and Statistics”; Macalester College, Vocational Michigan Credit Men, Oshkosh, Wis.; Kiwanis Day Program, Minneapolis, Minn. Informal Club, Milwaukee, Wis. talk on accounting, etc.; Alpha Kappa Psi Fraternity, Minneapolis, Minn. J. Bernard Brown, Kentucky; “ The Ac­ countants Viewpoint in a Panel Presentation of Ja m e s O. P e a v e y , Washington, D. C.; “ What Management Control Accounting” ; United Constitutes an Adequate Accounting System for Typothetae of America, Chicago, Ill. a Public Welfare Agency?” ; American Public Welfare Association Annual Conference, Wash­ W a l t e r L. B r a d l e y , New York; “ Changes ington, D. C. Effected by 1941 Revenue A ct”; Steuben County Bar Association, Bath, N. Y. “ Basis for Es­ H a t c h e r A. P i c k e n s , Texas; “ Accounting tablishment of Reserves for Post-War Price Practices for Oilwell Drilling Contractors”; Declines,” National Council of Farmer Co­ American Association of Oilwell Drilling Con­ operatives, Atlanta, Ga. tractors—first annual meeting, Dallas, Texas.

T o m F. C a r e y , Oklahoma; “ Proposed In­ Emiliano Pol, J r., Puerto Rico; “ New In­ ternal Revenue Administrative Code” ; Mid- come Tax Law”; Lions Club, Lares, P . R. 8 The Certified Public Accountant 9

W illia m B. S c h a e f e r , New Jersey; “ Revenue Effect of These Requirements on the Accounting Act of 1941 and Your Pocketbook”; Kiwanis Practice”; New York University Accounting Club, Hackensack, N. J. Ledger, Oct., 1941.

F r a n k E. S eid m an , Michigan; “ Influence of Alfred M. Lust, New York; “ How Are You Excess Profits Taxation on Business Policy”; Doing?” ; Wine and Liquor Retailer, Dec., 1941. Tax Institute, Philadelphia, Pa. E r n e s t G. M a ih a c k , New Jersey; “ The G e o r g e W. Sim s, California; “ The 1941 In­ Revenue Act of 1941 and How It Compares with come Tax Bill”; Commercial Club, Fresno, the Revenue Act of 1940”; New Jersey Bankers Calif. “ Accountancy as a Career”; Alpha Delta Association, Bulletin, Dec., 1941. Gamma Society, Fresno State College. Charles Melvoin, Illinois; “ Ten Days Left C h a r l e s H. T o w n s , New York; “ Account­ To Make Gifts at Low Taxes”; Chicago Sun, ants’ Reports”; Accounting C lu b , New York Dec. 21, 1941. University, New York, N. Y. M a r y E. M u r p h y , New York; “ The English E r i c P. V a n , Oregon; “ Accepted Forms and Approach to the Distribution of Securities” ; Preparation of Balance sheets for Cooperative Journal of Business of the University of Chicago, Associations, Accounting Procedure Regarding Oct., 1941. “ Some Comments on the Develop­ Patronage Dividends and Members’ Equity ment of American Accountancy”; Accountancy Accounts”; Oregon Cooperative Council. (London), Oct., 1941.

Thefollowing articles by members of the Institute R a y m o n d S. B l u n t , Illinois, appointed vice have appeared recently in the publications men­ chairman, civilian protection, Englewood Dis­ tioned. trict of Chicago. F. J. B l a i s e , Illinois; “ Prepare for the Ides J. A. B o u l a y , Minnesota, elected president of of March”; The Pure Oil News, November, Minneapolis Professional Men’s Club. 1941. P. K. S eid m an , Tennessee, appointed instruc­ Dixon Fagerburg, Jr., Arizona; “ Account­ tor for defense course in accounting, University ancy and the Metal Mining Industry” ; The of Tennessee, and dean of the School of Taxation, Mining Journal, Nov. 30, 1941. Southern Law University.

B. Bernard Greidinger, New York; “ The S t u a r t M. C a m p b e ll, Illinois, appointed Accounting Requirements of the S.E.C. and the controller of the Pittsburgh Plate Glass Co. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t A Bulletin of The American Institute of Accountants

F e b r u a r y 1 9 4 2

V o l . 22 • No. 2

Meeting of Council

Accountants in War

Annual Meeting Plans

Activities of the Month

State Society News

1941 Yearbook

Obituaries

15¢ a Copy Published Monthly $ 1 a Year

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. American Institute of Accountants

Accounting in War Production Activities of the Month Program Since the issuance of accounting research It has been reported that an administra­ bulletins Nos. 13 and 14 last month, the re­ tive office memorandum has been circulated search department has been studying three among the various departments of the Office matters: accounting for income taxes, ac­ of Production Management announcing counting for stock options issued to officers that the services of the accounting and dis­ and employees, and a questionnaire on in­ ventory methods to be sent to industrial tribution advisory branch (which is headed concerns. Bulletin No. 13, “Accounting for by Eric A. Camman, a member of the In­ stitute, with the assistance of Maurice E. Special Reserves Arising Out of the War,” Peloubet, also a member) are available to was mailed by the acting director of the all divisions of O.P.M., and that through New York Stock Exchange’s department of the American Institute of Accountants stock list to the presidents of all listed corporations. committee on war activities the assistance The committee on auditing procedure and advice of outstanding members of the accounting profession may be called for last month issued Statement on Auditing when necessary. Procedure No. 9, “Accountants’ Reports It is believed that the accounting ad­ on Examinations of Securities and Similar visory function as referred to in the admin­ Investments under the Investment Com­ istrative memorandum will be continued pany Act,” which was published, with the without change under the War Production research bulletins, in the February J o u r ­ n a l . The committee assisted the Connecti­ Board. cut Public Utility Commission in the Changes in State Board Personnel preparation of an order, issued December 31st, defining comprehensive audits of pub­ Robert L. Holland, of Savannah, Ga., lic-utility companies of that State, which has been appointed to membership on the are required by law. The order will be pub­ Georgia State Board of Accountancy, re­ lished in the March issue of The Journal placing M. H. Barnes, also of Savannah, o f Accountancy. whose term has expired. The Institute’s objections to proposed amendment to section 18(a) of the Securi­ ties Exchange Act of 1934 were presented W a r Ac t iv it ie s Co m m it t ee by its counsel before the House Committee on Interstate and Foreign Commerce at a At a meeting on January 29th, the hearing January 23rd. The objections were executive committee of the Institute the same as those previously made to the approved a recommendation of the proposed section 12(d) to be incorporated committee on national defense that in the Securities Act of 1933, which the pres­ its name be changed to the committee ident of the Institute opposed before the on war activities. Upon active par­ same Congressional committee, December ticipation of the United States in the 2nd. His statement was reprinted in the last war, the committee on national January issue of The Journal. defense underwent a similar appropri­ A constructive program of activity is ate change of name. being developed by the Institute’s com­ mittee on education on the basis of sugges­ The Certified Public Accountant

ury Department; and H. A. Morgan, Di­ WOMEN STAFF ACCOUNTANTS rector of the Tennessee Valley Authority. Through arrangements made in coopera­ Members are requested to notify tion with the Institute’s speakers bureau, the Institute of experience in employ­ Leslie Mills, of New York, a member of the ment of women as staff accountants Institute’s committee on federal taxation, or in report departments to replace spoke on recent federal tax legislation at men who have been called from public the annual convention of the Merchant practice for war service. This informa­ Tailors and Designers Association, held at tion is desired by the executive the Hotel Roosevelt, New York, on Feb­ committee as a basis for consideration ruary 9th, 10th, and 11th. On February of means of meeting the impend­ n th , Henry G. Burke, of Maryland, dis­ ing shortage of trained accounting cussed “ Taxes, Rising Costs, and the Fu­ personnel. ture Outlook for the Small Businessman” at the annual convention of the Pennsyl­ vania and Atlantic Seaboard Hardware Association in Baltimore. Arrangements tions received in reply to questions asked of for this address were also made through the a number of prominent accounting edu­ speakers bureau. cators. Recommendations for new tax legisla­ F a c t s a n d F ig u r e s tion are being prepared by the committee During the present fiscal year, which on federal taxation for presentation to Con­ began September 1, 1941, 328 members gress at the appropriate time. and associates have been admitted to the The Institute’s committees on coopera­ Institute; for the same period last year the tion with bankers and cooperation with total figure was 155. credit men have submitted a program of Circulation of T h e Journal of A c­ activity to the presidents of all state so­ c o u n t a n c y on December 3 1 , 1941, was well cieties. over 16,000 and showed a net gain of more Press notices outlining the contents of than 1,000 over the figure for December 31, “ Accounting for Special Reserves Arising 1940. The continued rapid increase in cir­ Out of the War,” Accounting Research culation of T h e J o u r n a l is notable. It has Bulletin No. 13, were mailed to newspapers gained about one thousand a year regularly throughout the country, to the editors of for the past five or six years. Advertising outstanding business publications, and to revenue shows a comparable increase. the officers of interested professional More than 10,000 copies of Accounting, groups. Prominent publicity was given the Auditing and Taxes— 1941, containing pa­ bulletin in The New York Times, the New pers presented at the 1941 annual meeting York Herald-Tribune, and in other news­ of the Institute, have been distributed, papers. Business Week summarized the more than 4,000 of which represent sales to bulletin in the issue of January 24th. nonmembers. One indication of the interest aroused by Total distribution of “ Please Check complimentary distribution of special bul­ Your Account” has now exceeded 462,000 letins and publications issued by the Insti­ copies. Combined with the 142,000 copies of tute are the acknowledgments received. A “ Financial Statements— What They survey of personal acknowledgments for Mean” and the 211,000 copies of “ Ac­ items mailed in recent months reveals, counting and Your Pocketbook,” the among others, letters from the following: three public-information pamphlets have Senators Robert A. Taft, Arthur Capper, been distributed to. over 800,000 persons. Pat McCarran; Frank Knox, Secretary of An editorial entitled “ Accounting Informa­ the Navy; John L. Sullivan, Assistant Sec­ tion for the Public” in the February retary of the Treasury; Leon Henderson; J o u r n a l emphasizes the fact that these Thomas Tarleau, legislative counsel, Treas­ pamphlets “ are in no sense manuals of

1 2 The Certified Public Accountant

Message to Florida Institute An n u a l Me e t in g Plans January 30, 1942 On February 1st and 2nd, the sec­ M r. C. K. M i l l i g a n , President retary and assistant secretary of the Florida Institute of Accountants Institute met at Chicago with the Jacksonville, Florida Institute’s committees on meetings D ear M r. M i l l i g a n : and technical sessions to make plans At a meeting of the executive committee of the American Institute of Accountants, for the 1942 annual meeting, which January 29th, a resolution was adopted ex­ will be held at the Palmer House, pressing the appreciation of the committee September 28th through October 1st. for the highly cooperative attitude dis­ The arrangements are being made played by the Florida Institute of Ac­ with the cooperation of the Illinois countants toward the suggestion that the Society of Certified Public Account­ American Institute’s 1942 annual meeting ants. place be changed from Miami to Chicago. We all realize that this change may be a disappointment to the officers and members procedures, but simply attempts to convey of the Florida Institute, and we are, there­ general ideas with supporting illustra­ fore, all the more sensible of the magnanim­ tions.” ity which you and your associates have displayed in considering this matter. The Use of Accountants in War council of the Institute will remember your willingness to submerge your immediate in­ Following an investigation reported last terest in consideration of the welfare of the month of the status of accountants in rela­ Institute as a whole. tion to war agencies, the executive com­ Yours faithfully, J o h n L. C a r e y mittee has authorized appointment of a Secretary special committee, of which Carman G. Blough is chairman, to present to the proper Kentucky Security Dealer Audits governmental authorities pertinent data On January 10th the Division of Securi­ bearing on the most advantageous use of ties, Kentucky Department of Business accountants in war. The purposes of the Regulation, mailed a notice to all registered committee have been stated as follows: security dealers which called for submission “The American Institute of Accountants of the customary audit report required to believes it necessary that the proper govern­ be filed annually with the Department. Of mental authorities be informed of the vital particular interest are the facts that the importance of accounting in the war effort dealer may select his own accountant; the —the relation of accounting to production accountant must be a certified public ac­ of war material, to the control of govern­ countant; and that the Department recog­ ment expenditures, and to the collection of nizes fiscal years other than December 31st. government revenues—so that trained and experienced accounting personnel can be Visitors at Institute Offices used to the best advantage of the nation as George D. Bailey, Detroit, Mich. a whole. Charles E. Baxter, Greensboro, N. C. “A shortage of accountants seems im­ Carman G. Blough, Chicago, Ill. minent—in public accounting, in industrial G. R. Eikenberry, Wilmington, Del. accounting, and in the ranks of government Spencer Gordon, Washington, D. C. employees as well. Our objective, is not to Clyde F. Hart, Newark, N. J. seek exemption of accountants from mili­ J. F. W. Heinbokel, Scranton, Pa. tary service, nor to maintain ‘ accounting as W. P. Hilton, Norfolk, Va. usual,’ but simply to avoid a severe short­ John P. Leyhan, Detroit, Mich. Ernest L. Luff, Gloversville, N. Y. age of essential technical accounting per­ Normal L. McLaren, San Francisco, Calif. sonnel which might seriously retard the Robert L. Miller, Lebanon, Pa. war effort. The use of accountants where C. A. Naylor, Tulsa, Okla. they will do the country the most good is George S. Olive, Indianapolis, Ind. our objective.” W. Ernest Seatree, Washington, D. C. The Certified Public Accountant 3

Committee Appointments m e e t in g o f Co u n c il In addition to those listed in earlier issues of this bulletin, the president has appointed The spring meeting of council will the following Institute committees to serve be held in New York on May 11 and for the fiscal year 1941-1942: 12, 1942. Provision has been made to continue the meeting for a third day C r e d e n t i a l s if the business to come before the Charles W. Jones, chairman, Illinois council demands it. As in the past, F. B. Andrews, Illinois the Advisory Council of State Society R. C. Brown, Illinois Presidents and the chairmen of all

M e e t i n g s Institute committees will be invited to attend. Frank Ahlforth, chairman, Illinois Stephen Gilman, Illinois Russell H. Hassler, Illinois Donald R. Jennings, Illinois Beta Alpha Psi Officers Lloyd Morey, Illinois The current officers of Beta Alpha Psi, Cyril Talbot, Illinois the national accounting fraternity, are as follows: President: Prof. James A. McCona­ Conserve Scrap Materials hey, University of Washington. Secretary- Treasurer: Prof. H. W. Kendrick, Univer­ The following notice is published at the sity of Colorado. Councilors: Prof. George request of George T. Weymouth, chief, E. Bennett, Syracuse University; Prof. industrial salvage section, Bureau of In­ Thomas Dickerson, Cleveland College; dustrial Conservation: Prof. F. H. Elwell, University of Wisconsin. “The Bureau of Industrial Conservation Election of Members is charged with the responsibility of devel­ oping salvage programs for waste materials, A d m it t e d a s M e m b e r s especially iron and steel scrap, nonferrous Bertram L. Alley, Boston, Mass. Leonard F. Beckers, Washington, D. C. metals, cotton and woolen rags, paper and Claude W. Bishop, Flint, Mich. rubber, wherever they can be found E. Harold C. Clark, New York, N. Y. throughout the land. James P. Colleran, Cleveland, Ohio “The industrial salvage section of the Rusco H. Crowell, Washington, D. C. Bureau is concerned with stimulating a Earl R. Dahlquist, Chicago, Ill. larger, faster flow of scrap from industry William H. Danne, Washington, D. C. into regularly established reclamation and Paul D. Dohan, Philadelphia, Pa. conversion channels so that immediate war Harold A. Eastman, New York, N. Y. Harry Einbund, New York, N. Y. needs for this material can be met. James B. Fish, Jr., New York, N. Y. “Here is a simple program which we sug­ Harold S. Geneen, New York, N. Y. gest you put into effect now: Marshall D. Hall, Los Angeles, Calif. “ 1. Put some one responsible individual in Murray T. Hiatt, New York, N. Y. Louis J. Kerber, St. Louis, Mo. charge of salvage throughout a ll de­ Samuel W. Lerer, New York, N. Y. partments of your business and give Edwin W. Lightfoot, San Juan, P. R. him authority to organize and start at Norman F. Luekens, Cleveland, Ohio once an emergency “ clean up” cam­ Robert A. Maes, Philadelphia, Pa. paign, to be followed with a permanent Francis H. McMullen, Chicago, Ill. salvage organization. James A. McQuail, Jr., Philadelphia, Pa. “ 2. Devise an effective method of bringing William T. Meglaughlin, New York, N. Y. the message of conservation to a ll of Harry Meresman, New York, N. Y. Samuel F. Mirandy, New York, N. Y. your employees every day. Joseph F. Niehaus, Houston, Texas “3. Build into your plan a program to keep Thomas J. O’Brien, Savannah, Ga. it alive. Don’t let initial enthusiasm die. Louis N. Perry, New York, N. Y. This is a continuous job. Charles A. Pertain, New York, N. Y. “4. Act now." Lloyd R. Raemer, Chicago, Ill. 4 The Certified Public Accountant

Kenneth S. Reames, Detroit, Mich. DeVere L. Sheesley, Du Bois, Pa. 1 9 4 1 YEARBOOK William J. Smith, New York, N. Y. Alton N. Snipes, New York, N. Y. Copies of the 1941 Yearbook are Jacob M. Solomon, Birmingham, Ala. being mailed this month to all mem­ Jay M. Squire, New York, N. Y. bers and associates of the Institute. F. Donald Squires, New York, N. Y. Julius Stackel, New York, N. Y. The book contains alphabetical and Alex M. Stollmeyer, New York, N. Y. geographical lists of members and Clayton Trout, Dayton, Ohio associates, names of committee mem­ Charles Wein, New York, N. Y. bers, reports of committees, and other William N. Yelverton, New York, N. Y. James I. Young, Decatur, Ill. material of the same nature as that Carlos R. Zener, Seattle, Wash. included in the 1940 edition. Addi­ A d m it t e d a s A s s o c ia t e s tional copies are available at $2.00 Dennis A . Darwin, Detroit, Mich. net, $2.20 delivered in the United Carl W. Dowling, Chicago, Ill. States. Charles H. Engle, Jersey City, N. J. Walter D. Ennis, Tulsa, Okla. Joseph L. Fahey, Chicago, Ill. partner of the firm of Murphy and Nash and John Wesley Fly, Gainesville, Fla. Jones, Decatur. He had been associated Rosa E. Gundall, New York, N. Y. Adley W. Hemphill, Pittsburgh, Pa. with the firm since 1924. Mr. Nash had been Fred I. Hobbs, Richmond, Va. a. member of the American Institute of Evan R. Hughes, Chicago, Ill. Accountants since 1930. Nelson C. Humphrey, Washington, D. C. Palmer Johnson, Great Falls, Mont. L. Tipton Young, of Louisville, Ky., John C. Kohlrieser, New York, N. Y. died January 19th, at the age of sixty-two. Herbert Levy, Chicago, Ill. A native of Mt. Sterling, Ky., Mr. Young Lea B. McIntire, Bloomington, Ind. entered the practice of accounting in 1910. James A. Milligan, Providence, R. I. James N. Neel, Evansville, Ind. For many years he had been head of the Walter A. Ninke, Chicago, Ill. accounting firm of L. Tipton Young & Co., Marshall V. Noecker, Benton Harbor, Mich. of Louisville. Mr. Young had been a mem­ Julia G. Norse, Chicago, Ill. ber of the American Institute of Account­ Eugene E. Ormsten, New York, N. Y. George A. Patrick, Detroit, Mich. ants since 1916. Robert A. Patten, Boston, Mass. William H. Radcliffe, Schenectady, N. Y. W. Kenneth Simpson, Louisville, Ky. STATE SOCIETY NEWS Charles Steinbock, Jr., Baltimore, Md. Gordon C. Stubbs, Washington, D. C. A u d i t i n g S t a n d a r d s David Stuzin, Miami, Fla. Frank M. Tait, Philadelphia, Pa. A number of state societies are respond­ Thomas F. Thompson, New York, N. Y. ing to the Institute’s request for opinions of Fred E. Trainor, Chicago, Ill. a proposed general statement of auditing Arthur P. Warringer, New York, N. Y. standards outlined at the Institute’s 1941 John L. Woods, Chicago, Ill. Robert O. Whitman, New York, N. Y. annual meeting by the chairman of the James J. Wilson, New York, N. Y. committee on auditing procedure. A typical James W. Wilson, Montgomery, Ala. example of cooperation in this respect is the Noah F. Wright, Tulsa, Okla. following item from The Worksheet, bulletin Cecil F. Yaekel, Toledo, Ohio of the Michigan Association: Obituaries “One of the highlights of the meeting of Willis A. Nash, of Decatur, Ill., was the American Institute in September was killed in an automobile accident December the paper presented by Mr. Samuel J. 30, 1941. Mr. Nash was born in Illinois in Broad on the subject of ‘Auditing Stand­ ards.’ In this paper it is indicated that the 1897, and attended the University of Illi­ American Institute committee on auditing nois. He was a certified public accountant procedure has decided that instead of at­ of Illinois and a member of the Illinois tempting to revise the bulletin ‘Examina­ Society of Certified Public Accountants. At tion of Financial Statements ’ it would first the time of his death Mr. Nash was a deal with the fundamental subject of audit­ The Certified Public Accountant 5

ing standards. But before issuing any gen­ deductions are greater than those given he eral statement on auditing standards the will, of course, use the ordinary method of Institute is endeavoring to sound out the computing his taxes. members of the profession as to their views on the subject. N e w S o c ie t y B u l l e t i n “ In order to coöperate in this matter, Volume 1, N o . 1, of The Wisconsin Mr. Barrett has appointed a special com­ C.PA., official bulletin of the Wisconsin mittee of H. M. Prevo, E. H. Fletcher, and Society, was issued in January. A four-page B. F. Jackson, and this committee will be very glad to have the views of the members pamphlet bearing news and items of interest of the Association on this subject. The to the members of the Society, the bulletin paper by Mr. Broad is published in the will be issued as a quarterly until it can be November (1941) issue of T h e J ou rn al o f developed to the point where more frequent A cco untancy and is also contained in the publication becomes desirable. Twenty-five published proceedings [Accountings Audit­ state societies now publish regular bulletins. ing, and Taxes — 19 4 1] of the Institute A c c o u n t in g C u r r ic u l u m meeting in September. It will be appre­ ciated if all members of the Association will An eight-page mimeographed description study this paper and give the benefit of of the accounting curriculum at the Uni­ their suggestions to the special committee.” versity of Florida was recently circulated by the Florida Institute to its members. The S u p p l e m e n t T University’s accounting instructors, the A simplified method for determining rela­ mimeograph states, will welcome suggestions tive tax liabilities under the optional Sup­ regarding the course. Among the questions plement T and under the regular income-tax asked are: What additional courses should form is given in a letter mailed by the be added? To what extent should the stu­ Minnesota Society to its members on De­ dent be required to prepare working papers cember 24th. The letter lists the amounts of in an auditing course, if at all? Should three deductions which have actually been al­ months of practical work in a public ac­ lowed in computing the taxes indicated on countant’s office be required of all candi­ Supplement T. If the taxpayer’s actual dates for a Master’s degree in accounting?

Announcements

The following firm announcements have recently Frazer and Torbet announce the admission been received from members of the Institute. of John P. Chole as a resident partner in their Paul C. Campbell announces the opening of Milwaukee office. an office at 516 First National Bank Bldg., M. G. F u r m a n , of Miami Beach, Fla., an­ Miami, Okla. nounces the removal of his offices to Mercantile J ames A. Councilor & Company, of Wash­ National Bank Bldg. ington, D. C., announce the opening of a branch James D. Glunts & Co., of Boston, Mass., office in Chicago, in charge of John E. Brown. announce the admission of Gerald I. Glunts and The address is First National Bank Bldg. Frederick D . Hyde to partnership in the firm. H. Robert Drew, of Philadelphia, Pa., an­ Pogson, Peloubet & Co., of New York, nounces the removal of his offices to 1518 Walnut N. Y., announce the admission of Crawford C. St. Halsey to partnership in the firm. Edmondson, Daniels & W illett, of Norfolk H arry R. Howell Company, of Charleston, and Newport News, Va., announce the admission West Va., announce change of firm name to of L. D . LedBetter to partnership in the firm. Howell and Paterno. Franke, Hannon & W ithey announce the re­ C. A. N a y l o r and E . W. M u l l e r announce moval of their Troy offices to 18 First St. the formation of a partnership under the firm 6 The Certified Public Accountant name of C. A. Naylor & Co., with offices at 910 (State), Los Angeles, Calif. “ Tax Structure of Philtower, Tulsa, Okla. L. A. Co.” ; Kiwanis Club, Southgate, Calif. “What Goes On”; Municipal Finance Officers R o g e r A. P e l l a t o n announces the opening of an office at 61 Broadway, New York, N. Y. Association of Southern California, Montebello, Calif. W illiam Pesmen, of Kansas City, Mo., an­ E r n e s t O. P a l m e r , Illinois; “ Percent Tax nounces the removal of his offices to 1104 Com­ Legislation” ; Elgin Bar Association, Elgin, Ill. merce Bldg. “ Individual Tax Returns” ; Northwest Real Richards & Ganly, of New York, N. Y., an­ Estate Board, Chicago, Ill. “ Revenue Act of nounce the opening of a branch office at 615 1941” ; South Bend Rotary Club, South Bend, Main Ave., Passaic, N. J. Ind. George Robertson and B. R a e S h a rp an­ Charles C. Potter, Florida; “ When Have nounce the formation of a partnership under the You Made a Profit?” ; Quality Courts United, firm name of Robertson and Sharp, with offices at Datona Beach, Fla. 415 Citizens National Bank Bldg., Riverside, R u s s e l l L. Schlotter, Iowa; “ Taxation”; Calif. Mitchell County Bankers Association, Stacy­ J a m e s A. Smith and U. C. Bobbitt announce ville, Iowa. “ Taxation”; Funeral Directors, the formation of a partnership under the firm Ottumwa, Iowa. name of Smith & Bobbitt, with offices at 212 Professional Bldg., Phoenix, Ariz. O t t o A. S h u l t s , New York; “ Revenue Act of 1941 as It Affects Insurance and Trusts” ; M a x S t a r r announces the admission of Joseph Rochester Life Insurance and Trust Council, Finer as a partner in the firm of Max Starr & Rochester, N. Y. Company, and the removal of their offices to 161 Devonshire St., Boston, Mass. L a w r e n c e S. T im p so n , California; “ Present Taxes”; Kiwanis Club, Emeryville, Calif. Lee Heyer W hite announces the removal of his office to 230 Park Ave., New York, N. Y. John Wiseman, West Virginia; “ History of the Income Tax Law in the United States” ; S. H. and L e e J. W o l f e , of New York, N. Y., Wheeling Chapter of the National Office Man­ announce the change of the firm name to Wolfe, agement Association, Wheeling, W. Va. Corcoran and Linder. Thefollowing articles by members of the Institute The following addresses have been delivered re­ have appeared recently in the publications men­ cently by members of the Institute before the or­ tioned. ganizations mentioned. U. C. B o b b i t t and J a m e s A. S m ith , Arizona; W a r r e n E. B a n k s , Arkansas; “ Explanation “ Types of Audits and Their Scope”; Profit, of Revenue Act of 1941 as It Affects Individual October, 1941. Taxpayers”; Y.W.C.A. Forum, Hot Springs, Ark. “The Revenue Act of 1941” ; Hot Springs E. R. B o y d , Texas; “ Audit Reports for Credit Civitan Club, Hot Springs, Ark. Purposes”; The Texas Accountant, January, 1942. W i l l a r d R. G in d e r , Pennsylvania; “ Internal E. R. B o y d , Texas; “ Audit Reports for Credit Purposes”; Southwest Credit Conference of the Control as Seen by the Accountant”; The Ac­ National Association of Credit Men, Dallas, counting Forum, January, 1942. Texas. Benjamin Harrow and Isidor Sack, New O s c a r R. D a v is , Oklahoma; “ Where D o York; New York State Income and Franchise Taxes Go from Here”; The Theatre Owners of Taxes; Alexander Publishing Co., December, Oklahoma, Inc., Oklahoma City. 1941. J o h n M. H a z e l e t t , California; “ Remember C h a r l e s N. H ostetler, Iowa; “ New Tax Provisions” ; Waterloo Rotary Club, Waterloo That Tax Man Will Be Around Again”; Con­ Chapter of National Credit Men, Waterloo solidator (Consolidated Aircraft Corporation Em­ Optimist Club, Waterloo Lions Club, Waterloo, ployees’ Magazine), October, 1941. Iowa. Joseph J. Klein, New York; “ Taxation in a Jo s e p h J. K l e i n , New York; “ Selected Changing World—Impact on Retailer and Con­ Aspects of Revenue Act of 1941 ”; Factors’ sumer” ; Women's Wear Daily, December 30, group, Federation for the Support of Jewish 1941. Philanthropic Societies”; Harmonie Club. “ 1941 C h a r l e s S. R o c k e y , Pennsylvania; “ Income Excess Profits Taxes and Prospective Tax Legis­ and Taxes Put under Study”; Philadelphia lation” ; Metropolitan Controllers Association, Inquirer, January 2, 1942. Hotel Martinique, New York, N. Y. H e n r y P. Seidemann, D. C.; “ Curtailment J. M. L o w e r y , California; “ Relationships be­ of Non-Defense Expenditures”; The Brookings tween State Department of Social Welfare and Institution, Washington, D. C., December 29, County Auditor” ; Department of Social Welfare 1941. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

M a r c h 1 9 4 2

Tax Extensions

Election of Members

Annual Meeting Plans

Procurement of Office Supplies

Pensions and Rate of Pay

Activities of the Month

Announcements

15¢ a Copy Published Monthly $ 1 a Year

V o l . 2 2 No. 3

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authorities, business­ men, and others. Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred—35¢ Auditing Examination of Financial Statements by Independent Public Accountants...... 15¢ Revised “ Extensions of Auditing Procedure” ...... 10¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢ Taxation Excess Profits Net Income and Exemptions under the Income Method — By Walter A. Cooper...... 10¢ Consolidated Excess Profits Tax Returns — By Walter A. Cooper...... 25¢ A Sound Basis for Taxation — By Walter A. Cooper...... 10¢ (Orders for more than 25 copies, 5¢ a copy) Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Refunded . 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 -— Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the War...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢

Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination...... 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “ Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “ Accountants’ Certificates” (continued).. 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies..10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon...... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar In­ vestments under the Investment Company Act of 1940...... 10¢ American Institute of Accountants

Activities of the Month accounting procedure, and representatives of the O.P.A. Last month the executive committee ap­ A report of the subcommittee on ac­ pointed a special committee of three— counting for taxes has been submitted to Carman G. Blough, chairman; Victor H. the full committee on accounting procedure Stempf; and J. N. Aitken— which is plan­ and may serve as the basis for an accounting ning to submit to the selective service research bulletin. The research department authorities evidence of a country-wide and members of a subcommittee have also shortage among accountants of the type been considering definitions and classifica­ whose experience and training make them tions of “ surplus,” as recommended in essential to the efficient conduct of the war accounting research bulletin No. 12. effort. Inquiries among state society presi­ dents, public accounting firms, and univer­ sity professors of accounting throughout Various aspects of the short form of the country have clearly indicated a short­ report and the nature of qualifications are age of accountants of supervisory grade with being studied by the committee on auditing industrial experience and resultant unfavor­ procedure with the view to the issuance of a able effects on the war effort, through statement on the subject. inadequate coordination of productive fa­ cilities, collection of tax revenues, etc. The Institute’s committee is cooperating T a x Ex t e n s i o n s with a similar committee of the National On February 27th the Commission­ Association of Cost Accountants. The er of Internal Revenue telegraphed N.A.C.A. is conducting among its own to all internal revenue collectors members a survey similar to that of the that all applications for exten­ Institute. sion of time to file all types of in­ If the selective service authorities are come-tax returns will hereafter be convinced that there is a shortage of ac­ passed upon by the collectors; the countants of a type essential to proper Commissioner suggested that full conduct of the industrial war effort, a consideration be given to conditions directive to the state directors of selective now existent and that sixty-day ex­ service may be issued, suggesting that tensions be granted where justified. essential individuals falling in this category be permitted to remain in a status where The Institute relayed the informa­ tion by wire to all state society and their accounting experience can be of the ut­ chapter presidents, and by postcard most effectiveness and value to the country. to its members. The return of power to grant ex­ tensions to the collectors followed Proposed financial reporting forms to be weeks of discussion and correspond­ used by the Office of Price Administration ence between the chairman of the as a means of learning current trends in Institute’s committee on federal revenues, expenses, and profits in various taxation and representatives of the industries were the subject of a meeting Treasury Department. last month of representatives of the In­ stitute’s committees on war activities and 1 2 The Certified Public Accountant

display advertising managers of the New Me e t in g o f Co u n c il York papers, and in every instance has been met with a cooperative attitude. These The spring meeting of council will managers have promised to remove ac­ be held in New York on May 11 and counting firms from their prospect lists. 12, 1942. Provision has been made to Individual members of the profession, and continue the meeting for a third day officers of state societies and their chapters if the business to come before the no doubt will find opportunity for similar council demands it. As in the past, missionary work in other cities. the Advisory Council of State Society Presidents and the chairmen of all Procurement of Office Supplies Institute committees will be invited by Accountants to attend. Some accountants foresee difficulty in procuring paper, carbon paper, typewriters, Through arrangements made with the typewriter ribbons, Ditto Machine fluid and Institute’s speakers bureau, Professor Perry other office supplies. It has been suggested Mason, University of California, spoke on that the Institute should attempt to obtain “Occupational Opportunities in the Field a priority rating for all public accountants of Accounting” at a meeting in San Fran­ in order to facilitate acquisition of such cisco on February 20th of the National supplies. Vocational Guidance Association. Investigation through the Institute’s counsel in Washington reveals that paper, Accountants Asked to Advertise carbon paper, typewriter ribbons and other ordinary office supplies are not at present The American Institute has been in­ subject to priority but may be obtained to formed that a number of accounting firms the extent that they are available. There is in New York City have been approached by a growing shortage of paper of the better daily newspapers with an advertising pro­ grades. This is caused by the diversion to posal in connection with sale of defense war use of certain chemicals such as chlorine bonds. Briefly, the proposition is that firms which are needed in the manufacture of whose employees have agreed to buy bonds high quality paper and also to the increasing on the salary-deduction plan pay for the demands of government agencies for paper listing of their names in special cooperative of this type. The result is that manu­ advertising displays. facturers and distributors must allocate Several firms have called the Institute the available supply among their regular and asked for suggestions as to the best customers as equitably as possible. Those thing to do when such advertising proposal whose full requirements cannot be met must is received. They have been advised that, satisfy themselves with paper of lower despite the fact the advertising displays are quality. linked with a worthy and patriotic purpose, Section 944.14 of Priorities Regulation inclusion of their names is believed to be in No. 1 prohibits the acceptance of any ma­ conflict with the spirit of the American terial if the inventory of such material held Institute rule against advertising. by the person accepting delivery will by. Undoubtedly, this cooperative adver­ virtue of such acceptance become in excess tising effort, which originated with a New of the practicable minimum working in­ York newspaper, will extend to other cities. ventory reasonably necessary to meet It is suggested that the best way to answer deliveries of the products of the person similar solicitations is to state that partici­ accepting delivery on the basis of his current pation in such displays is forbidden under method and rate of operation. While pro­ the Institute rules. fessional work done by accountants may The staff of the American Institute has not strictly be “deliveries of their prod­ brought this question to the attention of ucts,” professional men are considered as The Certified Public Accountant 3 within the terms of this order. Accountants should not therefore make purchases of Reg io n a l Co n feren ce materials beyond their reasonable require­ ments. The penalty would probably be The Pacific Coast Accounting Con­ denial of any further assistance in securing ference will be held May 27th to 29th goods. at Portland, Oregon. Sponsors are Preference ratings are now needed to state societies of California, Oregon, acquire substances like Ditto Machine fluid and Washington; the Institute is co­ because they contain chemicals or other operating in the arrangements. materials which are needed for war effort. Typewriters and other business machines will probably soon be the subject of a limita­ tion and will advise the membership of tion order, in which event persons not further developments. having priorities must be content with repaired and second hand machines, as in National Defense the case of tires. Supplementing the lists of members and At the present time it does not appear associates serving in defense capacities pub­ that there is any reasonable basis for apply­ lished in earlier issues of this bulletin is the ing for a general priority for public ac­ following name: countants, inasmuch as most supplies Perry Mason—Regional accountant, Office needed by them are at present available. of Price Administration, San Francisco. Nor is it likely that any general priority can ever be obtained for public accountants Activities of Officers since their relation to the war effort varies as among accountants. Some may be work­ P r e s i d e n t B e c o m e s N a v a l O f f i c e r ing on matters directly related to war pro­ Norman Loyall McLaren, president of duction but others may not. the American Institute of Accountants, was At the present time if accountants need commissioned last month as a commander, any materials for which they are told that a United States Naval Reserve, and assigned preference rating is necessary, applications to the Bureau of Supplies and Accounts. therefor should be made on Form PD-1A. He will be stationed at Washington, D. C. Whether" or not the application will be The rank of commander is the highest com­ granted will depend upon the showing made mission in the Reserve available to civilians; as to the necessity for the material and the it is attainable only by individuals of na­ relation of the application to the war effort. tional prominence. An accountant, for example, might state V i c e P r e s i d e n t A d d r e s s e s N e w C.P.A.’S that he was preparing income-tax returns for a company which was engaged in the George Cochrane, vice president of the production of war material and that he American Institute of Accountants, spoke needed the materials in question in order at a meeting of the Philadelphia Chapter, to go on with his work. The Institute has a Pennsylvania Institute, February 17th, at supply of Form PD-1A and will send them which C.P.A. certificates were awarded to to members who need them. more than forty successful candidates at We are told that WPB plans to form a the Pennsylvania C.P.A. examinations. service branch which will have the special Total attendance at the meeting was over problem of helping various groups including one hundred. Mr. Cochrane’s topic was accountants. Such a branch could be of “The Past, Present and Future of the assistance to accountants in obtaining new Accounting Profession.” He stressed the materials where such acquisition is con­ fact that changing economic and social sistent with the war effort and in finding conditions had resulted in rapid and funda­ secondhand materials where that seems mental changes in the philosophy of audit­ more beneficial to the general interest. The ing and accounting; that this process had Institute will keep in touch with the situa­ by no means been completed; and that the 4 The Certified Public Accountant

new certified public accountants were chal­ Federal taxation will be the subject of the lenged to participate in maintaining the Wednesday morning session. A representa­ high status which accountancy had reached. tive of the Treasury Department will be invited to present a paper. The chairman of Bankruptcy Conference the Institute’s committee on federal taxa­ Committees tion will present a report of the committee’s activities. A series of brief, intensive tech­ Charles S. J. Banks, of Chicago, and nical studies on selected phases of federal Arthur C. Upleger, of Texas, have been taxation will be presented. appointed, respectively, to the special com­ On Wednesday afternoon there will be a mittee on reorganizations, corporate and general session on auditing. The following railroad, and the special committee on subtopics will be dealt with: auditing creditors and arrangements with creditors standards, accountants’ liability, experience of the National Bankruptcy Conference. in converting clients to the natural business Mr. Upleger urges any member with ques­ year, interim work on inventories and re­ tions to submit them so that they may be ceivables, use of clients’ staff, and internal- brought to the attention of the committee control questionnaire. chairmen. At the Thursday morning session a promi­ Annual Meeting nent speaker will present a paper following the business meeting and selection of the The committees on technical sessions and 1943 annual-meeting place. annual meeting met on consecutive days On Thursday afternoon there will be four with the secretary and the assistant secre­ round-table sessions held simultaneously. tary of the Institute in Chicago last month Every opportunity will be given to those to outline plans for the Institute’s 1942 who attend the meeting to raise questions or annual meeting, to be held at the Palmer express their views on subjects under con­ House, Chicago, September 28th to October sideration. No stenographic record will be 1st. The four-day meeting will follow closely made of these sessions. Speakers who pre­ the pattern that was so favorably received sented papers at earlier sessions will be at Detroit last year. invited to be present and answer questions Monday will be given over to meetings of related to their papers. Following are the council, Advisory Council of State Society general subjects of the four round tables: Presidents, and Association of Certified How much test checking is enough? ac­ Public Accountant Examiners. A one-hour counting for war reserves; tax accounting; “intellectual cocktail” session (similar to defense accounting. the session on better English at the Detroit From month to month progress on ar­ meeting) will be arranged for 4:00-5:00 rangements will be announced in T h e P.M., Monday. In the evening a question- C e r t i f i e d P u b l i c A c c o u n t a n t . box session will be held in the main ballroom. A.M.A. Finance Conference At the general session on Tuesday a Present-day problems of financial man­ paper on economic and social changes dur­ agement will be the theme of the annual ing and after the war will be presented by finance conference of the American Manage­ a nationally prominent speaker. ment Association at the Hotel New Yorker, The general session on Tuesday afternoon New York, on March 24th and 25th. On the will deal with technical accounting prob­ morning of the 24th, Walter A. Cooper, lems arising from the war. One hour of this chairman of the Institute’s committee on session will be devoted to papers on control federal taxation, will discuss “Tax Aspects of government expenditures. Two hours will of Depreciation, Amortization, and Ob­ be devoted to war accounting problems of solescence,” and Robert M. Miller, a tax the client. Tuesday evening committee attorney of Washington, D. C., will speak clinics will be held, at which members may on “Probable Long-range Effects of Cur­ bring questions for informal discussion. rent Taxation Policies.” In the afternoon, The Certified Public Accountant 5

Harry E. Howell, a member of the Institute Election of Members and president of the National Association of Cost Accountants, will give an address A d v a n c e d t o M e m b e r s h ip entitled “The Financial Executive’s Job W. Charles Butscher, Philadelphia, Pa. Richard R. Cole, Los Angeles, Calif. under War Conditions.” J. Edwin Hanson, Kansas City, Mo. On Wednesday afternoon, March 25th, Edgar B. McDaniel, Jr., Dothan, Ala. Walter A. Staub, chairman of the Insti­ J. Donovan Ready, Meridian, Miss. tute’s committee on accounting procedure, Philip J. Taylor, Philadelphia, Pa. will discuss accounting for special reserves A d m it t e d a s M e m b e r s arising out of the war. Alvin R. Almquist, New York, N. Y. John L. Badeau, Birmingham, Ala. State Legislation H. I. Barclay, Jr., Birmingham, Ala. Virginia House bill 365 would define Garnett W. Barfield, Los Angeles, Calif. the “ equivalent” of public accounting ex­ Max Block, New York, N. Y. Lawrence E. Borland, Detroit, Mich. perience required of candidates for the Joseph H. Bridge, St. Louis, Mo. certified public accountant certificate. The Charles Ward Cheney, Boston, Mass. present Virginia accountancy law permits William H. Dongan, New York, N. Y. the board of accountancy to issue certifi­ Ralph R. Genter, Detroit, Mich. Morris M. Goldberg, New York, N. Y. cates to persons who have passed the writ­ Herbert E. Gouldman, Norfolk, Va. ten C.P.A. examination and, in addition to Sol Haas, New York, N. Y. meeting other qualifications, have for at Romey N. Hallman, Memphis, Tenn. least two years prior to application been William W. Head, Anchorage, Alaska Joseph H, Hecht, Philadelphia, Pa. engaged in practice as a public accountant Theodore Herz, Kansas City, Mo. or employed on the staff of a certified public James A. Jackson, Rochester, N. Y. accountant or, in the opinion of the board, S. Lloyd Jones, New York, N. Y. have had “ equivalent” experience. Neither David Kestenbaum, New York, N. Y. Harry Klein, Boston, Mass. the accountancy law nor the board rules Benjamin L. Landsberg, Baltimore, Md. define “ equivalent experience.” The bill is James Little, Cleveland, Ohio sponsored by candidates who have passed Percy Love, Pittsburgh, Pa. the C.P.A. examinations but are not en­ Loy Joseph Lucia, Chicago, Ill. Charles DeMotte McDaniel, Chicago, Ill. gaged in public practice. The bill passed in James P. Miller, Pulaski, Va. the House and Senate and has gone to the Paul S. Nutting, Manchester, N. H. Governor for approval. Thomas P. O’Connor, New York, N. Y. Charles A. Pfahler, Philadelphia, Pa. Examinations Louis J. Portnoy, Detroit, Mich. Spring examinations of the American In­ James Pottinger, Royal Oak, Mich. Frank K. Ralston, Philadelphia, Pa. stitute of Accountants will be held May Victor M. Schneider, New York, N. Y. 14th and 15th; cooperating state boards of James H. Sibbison, Cleveland, Ohio accountancy will hold simultaneous ses­ Thomas E. Stanley, Denver, Colo. sions. Following is the schedule: Edwin H. Stevens, Rochester, N. Y. William L. Stewart, Detroit, Mich. Thursday, M ay 14, 1942 O. V. Stovall, New Orleans, La. 9:00 a . m . to 12:30 p .m . Auditing. William A. Swift, New York, N. Y. 1:30 to 7:30 p . m . Accounting t h e o r y and Elton B. Taylor, Charlotte, N. C. practice. Part I. Harry G. Thomas, Philadelphia, Pa. Wayne S. Traer, Atlanta, Ga. Friday, M ay 15, 1942 John B. Waller, Dallas, Texas 9:00 a .m . to 12:30 p .m . Commercial law. Thomas H. Watkins, Atlanta, Ga. 1:30 to 7:30 p . m . Accounting theory and John F. Waymouth, Baton Rouge, La. practice. Part II. Frank Wheatley, Pittsburgh, Pa. William B. Zellmer, Milwaukee, Wis. Territorial Board Harry C. Zug, Philadelphia, Pa. W. R. Bjorneby, of Ketchikan, Alaska, A d m it t e d a s A s s o c ia t e s was appointed Nov. 11, 1941, a member C. Leroy Austin, Detroit, Mich. of the Territorial Board of Accountancy, Albert D. Battisti, New York, N. Y. Alaska, by Governor Ernest Gruening. Bernard D. Beckerlegge, Los Angeles, Calif. 6 The Certified Public Accountant

George D. Billock, Pittsburgh, Pa. of Ernst and Ernst, and in 1919 became Irvin W. Carpenter, Washington, D. C. resident partner in charge of the Buffalo, Lyle A. Clampett, Seattle, Wash. Francis D. Cooley, Los Angeles, Calif. New York, office, where he remained until Edward J. Cooper, New Haven, Conn. the time of his death. He was a certified Eleanor L. Craig, Columbus, Ohio public accountant of New York and Ohio, Walter H. Crim, Seattle, Wash. and a member of the New York State So­ Guy E. Dance, Jr., Fort Worth, Texas Christopher C. Denman, Wilmington, Del. ciety of Certified Public Accountants. He John A. Doelle, Detroit, Mich. had been a member of the American Insti­ Emerson E. Downing, Washington, D. C. tute of Accountants since 1936. Charles L. Fletcher, Chicago, Ill. Robert E. Franck, San Francisco, Calif. L. A. Garner, Oklahoma City, Okla. Bonds = Bombers Harold H. Garr, Oklahoma City, Okla. Ninety per cent of the Institute’s staff has Kenneth D. Gillanders, Portland, Ore. authorized the voluntary payroll-deduction George W. Green, Los Angeles, Calif. plan for the purchase of defense bonds. Visitors at Institute Offices Señor Affonso Henriques dos Santos Correa, STATE SOCIETY NEWS Rio de Janeiro, Brazil, S. A. J. N. Aitken, Jr., Philadelphia, Pa. Possibility of obtaining 60 or 90 day Martin Lee Black, Jr., Durham, N. C. draft deferments for public accountants now W. H. Blake, Chicago, Ill. in class I or I-A was the subject of a bulletin R. E. Eckert, New Haven, Conn. mailed January 19th to members of the Stephen Gilman, Chicago, Ill. Michigan Association by Arnold Barrett, Eugene F. Kenna, Rahway, N. J. president of the Association, and Ray C. Edward J. McDevitt, Jr., Boston, Mass. L. Nearberg, Suffern, N. Y. Lynn. The bulletin reports the State Ad­ Louis A. Searson, Columbia, S. C. visor on Occupational Deferments as stating that it would be reasonable to request Obituaries deferment for certain essential men to Thomas C. McNeill, of Wichita, Kan­ carry them through the accountants’ busy sas, died early in December, the Institute season. The advisor recommended that has just been informed. Mr. McNeill was requests, setting forth the facts in each born in Edinburgh, Scotland, in 1890, and individual case, be sent to the local boards, attended high school and college there. He and that they contain a statement along the came to America in 1912, and until 1933 following lines: “We suggest that if you held accounting positions with various determine tentatively that the deferment firms. From 1933 to 1938 he practiced ac­ sought cannot be granted, you confer with counting in England; then returned to this the Advisor on Occupational Deferments at country and joined the staff of Haskins & State Headquarters before reaching a final Sells, at Dallas, Texas, as senior account­ decision.” ant. At the time of his death Mr. McNeill A suggestion received from an accountant was with the Beech Aircraft Corporation, in active service that army clubs and social Wichita, Kansas. He was a certified public centers be audited by certified public ac­ accountant of Texas and a member of the countants without compensation was con­ Texas Society of Certified Public Account­ tained in a letter mailed by Abner J. Starr, ants, and had been a member of the Ameri­ chairman of the advisory council of state can Institute of Accountants since 1923. society presidents, to the presidents of all societies on February 16th. William H. Wilson, of Buffalo, New The first issue of The Ohio Certified Public York, died February 11th. Mr. Wilson was Accountant, the attractively revised bul­ born in Fredericktown, Missouri, in 1891. letin of the Ohio Society, was published He was graduated from the William Jewell in January, 1942. The magazine will hence­ College at Liberty, Missouri, in 1912, with forth be issued quarterly. Professor W. E. the A.B. degree. In 1914 he joined the staff Dickerson, of Ohio State University, is The Certified Public Accountant 7 editor; Dr. Viva Boothe, director of the accurate accounting on the part of those University’s bureau of business research, entrusted with the administration of gov­ will prepare for each issue an article on ernment contracts is deserving of the ap­ business conditions in Ohio. preciation of all thoughtful citizens upon whom will rest the burden of paying for Accounting research bulletins Nos. 13 needless waste and ill advised expenditures.” and 14, statement on auditing procedure No. 9, and the Securities and Exchange Pensions and Rate of Pay Commission’s accounting series releases Nos. 28, 29, and 30 were called to the atten­ Contributions by an employer to pension, tion of members of the Minnesota Society annuity, and similar plans for the benefit in a special bulletin dated February 4th. of his employees need not affect the em­ The bulletin briefly described these items ployee’s regular rate of pay on which over­ and also referred members to several time is computed, according to a statement articles on the last-in, first-out inventory of Thomas W. Holland, Administrator of method which were published in The Jou r­ the Wage and Hour Division, U. S. Depart­ nal and elsewhere. ment of Labor, on February 12th. The In The Spokesman, official organ of the statement in part was as follows: Pennsylvania Institute, for January, there is quoted an article by John H. Zebley, “ It is our opinion that provided certain Jr., president of the Pennsylvania Insti­ conditions are met, the amount of any pay­ ment by an employer on behalf of his tute, which appeared originally in The employees generally or for a class or classes Philadelphia Inquirer on January 2nd. A of his employees on account of the following portion of that article follows: types of plans need not be reflected in regular rate of pay computations: “ For more than a year the certified public accountants not only of Pennsylvania 1. Retirement, annuity, or pension plans but throughout the nation have been active 2. Sickness or accident-disability plans in various phases of work related to national 3. Medical and hospitalization plans defense. However, with the outbreak of 4. Death-benefit plans ‘total war’ the need for men with the inten­ sive training and breadth of experience The conditions which must be met are: such as can be obtained only in the practice (1) The employee must not have the option of public accounting has increased many to receive instead of the benefits under the fold . . . plan any part of the contributions of the “ No doubt there are some who may employer and (2) the employee must not think it is more necessary to ‘make rifles have the right to assign the benefits or to than to maintain records.’ But with costs receive a cash consideration in lieu of the mounting at an alarming rate and certain benefits either upon termination of the raw materials becoming increasingly more plan or his withdrawal from it voluntarily difficult to obtain, even for war uses, the or through severance of employment with recognition of the need for careful and the particular employer.” Announcements

The following firm announcements have recently W il l ia m F. L o f l in , Georgia; “ Revenue Act been received from members of the Institute. of 1941” ; Associated Credit Managers, Colum­ R o b e r t B . H a w t h o r n a n d J o h n F . W a y ­ bus, Ga. m o u t h announce the formation of a partnership I. B. M c G l a d r e y , Iowa; “ War, Taxes and under the firm name of Hawthorn, W aym outh & Freedom” ; Conopus Club of Cedar Rapids, and Company, with offices at 516 Florida St., Baton High Twelve of Cedar Rapids. “ Accounting, R o u g e , L a . Taxes and W ar” ; Nebraska Lumbermen’s Asso­ The firm of I r g a n g & R u b in has been dis­ ciation, Omaha. “ War and Taxes” ; Lions Club solved as of February 28, 1942. Mr. Carl Irgang of Marion, Iowa. will continue the independent practice of public L e o n a r d P a r k , Ohio; “ Federal Income Taxes ” ; accountancy at the same address, 51 Chambers Sales Managers Club, Cleveland. St., New York, N. Y. N o r m a n E. S c h l e y , Wisconsin; “ Government O. C. M o o r e announces the opening of an of­ Debt and Taxation” ; Rotary Club of Edgerton, fice at 808 Mills Bldg., El Paso, Texas. Wis. “ Your Income T ax” ; Kiwanis Club of M o u n t & C a r t e r announce transfer of Boston Waukesha, Wis. office from 1 Federal St. to 161 Devonshire St. J. S. S e i d m a n , New York; “ 1941 and 1942 In­ S t a n l e y S p u r r i e r , A l b e r t R. W o o d , a n d come and Excess Profit Taxes” ; Pace Alumni R o b e r t D. B e n s o n announce the formation of a Association, New York. partnership under the firm name of Spurrier, L a w r e n c e J. S e i d m a n , Illinois; “ Federal In­ Wood & Benson, with offices i n th e Wolcott come and Excess Profits Taxes— Present and Bldg., Hutchinson, Kan. Future” ; Hardwood Plywood Institute, Chicago. W il l ia m F. Sh o r s , Rhode Island; “ Income Taxes— Today and Tomorrow” ; Rotary Club of The following addresses have been delivered re­ Providence. cently by members of the Institute before the organ­ E u g e n e S. S o l o w a y , Ohio; “ The Revenue izations mentioned. Act of 1941 and the Individual” ; Alpha Sigma M. J. B o e d e k e r , New York; Participant in Iota Fraternity, Cleveland. symposium on “ Women’s Wartime Contribution E d w a r d P. T r e m p e r , J r . , Washington; to Office Work” ; Pace Institute, New York. “ Revenue Act of 1941 ” ; Quest Club of Seattle. W a l t e r A. C o o p e r , New York; “ New Capital A. C. U p l e g e r , Texas; “ Aspects of 1941 In­ under the Revenue Act of 1941 ” ; New England come Tax Laws” ; Rotary Club of Waco, and Control, Controllers Institute of America, Boston. Rotary Club of Temple. “ Accountancy in W ar” ; A. R. Cox, Ohio; “ Day After Tomorrow” ; Advanced Class of Texas A & M College, College Lions Club, Cadiz, Ohio. Station, and Delta Sigma Pi Fraternity of Baylor University, Waco, Texas. Jos. G. D i n g l e , Illinois; “ Income Taxes” ; Adults Agriculture Class, High School of Seneca, O. V. W a l l i n , Pennsylvania; “ Operating Ill., and of Morris, Ill. Standards for a Retail Lumber Yard” ; North­ A. J a m e s E b y , Pennsylvania; “ Standard eastern Retail Lumbermen’s Association, New Costs” ; Accountants Club of Rider College, York. Trenton, N. J . “ Income Tax, and What To Do About I t” ; Civitan Club, Trenton. Lt. Commander L e w is G l u i c k , Wisconsin; “ Federal Income Taxation of Military Pay and The following books and articles by members of Allowances” ; Reserve Officers Association, the Institute have appeared recently. Manitowoc, Wis. R o y a l D . M. B a u e r , Missouri; A n Outline of P a l m e r J o h n s o n , Montana; “ Credit— Its Elementary Accounting, published by Barnes & Uses and Its Abuses” ; Lions Club of Billings, Noble, Inc. Mont. W a l t e r A. C o o p e r , New York; “ New Capital J o s e p h J. K l e i n , New York; “The Credit under the Revenue Act of 1941 ” ; The Controller, Grantor’s Interest in Taxation” ; New York February, 1942. Credit Women’s Group of New York Credit Jos. G. D i n g l e , Illinois; “ Taxes— 1942 Style ” ; Men’s Association, New York. American Artisan, January, 1942. 8 The Certified Public Accountant 9

G e o r g e H. K in g s l e y , New York; “ Corpora­ A. G . C l a u so n , New York; appointed to local tions Improperly Accumulating Surplus and Its draft board No. 294, Staten Island, N. Y. Effect on the Balance-sheet” ; RobertMorris Asso­ J . H . G o o d w in , J r ., New York; appointed ciates Monthly Bulletin, February, 1942. member of National Association of Manufac­ J o s e p h J . K l e i n , New York; Feature inter­ turers committee on government finance, view on Lifo inventorying; New York Times, Tonawanda, N. Y. February 15, 1942. U r b a n S. G r e e n e , New York, elected presi­ I. H. K r e k s t e i n , Pennsylvania; Corporate dent of the Binghamton Kiwanis Club for the Taxation and Procedure in Pennsylvania, vol. 2, year 1942. published by Commerce Clearing House, Inc. R u s s e l l C. H a r r in g t o n , Rhode Island, W. W. L it t l e jo h n , Mississippi; “ Making In­ elected president of the Providence Chamber of come Tax Returns” ; bulletin published by Commerce; also appointed chairman of local Tire Business Research Station of Mississippi State Rationing Board. College to aid taxpayers. H. I. M a c L e a n , Pennsylvania; appointed to I. B. M c G l a d r e y , Iowa; “ Iowa Regulatory nominating committee of Eastern Association Accountancy Law” ; Journal of Business, Febru­ of College and University Business Officers; ap­ ary, 1942. pointed to committees on education, and tech­ C h a r l e s M e l v o in , Illinois; “ Tax Status of nical information and research, Controllers’ Stock Dividends” ; Chicago Sun, February 15, Institute. 1942. E r n e s t G . M a ih a c k , New Jersey; appointed M a r y E. M u r p h y , New York; “ The Profes­ general chairman for Defense Bonds and Stamps sion of Accountancy in England”; monograph throughout Kenilworth and Roselle Park, N. J.; published by American Accounting Association, also chairman of committee to coordinate hos­ February, 1942. pitality and entertainment through Union County for men in service. M a u r ic e E. P e l o u b e t , New York; “ Inven­ tories and Income”; Robert Morris Associates I. B. M cG l a d r e y , Iowa; appointed member Monthly Bulletin, February, 1942. “ Trends in of board of directors, Y.M.C.A. of Cedar Rapids. Accepted Accounting and Their Relation to Cost C h a r l e s M e l v o in , Illinois; appointed in­ Accounting” ; N.A.C.A. Bulletin, February 15, come-tax editor of The Chicago Sun. 1942. E d w a r d N e id e r , New York; appointed by F l o y d J. S w in g l e , Oklahoma; Simplified In­ Mayor Joseph J. Kelly as director of the budget come Tax Manual; Gardner-Shea Publishing Co., for the City of Buffalo. Oklahoma City, Okla. G e o r g e S. O l i v e , Indiana, elected second vice F. M. T h u d so n , New York; “ How Budgets president of the Indiana State Chamber of Com­ Control Costs at the Waldorf-Astoria” ; Hotel merce; elected vice president of Indianapolis Management. Chamber of Commerce; appointed chairman Red A. H. R o s e n k a m p f , New York, is co-author of Cross War Fund Campaign, Marion County Theory of Accounts, published by the New York ($350,000 quota). University Press. W. F. G. Ross, Illinois; reappointed vice chairman of the accountants’, auditors’ and ap­ praisers’ committee of the Chicago Association E l l io t t D. A d a m s, Tennessee; appointed of Commerce. captain of Organized Machine Gun Company, P. K. S e id m a n , Tennessee, appointed to Tennessee State Guard. U.S.O. Permanent Organization Board of Direc­ M i l l e r B a il e y , Missouri; appointed member tors. of the civilian defense board of Mission Township O t t o A. S h u l t s , New York, elected treasurer of Johnson County, Kansas. of the Rochester Business Institute Alumni As­ W a r r e n E . B a n k s , Arkansas, appointed sociation. auditor for the 1942 Campaign of the Community J. R a l p h T o e p f e r , New York; appointed Chest and Council of Hot Springs, Ark. general chairman of local committee, Municipal S a m u e l I. B e n d e t , New Jersey; appointed by Finance Officers’ Association convention, June New Jersey State Board of Public Accountants 22-25, 1942, at Buffalo. to the committee on character and fitness for G e o r g e C. W il l ia m s , New York; elected Essex County. trustee of the American University, Washington, C h a r l e s S. C h a p in , Wyoming, elected presi­ D. C. dent of Central Wyoming Council of Boy Scouts E r n e s t E . W o o d e n , Maryland, elected presi­ of America. dent of Rotary Club of Baltimore. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

AMERICAN INSTITUTE OF ACCOUNTANTS LIBRARY April 1942

State Legislation

Calendar of Events

Activities of the Month

Natural Business Year Pamphlet

Cooperation with Bankers

Election of Members

State Society News

15¢ a Copy Published Monthly $1 a Year

V o l . 22 No. 4

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authorities, business­ men, and others.

Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢ ) Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred— 35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢

Auditing Examination of Financial Statements by Independent Public Accountants...... 15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢

Taxation A Sound Basis for Taxation — By Walter A. Cooper...... 10¢ (Orders for more than 25 copies, 5¢ a copy)

Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Refunded . 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢

Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination...... 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “ Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “ Accountants’ Certificates” (continued).. 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies.. 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon...... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar In­ vestments under the Investment Company Act of 1940...... 10¢ American Institute of Accountants

Activities of the Month funded,” with special reference to income- tax savings. The letter to Selective Service head­ A number of comments on statements quarters, submitted by committees of the made in Samuel J. Broad’s paper, “ Audit­ Institute and the National Association of ing Standards,” which was presented at the Cost Accountants, which was reprinted in Institute’s 1941 annual meeting, dis­ the April Journal of Accountancy, was the tributed to presidents of state societies and subject of further discussion at a conference members of council, and published in the with a Selective Service official at Washing­ December, 1941, issue of The Journal, are ton March 27th. Final action is expected now being considered by the committee on soon. The Institute’s representatives were auditing procedure, which held an all-day Carman G. Blough, chairman of a spe­ meeting on March 31st. The following were cial committee, and the secretary of the present: Samuel J. Broad, chairman, Perci­ Institute. val F. Brundage, Fred J. Duncombe, They will attend a meeting of the Con­ George P. Ellis, P. W. R. Glover, George necticut Society of Certified Public Ac­ Wagner (representing Paul K. Knight), countants April 23rd, at which policy on Edward A. Kracke, John A. Lindquist, deferment of members of the accounting Frank Wilbur Main, Victor H. Stempf, profession will be discussed. John L. Carey, secretary, Victor Z. Brink, assistant to the committee.

Contemplated revisions in the uniform At a meeting of the executive committee system of accounts for public-utility hold­ on April 6th at the Institute offices, activi­ ing companies, proposed by the Securities ties relating to the war effort and routine and Exchange Commission, have been re­ business were discussed. This was the first ferred to the Institute’s committee on meeting of the committee since January. accounting procedure for review and The following were present: Commander comment. Norman Loyall McLaren, president; C. Accounting treatment of stock options Oliver Wellington, George Cochrane, vice issued to officers and employees is being president, George S. Olive, vice president, considered by a newly appointed sub­ T. Coleman Andrews, George D. Bailey, committee of the committee on accounting Clifton H. Morris, Victor H. Stempf, John procedure, consisting of Arthur B. Foye, L. Carey, secretary. chairman, George D. Bailey, and Warren W. Nissley. The committee on federal taxation met A report on the definition and classifica­ on March 23rd for a final review of the sub­ tion of surplus accounts is being drafted by ject matter to be covered by the commit­ the subcommittee on surplus of the com­ tee’s recommendations on proposed new mittee on accounting procedure for possible tax legislation under the consideration of presentation to the full committee. Congress. The meeting, which lasted from The practice of accounting for sinking- shortly after two in the afternoon until fund requirements under bond indentures is nearly two o’clock in the following morning, being studied by the research department followed voluminous correspondence among of the Institute. This department is also the committee members during the past considering possible revision of Research few months. Those present at the meeting Bulletin No. 2, “ Unamortized Discount and were: Walter A. Cooper, chairman, William Redemption Premium on Bonds Re­ R. McNamara, Leslie Mills, all of New

1 2 The Certified Public Accountant

ico, Wyoming, Utah, Montana, and MEETING OF COUNCIL Idaho). The spring meeting of council will Edward A. Dinkelspiel—Major, United States Army, Camp Bowie, Texas. be held in New York on May 11 and 12, 1942. Provision has been made to D. F. Houlihan—Director of fiscal affairs, War Shipping Board, Washington, D. C. continue the meeting for a third day if the business to come before the council demands it. As in the past, the Activities of Officers Advisory Council of State Society and Members

Presidents and the chairmen of all S p e a k e r s Institute committees will be invited On March 24th and 25th Walter A. to attend. Staub, chairman, committee on accounting procedure, and Walter A. Cooper, chair­ man, committee on federal taxation, spoke York; John A. Conlin, Newark, New before the American Management Associa­ Jersey; John D. Filson, Chicago; Troy G. tion’s finance conference on “Accounting Thurston, Indianapolis; Clarence L. Turner, for Special Reserves Arising out of the War” Philadelphia. and “Tax Aspects of Depreciation, Amor­ tization, and Obsolescence,” respectively. The board of examiners, at an all-day Victor H. Stempf, a member of the In­ meeting on March 30th, gave final ap­ stitute’s executive committee, spoke on proval to the problems and questions for the March 20th before the Professional Ac­ May examinations. Winners of Elijah Watt counting Society of Columbia University Sells awards in the November examina­ on accelerated depreciation; James L. tions, whose names appear on page 6, Dohr, research director of the Institute, were announced. The following members of spoke on the education of the internal the board were present: John H. Zebley, Jr., auditor before the Institute of Internal chairman, Harold R. Caffyn, J. William Auditors at the Williams Club, New York, Hope, Norman J. Lenhart, Henry E. on March 24th. The secretary of the Ameri­ Mendes, George E. Perrin, Hiram T. Sco­ can Institute of Accountants attended both vill, Norman E. Webster, John L. Carey, these meetings. secretary, H. T. Winton, assistant secretary. On April 13th the secretary of the In­ The Institute’s speakers bureau ar­ stitute spoke on the use of accountants in ranged for H. T. Winton, assistant secre­ war, at a meeting of the New York State tary of the Institute, to address the Ac­ Society held at the Waldorf-Astoria Hotel, counting Society of the College of the City New York. of New York, March 26th, on “The Role of the Accountant in Wartime.” On March Visitors at Institute Offices 9th Mr. Winton spoke on “ Professional Accounting Societies” before the Account­ in March ing Club of New York University. James W. Crenshaw, San Antonio, Texas Homer L. Dalton, Toledo, Ohio Members of the Institute C. R. Funnell, Mamaroneck, N. Y. Prof. Harold M. Heckman, Athens, Ga. Engaged in War Activities George F. Heller, Chicago, Ill. Supplementing the lists of members and E. C. Johnston, Montreal, Canada Maxwell E. Lerner, Hartford, Conn. associates serving in war capacities pub­ Gerald E. Martin, Halifax, Canada lished in earlier issues of this bulletin Merrill C. Patten, Greenville, S. C. is the following: Charles A. Pertain, Westfield, N. J. Clem W. Collins—Regional director, Office John S. Roth, Hartford, Conn. of Price Administration, for the Rocky W. A. Smyth, Montreal, Canada Mountain region (Colorado, New Mex­ J. Harold Stewart, Boston, Mass. The Certified Public Accountant 3

Committee Appointment Last month Francis Small, of Phila­ SALVAGE FOR VICTORY delphia, was appointed a member of the The secretary of the Institute has Institute committee on cooperation with the recently received a letter from Eric Securities and Exchange Commission. H. Marks, general salvage section, Bureau of Industrial Conservation, Natural Business Year Pamphlet War Production Board, asking that To assist certified public accountants in accountants throughout the country presenting the advantages of the natural be urged to join a “Salvage for Vic­ business year, and in securing its adoption tory” program by selling to junk by their clients, the Institute this month dealers, who will in turn sell to the published a pamphlet entitled “The Natu­ government, all scrap paper from ral Business Year — Its Advantages to obsolete records, old bulletins, out­ Business Management.” dated reference material and needless Prepared under the supervision of the newspaper files, scrap metal from Institute’s committee on public informa­ seals, binders, discarded or broken tion, this booklet is written so simply and office equipment, and rubber from old concisely that it can be read from cover to erasers, rubber bands, or mats from cover in a few minutes. It can be mailed in typewriter desks and chairs. a standard-sized envelope at the minimum rate of postage. The text explains advantages of the State Department Regulations natural business year from the point of view of the business executive, shows how on Audits to determine the natural fiscal year for an Revision of regulations issued by the enterprise and provides a simple chart for State Department regarding audits by this purpose; it describes requirements in certified public accountants of organiza­ changing from the calendar-year to the tions collecting contributions for use in for­ natural-business-year basis of accounting, eign countries was recently suggested to cites endorsements of the natural-business- A. A. Berle, Jr., Assistant Secretary of year principle, and includes a list of sug­ State, by John L. Carey, secretary of the gested fiscal closing dates. American Institute, following informal dis­ It is expected that copies of this pam­ cussions among George Cochrane, vice phlet will be widely circulated by state president, C. Oliver Wellington, member societies of certified public accountants of the executive committee, and State De­ among their members, nonmember ac­ partment representatives. countants in the state, business executives, One suggestion is that the period within attorneys, bankers, credit men, chambers which such audits must be submitted be of commerce, the press, and others who extended from 15 to 30 days, because of the may be interested. A suggested distribu­ great difficulty of completing the work re­ tion plan has been submitted to all state quired in a shorter period. Another pro­ society presidents. poses omission of the requirement that the Sample copies have been sent to all In­ audit be “sworn to by the certified public stitute members and associates. Larger accountant” because it is inconsistent with quantities can be secured from cooperating current practice and is not included in reg­ state societies (or from the Institute), ulations of other government departments at a price of two dollars and a half a hun­ and agencies. dred in quantities up to five hundred and On March 26th, Assistant Secretary Berle at two dollars a hundred for larger acknowledged these suggestions and gave quantities. Pamphlets distributed by a state assurance that they would be thoughtfully society will carry the imprint of the society considered when the regulations were re­ on the front cover. vised. 4 The Certified Public Accountant

Examinations of Accountants, known as the committee on cooperation with bankers, received these ex­ Spring examinations of the American amples and spent several months in reviewing Institute of Accountants will be held May them. As a result it was possible to bring errors in 14th and 15th; cooperating state boards of conception to the attention of both banker and accountant. accountancy will hold simultaneous ses­ “ So successful did this approach turn out that sions. Following is the schedule: from it has sprung two very important results. First and most important has been the cementing T h u r s d a y , M a y 14, 1942 of a friendly understanding and cooperation 9:00 a .m . to 12:30 p .m . Auditing. which has endured for more than twenty years. 1:30 to 7:30 p .m . Accounting theory and These two organizations have approached the practice. Part I. problem of supporting sound and effective ac­ counting in accord and friendship, in an effort to F r id a y , M a y 15, 1942 make complete and accurate accounting the rule, 9:00 a .m . to 12:30 p .m . Commercial law. rather than the exception. 1:30 to 7:30 p .m . Accounting theory and “ The second result was to develop a practice, practice. Part II. by which questioned procedure could be impar­ tially reviewed and explanations or corrective changes in that procedure or the understanding Cooperation with Bankers of it, opened alike to banker and accountant. Working together as mutually respecting and Forty-two questions submitted in ad­ cooperating organizations it has been possible to vance by members of the New York Chap­ effect sound understandings. ter of the Robert Morris Associates were “ Now in this year of 1942 there is a word to say which is important to all of us. An Associate answered by the committee on cooperation may receive a statement which he believes is in­ with bankers of the New York State So­ complete, inaccurate, or needful of closer auditing ciety of Certified Public Accountants at a or clearer exposition. The auditor may be at forum meeting of the bankers’ group in fault, the audit may be imperfect, or the Asso­ ciate may be in error. New York on February 17th. Among the “ Our committee is a medium to review audit questions of particular interest were those faults and, unless easily explainable, present dealing with variations in the wording of them as hypothetical cases to the committee of the independent auditors’ opinions, the the American Institute of Accountants. It is therefore suggested that audits which are deemed last-in, first-out inventory basis, treat­ to be inaccurate, deficient in coverage, or without ment of tax-anticipation notes in the proper qualifications be reported to the head balance-sheet, and the treatment of war office of the Associates in Philadelphia. A full and orders in the financial statements. The complete review will be made and in case of ap­ parently faulty audit the matter will be taken up questions and answers will be reprinted in with the Institute through our committee. By full in the April issue of The New York analyzing faults in audits, or such parts thereof Certified Public Accountant and will be as appear to be faulty, bankers and accountants reprinted later in pamphlet form. cooperatively will evolve a logical and fair con­ sideration and correctives for the general good.” The following statement by Walter J. Delaney, chairman of the Robert Morris State Legislation Associates committee on cooperation with P ennsylvania public accountants, was published in the March issue of the Bulletin of the Robert Pennsylvania Senate bill 45-X, intro­ Morris Associates: duced March 9th and referred to the edu­ “ This committee was first organized in 1920- cation committee, would suspend for the 1921, having as its purpose the study of what duration of the war the requirement for appeared to be faulty auditing procedure. The examinations prior to the licensing of accountants recognized the value of this critical professional men by the Department of but friendly review of their work and welcomed our invitation to survey certain cases. Public Instruction. The Pennsylvania ac­ “ The material, subsequently reviewed, con­ countancy law is under the jurisdiction sisted of a large number of audits which were of the Department of Public Instruction. faulty in one or more particulars. Identifying The Pennsylvania Institute of Certified names, locations, and the like were eliminated from these audits and the faults treated in the Public Accountants is following the prog­ abstract. A committee of the American Institute ress of this bill. The Certified Public Accountant 5

V ir g in ia ceive, and the Board shall forthwith issue to them the certificate of certified public account­ A bill defining the “equivalent” of ant, and any person receiving such certificate public accounting experience required of shall be known and styled as a ‘certified public certain candidates for the Virginia C.P.A. accountant.’ ” certificate was approved by the Governor of Virginia on March 13th. A prior law Election of Members permitted the board of accountancy to Advanced to Membership issue a certificate to any person who had Frederick M . Bruell, New York, N. Y. passed the written C.P.A. examination and, Ellsworth W. Muller, Tulsa, Okla. George B. Talmage, Dayton, Ohio in addition to meeting other qualifications, had for at least two years prior to applica­ Admitted as Members tion been engaged in practice as a public Leslie G. Agasim, Chicago, Ill. Thomas H. Beadles, Decatur, Ill. accountant or employed on the staff of a Anthony A. Belser, Jr., St. Louis, Mo. certified public accountant or, in the Carl H. Bjorkman, Topeka, Kansas opinion of the board, had had “ equiva­ Harold C. Chinlund, New York, N. Y. lent” experience. A candidate with “ equiv­ Wesley DeLong, Muskegon, Mich. Frank J. Dooley, Middlesboro, Ky. alent” experience is defined in the amended James C. Finney, Detroit, Mich. section as one: Harold H. Gilbert, Detroit, Mich. “ who shall have continuously for at least two Graham R. Green, New Orleans, La. years immediately preceding the date of his or Louis C. Grossberg, Washington, D. C. her application been engaged in practice as a Leo G. Harris, Chicago, Ill. public accountant or shall have been employed Ansell G. Johnson, Seattle, Wash. as a staff accountant of a practicing certified Eugene S. Karpus, Detroit, Mich. public accountant, or public accountant, who Huyler L. Lisk, New York, N. Y. shall have been actively employed for at least John McCullough, Detroit, Mich. four years preceding the date of his or her ap­ Harold B. Naramore, New York, N. Y. plication by the United States Treasury Depart­ Cecil L. Paxson, Topeka, Kansas ment as an internal revenue agent; or who shall Lionel C. Peppell, San Francisco, Calif. have been actively employed for at least four Loyd S. Pettigrew, Los Angeles, Calif. years preceding the date of his or her application Elorion Plante, Detroit, Mich. by any federal or state supervisory agency or Henry P. Schlichtmann, New York, N. Y . instrumentality as an auditor or examiner, whose Allan R. Shilts, New York, N. Y. duties entail the audit or verification of accounts D. Nevin Smith, Philadelphia, Pa. and records and the preparation, based thereon, Norval M. Stiers, Indianapolis, Ind. of reports to such agency or instrumentality for Edgar C. Suor, Detroit, Mich. the purposes of supervision or regulation and Earl E. Timm, Saginaw, Mich. provided further that the experience required in Selden K. Williams, Houston, Texas subsection (e) of this section shall include the Robert E. Witschey, Charleston, W. Va. preparation of balance-sheets and operating Admitted as Associates statements from general books, or who in the opinion of the Board shall have had experience Max W. Bay, Los Angeles, Calif. equivalent to that required in the foregoing, and William J. Calder, Wheeling, W. Va. the Board shall recognize that the said equivalent George S. Cerny, Chicago, Ill. experience may be obtained independently of Walter B. Chandler, Indianapolis, Ind. employment with a practicing certified public Peter J. Creagh, Chicago, Ill. accountant, public accountant, the United States Lloyd T. Christie, Kansas City, Mo. Treasury Department, or any federal or state Benjamin H. Crosby, Jr., Providence, R. I. supervisory agency or instrumentality, as here­ Earle H. Cunningham, Detroit, Mich. inabove set forth . . ." Glen R. Eikenberry, Wilmington, Del. F. Ray Friedley, Chicago, Ill. The amended section (567) further Leo Gottlieb, Jr., Independence, Kansas Allen M. Harrelson, Cincinnati, Ohio states: Henry W. Hinkle, Bartlesville, Okla. “ Applicants who prior to January 1, 1942, Benjamin Z. Holmes, Columbus, Ga. have passed successfully the examination but Raymond T. Hyer, New York, N. Y. whose certificates have been withheld until they Richard J. Janover, New York, N. Y. complied with practical experience requirements Guy P. Jones, San Francisco, Calif. provided in this section, shall, upon presenting Raymond B. Keating, Houston, Texas to the Board evidence of their having substan­ James H. Kirby, New York, N. Y. tially complied with practical experience require­ George A. Lee, Washington, D. C. ments as herein defined, shall be entitled to re­ Harry J. Longeway, Detroit, Mich. 6 The Certified Public Accountant

Hugh Lockridge Macauley, Dallas, Texas Obituaries Paul Matthews, Washington, D. C. Charles F. Myers, Richmond, Va. Edwin W. Breyer, of Cleveland, Ohio, Dermott A. Noonan, New York, N. Y. died February 12th, at the age of 63. Mr. William I. Parke, Emeryville, Calif. Breyer was born in Cincinnati, but spent V. L. Parker, Richmond, Va. V. Lee Phillips, St. Louis, Mo. most of his life in Cleveland. He became a Edward E. Rosborough, Kingsport, Tenn. certified public accountant of New York in Thomas Snelham, New York, N. Y. 1914 and of Ohio in 1915, and for many John P. Toole, Detroit, Mich. years was a partner in the R. G. B. & S. Warren M. Van Hoose, Frankfort, Ky. Co. At the time of his death he was practic­ ing under his own name in Cleveland. Mr. Elijah Watt Sells Awards Breyer had been a member of the American Following are the winners of the Elijah Institute of Accountants and predecessor Watt Sells scholarship awards for the No­ organizations since 1912. vember, 1941, examinations: C. Aubrey Nicklas, of Spring Lake, F irst prize (gold medal) New Jersey, died March 7th, at the age of John W. Shoemaker, Chicago, Ill. 55. A native of Turin, New York, Mr. Second prize (silver medal) Nicklas attended the City College, Wagner Walden C. Cummins, Jr., Chicago, Ill. Honorable mention Free Institute in Philadelphia, and New Alfred C. Harcourt, Hyde Park, Mass.; York University. He was chairman of the Charles O’Neill Galvin, Dallas, Texas; boards of the George W. Rogers Construc­ Welden O. Pennington, Seattle, Wash. tion Company and the Empire Construc­ These men obtained the highest grades tion Company, both of New York, having among 1,775 candidates examined in 41 been associated with both firms since 1906. states and territories and the Treasury De­ Mr. Nicklas was also director and member partment, which used the American Insti­ of the executive committee of the First tute of Accountants standard examination. National Bank of Spring Lake and a direc­ tor of the Haytian Corporation of Amer­ Calendar of Events ica. A certified public accountant of New

P hiladelphia A c c o u n t i n g F o r u m York since 1912 and of New Jersey since 1925, Mr. Nicklas had been a member of Warren W. Nissley, a member of the the American Institute of Accountants and Institute committee on accounting pro­ predecessor organizations since 1912. cedure, will speak on “The Junior Ac­ countant, His Duties and Opportunities” Thomas E. Quin, of Jackson, Miss., died at the opening session on May 7th of the February 1st, the Institute has just been Philadelphia Accounting Forum, to be held informed. Mr. Quin was born in Holmes­ at the University of Pennsylvania under ville, Miss., in 1878, and spent most of his the direction of the Philadelphia Chapter life there. He attended Mississippi College of the Pennsylvania Institute of Certified at Clinton, and later was graduated from Public Accountants in cooperation with Eastman’s Business College, Poughkeepsie, the universities and colleges in the Phila­ New York. Mr. Quin became a certified delphia area. Victor H. Stempf, a member public accountant in 1920 and, after prac­ of the Institute executive committee, will ticing several years, became a state bank speak at a dinner meeting in the evening on examiner and subsequently was made presi­ “ Changing Concepts of Responsibilities dent of one of the Mississippi banks. Some of Accountants.” Other topics to be dis­ time later he returned to private practice. cussed at the forum include: internal work He was active in civic affairs. A member of in public accounting offices, educational the Mississippi Society of Certified Public foundations essential in the development Accountants, Mr. Quin had been a member of well trained accountants, and accounting of the American Institute of Accountants in the preparation of statistics. since 1933. The Certified Public Accountant 7

Adolph F. Schumacher, of Paterson, Frederic A. Tilton, of Jacksonville, N. J., died March 20th, at the age of 65. Florida, died March 2nd. Mr. Tilton was Mr. Schumacher was born in Brooklyn, born in Cleveland, Ohio, in 1876, and re­ New York, and was educated in Germany. ceived his early education in the public He held positions with commercial firms schools of that city, where he also attended in New York for several years and then Western Reserve University. He received spent three years in various departments of the C.P.A. certificate of the State of Michi­ the Elberfeld Branch of the Deutsche Bank, gan in 1910 and for twelve years served as Berlin, returning to the United States in chairman of the Michigan State Board of 1903. In 1915 he entered the office of a cer­ Accountancy. After serving under President tified public accounting firm in Paterson, Hoover as third assistant postmaster gen­ and at the time of his death was practicing eral, Mr. Tilton went to Jacksonville in accounting under his own name. Mr. 1934 as acting manager of the Haskins & Schumacher was a member of the New Sells office. There he became a member of Jersey Society of Certified Public Account­ the Florida Institute of Accountants and ants, and had been a member of the was active in its affairs. He had been a mem­ American Institute of Accountants since ber of the American Institute of Accountants 1924. and predecessor organizations since 1910. assistant to Donald Nelson, chairman of the STATE SOCIETY NEWS War Production Board, a plan designed to increase the services of Institute members A special committee on wartime prob­ to the W.P.B. in the following ways: lems, appointed by the president of the 1. Furnish information as to plant facilities, New York State Society is distributing a personnel, and other essential facts. series of releases indicating how members 2. Act as representatives for their clients can cooperate in meeting problems arising (a) In aiding in plant conversion from the war effort. Release No. 1, dated (b) In aiding in securing subcontracts March 14th, outlines a general eight-point direct or by bringing clients together program to be elaborated in later releases. through proper channels. It involves spreading the work, making 3. Aiding in systematizing and setting most effective use of personnel, and securing standards for particular industries. replacements for those called to war work, 4. Aiding in utilizing all facilities of all local communities. as well as maintaining a roster of New York 5. Submitting necessary reports on prog­ accountants available for war work. The ress. Institute has sent copies of this program to all state society presidents, suggesting a Keen interest in war problems and re­ cooperative effort in these directions on a lated issues is indicated by the choice of national scale. Release No. 2, dated March speakers and topics at recent state society 23rd, presents detailed plans for registra­ meetings. Albert W. Hawkes, president of tion of Society members, and persons rec­ the United States Chamber of Commerce, ommended by them, who are available for discussed “ Business Survival during the employment by government war agencies. War Period” before the New Jersey Release No. 3, also dated March 23rd, out­ Society; Gerhart H. Seger, former member lines arrangements for exchanging staff of the German Reichstag, addressed the accountants among cooperating firms in Massachusetts Society on “The War and order to meet demands for professional the Fifth Column in America”; James L. service with depleted staffs. Wick, economic analyst for Prentice-Hall’s Upon the suggestion of the board of gov­ Washington Letter, spoke on “What’s Hap­ ernors of the District of Columbia Insti­ pening in Taxation and Government tute, Simon W. Levitan, president, with Regulation?” at a meeting of the Minne­ the assistance of Arthur Linn and Henry sota Society; and Dr. Leon H. Ellis, act­ Seidemann, submitted to C. C. Hill, Jr., ing head of the department of international 8 The Certified Public Accountant relations of the University of Southern tute has unanimously approved an appli­ California, addressed the Los Angeles cation from fifteen members to charter Chapter of the California Society on a Northwestern Chapter, the fifth chapter “The War in the Pacific.” A panel discus­ in the state. sion on European finance during the war An article on “ Income Tax Problems of and commerce and trade after the war was Banks,” prepared by a committee of the conducted at a meeting of District of Kansas Society appeared in the January, Columbia Institute. The panel was com­ 1942, issue of The Kansas Banker, official posed of European diplomats, most of monthly publication of the Kansas Bankers whom are refugees. Association, together with a roster of the The council of the Pennsylvania Insti­ Society’s members.

Announcements

The following firm announcements have recently G. H. E m e r y , North Carolina; “ Am I My been received from members of the Institute. Brother’s Keeper?”; Kiwanis Club, Kings Moun­ tain, and Kiwanis Club, Statesville. P e r c i v a l G. B ix b y & Co. and Frederick A. W a g n e r and R o b e r t L. W ils o n of Wagner, J . P. G o d d a rd , Utah; “ Income Tax Problems Phillips & Wilson announce the merger of their of Livestock Men”; Utah Woolgrowers Associa­ respective practices under the firm name of tion, Salt Lake City. Percival G. Bixby & Co., with offices at 520 H a r r y A. H o u s t o n , Illinois; “ Individual Marine Trust Company Bldg., Buffalo, N. Y. Income Tax Returns” ; Businessmen’s Associa­ H arold H. Jacobs announces the removal of tion, Mt. Carmel. “ Changes in 1941 Revenue his offices to 60 Park Place, Newark, N. J. A ct”; Kiwanis Club, Paris, Ill. Herschel Silverstone and R o b e r t O. W i llia m R. K id d o o , Delaware; “ Activities of F o l k o f f , of San Francisco, Calif., announce the the State Board of Accountancy”; Delaware Ac­ dissolution of their partnership as of March 31st. countants’ Association, Wilmington. From that date each will continue independently E d w in H. K o e n e m a n , Indiana; “ Taxes and the practice of public accounting—Mr. Folkoff at room 500, 25 Taylor St., and Mr. Silverstone More Taxes” ; Northeastern Indiana Hay and at room 728, 25 Taylor St., San Francisco. Grain Dealers Association, Fort Wayne. A. William M orris, Washington; “ Pitfalls Norman H. Tracy announces the opening of an office at 105 West Madison St., Chicago, Ill. the Tax Adviser Should Avoid”; Spokane County Bar Association. “ Relationship of Taxa­ Frank Vallei announces the removal of his tion to Price Controls”; Life Underwriters offices to 1020 North American Bldg., Broad and Cashiers Association, Spokane. Sansom Sts., Philadelphia, Pa. W i llia m D. M o r r i s o n , Colorado; “ Income Taxes, with Special Reference to Corporations”; The following addresses have been delivered re­ Denver Law Club. cently by members of the Institute before the organ­ izations mentioned. A l b e r t Moss, Washington; “ Your 1941 In­ come Tax”; King County Insurance Association, C o n r a d T. B j o r n l i e , Montana; “ Systems, Seattle, and Town Club, Seattle. Their Installation and Operation”; Montana State University, Missoula. W. H. R e a d , Tennessee; “ Accountancy as a Career”; Radio Station WSM, Nashville. Samuel J. Broad, New York; “ The Con­ “ Standards of Municipal Accounting” ; Eastern troller’s Responsibility to Private Enterprise”; Division, Power Accountants Association, Nash­ Milwaukee Control of Controllers Institute of ville, and Knoxville Chapter, American Account­ America. ing Association. W a l t e r A. C o o p e r , New York; “ New Capital O. G. Roquemore, Oklahoma; “ Personal In­ under the Revenue Act of 1941 ”; New England come Taxes”; Tax Division, Mid-Continent Oil Control, Controllers Institute of America. and Gas Association, Tulsa. The Certified Public Accountant 9

H. W. S w e e n e y , Washington, D. C.; “ Con­ M o r r is L e v i n s o n , New York; appointed a tractors’ War Accounting Problems,” before a member of the Registrants’ Advisory Board for group of federal government accountants, Local Board No. 215, Borough of Brooklyn. Brookings Institution, Washington. J . M. L o w e r y , California; elected vice presi­ F r e d E. T r a in o r , Illinois; “ Your Income dent of the Los Angeles Chapter, American Tax” ; series of six 10-minute talks over radio Society for Public Administration, and a member station WGA, Chicago. of the Speakers’ Bureau, Los Angeles County Defense Council.

H e n r y E. M e n d e s , New York; served as Thefollowing articles by members of the Institute chairman of the accounting division of the Spe­ have appeared recently in the publications men­ cial Gifts Committee for the 1942 Appeal of New tioned. York Catholic Charities.

R o y T. C u l e y , California; “ Your 19 4 1 A. W i l l i a m M o r r is , Washington; elected Income Tax Returns” ; Los Angeles School president, Bundles for Britain. Mr. Morris is also Journ al, February. an officer of several Spokane War Aid organiza­ W i l l i a m D. M o r r is o n , Colorado; “ The tions. Corporation Tax Return” ; Dicta (published A r t h u r L. P o d o l a k , Illinois; appointed a monthly by Denver and Colorado Bar Associa­ member of the Finance Committee, Local De­ tions), March. fense Council, Aurora.

D. M. S h e e h a n , Missouri; “ Balance-sheet P h i l i p R. P r i n c e , Tennessee; appointed in­ Treatment of Tax Anticipation Notes” ; Bulletin structor for defense course in Accounting being of the Robert Morris Associates, January, and held at Memphis, conducted by Mississippi State The Controller, February. College in cooperation with U. S. Office of Education.

D. M. S h e e h a n , Missouri; appointed member J o e B o n d , Arkansas; appointed first vice president and member of the board of directors, of the Committee on Cooperation with the De­ Arkansas Employment Service for the Blind, fense Program of the Controllers Institute of Inc., affiliate of Arkansas Department of Public America. Welfare. A. J . W a t s o n , California; appointed member of the Civilian Defense Council, San Mateo A l b e r t E. H u n t e r , Massachusetts, served as County, and Red Cross Disaster Relief Com­ chairman, and A n t h o n y J a u r e g u y and J . H a r ­ mittee. o ld S t e w a r t served as vice chairmen, of the vol­ unteer Auditing and Reports Committee of the J o se p h H . W i l l i a m s , Pennsylvania, ap­ Greater Boston United War Fund. pointed auditor of Luzerne County.

RUMFORD PRESS CONCORD, N. H. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t A Bulletin of The American Institute of Accountants

M a y 1 9 4 2

Annual Meeting

Council Meeting

State Society News

Reexamination Period Extended

Activities of the Month

Dickinson Lectures

Priorities

15¢ a Copy Published Monthly $ 1 a Year

V o l . 2 2 No. 5

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authorities, business­ men, and others.

Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred—35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢

Auditing Examination of Financial Statements by Independent Public Accountants...... 15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢

Taxation A Sound Basis for Taxation — By Walter A. Cooper...... 10¢ (Orders for more than 25 copies, a copy)

Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 1 — Unamortized Discount and Redemption Premium on Bonds Refunded. 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment— Amplification of Institute Rule No. 1 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢

Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination...... 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued).. 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies.. 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon...... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar In­ vestments under the Investment Company Act of 1940...... 10¢ American Institute of Accountants

Activities of the Month A joint subcommittee of the committee on auditing procedure of the Institute and Carman G. Blough, chairman of a special the committee on practice procedure of the committee, C. Oliver Wellington, acting New York State Society met on April 15th chairman of the executive committee, and and 16th to consider methods of spreading the secretary of the Institute discussed fur­ the work to help compensate for the man­ ther with Selective Service officials in Wash­ power shortage caused by the war. P. L. ington, on April 22nd, the Institute’s pro­ West, acting director, department of stock posal that a bulletin be issued by Selective list, New York Stock Exchange; William Service referring to occupational classifica­ W. Werntz, chief accountant of the S.E.C.; tion of accountants by local draft boards. and Earle C. King, assistant chief account­ There seemed to be agreement that some ant of the S.E.C., participated in the dis­ accounting activities are essential to war cussion. A comprehensive report on this production and the support of the war subject is now being prepared for publica­ effort. Due to the accumulation of urgent tion. tasks now confronting Selective Service headquarters, however, it is impossible to predict when such a bulletin may be issued. As this issue goes to press, the committee In the meantime, the Institute's representa­ on public information reports that circula­ tives were assured that accountants con­ tion of the public information pamphlet, form to the spirit of the Selective Service “The Natural Business Year—Its Ad­ Act by requesting deferment, and appealing vantages to Business Management,” is decisions of draft boards, if necessary, in approximately 25,000. Ten state societies cases where they believe members of their have already arranged to circulate this staffs are performing essential services re­ booklet, and others are now considering its gardless of the wishes of the individual distribution. employee concerned. Procedures in auditing cost-plus-fixed-fee government contracts were discussed with Institute members recently filled the fol­ representatives of interested government lowing speaking engagements arranged by agencies, by Mr. Wellington and the secre­ the speakers bureau: Roy Andreae of Chi­ tary, on the same date. cago addressed the American Industrial Bankers Association on “ Current Account­ ing and Auditing Problems.” J. N. Aitken, The full membership of the committee on Jr., of Philadelphia discussed “Audit and accounting procedure held a meeting at Control of Charged-Off Assets and Recov­ Institute headquarters, May 13th. Princi­ eries” at the Eastern Regional Conference pal subjects discussed were the report of of the National Association of Bank Audi­ the subcommittee on surplus, reprinted in tors and Comptrollers. Mary E. Murphy the May issue of The Journal of Account­ spoke on “The Effect of the War Situation ancy under the title “Should the Term on Woman’s Place in the Accounting ‘Surplus’ be Eliminated?” and a report on World” before the George K. Hinds Ac­ accounting for income taxes prepared by counting Club of Washington Irving High another subcommittee. School, New York City. 1 2 The Certified Public Accountant

Donald K. McAllen—Lieutenant, United RE-EXAMINATION PERIOD EX­ States Army, Fifth Corps Area, Fort TENDED FOR CANDIDATES Hayes, Columbus, Ohio in Arm ed Forges John W. McEachren—Lieutenant Colonel, United States Army; Chief, Cost Account­ The Institute’s board of examiners ing Section has modified its rule requiring that a Joseph L. Overlock—Chicago Regional candidate must be reexamined within Director, War Production Board three years on any subject or sub­ Neal F. Pendleton—Lieutenant, United jects in which he has previously been States Navy conditioned, so that time served with Peter F. Ratigan—Civilian Personnel, Cen­ the armed forces of the United States tral Procurement District, Detroit, Mich. would be excluded from the period E. E. Rosborough—Lieutenant, Quarter­ within which reexamination is per­ master School, Camp Lee, Va. mitted. Similar action has been sug­ Andrew Stewart—Lieutenant Colonel, gested to state boards of accountancy. United States Army; Chief, Accounting and Audit Supervisory Branch J. S. Seidman—Lieutenant Commander, Members of the Institute Supply Corps, United States Naval Engaged in War Activities Reserve Morris C. Troper—Lieutenant Colonel, This list supplements those published in earlier issues. United States Army; Chief, Cost Analysis Section Robert O. Berger, Jr.—Lieutenant, Expert Aerial Navigator, Air Corps Reserve Staff Member Commissioned in William M. Black—Special assistant on re­ Naval Reserve quirements, Bureau of Industry Opera­ Charles Carver, editorial assistant on the tions, War Production Board Institute staff since November, 1939, has Stanton C. Brumfield—United States been commissioned an Ensign in the United Naval Reserve States Naval Reserve and assigned to Mid­ Harold A. Buras—Ensign, United States shipmen’s Training School, Northwestern Navy University, Chicago, Ill. Maurice D. Clelland—Lieutenant, United States Naval Reserve Activities of Officers and Gayle L. Dalferes—Ensign, United States Members Navy Lieutenant Commander J. S. Seidman, Ralph G. Davis—Major, United States former chairman of the Accountant Divi­ Army Air Corps, Finance Officer, Lub­ sion’s War Emergency Campaign on behalf bock, Texas of the United Jewish Appeal, and Lieuten­ Joseph G. Ehrlicher—Lieutenant, United ant Colonel Morris C. Troper, former States Naval Reserve European chairman of the Joint Distribu­ O. P. Gokay—Captain, Corps of Engi­ tion Committee—one of three agencies neers, United States Army making up the United Jewish Appeal— B. Bernard Greidinger—Major, Army were among those who officially greeted School of Finance, Fort Benjamin Harri­ guests at a dinner marking the opening of son, Ind. the current War Emergency Campaign of William W. Jackson—Lieutenant, Ar­ the Accountant Division, in New York mored Force School, Fort Knox, Ken­ City, on May 5th. Other Institute members tucky attending the dinner included Joseph Lucien J. Moret—Lieutenant Colonel, Eisner, vice chairman of the Accountant United States Army Division; Myron A. Finke, treasurer of the Ellsworth W. Muller—Captain, Finance Division; and Samuel D. Leidesdorf, chair­ Department, Officers Reserve Corps man of its executive committee. The Certified Public Accountant 3

George O. May and John B. Niven were among the sponsors of a testimonial dinner to Joseph E. Davies, former United States An n u a l Me e t in g Ambassador to the Soviet Union and chair­ man of the President’s Committee on War The fifty-fifth annual meeting of Relief Agencies, in New York City, May the Institute will be held at the 7th. The dinner opened a campaign by Palmer House, Chicago, September Russian War Relief, Inc., to raise $6,000,000 28th to October 1st. As in 1941, the for medical and surgical aid for Russia. program will be limited to four days The secretary of the Institute spoke on —Monday through Thursday. “War “Wartime Problems of the Profession” be­ and its relation to accounting prac­ fore the Rhode Island Society of Certified tice” is the central theme of the Public Accountants at Providence, on April technical sessions, planned to provide 21st, and before the Connecticut Society of practical help in the solution of un­ Certified Public Accountants at New usual accounting, auditing, and tax Haven, on April 23rd. problems arising from the war. Dana F. Cole of Lincoln, Nebraska, ad­ Accounting topics will include war­ dressed the 15th annual convention of the time problems of clients such as ac­ Wholesale Dry Goods Institute, in New counting for allocated materials, York City, on “ Some Management Prob­ accounting for conversion and other lems of the Dry Goods Wholesaler Under abnormal costs, distribution of over­ Today’s Changing Conditions.” head on cost-plus-fixed-fee contracts, plant accounting for government- owned property, problems of fixed- Council Meeting price subcontractors in accounting The midyear meeting of council was held for materials furnished by prime con­ in New York on May nth and 12th. Presi­ tractors. dents of state societies, chairmen of Insti­ Technical sessions on auditing will tute committees, and representatives of be devoted to auditing standards, the American Accounting Association at­ auditors’ liability, internal control, tended open sessions at which committee audits of government expenditures reports were presented and recommenda­ including contractors’ costs, methods tions of committees discussed. Sitting as a of “spreading the work” with special trial board, the council heard charges reference to experience in converting against an Institute member submitted by clients to the natural business year, the committee on professional ethics. Pro­ inventories and receivables in monthly ceedings of the council meeting will be sum­ and quarterly audits, effective use of marized in the June issue. clients’ staffs. The technical program has been completely outlined and acceptances Priorities have been received from a number of Priority regulations and reports required speakers. Plans have been made to in­ by the War Production Board were ex­ clude new accounting, auditing, or plained to certified public accountants at a tax problems of special importance meeting in the offices of the Commerce and which may develop within the next Industry Association of New York, April few months. 28th. Speakers included William R. Don­ In addition, there will be a limited aldson, chairman of the New York State number of general sessions devoted to Society’s special committee on wartime subjects which vitally concern mem­ problems, William E. Arnstein of the pro­ bers of the profession in their relation duction requirements branch of W.P.B., to the war program. and Sydney Hogerton, manager of priori­ ties in the W.P.B. field service. 4 The Certified Public Accountant

Institute Lecture and Study Group Typewriters Rationed The spring series of lecture and study According to regulations which went into group meetings of the American Institute operation on April 20th, persons who pur­ were held at the Town Hall Club, New chase typewriters for their own use must York City, April 29th, May 6th, and May apply to the rationing board in the district 13th. On April 29th, Gilbert R. Byrne led in which the typewriter is to be used. Once discussion of the subject “Spread the eligibility is determined, a purchase certifi­ Work” ; on May 6th, Marshall Granger led cate is issued which must then be presented discussion of “ Current Day Cost Prob­ to a dealer. lems.” The May 13th meeting was con­ In all cases in which the applicant must ducted as an “Auditing Clinic” by Harold establish eligibility, typewriters may be R. Caffyn, with a panel of present and past sold only upon presentation of the certifi­ members of the Institute’s informal com­ cate. Such certificates will be issued only mittee on lecture and study group answer­ when the applicant has shown immediate ing extemporaneously auditing questions need for a typewriter to carry on the specific submitted in writing by the audience. The duties that made the purchaser eligible. committee arranging these three programs consisted of Charles J. J. Cox, chairman, Greetings from D. W. Springer John B. Hart, and Walter A. Hurley. The following long-distance telephone conversation with D. W. Springer, for­ Price Ceilings merly secretary of the American Society of General Maximum Price Regulation, is­ Certified Public Accountants, is reported sued on April 28th by the Office of Price by the editor of the Michigan Association’s Administration, specifically excludes “ pro­ W orksheet in the April issue. “ D. W.,” at fessional fees” on the ground that they are present in University Hospital, Ann Arbor, not defined as a “commodity” under the sends this message: Emergency Price Control Act of 1942. “Tell the boys I’m enjoying today im­ mensely. I’m sleeping well and eating well. S.E.C. Report Tell the boys I appreciate their interest in me.” The seventh annual report of the Securi­ In reply to a question regarding account­ ties and Exchange Commission, covering ants’ contribution to the war effort, Mr. the fiscal year ended June 30, 1941, has Springer said: been transmitted to Congress. Copies may be obtained from the Superintendent of “ If everybody is actually doing what the Documents, U. S. Government Printing papers say is being done to win the war, we Office, Washington, D. C., for thirty-five are all doing all we can.” cents each. “ D. W.,” who has devoted his life to the advancement of the accounting profession, Dickinson Lectures will be delighted to hear from any of his old friends. The annual Dickinson lectures at Har­ vard University Graduate School of Busi­ ness Administration, were delivered by Regional Conferences Canceled Professor Henry Rand Hatfield of the Uni­ The Pacific Coast Accounting Conference versity of California, on April 21st and 23rd. scheduled to be held in Portland, Oregon, Professor Hatfield’s subject was “ Surplus on May 27th, 28th, and 29th, with the and Dividends.” These lectures com­ Washington, Oregon, and California socie­ memorate the services to accounting of Sir ties participating, has been canceled. Trans­ Arthur Lowes Dickinson, former senior portation difficulties and uncertainties, partner of Price, Waterhouse and Co. in together with the inability of prominent New York. speakers to keep their engagements, are The Certified Public Accountant 5 cited as reasons for the cancellation. It is “ Public Accountants and the War Pro­ expected that the annual Oregon-Washing­ gram,” April 13th. ton joint conference will be held in Port­ Recent annual meetings include the fol­ land about the third week in June. lowing: Louisiana observed the completion The Southern States Accountants’ Con­ of its thirty-first fiscal year on April 23rd; ference scheduled to be held in Atlanta on Washington—May 8th; Arizona—April April 30th, May 1st and 2nd, with ten so­ 25th. Maryland held its annual social meet­ cieties participating, was also canceled be­ ing, April 14th. At the Rhode Island cause of war conditions. The New England annual meeting, April 21st, Russell C. States Accounting Conference, scheduled Harrington of Providence was elected for the spring of 1942, will not be held this president of the Society. Currently president year. of the Providence Chamber of Commerce, N.A.C.A. Programs he is the first man to hold both offices simultaneously. The 23rd International Cost Conference To help solve wartime problems of the of N.A.C.A. will be held at the Palmer profession, outlined in the Institute’s letter House, Chicago, June 22nd, 23rd, and 24th. of March 19th to state society presidents, A “ streamlined” program will be limited to the board of directors of the Illinois two and one-half days, emphasizing current Society has requested the Society’s sub­ wartime problems in industrial accounting. committee on vocational guidance to de­ The “ Summer Institute of Industrial Ac­ velop a program for conserving man power counting,” conducted jointly by N.A.C.A. and providing skilled personnel urgently re­ and Babson Institute of Business Adminis­ quired by government war agencies. The tration, will be held at Babson Institute, Institute’s suggestion that state societies Wellesley Hills, Mass., August 9th to 22nd. consider an intensive campaign to secure wider adoption of natural fiscal closing American Institute of Laundering dates, as a means of utilizing man power more effectively, has been referred to the The February issue of “News Letter,” Society’s committee on natural business official publication issued to members of year. this organization, carries an article urging The Philadelphia Accounting Forum was laundryowners to utilize the services avail­ held under the direction of Philadelphia able through members of the public ac­ Chapter of the Pennsylvania Institute, counting profession. with the cooperation of universities and State Society News colleges, on May 7th. Speakers at after­ noon and evening sessions included Dr. Recent state society meetings include the Thomas S. Gates, president of the Uni­ following: Illinois presented certificates to versity of Pennsylvania; Dr. Harry A. successful candidates in the November Cochran, Dean of the School of Commerce, C.P.A. examinations at a dinner program, Temple University; Dr. Robert P. Brecht, March 26th. George O. May delivered an Chairman of the Geography and Industry address on “War and Accounting Pro­ Department, Wharton School of Commerce cedures” which is reprinted in the May and Finance; J. A. Livingston, Economist, issue of The Journal of Accountancy. Business Week; Verl L. Elliott, Controller, Minnesota held its annual joint meeting Atlantic Refining Company; and several with the state university, April 28th. Prominent speakers representing both the leaders of the accounting profession. Dis­ university and the profession discussed cussions related to internal work of the vital problems of the war period at after­ public accounting office; the field of edu­ noon and evening sessions. Dean Herluf V. cational foundations in the development of Olsen of the Amos Tuck School of Business well trained accountants; use and interpre­ Administration, Dartmouth College, ad­ tation of accounting information by in­ dressed the Massachusetts Society on dustry and the public. 6 The Certified Public Accountant

Northwestern Chapter of the Penn­ Illinois Society, following the recommen­ sylvania Institute was inaugurated at a dation of the Society’s committee on pro­ dinner meeting in Oil City, April 10th. fessional ethics and an expression of John H. Zebley, Jr., president of Pennsyl­ opinion from Society members. vania Institute, spoke briefly in presenting A loose-leaf directory of membership, the charter. Frank Wilbur Main, past containing the constitution and by-laws of president of Pennsylvania Institute, was the Ohio Society of Certified Public another speaker. The following officers of Accountants was issued by the Society last the new chapter were elected: Edward W. month. The booklet is pocket-size, bound Farmer of Erie, chairman; Maurice A. in black limp leather with gold stamping, Brewster of Oil City, vice chairman; Fran­ and the sections are indexed by a visible cis E. Sowersby of New Castle, secretary; file. The preface states that “ This directory Harold E. Bell of Sharon, treasurer. Frank of membership was designed in loose-leaf W. Alcorn, Oil City; Dallas C. Smiley, form to be supplemented as additions and Corry; and Thomas E. Moore, Erie, were changes take place in our membership; also elected members of the executive com­ to record revisions of the constitution and mittee. by-laws.” The special committee on wartime prob­ Visitors at Institute Offices lems of New York State Society has dis­ Henry Bodensick, New York, N. Y. tributed Releases Nos. 4 and 5 in the series H. R. Borthwick, Winston-Salem, N. C. indicating how members can contribute to William B. Castenholz, Memphis, Tenn. the war effort. No. 4, entitled “A Com­ William D. Cranstoun, New York, N. Y. munication to Selective Service Authori­ C. W. Crenshaw, San Antonio, Texas Fred J. Duncombe, Chicago, Ill. ties,” reprints a joint communication from H. W. Funk, New York, N. Y. committees of the Institute and N.A.C.A. Charles Goldstein, Perth Amboy, N. J. filed with national headquarters of the Se­ Spencer Gordon, Washington, D. C. lective Service System describing the type Henry R. Hatfield, Berkeley, Calif. Miss Marjorie Hathaway, Brooklyn, N. Y. of accountant essential to the war effort and William P. Herwood, New York, N. Y. of a class of which a shortage has been Fred P. Higgins, Toronto, Canada demonstrated. No. 5, entitled “Assisting Albert L. Jonal, New York, N. Y. Members Who Enter War Work to Con­ Irving L. Kornblut, Bridgeport, Conn. Frank W. Main, Pittsburgh, Pa. serve Their Clientele during Their Absence Edward H. Moeran, Yonkers, N. Y. on War Duty,” outlines the Society’s pro­ Oscar L. Niles, Rochester, N. Y. gram for registering names of members and Clyde M. Noble, Boston, Mass. firms who volunteer to care for the practice Charles W. Plum, New York, N. Y. Adam Rhodes, Boston, Mass. of another member during his absence on Benjamin Robin, Chicago, Ill. war duty and providing a channel of com­ James M. Roche, New York, N. Y. munication for the discussion of such John Rolli, New York, N. Y. arrangements. H. W. Rosewater, Cleveland, Ohio With the aim of utilizing every available T. Edward Ross, Philadelphia, Pa. W. Ernest Seatree, Washington, D. C. man-hour in the service of the profession Daniel A. Young, Glen Ridge, N. J. and of the government, the New York State Society has established at its offices Election of Members a placement bureau with an experienced A d v a n c e d t o M e m b e r s h ip placement director in charge. Facilities of Arthur F. Evans, New York, N. Y . the bureau are available to members seek­ Nelson T. Hampson, New York, N. Y. Charles W. Plum, New York, N. Y. ing employees for positions in both public A d m it t e d a s M e m b e r s and private accounting, to their clients, and William Allan, New York, N. Y. to government agencies. Haver E. Alspach, New York, N. Y. Rules of professional conduct, patterned Charles F. Barrett, New York, N. Y. Richard F. Barry, New York, N. Y. upon those of the Institute, have been Charles M. Bernstein, Chicago, Ill. adopted by the board of directors of the Henry V. Blankenbaker, Los Angeles, Calif. The Certified Public Accountant 7

James A. Brennan, New York, N. Y. Herbert S. McReynolds, Phoenix, Ariz. Harry C. Brown, Providence, R. I. Christian D. Meislahn, Litchfield, Ill. Donald F. Carroll, New York, N. Y. Robert R. Norwich, Rock Island, Ill. Oliver P. Cobb, Jr., Memphis, Tenn. Howard W. Ohlsen, New York, N. Y. E. F. Conner, St. Louis, Mo. Robert N. Peck, Niagara Falls, N. Y. Thomas B. Crawford, New York, N. Y. Burke G. Piper, Appleton, Wis. Charles E. DiPesa, Boston, Mass. Edmund A. Pontius, Jr., Memphis, Tenn. John J. Drummey, Jr., Chestnut Hill, Mass. James J. Porte, Chicago, Ill. Richard A. Ellington, Jr., Fayetteville, N. C. August J. Pousson, New York, N. Y. Samuel E. Ellis, Washington, D. C. John C. Rambeau, Boston, Mass. Arthur F. Freelove, Albany, N. Y. Edward T. Reilly, New York, N. Y David A. Goodkind, New York, N. Y. Berndt K. Sanden, Chicago, Ill. Murray A. Granet, Newark, N. J. Samuel Seldon, New York, N. Y. Richard G. Hantzmon, Charlottesville, Va. John G. Shaver, Richmond, Va. Clayson J. Hauck, Chicago, Ill. Edwin R. Shields, Chicago, Ill. Donald J. Henderson, Manchester, N. H. Willard G. Smith, Salt Lake City, Utah Merrill G. Henry, New York, N. Y. Eugene D. Sommerfield, Chicago, Ill. Arnold J. Hoffman, St. Louis, Mo. Donald F. Stewart, New York, N. Y. Gerard J. Hungerford, Wyandotte, Mich. David W. Thompson, Indianapolis, Ind. Harry M. Iverson, New York, N. Y. Fred C. Ward, Bucyrus, Ohio Harold A. Johnson, Great Falls, Mont. Neal A. Jordan, Pocatello, Idaho Charles W. Knapp, Jr., New York, N. Y. Obituaries William O. Knutson, Eau Claire, Wis. LeRoy M. Magruder, Springfield, Mo. Willard E. Crim, of Akron, Ohio, died Henry T. Maschal, San Francisco, Calif. March 6th. He was born in Salem, Ind., in Zalma E. Matthews, Norfolk, Va. 1901, and was educated in Chicago, Ill., Leonard W. Natthen, New York, N. Y. Hale L. Newcomer, Urbana, Ill. where he attended the Walton School of Albert H. Powers, Los Angeles, Calif. Commerce. For twelve years Mr. Crim was Harry J. Reicher, New York, N. Y. an accountant on the staff of Price, Water­ Elmer W. Renker, Topeka, Kan. house & Co., and at the time of his death he Perry J. Reynolds, Detroit, Mich. Robert W. Russell, St. Louis, Mo. was with the Firestone Tire & Rubber Co., Albert L. Schneider, Pittsburgh, Pa. Akron. He was a certified public accountant Howard N. Smith, Boston, Mass. of Illinois and a member of the Illinois So­ Sol L. Stangle, Chicago, Ill. ciety of Certified Public Accountants, and Herbert F. Taggart, Washington, D. C. Donald H. Taylor, Flint, Mich. had been a member of the American Insti­ Theron C. Teel, Salt Lake City, Utah tute of Accountants since 1931. George Vacher, Los Angeles, Calif. Samuel A. Walker, Grand Rapids, Mich. Cecil P. Cregan, of Chicago, Ill., died Ogden C. Woodruff, New York, N. Y February 22nd, the Institute has just Admitted as Associates learned. He was born in Manchester, Eng­ Raymond E. Beimer, New York, N. Y. land, in 1891, and received his education A. H. Blake, Miami, Fla. there. He came to this country in 1912 and, Russell S. Bock, Los Angeles, Calif. after a few years experience in commercial George A. Bricault, New York, N. Y. Tindall E. Cashion, Los Angeles, Calif. firms, entered the accounting department James W. Clauson, East Hartford, Conn. of the Pullman Company. He later joined Edward W. Crumley, Jr., Dallas, Texas the staff of William C. Kirby & Company, Esper L. Dix, Philadelphia, Pa. Chicago, and for a number of years was David Dodge, San Francisco, Calif. Samuel D. Friday, New York, N. Y. senior accountant with that firm. At the John W. Hannon, Chicago, Ill. time of his death he was practicing under Theodore Haxall, Richmond, Va. his own name in Chicago. Mr. Cregan had John F. Hayden, Moscow, Idaho been a member of the American Institute G. C. Henricksen, Durham, N. C. Julius J. Jakobi, Akron, Ohio of Accountants since 1932. Walter H. Kamp, New York, N. Y. George T. Kearns, Milwaukee, Wis. Edward J. Fink, of Milwaukee, Wis., Kenneith F. Lacy, Shreveport, La. died in March, at the age of 48. Mr. Fink Homer I. Longenecker, Kansas City, Mo. Kenneth P. Mages, Detroit, Mich. was born in Appleton, Wis., but had lived Dudley S. Mallory, Cleveland, Ohio in Milwaukee for the past 29 years. He at­ 8 The Certified Public Accountant

tended Marquette University. Mr. Fink had Perley Morse died April 25th at his recently been engaged in an advisory ca­ home in Suffern, New York, at the age of pacity by the Conway & Winter Shoe Pat­ 73. Mr. Morse was a native of Bradford tern Manufacturing Company, of Appleton. County, Pa., and attended the Arlington Since 1924, he had been practicing account­ Academy in Washington, D. C. He began ing under the firm name of Edward J. Fink his accountancy career in 1894, and be­ & Co. He was a certified public accountant came a certified public accountant of New of Wisconsin and a member of the Wiscon­ York in 1904. He was a vice president and sin Society of Certified Public Accountants. director of the Addressograph-Multigraph He had been a member of the American Corporation. His book, The ABC of the Institute of Accountants since 1931. Government of the United States, was adopted as a textbook on civics by the George H. Iffla, of New York, New New York City Board of Education. He York, died April 12th, at the age of 63. A was also the author of other books. Mr. native of New York, Mr. Iffla was gradu­ Morse was named a special attorney gen­ ated from New York University in 1903. eral of the State of New York during the His home was in Salisbury, Conn., but he first World War. For twenty years he served as the official accountant-investiga­ had practiced accounting in the City of tor for the Controller of the Currency in New York for many years. He was a certi­ the matter of fixed liability of directors in fied public accountant of New York and a cases of failed national banks. At the time of member of the New York State Society of his death he was senior member of Perley Certified Public Accountants. He had been Morse & Company, New York, N. Y. He a member of the American Institute of had been a member of the American Insti­ Accountants and predecessor organizations tute of Accountants and predecessor organi­ since 1910. zations since 1908. Announcements

The following firm announcements have recently W . J. C a r t e r , Georgia; “ Here’s That Tax been received from members of the Institute. Man Again”; Southern Bakers Association, Inc., Annual Convention, Atlanta. T h e o d o r e G. A n d e r s o n announces the open­ ing of an office in the Russ Bldg., San Francisco, Alfred D’Alessandro, Massachusetts; Calif. “ Spotlighting Service and Loan Costs”; Massa­ chusetts Cooperative Bank League, Boston. R o b e r t A. B e r n e r announces the removal of his office to 8 West 40th St., New York, N. Y. Lt. Commander Lewis Gluick, Wisconsin; “The Navy and the Bible”; St. John’s Evangeli­ Ernst & Ernst announce the removal of cal Church, Manitowoc. their St. Louis office to 1700 Boatmen’s Bank Bldg. H a r r y D. H o p s o n , Texas; “ Observations on Federal Tax Practice”; Accounting Society, W esley W. Jung announces the removal of Agricultural & Mechanical College of Texas, his office to 701 North 8th St., Sheboygan, W is. College Station. Loeb & Troper announce the removal of H . E. H o w e l l , Rhode Island; “ Financial their offices to 501 Fifth Ave., New York, N. Y. Executive’s Job under War Conditions” ; Ameri­ R a y C. L y n n announces the removal of his can Management Association, New York. office to the Mutual Bldg., Ionia at Capitol, Joseph J. Klein, New York; “ A Session on Lansing, Mich. the Pro’s and Con’s of Last-in, First-out In­ A. L. M e n i k o f f & Co. announce the removal ventorying,” Controllers Institute of America, of their offices to 165 Broadway, New York, Waldorf-Astoria Hotel, New York; “ Lifo”; N. Y. Downtown Textile Credit Group, Arkwright Club, New York. S n y d e r & M c A lp in e announce the removal of their offices to 1528 Walnut St., Philadelphia, Pa. J. M. L o w e r y , California; “ Duties of County Auditor” ; Wilson Junior High School, Pasadena. A d o lp h C. M e y e r , California; “ Mine Ac­ counting and Taxation”; Stanford University The following addresses have been delivered re­ Department of Mining Engineering, Palo Alto. cently by members of the Institute before the organizations mentioned. M a r y E. M u r p h y , New York; “ Britain’s War Effort”; Woman’s Club, Hunter College. R. D. M. B a u e r , Missouri; “ Keeping the Proper Balance between Practical and Theoreti­ F r a n k V. R u s s e l l , Louisiana; “ Accounting . cal Accounting Training”; Midwest Economic for the Cotton Compress and Cotton Warehouse Association, Davenport, Iowa. Industry”; National Cotton Compress & Cotton Warehouse Association, annual convention, Jacob Bennett, New York; “ The Credit New Orleans. Man and His Job”; Stationers and Publishers Board of Trade, Inc., New York. E a r l A. S a l i e r s , Louisiana; “ Defense Pro­ duction and Accelerated Depreciation”; South­ Max Block, New York; “ Planning for Tax eastern Social Science Association, Dallas. Economy”; Kiwanis Club of New York, New N o rm a n E. S c h l e y , Wisconsin; “ Taxes and York. Government Debt,” Waukesha Kiwanis Club; R a y m o n d S. B l u n t , Illinois; “ Foundation “ 1941 Revenue Act,” Waukesha Junior Cham­ Stones for Happiness”; Kiwanis Club of Hyde ber of Commerce. Park, Chicago. Ross A. S e g r e s t , Texas; “ The Prospect of C h a r l e s C. C o b u n , California; “ The Ac­ Taxes”; Waco Retail Credit Association. counting Profession, Its Requirements and Op­ W a l t e r A. S ta u b , New York; “ Accounting portunities”; Commerce Department, Beverly for Special Reserves Arising Out of the W ar”; Hills High School, 4th Annual Vocational Guid­ American Management Association, New York. ance Conference, Beverly Hills. C h a r l e s H. T o w n s , New York; “ The Role of A. R. Cox, Ohio; “ Life”; Brotherhood of the Accountant in Wartime”; Delaware Ac­ Men—First United Brethren Church, Canton. countants Association, Wilmington. 9

RUMFORD PRESS CONCORD. N. H. 10 The Certified Public Accountant

A. J. W a t s o n , California; “ Civilian Defense Don D. B a t t e l l e , Ohio; reelected for third and Morale”; Peninsula Branch of the Kiwanis term as president of the Dayton Y.M.C.A. Club, San Francisco. D a v id B e r d o n , New York; secretary and J. O. W il l if o r d , Oklahoma; “ Some Modern member of Local Board 27, Selective Service, Aids to Accounting and Control with Particular since October, 1940. Reference to Multiple Unit Operations in the Oil D o n a ld E . C u r r i e r , Illinois; appointed sec­ Well Supply Business”; Beta Alpha Psi Frater­ retary of the National Small Business Conference, nity at Oklahoma A & M College, Stillwater. January, 1942.

H a r r y E . H o w e l l , Rhode Island; appointed member of the National Association of Manu­ The following articles by members of the Insti­ facturers committees on resolutions and govern­ tute have appeared recently in the publications ment finance. mentioned. E d w a r d F. J a n n o t t , Pennsylvania; appointed M a x B l o c k , New York; “ Need for, and Use supervisor of accounting and management of, Audit Programs on Monthly Audits”; Ac­ courses for the Altoona area in the Defense counting Forum of the College of the City of Training Program conducted by the Pennsyl­ New York, February. vania State Office of Education.

W il l ia m M il l s C o r l is s , Pennsylvania; “ The M a r y E . M u r p h y , New York; named chair­ Ring of Freedom”; General Magazine, Alumni man of auditing committee of Hunter College, Society of the University of Pennsylvania, to audit all books of student clubs and activities. January. F r e d E . P f l u g h a u p t , Texas; elected chair­ O. W. D ie h l , and Lloyd Morey, Illinois; joint man of the Zoning Commission of the City of authors of Municipal Accounting—Principles San Antonio. and Procedure, 1942. C h a r l e s W . S m it h , District of Columbia; ap­ J . P r y s e G o o d w in , New York; “ Profit Shar­ pointed to special committee of the public-utility ing— Depression Sharing, Its Influence upon the section of the American Bar Association to re­ W ar”; Wall Street Journal, March 12th. port on effect of national defense laws and regu­ lations on public utilities. E d w in K a l b f l e is h , Missouri; “Accounting for Private Country Clubs”; Pathfinder Service W a l t e r D. S n e l l , Oklahoma; appointed cost Bulletin, February. accounting instructor, Oklahoma City Uni­ versity E.M.S.D.T. Program, under federal Of­ J o s e p h J . K l e in , New York; “ Corporate v. Partnership Form of Doing Business—Relative fice of Education. Tax Advantages and Disadvantages in New J . R a l p h T o e p f e r , New York; appointed York”; Taxes— The Tax Magazine, April. general chairman of the local committee for the annual conference of the Municipal Finance M a r y E. M u r p h y , New York; book review— Rise of Labor Movement in Britain; American Officers Association at Buffalo. Economic Review, December. “ The Auditor in J. O. W il l if o r d , Oklahoma; honorary mem­ the Role of Business Interpreter”; Accounting ber of the Beta Alpha Psi Fraternity at Okla­ Ledger of New York University, February. homa A & M College. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

J u n e 1942

Council Meeting

Accountants in the Army

Fifty-fifth Annual Meeting

Questions and Answers on Professional Ethics

O.P.A. Financial Reporting Forms

Bureau of Economic Research

Natural Business Year

15¢ a Copy Published Monthly $ 1 a Year

V o l . 22 No. 6

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. Announcements

The following firm announcements have re­ J e n n ie M. P a l e n , New York; “ Opportuni­ cently been received from members of the Institute. ties for Women in the Public Accounting Field”; Vocational Guidance Committee of Hunter S a m S . B a y , N a t h a n R. H e r z b e r g , and M a x College, Student Body, New York. W. B a y announce the formation of a partnership under the firm name of Bay, Herzberg & Bay, O t t o A. S h u l t s , New York; “ Accounting with offices at 631 Rives-Strong Bldg., 112 W. Changes as Required as a Result of War Effort”; 9th St., Los Angeles, Calif. Rochester Chapter, Robert Morris Associates, Rochester, N. Y. D e l o it t e , P l e n d e r , G r if f i t h s & Co., New York, N. Y ., announce the admission of J ohn F. P a r n a b y to partnership in the firm, as of October 1, 1941. J o s e p h C. B r a u e r , Wisconsin; elected presi­ dent of the Mayor’s Advisory Council, City of M ic h a e l S. L o b e n t h a l announces the re­ Milwaukee. moval of his office to 40 Exchange Place, New York, N. Y. L e o n H . C o o k , New York; appointed secre­ tary and assistant treasurer, New York Post. H e r m a n L u b in announces the removal of his office to 32 Broadway, New York, N. Y. C h a r l e s B . C o u c h m a n , New York; appointed chairman of the taxation committee, Chamber W m . D. M o r r is o n and L a w r e n c e D. W il c h of Commerce of the State of New York. announce the formation of a partnership under the firm name Morrison & Wilch, with offices at W il l ia m R . D o n a l d so n , New York; ap­ 1229 First National Bank Bldg., Denver, Colo. pointed chairman, Area No. 9 (Brooklyn, N. Y .), Boys Club, National Victory Council. H a r r y A. R o s e n & C o m p a n y announce the removal of their offices to 436 Bulkley Bldg., H a r r y O s b o r n L e e t e , New York; appointed Cleveland, Ohio. member of Mayor’s committee for the patriotic events of May 17th and June 13th. L. H. R o s o f f a n d C o m p a n y announce the re­ moval of their offices to 41 East 42nd St., New J. E w in g M it c h e l l , New Jersey; elected a York, N. Y. director of the Newark Chamber of Commerce for a three-year term. Also appointed a member I . A r n o l d Ross announces the removal of his of the executive committee and of the budget office to 40 Exchange Place, New York, N. Y. committee of the Chamber for current year.

G e o r g e S c h il l e r announces the removal of A. W il l ia m M o r r is , Washington; appointed his offices to 10 East 40th S t ., New York, N. Y. committee chairman, Industrial Salvage Section, F . E. W e l c h & C o m p a n y , Providence, R. I., Bureau of Conservation, W.P.B., Spokane. announce the admission of J. F r a n k W a r in g F r e d e r ic A. P o w e r s , Ohio; appointed to the to partnership in the firm. Division of Accounting, Analysis and Review of the Office of Price Administration, Washington.

The following addresses have been delivered re­ K e n n e t h G . V a n S c iv e r , New York; elected cently by members of the Institute before the or­ secretary of the Rotary Club of Larchmont, ganizations mentioned. N. Y., for the ninth consecutive year.

J. B . B a e r n c o p f , Indiana; “ What Is Ahead U r b a n F. v o n R o s e n , Ohio; advanced from for the Junior Accountant?” Commerce Club of associate professor to professor of accounting, Butler University, Indianapolis. Fenn College, Cleveland.

H a r v e y C. D a in e , Illinois; “ Outlook for En­ T h o m a s W a t t , Connecticut; appointed comp­ dowment Investments during the W ar”; Central troller of the Soundscriber Corp., New Haven. Association of College and University Business W il l ia m R . W in n , Pennsylvania; appointed Officers, Austin, Texas. instructor for course in accounting given at W il l ia m R. D o n a l d so n , New York; “ Ac­ Dickinson Junior College, Williamsport, Pa., counting Requirements under the New Produc­ in connection with the Defense Training Pro­ tion Requirements Plan”; Commerce and In­ gram conducted by Pennsylvania State College dustry Association, New York, N. Y. in cooperation with U . S. Office of Education. American Institute of Accountants

Council Meeting Ac c o u n t a n t s in t h e Ar m y The council of the American Institute of Accountants held its midyear meeting at In the hope that the technical the Hotel Waldorf-Astoria, New York, skills of accountants in the Army N. Y., May n and 12, 1942. Forty-four of may be put to the best possible use, the fifty-two members of council attended the Institute has submitted to the the meeting. State society presidents from appropriate branch of the Army the fourteen states, two representatives of the names of well qualified accountants American Accounting Association and who have enlisted or have been in­ eighteen committee chairmen attended the ducted into military service. These Monday afternoon and Tuesday sessions names were obtained from members and were given the privilege of the floor. in response to a questionnaire circu­ Since Commander Norman Loyall Mc­ lated January 3, 1942, seeking data Laren, president of the Institute, was un­ regarding staff accountants in the able to be present for the entire meeting, armed forces. Members are invited Vice Presidents George Cochrane and George to continue to advise the Institute’s S. Olive served as chairmen of the sessions. office of the enlistment or induction of partners and staff members, so that the names of those with better T r i a l B o a r d than average qualifications can be Council sitting as a trial board met in forwarded to the Army. Data required closed executive session Monday morning. for this purpose include the name and A complaint against one member was heard age of the individual concerned, his and the board’s decision will be reported present Army unit, and the address in the July issue of The Journal of Account­ of his station if known, his present ancy. rank, approximate date of entrance into the service, length of public

R e p o r t o f t h e S e c r e t a r y accounting experience, his staff grade, The secretary’s report described the fields of specialization, and college staff’s work in answering questions from degrees, C.P.A. certificates, and mem­ members and their employees about civilian berships in professional societies, if any. war jobs, operation of Selective Service and procedure to be followed in applying for commissions in the Army or Navy. The secretary reported that the library’s form under the title, “Accounting, Audit­ services to members tend to increase each ing and Taxes, 1941,” were sold in quantity year. 11,557 questions were answered, 3,943 more than sufficient to pay the entire cost books and pamphlets were lent, and 4,881 of producing and distributing free copies to visitors called at the library during the members. current fiscal year. The Bureau of Infor­ It was reported that due to the war and mation has answered 44 questions. pressure on members of the state societies, He reported that papers presented at the regional conferences at Atlanta, Georgia, 1941 annual meeting published in booklet Portland, Oregon, and New London, Con­ 1 2 The Certified Public Accountant necticut, scheduled for this spring, were ences, with Robert H. Montgomery as the canceled. Institute’s delegate. The secretary reported that the presi­ In view of the interest of many members dent addressed three meetings last fall and in the subject of commercial arbitration, the two vice presidents gave addresses be­ the council adopted a resolution recognizing fore four meetings. The secretary addressed the service to the cause of arbitration meetings in eleven cities. Twenty-six mem­ rendered by Judge Moses H. Grossman. bers of the executive committee and council Council adopted a resolution honoring and committee chairmen have addressed the memory of the late Judge J. Harry twenty-four state society meetings and Covington, of the firm of Covington, Burl­ forty meetings of other organizations. ing, Rublee, Acheson & Shorb, counsel for the Institute. E x e c u t i v e C o m m i t t e e The executive committee’s report sum­ W a r A c t i v i t i e s marized the more important administrative The committee on war activities reported acts since the fall meeting of council. the following: Wartime problems, such as the status of Last fall a subcommittee, at the request accountants under Selective Service, pro­ of Donald M. Nelson, then Executive Di­ cedure followed by governmental war agen­ rector of Supply, Priorities and Allocations cies in auditing costs of contractors under Board, made studies and presented recom­ cost-plus-fixed-fee contracts, means of mendations on the problem of allocating spreading work to compensate for personnel materials between defense and non-defense shortages, possible coordination of Army industries in such a manner as to permit audit manuals, priorities and allocation of maximum production of military necessities material, requests for preparation of manual without disrupting the civilian economy. for audit of Army Post Exchanges, are a Another committee assisted the National few of the matters dealt with by the execu­ Roster of Scientific and Specialized Person­ tive committee or referred to newly ap­ nel in ascertaining the qualifications of pointed committees. accountants who might be deemed essential Although the Institute’s revenue from in the war effort. dues has equaled budget estimates and is A third committee at the request of the higher than last year, the executive com­ Army and in cooperation with the Controll­ mittee presented a list of ways in which in ers’ Congress of the National Retail Dry the opinion of the budget committee, an Goods Association, prepared a manual of initial saving of 15 per cent of annual ex­ audit of Army Post Exchanges. penses could be achieved whenever cur­ The Institute has been cooperating with tailment might become necessary. the Bureau of the Budget and the War The executive committee expressed the Production Board in a study designed to belief that all present activities are of value eliminate duplication of questionnaires sent to the membership and to the profession, by war and federal agencies to corporations. and none could be discontinued without Another committee has been appointed some loss of benefit. Discussion by members to assist in the review and coordination of of council and state society presidents evi­ audit manuals now utilized by the several denced their desire to maintain present branches of the Army. Institute activities until such time as the The committee on Selective Service re­ executive committee might find there was ported its work in dealing with the problem insufficient revenue to maintain the various of effective use of accountants in war. services. On March 6th, the committee submitted The executive committee reported that its recommendations to the Selective Serv­ the Institute had become one of the par­ ice Department, and the document filed ticipating organizations in the Pan Amer­ was published in the April issue of The ican Union of Experts in Economic Sci­ Journal of Accountancy. Since filing the The Certified Public Accountant 3

recommendations, a number of conferences F e d e r a l T a x a t i o n have been held with representatives of The committee on federal taxation re­ Selective Service department to answer ported that the two major activities, to questions and to furnish helpful informa­ which most of its efforts had been directed tion. The committee reported that encour­ during the first eight months of the current agement of ultimate favorable action had fiscal year, were securing extensions for been given, but it was not possible to filing of federal income-tax returns and predict when a bulletin might be issued. presentation to the Ways and Means Com­ A committee composed of two represent­ mittee of the United States House of Rep­ atives of the American Institute of Ac­ resentatives of recommendations for tax countants and two representatives of the legislation. National Association of Cost Accountants Council approved a proposal of the has tentatively been selected in each state committee to issue a questionnaire to as­ to consult with occupational advisers and certain the number of 1941 federal income- the director of Selective Service on ac­ and excess-profits-tax returns ordinarily due counting matters as soon as the occupa­ March 15th handled by each member and tional bulletin relating to accountants is the number of such returns for which ex­ released. tensions had been requested. The committee expressed its intent to Council expressed its approval of the keep the membership fully advised of de­ committee’s proposal that the revenue law velopments on the Selective Service status be amended to permit all corporations auto­ of accountants through The Journal of matically an extension of time up to three Accountancy and T h e C e r t i f i e d P u b l i c months, without the formality of request­ A c c o u n t a n t . ing it. The committee reported that it did not P rofessional E t h i c s favor an amendment to make the due date The committee presented an analysis of for all federal tax returns April 15th, or the disposition of cases dealt with by the three and one-half months after the close committee. A summary of inquiries and of the taxable year, since the committee felt responses which formed a part of the com­ that only a small percentage of the millions mittee’s report is included elsewhere in this of individual taxpayers and corporations issue. are unable to file by the 15th of March.

B o a r d o f E x a m i n e r s C o öp e r a t i o n w i t h C o n t r o l l e r s ’ C o n g r e s s The council approved a recommendation of the board of examiners that its rules be The committee on cooperation with Con­ amended so as not to require that an appli­ trollers’ Congress of the National Retail cant, whose C.P.A. examination papers are Dry Goods Association reported a study of not available for review by the board, have problems of application of last-in first-out an oral examination or interview before inventory pricing to department-store in­ being recommended for admission to the ventories, which appeared in the February, Institute. The board stated, however, that 1942, issue of The Journal of Accountancy. it would continue close scrutiny of appli­ The committee also reported its prepara­ cants’ experience and ethical qualifications tion, at the Army’s request, of a proposed and recommend interviews or further ex­ manual of accounting and auditing proce­ amination in those cases where it felt fur­ dure for Army Post Exchanges. ther evidence of an applicant’s professional qualifications was needed. The board re­ H i s t o r y ported that it did not propose any change The committee on history reported that in its policy of requiring examination (usu­ in addition to historical documents listed ally written) of waiver certificate holders in earlier reports to council, material had who apply for admission to the Institute. been received from Colorado, Pennsylvania, 4 The Certified Public Accountant

and Washington, and that histories of ac­ indicated by the fact that twice as many countancy in the states of Illinois, Missis­ letters have been published in the past eight sippi, and Utah were in preparation. months in the correspondence department as during a similar period last year. A n n u a l M e e t i n g The committee on meetings reported P u b l i c I n f o r m a t i o n that arrangements have been completed The committee on public information re­ for the fifty-fifth annual meeting of the ported, that through the speakers bureau, Institute at the Palmer House, Chicago, speaking engagements have been arranged Illinois, September 28-October 1, 1942. for members of the Institute before twenty- The committee on technical sessions re­ three regional and national organizations. ported that the program, which was nearly Over 23,000 copies of the fourth pam­ complete, was designed to be of practical phlet in the public-information series, “The help to members in dealing with pro­ Natural Business Year—Its Advantages to fessional problems arising from the war. Business Management,” have been dis­ tributed. Circulation of the earlier public- M e m b e r s h i p information pamphlets has now reached the The committee on membership reported following totals: “Please Check Your Ac­ that the Institute’s present membership count,” 474,310; “Accounting and Your of 6,184 is higher than it has ever been. Pocketbook,” 211,688; “ Financial State­ There has been an increase of 613 members ments, What They Mean,” 178,158. and associates above the figure reported by Discussion from the floor, following pres­ the committee last year. Applications re­ entation of the report, developed the point ceived during the current year total 402, that national welfare organizations might representing 114 more than were received profitably change from the calendar year to during the comparable period last year. the natural business year. The committee reported that the In­ stitute’s records show that 103 members P u b l i c U t i l i t y A c c o u n t i n g and associates are serving in the armed The committee on public-utility account­ forces. Many other members and associates ing called attention in its report to the rules now serving have not officially reported and regulations promulgated by the Con­ military status to the Institute. necticut state utilities commission under the Connecticut law requiring that utility N a t u r a l B u s i n e s s Y e a r companies “ have a comprehensive audit” The committee reported that the advan­ made annually. The rules and a proposed tages of the natural business year became form of auditor’s report conforming with more important during war than in peace­ these regulations appeared respectively in time and that the promotion of the natural the March and May issues of The Journal business year was one of the major wartime o f Accountancy. activities of the Institute. It is expected that the public-information pamphlet, S t a t e L e g i s l a t i o n “The Natural Business Year—Its Advan­ The committee on state legislation re­ tages to Business Management,” will do ported its work in preparing model sections much to acquaint corporation officials with of accountancy bills. To the question the benefits of adoption of the natural “ Shall an attorney be a member of the ac­ business year. countancy board?” the committee ex­ pressed the opinion that the model act P u b l i c a t i o n should not require that an attorney be a The committee on publication reported member, but that all members of the board that The Journal of Accountancy has con­ should be certified public accountants. tinued to grow both in circulation and It is the majority opinion of the commit­ advertising revenue. Heightened reader tee that so long as the educational require­ interest in the contents of The Journal is ments of the accountancy laws are not The Certified Public Accountant 5 greater than a high-school education, pro­ S.E.C., reviewed a draft revision of the vision should be made for those individuals uniform system of accounts for public- who have the equivalent of a high-school utility holding companies. education to sit for the examination. The committee has been invited to co­ The committee plans to submit model operate with the Association of Investment sections of an accountancy bill for consid­ Companies and the S.E.C. in a study of eration of the council in the fall. accounting procedure of companies subject to the Investment Company Act of 1940. A u d i t i n g P r o c e d u r e Members of the committee on accounting The committee on auditing procedure re­ procedure reviewed, at the request of the ported continuation of its study of auditing Office of Price Administration, drafts of standards. Case studies of the following financial report forms to be issued by subjects are being undertaken by sub­ O.P.A. committees: inventories; accounts receiv­ able in public-utility companies; review of C o o p e r a t i o n w it h B a r A s s o c ia t io n internal control; auditor’s responsibilities The committee on cooperation with bar as to goods held in warehouse when the association reported that the Virginia company owning the warehouse is itself State Bar’s committee on unauthorized being audited. practice of law, at its November 3, 1941, The committee recommended in a sup­ meeting, “ was of the unanimous opinion plementary report to council that hereafter that preparation and filing of income-tax disclosure be required in the short form of returns does not constitute the practice of independent accountant’s report or opinion law.” in all cases in which the extended procedures The committee summarized its recom­ regarding inventories and receivables set mendations to a state society of certified forth in “ Extensions of Auditing Proce­ public accountants on its negotiations with dure” are not carried out, regardless of a local bar association, as follows: (1) that whether they are practicable and reason­ all questions related to federal tax prac­ able, and even though the independent ac­ tice be referred to the national professional countant may have satisfied himself by societies for consideration; (2) that the state other methods. society refuse to adopt any written state­ Council approved this recommendation ment delimiting the scope of activities of with the understanding that it would come accountants in tax practice; (3) that the before the membership at the annual meet­ suggestion be made that the state society ing in Chicago for final action. will gladly consider any specific complaints by the bar association of any improper A c c o u n t in g P r o c e d u r e activities on the part of the accountant The committee on accounting procedure and, if such activities are found to be in reported a study now being conducted by fact improper, will use its influence to the committee relating to the use of the prevent continuation thereof or will in­ term “ Surplus.” A preliminary memo­ stitute disciplinary proceedings against the randum was published in the May issue of accountant concerned either before the so­ The Journal of Accountancy. ciety or the state board. A subcommittee on inventories has re­ cently sent to a selected list of corporations, C o o p e r a t i o n w it h B a n k e r s a n d a questionnaire to obtain data as to the re­ C r e d it M e n lationship between cost and selling prices in The committees on cooperation with various classes of business enterprise. credit men and cooperation with bankers Another subcommittee is making a study reported that a program of activity for of the treatment of taxes in financial state­ state society committees had been jointly ments. prepared by the two Institute committees The committee, at the request of the and submitted to state societies. 6 The Certified Public Accountant

A. There is nothing improper in this arrangement. G overnmental A c c o u n t i n g The committee on governmental ac­ Q. Is there any impropriety in an accountant’s cer­ tificate being used by a sales company in its news­ counting reported that in cooperation with paper and window display advertising as evidence the National Committee on Municipal of the reasonableness of prices offered for sale? Accounting and the Municipal Finance A. While the issuance of such a certificate would not violate the by-laws or rules of professional Officers’ Association, progress had been conduct of the Institute, it should be discouraged made in discouraging the practice of com­ so far as possible, since the use of an accountant’s name in this manner is undignified and tends to petitive bidding for governmental auditing lower respect for the profession in the mind of the engagements. public. An accountant should consider the possible effect on his own standing as a professional The committee reported evidence that accountant which might follow the use of his name some members of the profession have not in such a manner. become familiar with the principles of gov­ Q. On the death of a partner, may the sole surviving ernmental accounting and auditing devel­ partner continue practice as individual but con­ oped by the National Committee on Munic­ tinue use of firm name? ipal Accounting. A. There is no prohibition in the Institute’s rules against continuing the use of the firm name (al­ though Treasury Department rules prohibit prac­ Questions and Answers on tice by an individual under a partnership style), but it would be a violation of the Institute’s rules if Professional Ethics the description “ Members American Institute of Accountants,” were used in conjunction with a The following questions have been an­ firm name indicating a partnership when in fact a swered as indicated by the American Insti­ sole proprietorship existed. tute of Accountants committee on profes­ Q. I am moving my new office to a new location with sional ethics during the current fiscal year. the intention of increasing my public practice. Will it be unethical to insert a notice in the news­ The questions and answers formed a part papers that I am moving to a new location with of the committee’s report to council at its the intention of devoting all my time to public meeting at New York, May 11 and 12, practice, and my withdrawal from my present business firm? 1942: A. There is no objection to insertion of such a notice Q. Are governmental and municipal auditing ex­ in newspapers, provided the announcement does cluded from the application of Rules No. 7 and not exceed the limitations contained in Rule No. 10 No. 10, regarding solicitation and advertising? of the rules of professional conduct. A. The Institute’s rules of professional conduct apply to the conduct of members and associates of the Q. I am engaged by certain clients as a consultant and Institute in any type of professional practice. Both receive a minimum fee and a percentage of the rules No. 7 and No. 10 apply to municipal ac­ profits of the business for a stipulated period of counting and auditing with as much force as to time, but the determination of profits is made by any other accounting service. another certified public accountant. Do these arrangements violate Rule No. 9? Q. The terms of my employment permit me to take a A. Fees for consulting services not involving an limited number of independent accounting en­ opinion as to financial statements might be based gagements. Would a formal announcement of such on a percentage of net profits without violating availability to business associates constitute a Rule No. 9, but the question of violation would violation of Rule No. 5 ? depend on the circumstances, including the nature A. In general, when a new practice is undertaken, of the consulting services rendered, extent to which there would be no objection to such an announce­ third parties may be informed or influenced as a ment, by means of a card sent through the mails result of the service, and the precise nature of the to personal associates or a card published in the fee arrangement. press. Q. Our firm has been asked by a large bank to make Q. Is it ethical to use the initials C.P.A. on my busi­ some arrangement whereby we could take care of ness cards in view of the fact that my degree was its customers’ needs for assistance in filing of fed­ obtained in a state other than the one in which I eral income-tax returns. Does this conflict with am now practicing? any o f the ethical standards of the accounting A. Most states do not permit such a practice, but the profession ? suggestion is made that an official opinion be ob­ A. The committee withholds approval of such an ar­ tained from the state board of accountancy. rangement because it may result in complaints alleging indirect advertising or solicitation. Q. Is it unethical to permit clients, who spend only part of the year in this state, and whose tax re­ turns we prepare, to leave in our office their re­ Q. Is it ethical for a partnership to consist of a li­ ceipted tax bills and supporting papers to substan­ censed public accountant and a non-licensed pub­ tiate items of income and deduction in the returns, lic accountant? and to give our office address to the Treasury A. We believe it is generally agreed in the accounting Department for tax purposes? profession that while a qualified practitioner may The Certified Public Accountant 7

associate himself in partnership with one not so Members of the committee are: Frederick qualified, there should be no designation attached to the firm name which would indicate that all H. Hurdman, chairman, New York; Homer partners were qualified. L. Dalton, Ohio; Joseph J. Klein, New Q. A corporation is owned by a father and son. The York; J. Harold Stewart, Massachusetts; father is physically disabled and the son is being Edward B. Wilcox, Illinois. drafted into the Army. They have proposed that I serve on the executive board to carry on or liquidate the firm’s business. May I have your advice? Fif t y -Fif t h An n u a l A. If liquidation were decided upon financial state­ M e e t in g ments might not be certified for public con­ sumption, and presumably there would be no In tune with the times, the fifty- applications for credit; therefore, it would be of fifth annual meeting of the Institute, little practical significance to anyone if you were both a member of the executive board and auditor, to be held at the Palmer House, Chi­ but you should disclose in any certificate or re­ cago, September 28th through Oc­ port the fact that you were a member of the ex­ ecutive board. It would be a better arrangement if tober 1st, will emphasize problems in you continued as auditor and sat with the board accounting practice which result from as technical advisor without being a member of it wartime conditions. or having any vote in its decisions; or you might accept membership on the board for compensa­ Topics scheduled for discussion in­ tion and arrange to have any necessary audit per­ clude effective use of technical per­ formed by some other firm. sonnel in war; auditing contractors’ Q. A certified public accountant is employed by a costs; accounting for allocated ma­ company as assistant auditor. The company owns stock in another company and an officer and di­ terials; accounting for conversion and rector of the first company hold the same positions other abnormal costs; distribution of in the second company. The accountant as part of overhead expenses on cost-plus-fixed- his regular duties conducts periodic audits of the second company. He is now asked to certify the fee contracts; methods of “ spreading financial statements of the second company. Is the work” including experience in there any objection to this procedure? A. In the circumstances outlined, it is doubtful converting clients to the natural whether the accountant could be considered “ in­ business year, inventories and re­ dependent” with respect to the financial state­ ments of the second company. The financial in­ ceivables in relation to monthly and terest of the first company in the second company, quarterly audits, use of clients’ staffs by which he is employed, would raise questions as from the point of view of both client to the accountant’s independence. If he should decide to sign the report, disclosure should be and practitioner. made of the factors which adversely affect his in­ There will be round-table sessions dependent status. devoted to such vital topics as the Q. I have always used the plural “ we” in corre­ scope of test-checking; accounting for spondence and certificates, although I have no partners. Is there any objection to using this form? war reserves; tax accounting; and A. There appears to be no objection to this usage. defense accounting. The popular “question-box” program at which an Q. A certified public accountant purchased the prac­ tice, including the goodwill and firm name, of a impressive panel of experts attempts certified public accountant who had, in turn, to answer questions from members bought his partner’s interest at a prior date. Is it a violation of the Institute’s rules to continue prac­ will emphasize wartime problems. tice under the firm name, although neither of the One session will be devoted to a men of whose names it consists are now connected discussion of taxes, with special em­ with the firm? A. No. phasis upon accelerated depreciation and other timely questions. Q. An accountant starts a private practice after having been employed by a firm of public account­ The committee on meetings has ants in the same locality. Under Rule No. 7, is succeeded in arranging a program he permitted to send announcements to clients of the former employer? which should be of immediate practi­ A. In the case of a member embarking upon public cal value for everyone who attends. practice for the first time it is believed permissible The list of speakers, which is almost to publish in the press a simple card announcing his undertaking and a similar announcement complete, includes outstanding lead­ might be sent by mail to persons whom the ers in the profession and representa­ accountant knows. However, it is undesirable to send such announcements to clients of a former tives of government. employer. 8 The Certified Public Accountant

American Women’s Society N a t u r a l Bu sin e ss Y e a r of C.P.A’s Str e sse d a t Lu n c h e o n The American Women’s Society of Certi­ The use of the natural business fied Public Accountants, national profes­ year as one factor contributing to sional society of women C.P.A’s, will hold solution of problems of financial re­ its annual meeting at the Palmer House, porting under war conditions was Chicago, on September 25th and 26th— stressed by speakers at a luncheon immediately preceding the Institute’s an­ held by the New York State Society nual meeting. Institute members are cor­ of Certified Public Accountants at dially invited to attend these sessions. the Waldorf-Astoria Hotel in New York on May 26th. Sixty leaders in Advancement of Commercial business, banking, the legal profes­ Arbitration sion, credit groups, and the invest­ ment field attended the luncheon as In recognition of the services performed guests of the New York State Society. for commercial arbitration by Judge Moses Speakers at the luncheon, which H. Grossman, founder of the Arbitration may prove to be the first of a series of Society of America, one of two groups merg­ similar meetings, included William ing to form the American Arbitration Asso­ W. Werntz, chief accountant of the ciation, the council of the Institute adopted Securities and Exchange Commis­ the following resolution: sion, and Philip L. West, acting di­ “ Resolved, That the council of the rector of the Department of Stock American Institute of Accountants, assem­ List of the New York Stock Ex­ bled at its spring meeting in New York, change. May 11, 1942, hereby expresses its appre­ Also on the speakers’ list were ciation of the contribution to the advance­ Philip F. Gray, vice president of the ment of commercial arbitration by Judge Irving Trust Company, New York, Moses H. Grossman, and joins the Amer­ and Walter A. Cooper, chairman of the ican Arbitration Association in congratu­ lating Judge Grossman on the notable re­ committee on federal taxation of the sults of his untiring efforts.” American Institute, who outlined tax factors involved in changes to This resolution was transmitted to the natural fiscal closing dates. Another American Arbitration Association to be speaker was A. R. M. Boyle, treasurer presented at a dinner for Judge Grossman, of Lehn and Fink Products Corpora­ scheduled for May 12th but postponed due tion, who spoke from the viewpoint to his illness. Judge Grossman died June of a company keeping its accounts 6th. on the natural business year basis. The chairman of the luncheon was Ohio State University Program Saul Levy, recently elected first vice Ohio State University held its Fifth An­ president of the New York State So­ nual Institute on Accounting at Columbus, ciety, who spoke briefly on the nat­ May 15th and 16th, with Russell Willcox of ural business year and its advantages the accounting faculty in charge of the pro­ to management, credit grantors, and gram. Speakers included Eric L. Kohler, independent auditors. J. Arthur Mar­ editor of The Accounting Review, now with vin, president-elect of New York the War Production Board; Herbert F. State Society, also spoke. Taggart, now with the Office of Price Ad­ The American Institute of Ac­ ministration; Harry F. Howell, president countants cooperated in arrange­ of N.A.C.A.; and Donald M. Russell of De­ ments for the luncheon. troit, partner in Lybrand, Ross Bros. and Montgomery. The Certified Public Accountant 9

News from State Boards Francis Small, Philadelphia, Pa.—Chief Supervising Auditor, Fourth and Fifth Members of North Dakota State Board Naval Districts. of Accountancy elected the following offi­ Gordon C. Stubbs, Cincinnati, Ohio—1st cers on May 2nd: William M. Schantz of Lt., War Department, Fiscal Division, Bismarck, president; Edward W. Brady of Headquarters, Services of Supply, Ac­ counting and Audit Supervisory Branch, Grand Forks, secretary-treasurer. E. C. Cost Analysis Section, Washington, Daniels of Spokane has resigned from the D. C. Washington State Accountancy Examining Herbert F. Taggart, Washington, D. C.— Committee, completing seventeen years’ Director of the Accounting Division, service. His successor is Tracy K. Elder of Office of Price Administration, Tempo­ Spokane. John P. Begley of Omaha has rary Building, 6th and Independence been appointed to the Nebraska State Ave., S. W., Washington, D. C. Board succeeding Edward E. Lanphere of Lincoln. BUREAU OF ECONOMIC RESEARCH Members of the Institute The executive committee of the In­ Engaged in War Activities stitute, at its recent meeting, ac­ cepted an invitation from the Bureau This list supplements those published in of Economic Research to become one earlier issues. of the organizations participating in Haver E. Alspach, New York, N. Y.— the work of the Bureau and to nomi­ Ensign, U. S. Naval Reserve, Supply nate a member of the Institute as Corps, Washington, D. C. T. Coleman Andrews, Richmond, Va.— a member and director of that organ­ Supervising Auditor, Navy Department. ization for the five-year period end­ Donald F. Carroll, New York, N. Y.—Lt., ing with its annual meeting in Feb­ U. S. Military Academy—teaching. ruary, 1947. Percival F. Brundage of Benjamin M. Davis, Abilene, Texas—Cap­ New York was appointed to repre­ tain, Military Intelligence Section, U. S. sent the Institute in this capacity. Army, Fort Sam Houston, Texas. The National Bureau of Economic 0 . W. Ecuyer, New Orleans, La.—U. S. Research is an independent agency Naval Reserve. cooperating actively with universi­ Samuel E. Ellis, New York, N. Y.—Lt., U. S. Naval Reserve, Supply Corps, ties, government agencies, business Washington, D. C. enterprises, and associations and Arthur F. Evans, Brooklyn, N. Y.—U. S. professional societies in the study of Army Air Corps, Officer Candidate economic activities and their inter­ School, Miami, Florida. relations. Many of its investigations Fred R. Kohler, Chicago, Ill.—War De­ require the development and use of partment, Army Field Auditor in charge materials found in the accounting of Army Fiscal Field Office, Cleveland records of business enterprises. Or­ Ordnance District. ganizations now eligible to nominate Burke G. Piper, Appleton, Wis.—S/Sgt., Medical Detachment, Jefferson Bar­ directors of the Bureau, in addition racks, Mo. to the Institute, include the Ameri­ August J. Pousson, New York, N. Y.— can Economic Association, American First Finance Training Battalion, Fort Farm Economic Association, Ameri­ Benjamin Harrison, Ind. can Federation of Labor, American Adam Rhodes, Boston, Mass.—1st Lt., Management Association, American Signal Corps, U. S. Army, Washington, Newspaper Publishers Association, D. C. American Statistical Association, and Walter D. Snell, Oklahoma City, Okla.— National Publishers Association. Captain, Army Air Corps, Technical Training Command, Scott Field, Ill. 10 The Certified Public Accountant

addressed the annual meeting of the Mis­ O.P.A. financial reporting sissippi Society at Laurel on May 30th. f o r m s John L. Carey, secretary, spoke at the recent annual meeting of the Massachu­ New financial reporting forms re­ setts Society. He is at present on a trip in­ quired from about 25,000 business cluding visits to a number of state societies corporations with assets in excess of in the southwest, mountain states area, $250,000 engaged in manufacturing, and on the Pacific Coast. The itinerary in­ mining, construction, and wholesal­ cludes Tulsa, Fort Worth, Denver, Salt ing were issued by the Office of Price Lake City, Los Angeles, San Francisco, Administration on May 10th. The Portland, and Seattle. O.P.A. sent copies of these forms and Victor H. Stempf, member of the execu­ related instructions to all members tive committee, represented the Institute and associates of the American In­ at Ohio State University’s Fifth Annual stitute of Accountants, in the belief Institute on Accounting, held in Columbus that clients would consult their audi­ on May 15th and 16th, and spoke briefly tors about the forms, and that public at the dinner meeting. accountants, therefore, should be fa­ A number of Institute members are serv­ miliar with them. ing as chairmen and members of volunteer Herbert F. Taggart, director of the committees organized to raise funds in the O.P.A. accounting division, explained current U.S.O. campaign to provide recre­ in a statement issued May 25th that ational and spiritual facilities for the armed only those corporations receiving forces of the United States. This campaign, Form A, annual financial report, and with a quota of $32,000,000, is scheduled to Form B, interim financial report, end on July 4th. C. H. Knoll of New York from O.P.A. are required to supply City announces that the Accountants Divi­ data. Retail businesses, he points out, sion of the Greater New York—U.S.O.— have not been asked to file these Joint War Appeal has accepted a quota of forms except in a few cases where $30,000. A committee of thirty accountants corporations combine wholesale and is assisting him in this activity in the retail activities. Greater New York area.

Publications Activities of Officers and Members Between September 1, 1941, and April 30, 1942, the Institute distributed 835,287 George Cochrane, vice president of the copies of publications, exclusive of The Institute, addressed the annual meeting of Journal of Accountancy, The Certified Massachusetts Society, in Boston, May Public Accountant, and other publica­ 25th; a meeting of the Oklahoma Society, tions of the American Institute Publishing in Tulsa, June 10th; and the annual meet­ Co., Inc. O f this number, 762,269 were sold. ing of the Texas Society, in Fort Worth, A few of the more popular items were June 11th. Accounting, Auditing and Taxes— 1 9 4 1 : George S. Olive, vice president; Samuel 10,914; Examination of Financial Statements J. Broad, treasurer; and T. Coleman An­ by Independent Public Accountants: 5,302; drews, member of council, addressed the Yearbooks: 6,189; Bank Confirmation annual down-state meeting of the Illinois Forms 1940 and 1940A: 180,904; “ Finan­ Society at the University of Illinois, May cial Statements—What They Mean” : 15th. Mr. Andrews also addressed the 178,158; “ Please Check Your Account” : annual meeting of the Florida Institute, 474,310; Accounting Research Bulletins: held in Jacksonville on May 22nd and 23rd. 46,405. The present circulation of T h e Edward S. Rittler, member of council, Certified Public Accountant is about The Certified Public Accountant II

7,500, and that of The Journal of Account­ determining the maximum price of any item ancy about 17,000. sold after May 18 th (effective May 18th); (5) Continue to provide customary sales slips and give receipts (effective May 18th); Institute of Internal Auditors (6) Properly identify all merchandise in The Institute of Internal Auditors will displaying prices or preparing statements of maximum prices. hold a dinner meeting at The Biltmore, New York City, June 16th. William W. Werntz, chief accountant of the Securities Staff Member Called to and Exchange Commission and consultant Active Duty to the accounting division of the Office of Victor Z. Brink, technical assistant to the Price Administration, will speak on “ Finan­ committee on auditing procedure of the cial Reports to the O.P.A.—Role of the American Institute since August, 1941, Internal Auditor.” instructor in accounting at Columbia Uni­ versity, and a member of the Institute, has Canadian Excess Profits Tax been called to active duty as a Captain in Copies of a recent address on the “Work the Army of the United States. of the Board of Referees under the Excess Profits Tax Act,” by Mr. Justice Harrison, chairman of the board, are offered to Insti­ STATE SOCIETY NEWS tute members without charge by A. H. Carr, secretary-treasurer of the Dominion The executive committee of the Massa­ Association of Chartered Accountants, 10 chusetts Society has appointed a special Adelaide Street, East, Toronto. committee on wartime problems consisting of Edward J. McDevitt, Jr., immediate General Maximum Price past president, chairman, Albert E. Hunter, and J. Harold Stewart, both past presidents, Regulation Bulletin No. 2 to coordinate activities of all practicing ac­ This bulletin, entitled “What Every Re­ countants in the state in order that the pro­ tailer Should Know about the General fession may make its maximum contribu­ Maximum Price Regulation” was released tion to war activities. Release No. 1, by the Office of Price Administration, Wash­ issued by this committee, outlines a pre­ ington, D. C., on May 22nd, to explain as liminary program for study and action. simply as possible essential features of The N ew York State Society has re­ retail price control. It describes the five tests cently distributed releases Nos. 6, 7, 8, and by which the retailer determines his maxi­ 9 in the series prepared by its special mum selling prices, tells how to display and committee on wartime problems. Titles of report ceiling prices on cost-of-living com­ these releases are, respectively, “Account­ modities, explains what records the retailer ing Procedures and Requirements under the must keep in his store, and provides other New Priorities Plan”; “ Solving Some War­ useful information. Record-keeping require­ time Problems: The Natural Business ments of the General Maximum Price Year”; “Priorities and Scarcities in Ac­ Regulation are summarized as follows in countants’ Office Supplies and Recommen­ Bulletin No. 2: dations for Meeting This Problem”; and “Priorities Round-Table on Accounting (1) Preserve all existing records of Procedure in Connection with Production March, 1942, prices (effective April 28th); Requirements Plan.” (2) Keep the same kind of records or docu­ ments relating to prices charged after May An intensive six-session clinic on “ Re­ 18th (effective May 18th); (3) Prepare a sponsible Talking,” was initiated by the statement of highest prices charged in the New York State Society June 1st. Emphasis base period (March) (effective July 1st); is being placed on informal presentations (4) Keep records showing the basis for before groups which make decisions, con­ 12 The Certified Public Accountant

ference discussions with clients, and papers Massachusetts, at Boston, May 25th, with for professional and lay audiences. Included officers of all New England societies in­ among other important topics is the prob­ vited; Mississippi, at Laurel, May 30th; lem of presenting technical material in a New Jersey, at Newark, May 21st; New form clear and interesting to laymen with­ Y o r k , at New York City, May nth, ad­ out sacrificing accuracy. dressed by Senator Elmer Thomas of Okla­ The Nebraska Society, at its meeting on homa on “Limitation of Profits on War April 18th, unanimously adopted a resolu­ Contracts”; Pennsylvania Institute’s Har­ tion “recommending that the American risburg Chapter, May 13th, with Joseph Institute of Accountants, through the Getz of New York as the principal speaker; proper committee, urgently exert its best Seattle Chapter o f Washington Society efforts to establish through appropriate May 20th. legislation a date not later than 105 days following the closing date of the period cov­ ered for filing of federal income-tax returns.” Visitors at Institute Offices The Society pledged its assistance in any Roy L. Alborg, Chicago, Ill. effort to accomplish this objective. A copy T. Coleman Andrews, Richmond, Va. of the resolution was sent to the chair­ Andor Beretvas, Los Angeles, Calif. J. B. Carlin, Memphis, Tenn. man of the Institute’s committee on federal Gordon M. Dickinson, Deland, Fla. taxation. Carl E. Dietze, Milwaukee, Wis. The fourth annual down-state meeting of Thornton G. Douglas, Los Angeles, Calif. the Illinois Society was held at the Uni­ Oscar Ferger, New York, N. Y . T. Low Ferguson, Montreal, Canada versity of Illinois, Champaign-Urbana, May R. J. Gallagher, Philadelphia, Pa. 14th and 15th. Stephen Gilman, Chicago, Ill. Members of the California Society and Charles Goldstein, Perth Amboy, N. J. invited guests were addressed by Paul Herbert Greenwood, New York, N. Y. William E. Hanley, Washington, D. C. Barksdale D’Orr, state rationing adminis­ Henry R. Hatfield, Berkeley, Calif. trator, on “The Rationing Program and Its C. N. Hockam, Denver, Colo. Effect on Accountants” at a luncheon meet­ David Humphries, New York, N. Y. ing in Los Angeles, May 18th. Joel Hunter, Jr., Atlanta, Ga. A. Joel Jackson, Norfolk, Va. Recent annual meetings of state societies James I. Keller, Jr., Miami, Fla. and their chapters include the following: Lincoln G. Kelly, Salt Lake City, Utah Colorado, at Denver, May 22nd, with a Edward H. Kinn, New York, N. Y. business session, banquet, and sports pro­ Paul Landers, Hartsdale, N. Y. E. E. Lanphere, Lincoln, Neb. gram; Florida, at Jacksonville, May 22nd Vinton E. Lee, Washington, D. C. and 23rd, with addresses by John L. Fahs, F. L. May, Owensboro, Ky. collector of internal revenue, and John P. Edward H. Moeran, Yonkers, N. Y. Ingle, general manager, Associated Indus­ Arthur Monat, Washington, D. C. L. Lynn McManus, Philadelphia, Pa. tries of Florida; Georgia, at Atlanta, May Andrew Nelson, New York, N. Y. 16th, addressed by Norman D. Cann, of Nicholas Picchione, Providence, R. I. Washington, D. C., assistant to the com­ Dr. Alfred Schlomann, Boston, Mass. missioner of internal revenue, and George W. Ernest Seatree, Washington, D. C. Albert E. Smith, New York, N. Y. B. Hamilton, state treasurer—a special in­ Maurice H. Stans, Chicago, Ill. vitation was sent to members engaged in the John T. Stapleton, Wilkes-Barre, Pa. war effort and to members of other state Abner J. Starr, Cincinnati, Ohio societies stationed at military posts in Ralph B. Stratford, Portland, Ore. Albert P. Taliaferro, New York, N. Y. Georgia; Indiana, at Indianapolis, May Charles W. Todd, Philadelphia, Pa. 23rd, addressed by James L. Wicks, editor Charles Tucker, Boston, Mass. and economic analyst; Minnesota, at St. Edwin H. Wagner, Sr., St. Louis, Mo. Paul, May 26th; Maryland, at Baltimore, Earl A. Waldo, Minneapolis, Minn. W. Ballard Ward, New York, N. Y. May 12th, with an address by Charles W. Paul J. Wedel, Alexandria, Va. Smith, chief, Bureau of Accounts, Finance Donald Y. Wemple, Los Angeles, Calif. and Rates, Federal Power Commission; L. C. J. Yeager, Louisville, Ky. The Certified Public Accountant 1 3

Election of Members Arnold C. Soney, Boston, Mass. Jake B. Sureck, Oklahoma City, Okla. A d v a n c ed to M e m b e r s h ip Dettmer L. Wahl, Minneapolis, Minn. A . 0. Bryan Turner, San Juan, P. R. J. Russell Walsh, St. Louis, Mo. A d m it t ed as M e m b e r s Irwin M. Alberts, New York, N. Y. Victor Z. Brink, New York, N. Y. C. Vaughan Darby, of Washington, Isador Bressler, Newark, N. J. D. C., died May 13th at the age of 53. A John F. Callahan, New York, N. Y. John P. Darmody, Boston, Mass. native of Barnesville, Md., Mr. Darby at­ Omar K. Edes, Boston, Mass. tended the Washington School of Account­ Noah Fetter, Huntington, W. Va. ing and Business Administration and the Pascha M. Goldberg, Minneapolis, Minn. Pace Institute. He had been in public prac­ Frank E. Gray, Newark, N. J. Sydney Jay Greenwald, New York, N. Y. tice since 1919. A certified public account­ Theodore J. LaManna, New York, N. Y. ant of North Carolina and of the District Irvin L. Levitan, Louisville, Ky. of Columbia, he was a member of the Dis­ Frederick A. Linden, San Francisco, Calif. trict of Columbia Institute of Certified Frank J. Linehan, New York, N. Y. Herbert T. McAnley, Chicago, Ill. Public Accountants, and for many years Stewart Y. McMullen, Evanston, Ill. had been secretary of the Board of Account­ Edward C. Nicholson, Minneapolis, Minn. ancy for the District of Columbia. He was Roy T. Omundson, Chicago, Ill. formerly dean of the Graduate School of Marino Possidente, New Haven, Conn. Arnold E. Roschli, New York, N. Y. Accountancy of Strayer College. At the Ben L. Rosenberg, Chicago, Ill. time of his death, Mr. Darby was senior Joseph Sandler, New York, N. Y. partner in the firm of Darby & Feller. He Neville C. Seymour, Havana, Cuba had been a member of the American Insti­ Otis K. Smith, Washington, D. C. Henry L. Schwering, Cleveland, Ohio tute of Accountants since 1924. Willard D. Squires, Pittsburgh, Pa. R. LeRoy Kirschner, of Columbus, George M. Thayer, Columbia, S. C. Ohio, died May 2nd at the age of 44. He was Irving Weinstein, New York, N. Y. born in Elyria, Ohio. In 1920 Mr. Kirschner Benjamin A. Wilson, Winston-Salem, N. C. Edward C. Wirotzious, Memphis, Tenn. was employed in the accounting firm of Harry A. Keller. In 1928 he became a part­ A d m it t ed as A sso c ia t es ner of the firm, where he remained until the Earl W. Bauman, Casper, Wyo. time of his death. Recently the firm was Eugene A. Birmingham, Jersey City, N. J. known as Keller, Kirschner, Martin & Charles C. Bowen, San Francisco, Calif. Clinger. Mr. Kirschner was a certified pub­ John L. Danch, New York, N. Y. John S. Darling, Chicago, Ill. lic accountant of Ohio and a member of the Edward L. Dublin, New York, N. Y. Ohio Society of Certified Public Account­ William H. Evans, Dallas, Texas ants. He had been a member of the Ameri­ Quentin Kermit Ford, Chicago, Ill. can Institute of Accountants since 1928. Joseph Geringer, New York, N. Y. Solomon Goldman, New York, N. Y. James E. Nugent, of Newburgh, N. Y., Woodie J. Hamby, Beaumont, Texas died May 11th. A native of Newburgh, Mr. Herbert S. Hopkins, Detroit, Mich. Nugent was a graduate of Spencerian Busi­ Bernard B. Isaacson, Wilmington, Del. ness College and of the School of Commerce, C. Lester Janes, Fremont, Mich. Arthur S. Jensen, New York, N. Y. Accounts and Finance of New York Uni­ Charles M. Katz, Newark, N. J. versity. He worked in public accounting Glenn R. Kleinau, Chattanooga, Tenn. firms in New York City until 1915, when he Arnold W. Lapp, Toledo, Ohio returned to Newburgh to become secretary Sidney I. Marcus, New York, N. Y. M. D. McCaskill, St. Paul, Minn. of the automobile firm of Sloan and Clapper. Justin K. Miller, New York, N. Y. Since 1925 he had been senior partner in the Lowell Nichols, Louisville, Ky. firm of Nugent and Haeussler. Mr. Nugent Charles J. Oraftik, Fort Meade, Md. had been auditor of the Newburgh Com­ Harry G. Pearson, New Orleans, La. munity Fund since its organization, and for William S. Reagan, Boston, Mass. Albert O. Schnabel, Dallas, Texas a long time served on the auditing commit­ Paul C. Smith, Camden, N. J. tee of the local Chamber of Commerce. A

RUMFORD PRESS CONCORD, N. H. H The Certified Public Accountant certified public accountant of New York, Pace was deputy commissioner in the Bu­ he was a member of the New York State reau of Internal Revenue, and was largely Society of Certified Public Accountants, responsible for reorganizing and directing and for a number of years had been a mem­ the income-tax unit in 1918 and 1919. A ber of the Grievance Committee of the New member of the American Institute, of Ac­ York State Education Department. He had countants and predecessor organizations been a member of the American Institute of since 1908, Mr. Pace had served on a num­ Accountants since 1924. ber of its committees, and from 1923 to 1927 Homer S. Pace, of New York, N. Y., was a member of the Institute’s council. died on May 22nd, at the age of 63. He was William A. Smith, of Memphis, Tenn., a native of Rehoboth, Ohio. Mr. Pace re­ died May 13th. He was 71. A native of Chi­ ceived the C.P.A. certificate from the State cago, Mr. Smith had made his home in of New York in 1907, and was at one time Memphis for the past 45 years. For a few president of the New York State Society of years after going to Memphis, he was sec­ Certified Public Accountants. In 1906 he retary of the Tennessee Club. When he be­ was co-founder with his brother, Charles A. came a certified public accountant, Mr. Pace, of the firm of Pace & Pace, and later Smith formed a partnership with Edward of Pace Institute, a school of commerce S. Elliott. He held the C.P.A. certificate of and accounting. Recently Mr. Pace had the states of Arkansas, Ohio, Mississippi, organized special wartime courses in many and Tennessee, and was a member of the subjects, including a refresher course in Tennessee Society of Certified Public Ac­ auditing designed to increase the supply countants. Mr. Smith had been practicing of accountants in the present emergency. accounting under his own name for the past Mr. Pace had been a professor at Colum­ 25 years. He had been a member of the bia University, and was formerly editor American Institute of Accountants and of The American Accountant. He was the predecessor organizations since 1905, and author of many books on accounting and during the period of 1918-1927 served on allied subjects. In World War One Mr. the Institute’s council. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

J u ly 1 9 4 2

Annual Meeting

Army Specialist Corps

State Society Elections

Selective Service Bulletin

Questionnaires to Industry

O.P.A. Calls Accountants

Examination Results

15¢ a Copy Published Monthly $1 a Year

V o l . 2 2 No. 7

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO.. INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authorities, business­ men, and others.

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Auditing Examination of Financial Statements by Independent Public Accountants...... 15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢

Taxation A Sound Basis for Taxation—By Walter A. Cooper...... 10¢ (Orders for more than 25 copies, 5¢ a copy)

Accounting Research Bulletins No. 1—General Introduction and Rules Formerly Adopted...... 10¢ No. 2—Unamortized Discount and Redemption Premium on Bonds Refunded.. 10¢ No. 3—Quasi-Reorganization or Corporate Readjustment—Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4—Foreign Operations and Foreign Exchange...... 10¢ No. 5—Depreciation on Appreciation...... 10¢ No. 6—Comparative Statements...... 10¢ No. 7—Reports of Committee on Terminology...... 10¢ No. 8—Combined Statement of Income and Earned Surplus...... 10¢ No. 9—Report of the Committee on Terminology...... 10¢ No. 10—Real and Personal Property Taxes...... 10¢ No. 11—Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12—Report of Committee on Terminology...... 10¢ No. 13—Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14—Accounting for United States Treasury Tax Notes...... 10¢ Statements on Auditing Procedure No. 1—Extensions of Auditing Procedure...... 10¢ No. 2—The Auditor’s Opinion on the Basis of a Restricted Examination...... 10¢ No. 3—Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4—Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5—The Revised S.E.C. Rule on “Accountants’ Certificates” ...... 10¢ No. 6—The Revised S.E.C. Rule on “Accountants’ Certificates” (continued).. 10¢ No. 7—Contingent Liability under Policies with Mutual Insurance Companies. 10¢ No. 8—Interim Financial Statements and the Auditor’s Report Thereon...... 10¢ No. 9—Accountants’ Reports on Examinations of Securities and Similar In­ vestments under the Investment Company Act of 1940...... 10¢ No. 10—Auditing Under Wartime Conditions...... 10¢ American Institute of Accountants

Activities of the Month SELECTIVE SERVICE BULLETIN At the request of the National Associa­ RELATING TO ACCOUNTANTS tion of Investment Companies, the Insti­ tute committee on accounting procedure, Accountants are included in a list of with the consent of the executive com­ critical occupations attached to Occu­ mittee, has appointed an advisory com­ pational Bulletin No. 10 on the subject mittee to cooperate with the Association of scientific and specialized personnel, and with the S.E.C. in a study of accounting issued June 18, 1942 by National procedures for companies subject to the Headquarters of the Selective Service Investment Company Act of 1940. The ad­ System to state directors, board of visory committee is composed of Homer N. appeal members, local board members, Sweet, chairman, Chester W. DeMond, and government appeal agents. Paul K. Knight, Raymond E. North, and The bulletin states that careful con­ Harry I. Prankard. sideration for occupational classifica­ tion should be given to all persons trained, qualified, or skilled in the An inquiry to determine the relationship critical occupations listed “ and who are between reproductive costs and selling engaged in activities necessary to war prices in certain industries, and the effect production or essential to the support of this relationship on inventory methods, of the war effort.” has recently been sent to a limited number The bulletin states that the Na­ of selected manufacturing concerns by tional Roster of Scientific and Special­ the subcommittee on inventories of the ized Personnel has certified to the committee on accounting procedure. This Director of Selective Service that inquiry, prepared by the subcommittee in there are serious shortages of persons cooperation with the Institute research trained, qualified, or skilled to engage staff, has already resulted in a number of in these critical occupations in neces­ replies which will be useful in continuing sary activities. the study of inventories. The bulletin also provides in certain circumstances for deferment of stu­ A report of the subcommittee on surplus dents in these fields who have com­ of the committee on accounting procedure pleted a substantial part of their was submitted at a recent meeting of the training. In addition to accountants, full committee. It was agreed that the Insti­ the list of critical occupations includes tute research staff should prepare, and twelve types of engineers, statisticians, send to committee members and others, industrial managers, mathematicians, as a basis for discussion, a memorandum economists, chemists, and several other embodying criticism and comment on this groups. report. At the same meeting, it was agreed The complete text of the bulletin to send a questionnaire to members of the was sent to all members and associates full committee for the purpose of obtaining of the American Institute of Account­ their views on various aspects of the recent ants on July 3rd. report of the subcommittee on income taxes. 1 2 The Certified Public Accountant

John H. Zebley, Jr. of Philadelphia rep­ ing, the research staff of the Institute is now resented the American Institute of Ac­ preparing a preliminary draft to be sub­ countants at the National Bankruptcy Con­ mitted to members of the full committee for ference held on June 5th and 6th in that review and comment. city, in place of Arthur C. Upleger of Waco, Texas, chairman of the Institute commit­ tee on bankruptcy. Benjamin Goldenberg Activities of Officers and and Lewis J. Laventhol of Philadelphia, In­ Members stitute members, also attended these ses­ sions. Charles S. J. Banks of Chicago, a George Cochrane, vice president of the member of the Institute committee on Institute, addressed the Tulsa Chapter, bankruptcy, was one of the speakers. Topics Oklahoma Society of Certified Public Ac­ discussed included the function of certified countants, June 10th, and the annual meet­ public accountants in examining accounts ing of the Texas Society of Certified Public filed by referees in bankruptcy and by Accountants at Fort Worth, June 12th, on trustees. current trends in financial statements. He stressed particularly the impact of the war In response to a request from the Securi­ on business and consequent problems of ties and Exchange Commission, the chair­ accounting and financial reporting. man of the Institute committee on auditing C. Oliver Wellington, immediate past procedure recently forwarded to the Com­ president of the Institute, and acting chair­ mission comments of committee members man of the executive committee, addressed referring to a proposed regulation requiring the Tanners’ Council of America, May 8th, annual reports from members of national on “ Capital Protection for Tanners”; and securities exchanges, brokers, and dealers in the Flavoring Extract Manufacturers’ As­ securities. sociation of the United States, May 18th, on “ Doing Business in Wartime.” Mr. Well­ A report entitled “Auditing Under War­ ington was recently elected a member of time Conditions” has recently been issued the Conference on Price Research, an or­ jointly by the Institute committee on audit­ ganization sponsored by the National Bu­ ing procedure and the committee on prac­ reau of Economic Research and a number tice procedure of the New York State So­ of affiliated universities. ciety of Certified Public Accountants. This James A. Rennie of Richmond repre­ report has been published as No. 10 in the sented the American Institute of Account­ series of statements on auditing procedure ants at the Institute of Public Affairs, a issued by the Institute committee. forum for the discussion of foreign and domestic problems, held at the University of Virginia, Charlottesville, July 5th-11th. The staff of the research department has On June 11th the secretary of the Insti­ been making a study of accountants’ short- tute addressed the annual meeting of the form reports, as presented in the published annual reports of corporations, giving par­ Texas Society of Certified Public Account­ ants at Fort Worth on contributions of the ticular attention to variations from the In­ accounting profession to the war program, stitute’s standard form of report. and on June 19th he spoke before the annual meeting of the California Society of Certi­ Possible publication of a bulletin in the fied Public Accountants at Los Angeles on accounting research series, referring to the the same subject. He also attended spe­ effect on financial statements of recent leg­ cially-arranged meetings of the Tulsa Chap­ islation providing for renegotiation of gov­ ter, Oklahoma Society, June 10th; the ernment contracts, was discussed at an in­ Colorado Society of Certified Public Ac­ formal meeting attended by members of countants at Denver, June 15th; the Utah the Institute committee on accounting pro­ Association of Certified Public Accountants cedure, June 18th. As a result of this meet­ at Salt Lake City, June 16th; the Oregon The Certified Public Accountant 3

State Society of Certified Public Account­ Joseph B. Fyffe, Boston, Mass.—Lt., U. S. ants at Portland, June 24th; and the Seattle Navy, Washington, D. C. and Tacoma Chapters of the Washington Albert J. Henke, Portland, Oregon—En­ Society of Certified Public Accountants at sign, Supply Corps, U. S. Naval Reserve. Anson Herrick, San Francisco, Calif.— Seattle, June 25th. War problems were the Chief Supervising Cost Inspector, Twelfth subject of discussion at all the meetings. Naval District. The total attendance at all meetings was Marvin P. Kahl, Indianapolis, Ind.—Cap­ approximately six hundred. tain, Army Air Corps. The secretary of the Institute also con­ Eric L. Kohler, Wilmette, Ill.—Manage­ ferred on state society problems with the ment Services Staff, Division of Indus­ presidents of several of the organizations try Operations, War Production Board, mentioned, and a number of luncheon Washington, D. C. meetings were arranged with officers and R. Louis Lazo, San Juan, Puerto Rico—Lt. Commander, Supply Corps, U. S. Naval directors of the state societies. Reserve, San Juan. Everywhere the discussions brought out I. B. McGladrey, Cedar Rapids, Iowa— evidence of the acute shortage of trained Major, United States Army, Fort Francis and experienced accountants due to the in­ E. Warren, Wyo. roads of selective service and war industries William A. Munroe, Boston, Mass.—Lt., upon accounting personnel. One of the U. S. Navy, Boston. principal problems of the profession during Harry O. Parker, Raleigh, N. C.—1st Lt., the coming year will be to render needed Supply Headquarters of the War De­ accounting service with greatly depleted partment, Washington, D. C. Adolph T. Samuelson, Chicago, Ill.—Lt., staffs. To this end much interest was shown Supply Corps, U. S. Naval Reserve, in suggestions for spreading the work and Manitowoc, Wis. curtailing nonessential work. Henry P. Seidemann, Washington, D. C.— Deputy Director and Executive Officer, Members of the Institute Army Specialist Corps, Washington, Engaged in War Activities D. C. George R. Talmage, Dayton, Ohio—Fi­ This list supplements those published in nance Officer, Camp Haan, Texas. earlier issues. Fladger F. Tannery, Austin, Texas—Ac­ counting Consultant for the Air Forces Roy Andreae, Chicago, Ill.—Chief Super­ of the United States Army, Washington, vising Cost Inspector, Ninth Naval Dis­ D. C. trict. Herbert R. Thielman, San Mateo, Calif.— Josef A. Baird, Detroit, Mich.—28th Tech­ United States Naval Reserve. nical School Squad, Jefferson Barracks, Norman H. S. Vincent, Boston, Mass.— Mo. Chief Supervising Cost Inspector, First M. H. Barnes, Savannah, Ga.—Chief Su­ Naval District. pervising Cost Inspector, Sixth Naval William H. Walker, Indianapolis, Ind.— District. Lt., United States Army. Robert I. Barry, Washington, D. C.—Chief William C. Woodard, Fort Worth, Texas— Accountant, Central Procurement Dis­ Lt., United States Naval Reserve, trict, Army Air Forces. Eighth Naval District. Robert P. Briggs, Ann Arbor, Mich.— Chief of Audit Division, Detroit Ord­ Three Sons Commissioned nance District. Victor Z. Brink, New York, N. Y.—Cap­ in Army and Navy tain, U. S. Army, Contracts and Pur­ Three sons of Edwin H. Wagner of chases Section, Accounting and Audit St. Louis, a member of council of the In­ Supervisory Branch, Fiscal Division, stitute—all of whom were formerly in Service of Supply, Washington, D. C. T. Reginald Cloake, New York, N. Y.— public accounting practice—are now serv­ Lt., Supply Corps, U. S. Naval Reserve. ing with the armed forces of the United Earl R. Dahlquist, Chicago, Ill.—U. S. States. Edwin H. Wagner, Jr., is a Lieuten­ Army, Jefferson Barracks, Mo. ant Commander in the United States Naval 4 The Certified Public Accountant

Reserve; W a r r e n S. W a g n e r , a Second tion by letter or telegram or telephone, re­ Lieutenant in the U. S. Army, Ordnance questing identical data from more than Department; and John S. Wagner, a Lieu­ three companies, regardless of whether the tenant in the U. S. Naval Reserve. request is made direct by the War Produc­ tion Board or by another Federal agency or private organization on behalf of the War Questionnaires to Industry Production Board. A subcommittee of the American Insti­ Section 3. Establishment of the Committee: tute of Accountants committee on war ac­ .01. There is hereby established within tivities has made studies and submitted re­ the Executive Office of the Chairman a ports to appropriate government agencies committee for the revision and elimination on the possibility of reducing the number of of Data Requests which consists of a Chair­ requests to industry for financial and other man, to be appointed by the Chairman of data required by war agencies. The follow­ the War Production Board, and a repre­ ing letter from the War Production Board sentative from the War Department, Navy addressed to the Institute under date of Department, Materials Division, Statistics June 27th and the attached General Admin­ Division, Bureau of Priorities, Bureau of istrative Order No. 2-43 show that action Industry Branches and an advisor from the Bureau of the Budget. has been taken in an effort to eliminate duplication of requests for data of this kind: Section 4. Interim Procedure for Clearance of ‘ Data Requests': “ Because of the work that you and your .01. In the period ending September 30, associates have done to assist the War 1942, no new Data Requests shall be issued Production Board and the Bureau of the by the War Production Board until existing Budget with the survey which they have Data Requests can be restudied and their made in the interest of eliminating certain need determined, except in an emergency objectionable data requests from business and then only after approval as prescribed and industry, I thought you would be inter­ in General Administrative Order No. 6 and ested in the attached General Administra­ General Administrative Instruction No. 6, tive Order which Mr. Donald M. Nelson dated February 12, 1942, and after final signed on Thursday and which is being approval by the Chairman of this com­ issued to all organizational units of the mittee. War Production Board this week. Section 5. Functions of the Committee: W i l l i a m E. L e v i s , Special Assistant Executive Office of the Chairman .01. The Chairman of the Committee for the Review of Data Requests from industry, “General administrative with the advice and assistance of the mem­ ORDER NO. 2-43 bers of the committee and subject to the direction of the Chairman of the War Pro­ Effective date, June 27, 1942 duction Board, shall: Subject: Committee for the Review of Data 1. Review all Data Requests being Requests from Industry. sent to industry by any organizational unit of the War Production Board and Section 1. Purpose of this Order: when it is determined that the value of .01. The purpose of this order is to estab­ the information for war production re­ lish a committee to review all existing Data quested on such forms justifies the work Requests of the War Production Board in entailed, he shall authorize the affixing to order to determine those that shall be re­ the approved form a symbol to indicate vised or eliminated in view of Priorities that the form has been reviewed and is Regulations Nos. 3, 10 and 11. considered necessary to war production. 2. When all existing Data Requests Section 2. Definition o f 'Data Request': have been so reviewed and the symbol .01. For the purpose of this order, the affixed, but not later than October 1, term ‘Data Request’ includes any ques­ 1942, advise business and industry that tionnaire, priority application or any other no WPB forms need be processed by form of report or return, whether for single­ them unless the forms bear the desig­ time or recurring use, and any communica­ nated symbol. The Certified Public Accountant 5

j. Work with the Bureau of the Budget in an effort to have all other National War Agencies including the Armed Serv­ ANNUAL MEETING WILL ices establish moratoria, conduct similar Be H eld surveys and apply similar symbols indi­ cating that their forms have been re­ viewed and deemed necessary for war In view of public announcements production. of cancellation of conventions of vari­ ous associations, many members of Section 6. Accessibility of Information: the Institute have asked whether the .01. The committee shall have access to all information necessary for the perform­ Institue’s annual meeting would be ance of its functions available in or through held at Chicago, September 28th to any office of the War Production Board. October 1st, as planned. Representa­ tives of the Institute have discussed Section 7. Termination of Committee: .01. When the survey is complete and all the situation with the Office of De­ Data Requests of the War Production fense Transportation and have been Board bear a symbol to indicate that the informed that, while that office has form has been reviewed and is considered requested that all non-essential con­ necessary to war production, and rules for ventions be cancelled for the duration enforcing General Administrative Order of the war in order to relieve traffic No. 6 and General Administrative Instruc­ congestion, there is no present inten­ tion No. 6 are promulgated, the work of tion to ban meetings which further the committee shall be deemed completed the war effort. Inasmuch as the Insti­ and the committee shall be discontinued. tute’s program for the Chicago meet­ Section 8. Effective Date: ing will be entirely devoted to discus­ .01. This order shall be effective June 27, sion of technical problems related to 1942. the accounting profession’s part in D onald M. N elso n Chairman ” the war economy, it has been de­ cided definitely to carry out the plans News from State Boards for the meeting. In order to cooperate with the Of­ Following the decision of the Institute fice of Defense Transportation, how­ board of examiners to exclude time served ever, the program will be shifted so with the armed forces of the United States, that no general sessions will occur on in determining the period within which a Monday, September 28th, in order candidate must be reexamined in any sub­ that the majority of those who at­ ject in which he has previously been con­ tend will be able to travel on Mon­ ditioned, similar action was suggested to day and thus avoid adding to the state boards of accountancy. Illinois and normally heavy week-end traffic. All Ohio state boards have announced corre­ entertainment features have been sponding revisions in their requirements. eliminated from the program at the Marvin O. Carter of Memphis has re­ suggestion of the Office of Defense cently been appointed to succeed James A. Transportation so as not to encour­ Matthews, also of Memphis, as a member age attendance of persons who are of the Tennessee state board. Mr. Mat­ not interested in the proceedings of thews, who was president of the board, the technical sessions. resigned at the expiration of his term. The Chicago meeting will, there­ Millard T. Charlton has been appointed fore, be strictly business, devoted en­ a member of the Board of Accountancy tirely to discussion of wartime prob­ for the District of Columbia, filling a va­ lems in harmony with the war effort cancy resulting from the death of C. of the nation as a whole. The program Vaughan Darby. John P. Begley of Omaha is outlined on page 9 of this bulletin. has been elected secretary and treasurer of the Nebraska board. 6 The Certified Public Accountant

cate the organization structure of the War Ar m y Spe c ia l ist Co r p s Production Board and of the Bureau of Industry Branches which is the subdivision A limited number of appointments of the Board directly responsible for con­ are available for qualified members of tacts between various industries and the accounting profession in the Army W.P.B. Another chart shows relationships Specialist Corps, at Washington. The among federal war agencies. Copies of the Corps provides skilled personnel for handbook may be secured from the Super­ specific assignments at the request of intendent of Documents, Washington, the Army, in many instances releas­ D. C., or from O.E.M. field offices. ing Army officers for combat duty. Military training is not required, but applicants must be citizens of the Institute Member Directs United States and must pass a physi­ W.P.B. Audit cal examination. Age limits are flexi­ Joseph I. Lubin of New York, N. Y., ble, but persons under thirty will not Deputy Chief, Investigation Section, Com­ be considered unless they are per­ pliance Branch, War Production Board, manently physically disqualified for has been assigned the responsibility of active service. Persons over thirty directing a continuous audit of business and under forty-five who have been organizations operating under the Produc­ classified as 1-A by Selective Service tion Requirements Plan. It is estimated are not eligible. Admission to the that about 18,000 business enterprises Corps does not, of itself, alter the throughout the United States are included appointee’s liability under the Selec­ in this group. A comprehensive program tive Service Act. Compensation is providing for successive surveys of the equivalent to that provided by the records of such companies was inaugurated United States Army for officers and on July 1st. Field work of W.P.B.’s Com­ men of similar rank, ranging from pliance Branch will be directed by eight $1,160 to $8,000 a year. Forms and regional compliance chiefs, and the staff information sheets describing require­ of the Wage and Hour Division will be ments of the Army Specialist Corps “ borrowed” to conduct the investigations. are available at Institute head­ Mr. Lubin is a certified public accountant quarters. and a member of the American Institute of Accountants.

“O.E.M. Handbook” Australian Accountants Carry On A 72-page booklet bearing the above The recent annual report of the Council title, issued by the Office for Emergency of the Federal Institute of Accountants Management on June 17th, describes the (Australia) reads, in part, as follows: “The organization, functions, and authority of Council had to decide the policy which the federal war agencies whose activities are Institute should adopt during the war. The coordinated by O.E.M. Included—among choice lay between a general curtailment others—are the War Production Board, Of­ of activities and expenditure, or a continu­ fice of Price Administration, Office of Civil­ ance, and, where possible, an increase of ian Defense, National War Labor Board, activities, particularly those of an educa­ Office of Defense Transportation, and the tional and developmental nature. Without War Manpower Commission. This hand­ hesitation the latter policy was adopted book also lists the principal administrative since it was felt that during the war and personnel of the agencies described and, in after, our profession is destined to play some instances, the addresses and tele­ an important part.” During the past year, phone numbers of field offices together with membership in the Federal Institute of the names of local executives. Charts indi­ Accountants passed the 6,000 mark. The Certified Public Accountant 7

Racketeer Wartime Hospitality An Institute member in an eastern indus­ The April issue of “The Federal Account­ trial center recently reported a call from a ant,” official organ of the Federal Institute visitor whom he described as follows: of Accountants (Australia), announces that freckled, bald head, glasses, grey eyes, about the Australian Institute offers hospitality 180 pounds, about 48 years of age, neat and assistance to members of accounting appearance, rapid and fluent speaker. This societies in the United States who may be in man stated that he was calling on the rec­ Australia during the war. This announce­ ommendation of “ several clients,” whose ment reads, in part: “ Some state divisions names he mentioned, to inquire whether the have already been in touch with the forces practitioner would be interested in an here, in an endeavor to be of assistance to engagement for which “ a retainer of not any Americans in Australia, and it is known less than $250 would be paid immediately.” that members of the Institute will be only The visitor added that he would first re­ too glad to offer such assistance person­ quire a modest advance of “ at least five ally.” The Head Office of the Australian dollars to bring in the client” because he Institute is situated at Vaughan House, 108 was temporarily unemployed and, there­ Queen Street, Melbourne, Victoria. fore, unable to make the preliminary ar­ President Percy Toothill of the Society of rangements at his own expense. Fortu­ Incorporated Accountants and Auditors in nately, the certified public accountant his Presidential address delivered at the recognized this request as a type of racket. fifty-seventh Ordinary General Meeting of the Society, in London on May 21st, made Pacific Northwest Conference the following reference to accountants serv­ ing with the armed forces: The twentieth annual conference of certi­ “The Council is grateful to the Society’s fied public accountants of the Pacific North­ branches overseas and to bodies of account­ west, attended by certified public account­ ants in the British Dominions and in the ants in Washington and Oregon, was held in United States of America for the hospitality Portland, June 19th and 20th. Among the they have offered to any members who may topics discussed at technical sessions were be serving overseas. The branches and dis­ the Production Requirements Plan, ac­ trict societies in Great Britain and Northern counting problems in preparing O.P.A. Ireland will also be pleased if they can offer any facilities to members of the Society and forms “ A ” and “ B, ” determination of costs students who may be serving in the neigh­ under government contracts, federal taxes, bourhood of their respective headquarters.” and the preparation of more understandable financial statements. Speakers included Restrictions on Office Equipment F. J. McIndoe, production and inventory analyst with the Portland office of the War Purchases Production Board, and prominent members General Limitation Order L-54-c, issued of the participating societies. Visitors were by the War Production Board on June 1, present from Idaho, Montana, and British 1942, and effective immediately, forbids Columbia. manufacturers and dealers to deliver office machinery from their production or stock, Accountants’ Fees regardless of the terms of any contract or Excluded from Price Control sale or purchase or other commitment or of any preference rating, or any blanket pref­ Among charges for various services which erence rating order, except under certain are excluded from provisions of the Price specified conditions. Manufacturers or deal­ Control Act under amendment No. 1 to ers are permitted to apply for authorization supplementary regulation No. 11—“ Excep­ to deliver special new office machinery tions for Certain Services”—are “fees and which, on the date of issuance of this order, charges of accountants and auditors.” was assembled, or in the process of fabrica­ 8 The Certified Public Accountant

tion and assembly, but which could not Art Gallery otherwise be delivered under the terms of the order. A “special machine” is described A collection of originals of newspaper as a machine built to special specifications cartoons in which the artists base serious or for a customer, with features which render comic pictorial comments on accountancy it unusable except by a small class of per­ is in the possession of the American Insti­ sons similarly situated. tute, and will be displayed at the annual Sale of typewriters except to certain meeting in Chicago. designated categories of buyers, who must Among these works of art is the original present rationing certificates issued by the of a cartoon by Karl Knecht which ap­ local War Price and Rationing Board, has peared in the Courier of Evansville, Indiana, been prohibited since March 6, 1942. The last August. Captioned “ Wondering,” the so-called “lend-lease” plan recently adver­ drawing shows Uncle Sam erasing tax fig­ tised by certain New York department ures on a blackboard and reading with great stores, whereby the customer agrees to interest a card held out to him. The sheet make periodic rental payments totaling the reads: sales price of the typewriter with the under­ “We recommend: Take a normal tax off standing that he will acquire title, subject all payments of salaries—interest—divi­ to O.P.A. regulations, was banned on June dends and fixed or determinable incomes. 25th. Collect as you do social security now.— Wood filing cabinets containing not more American Institute of Accountants.” than two pounds of essential steel hardware Another cartoon original, reproductions for each drawer were removed on June 1, of which were widely used in United States 1942, from restrictions previously placed newspapers, is a droll study of an engine- upon metal furniture by the War Produc­ man and fireman at the side of a locomo­ tion Board. tive. One says: “ Funny thing, Joe. When I was a kid, I wanted to be a certified public Bethany College Honors Institute accountant.” The cartoon was drawn by artist “Lichty” and bears the copyright of Member the Chicago Times. J. Weldon Jones, a member of the Insti­ A third original in the Institute gallery is tute and Assistant Director, Fiscal Depart­ in the form of a comic strip, based on a ment, Bureau of the Budget, was awarded statement reading: “Tulane business school an honorary degree of Doctor of Laws by the dean foresees serious shortage of public Trustees of Bethany College, Bethany, accountants because of military, govern­ West Virginia, May 17, 1942. Mr. Jones ment needs.” The strip, drawn by Cun­ also delivered an address at the commence­ ningham of Wide World Feature Service, ment exercises. shows amusing examples of what might happen to people if there were no more pub­ Scholarships for Women lic accountants. Notable among the accomplishments of State Legislation women’s accounting groups is the program of Los Angeles Chapter of the American Legislation popularly described as the Society of Women Accountants, which has “ Moffat Bill,” enacted at the recent session been in existence about a year. In addition of the New York State Legislature but ve­ to scheduling monthly meetings, addressed toed by the Governor, included a provision by prominent speakers, the Chapter has advancing the date for filing and paying established a scholarship at the University the state franchise tax from May 15th to of Southern California to be awarded to March 15th. This bill was opposed by the the outstanding woman student, and ex­ New York State Society of Certified Public pects to introduce a similar scholarship at Accountants and by many prominent busi­ the University of California at Los Angeles. ness organizations. The Certified Public Accountant 9

Program—1942 Annual Meeting, Use of Client’s Staff, from Client’s Viewpoint September 28-October 1 Use of Client’s Staff, from Practi­ T h em e: Ac c o u n t in g a n d t h e tioner’s Viewpoint WAR EFFORT T h u r s d a y —O c t o b e r 1 st: M o n d a y —S e p t e m b e r 2 8 t h : 9 :1 5 A.M. Meetings of Council, Advisory Council of General Session: State Society Presidents, Joint meeting Address: Future of the Professions Association of Certified Public Account­ 2 : 0 0 to 5 : 0 0 p .m .—or 2 : 0 0 to 4 : 0 0 p .m . ant Examiners and Institute Board of Round Tables: Examiners. 1. How Much Test Checking is Enough? 2 . T u e s d a y —S e p t e m b e r 2 9 t h : Accounting for War Reserves 9 : 3 0 a .m . t o 1 2 :0 0 M. 3 . Tax Accounting Round Table General Session:— 4 . War Accounting Round Table Accounting Problems in Price Control The business show which has been a fea­ 2 : 0 0 to 5 : 0 0 P.M. ture of the last five annual meetings will be Technical Session: omitted this year. Technical Accounting Problems Arising from the War 1. Control of Government Expendi­ Gasoline Rationing tures A. Renegotiation of Contracts A request from a regional executive of B. Auditing of Contractors’ Costs O.P.A. for assistance to local War Price and C. Procedure of Comptroller Gen­ Rationing Boards in connection with the eral gasoline-rationing program was recently re­ 2 . War Accounting Problems of the ferred to societies of public accountants in Client five middle-Atlantic states and the District A. Problems in the Distribution of Columbia. The Institute was one of nine of Overhead Expenses on organizations approached by the New York Cost-Plus-Fixed-Fee Con­ office of O.P.A. in the belief that their mem­ tracts B. Plant Accounting for Govern­ bers would be particularly well qualified to ment-Owned Property review applications for supplementary allot­ C. Problems of Accounting for ments of gasoline in excess of the basic Material Furnished by Prime ration and to recommend appropriate Contractors to Fixed-Price action. Subcontractors 8 : 0 0 to 1 0 :0 0 P.M. Effective Use of Technical Personnel in Prompt Action on Competitive War Bidding Question Box Members of the Arizona Society of Pub­ lic Accountants, at a special meeting called W e d n e s d a y —S e p t e m b e r 3 0 t h : 9 : 3 0 a .m . t o 1 2 :3 0 P.M. to consider a request from a water users’ Technical Session: association for sealed bids covering an audit Federal Income and Excess-Profits of its accounts, resolved to inform the as­ Taxes sociation that both the American Institute 2 : 0 0 to 5 : 0 0 P.M. of Accountants and the state society have Technical Session: discouraged the practice of competitive Auditing bidding for audit engagements, as contrary Auditing Standards to the best interests of the public and the Accountants’ Liability Internal Control Questionnaire profession. Within three weeks from the Inventories and Receivables in Re­ date when bids were requested an officer lation to Monthly and Quarterly of the water users’ association expressed Audits appreciation of the action of the state so­ 10 The Certified Public Accountant ciety, and named a public accounting firm (Release OPA-54, dated June 20th). It is which had been selected for this engage­ reported that this process, developed by ment on a basis satisfactory to the pro­ Bell Telephone Laboratories, is superior to fession. ordinary regrinding which reduces the thickness of the roller to a greater degree. Examination Results Most companies engaged in sand-blasting have equipment necessary to perform the Five hundred and ninety-one candidates required operations. O.P.A. warns that sat for the May, 1942, C.P.A. examinations only those typewriters now in use— esti­ in twenty-seven states and two territories mated at 8,000,000— will be available for which adopted the American Institute civilian requirements during the war. of Accountants examinations and submitted their papers for grading by the Institute, with the following results: Louisville Award Joseph M. Cunningham, first deputy P e r C e n t P a s s e d controller of New York City and an asso­ Audit­ Account­ ciate of the American Institute, recently ing Law ing received the 1942 “ Louisville award” in May, 1942...... 36.8 44.6 34.2 recognition of his work in designing and su­ November, 1941. 45.2 49.5 31.8 pervising the installation of a machine- accounting system for the office of the Con­ Approximately 770 other candidates took troller of New York City. This award, a the Institute examinations in 9 other states gold medal, was established in 1941 by and the District of Columbia which do not John R. Lindsay, director of finance of the submit papers to the Institute for grading. City of Louisville, Kentucky, to be pre­ The total number of candidates was 1,361. sented annually by the Municipal Finance Officers Association “ for outstanding serv­ O.P.A. Calls Accountants ices rendered by a public finance official.” Among numerous requests for coopera­ tion of members of the accounting profes­ sion in war activities is a recent letter from St a t e So c i e t y N e w s Herbert F. Taggart, director of the ac­ counting division of the Office of Price Recent activities of state societies reflect Administration. He expresses the opinion the effort of the accounting profession to that most certified public accountants are make a useful contribution to the war pro­ well qualified by training, experience, and gram. The N ew Y o rk State Society, in temperament to serve as volunteer members cooperation with four N.A.C.A. chapters in of local War Price and Rationing Boards in New York City and vicinity and with the their own communities and urges account­ War and Navy Departments, sponsored a ants who may be asked to assume such re­ special meeting on June 15th for the purpose sponsibilities to give serious consideration to of explaining how executives of large and this opportunity for government service. small businesses not presently engaged in war activities might secure information New Discovery Saves Rubber about essential materials and services and learn how to convert their operations to a Useful life of worn typewriter rollers war basis. This meeting, which was open can be extended for several years by a new to the public, was attended by many public process which blasts hard films of dirt and accountants and their clients. Principal dried ink from the surface of the roller, speakers were procurement and supply offi­ leaving the live rubber beneath clean and cers of the United States Army and Navy. smooth, according to a recent announce­ The president of the M ichigan Associ­ ment by the Office of Price Administration ation recently appointed a committee on The Certified Public Accountant II wartime problems, consisting of Harold W. Club, St. Louis County, June 19th, with an Scott of Detroit, chairman, and seven other all-day program including business sessions, members representing the Detroit area, sports, and entertainment; Connecticut, eastern, central, and western Michigan. in New Haven, June 17th. Recent releases in the series issued by the The Texas Society held its annual meet­ New York State Society committee on ing in Fort Worth on June nth, 12th, and wartime problems include No. 10, entitled 13th. Topics presented by speakers included “The New O.P.A. Financial Reporting accounting problems resulting from war Forms”; No. 11—“ Recent Publications contracts, O.P.A. regulations, taxation, Relating to Wartime Problems of the Ac­ trends in accounting statements, case stud­ counting Profession”; and No. 12—“ De­ ies in auditing. Technical sessions were open velopment of New Sources of Accounting to the general public, for the first time. The Staff Personnel in Cooperation with the Ac­ Texas Association of University Instructors counting Schools.” District of Columbia in Accounting arranged a program in Fort Institute reports that a number of its mem­ Worth on June 13th, enabling its members bers assisted in advance arrangements for to attend the Texas Society’s meeting the sugar-rationing program and in the reg­ also. The annual convention of the Cali­ istration of wholesalers and dealers. fornia Society was held in Los Angeles The ninth annual regional conference of June 19th and 20th. Special emphasis was the New York State Society of Certified placed on technical sessions at which war­ Public Accountants was held at Saranac time problems of the profession, accounting Lake on June 2.6th, 27th, and 28th, with for war industries, auditing standards, and a program designed to help members cope federal taxation were among the principal more effectively with wartime problems. topics discussed. Topics presented included W.P.B. and At a recent meeting of Louisiana Society O.P.A. requirements, taxation, interim au­ in New Orleans, June 25th, “ Specific Prob­ dit work and preparation of financial state­ lems Encountered in Change of Accounting ments under wartime conditions, renegotia­ Period” were discussed under the leadership tion of war contracts. Among the speakers of members of the committee on natural were William W. Werntz, chief accountant business year, and medals were presented of the S.E.C.; Walter B. Mitchell of Dun to outstanding students of accountancy at and Bradstreet; Walter A. Cooper, chair­ Tulane, Loyola, and Louisiana State uni­ man of the American Institute committee versities. Maryland’s dinner program in on federal taxation; and George N. Farrand Baltimore, June 9th, was addressed by of the Institute research staff. Donald F. Hagner, assistant cashier, Balti­ Among recent annual meetings of state so­ more Branch, Federal Reserve Bank of cieties are the following: North Carolina Richmond, who discussed “ Regulation W,” in Winston-Salem, June 12th and 13th, with and Leo H. McCormick, State Director of principal speakers including William W. O.P.A., whose subject was the “ General Werntz, chief accountant of the Securities Maximum Price Regulation.” Officers were and Exchange Commission and consultant elected at this meeting. Members of to the Office of Price Administration, who Minnesota Society enjoyed an afternoon of discussed O.P.A’s new financial reporting golf followed by dinner and informal discus­ requirements; and Richard B. Barker, sion at the Country Club, Edina, on July Washington attorney, who described ex­ 1st. cess-profits abnormalities in the federal Western Chapter of the North Carolina revenue act; Pennsylvania’s forty-fifth an­ Association was formally organized at a nual meeting in Skytop, June 22nd, 23rd, meeting in Statesville, April nth. It is and 24th, also addressed by Mr. Werntz; planned to rotate future meetings of the Michigan’s annual meeting and golf tour­ new chapter among several communities in nament at Clinton Valley Golf Club, near this area. The Arizona Society recently Detroit, on the afternoon and evening of circulated the first issue of its “ Bulletin, ” June 12th; Missouri, at Sunset Country consisting of a table of contents and 21 11 The Certified Public Accountant

mimeographed pages describing state so­ Connecticut ciety activities and developments of inter­ June 17, 1942. President—Harry W. Babineau, Bridgeport. est to members of the profession. E. J. Vice president—George W. Childs, Jr., New Hilkert, president of the society, is acting as Haven. Secretary—Irville A. May, West editor, pro tem, pending development of a Haven. Treasurer—Frank N. Robinson, Nor­ permanent editorial staff. Periodicals are walk. now published by 26 state societies. District of Columbia Twenty-five dollar cash awards, accom­ May 2 6 , 1942. President—Maurice A. Martin. Vice president— panied by certificates, were recently pre­ Millard T. Charlton. Secretary-Treasurer— sented by the New York State Society of Henry A. O’Neill. Certified Public Accountants to twenty- Florida four high-ranking graduates of New York May 2 3 , 1942. State colleges and universities registered by President—Joseph A. Sweeny, Tampa. First the State Education Department. Eligibil­ vice president—O. J. Oosterhoudt, Jackson­ ville. Second vice president—Roy L. Purvis, ity for these awards was determined by the Gainesville. Third vice president—Lee W. following qualifications: completion of the Shepard, St. Petersburg. Secretary—Charles entire accounting curriculum required for H. Lindfors, Fort Lauderdale. Treasurer— the degree with a major in accounting, Harry Goldstein, Miami. with a minimum of twenty-four semester Georgia May 16, 1942. hours devoted to accounting subjects; the President—A. L. Norris, Macon. Vice presi­ highest general average grade in all ac­ dent—T. A. Avery, Atlanta. Secretary—Lyle counting courses, or the second highest E. Campbell, Emory University. Treasurer— average in classes including more than Wayne S. Traer, Atlanta. twenty-five students majoring in account­ Idaho ing; evidence that the recipient would be May, 1942. President—M. T. Deaton, Pocatello. Vice presi­ a desirable candidate for admission to the dent—Elmer Fox, Boise. Secretary-Treasurer profession of public accounting. Most of the —Waldo Thurber, Boise. awards were presented at commencement Illinois exercises by an officer of the State Society or June 9, 1942. one of its chapters, or by a member of the President—Frank Ahlforth, Chicago. Vice presi­ Society’s education committee. dent—Roy Andreae, Chicago. Secretary- Treasurer—J. Leonard Penny, Chicago. STATE SOCIETY ELECTIONS Indiana Alabama May 23, 1942. May 30, 1942. President—Thomas A. Houlihan, Fort Wayne. President—William M. Franklin, Birmingham. Vice president—James L. Rose, Indianapolis. Secretary-Treasurer—Chester H. Knight, Uni­ Secretary—K. J. Carpenter, Indianapolis. versity. Treasurer—Horace T. Mathews, Indianapolis. Arizona Louisiana April 2 5 , 1942. April 23, 1942. President—C. T. R. Bates, Tucson. Vice presi­ President—Otis J. Chamberlain, New Orleans. dent—U. C. Bobbitt, Phoenix. Secretary— Vice president—Malcolm M. Dienes, New Max A. Millett, Phoenix. Treasurer—H. Orleans. Secretary—George A. Treadwell, New Marvin Dennis, Phoenix. Orleans. Treasurer—John F. Hartmann, New Orleans. California June 20, 1942. Maine President—Francis P. Farquhar, San Francisco. May 15, 1942. First vice president—Thornton G. Douglas, President—Ernest M. Shapiro, Lewiston. Vice Los Angeles. Second vice president—Frank G. president—Marcus H. Pero, Portland. Secre­ Short, San Francisco. Secretary-Treasurer— tary—Maynard H. Shaw, Portland. Treasurer B. W. Bours, San Francisco. —Leon W. Dresser, Portland. Colorado Maryland May 22, 1942. June 9, 1942. President—Alfred D. Peabody, Denver. Vice President—Howard A. Schnepfe, Baltimore. president—R. Wallace Haworth, Denver. Vice president—Harvey T. Casbarian, College Secretary-Treasurer— Charles J. Harcourt, Park. Secretary—Louis C. Schulte, Baltimore. Denver. Treasurer—Charles Steinbock, Jr., Baltimore. The Certified Public Accountant 13

Massachusetts Pennsylvania May 25, 1942. June 24, 1942. President—Philip Saunders, Boston. Vice presi­ President—J. F. W. Heinbokel, Scranton. Vice dent—E. Ober Pride, Boston. Secretary—Joel president—I. Russell Bush, Philadelphia. D. Harvey, Boston. Treasurer—Christopher Secretary—Robert J. Bennett, Philadelphia. Haworth, Boston. Treasurer—J. N. Aitken, Jr., Philadelphia. Michigan Puerto Rico June 12, 1942. February 22, 1942. President—Ernest H. Fletcher, Detroit. Vice President—Pedro E. Purcell, San Juan. Vice president—Donald M. Russell, Detroit. Treas­ president—Fernando E. Garcia, Caguas. Secre­ urer—Harry M. Prevo, Detroit. tary—R. Garcia Moreno, San Juan. Treasurer —Carlos Soltero, San Juan. Minnesota Rhode Island May 26, 1942. April 21, 1942. President—Harold C. Utley, Minneapolis. First President—Russell C. Harrington, Providence. vice president—Clifford R. Munson, St. Paul. Vice president—Albert H. Baer, Providence. Second vice president—Robert C. Anderson, Secretary-Treasurer—William B. M. Miller, Duluth. Secretary—Edwin L. Pearson, Min­ Providence. neapolis. Treasurer—Moody D. McCaskill, St. Paul. Texas Mississippi June 11, 1942. President—J. C. Cobb, Houston. Vice president May 30, 1942. —Lyle R. Sproles, Fort Worth. Secretary- President—Robert L. Stainton, Jackson. Vice Treasurer—T. W. Leland, College Station. president—Louis A. Miazza, Jackson. Secre­ tary-Treasurer— F. J. Block, Laurel. Washington May 8, 1942. Missouri President—R. C. Mounsey, Seattle. Executive June 19, 1942. vice president—Clyde H. Rogers, Seattle. President—F. G. Buenger, Kansas City. First Secretary-Treasurer— C. A. Andrews, Seattle. vice president—Louis J. Kerber, St. Louis. Second vice president—T. C. Hansen, Kansas City. Secretary—J. Y. McManus, Kansas Visitors at Institute Offices City. Treasurer—H. Ashley Dykes, St. Louis. J. A. Ainge, Dunedin, New Zealand L. W. Aldrich, New York, N. Y. Nebraska Walter L. Bradley, Buffalo, N. Y. May 2 1 , 1942. J. G. Calvert, New York, N. Y. President—J. H. Imig, Omaha. Vice president— Edward Caton, Jr., Norfolk, Va. J. Edmunds Miller, Lincoln. Secretary—Philip John Drury, New York, N. Y. G. Johnson, Lincoln. Treasurer—Herman William J. Elbert, New York, N. Y. Siefkes, Lincoln. Harry H. Fisher, Fanwood, N. J. Ernest F. Johnson, Littleton, N. H. New Jersey Louis DeR. MacMillan, Chapel Hill, N. C. May 2 1 , 1942. Edward H. Moeran, Yonkers, N. Y. President—Andrew Nelson, Newark. First vice Edwin W. Norberg, Minneapolis, Minn. president—C. Perry King, West Orange. Sec­ J. W. Olshen, Miami, Fla. ond vice president—John J. White, Paterson. I. Graham Pattinson, Los Angeles, Calif. Secretary— Frederick Banks, Trenton. Treas­ Albert Rendell, New York, N. Y. urer—Andrew M. Hauser, Newark. Wilford D. Sawyer, Cincinnati, Ohio A. Vernon Sheffield, Norfolk, Va. North Carolina Irving Yaverbaum, Harrisburg, Pa. June 11, 1942. Daniel A. Young, Glen Ridge, N. J. President—R. L. Bradley, Lenoir. Executive vice president—John Prescott, Raleigh. Secre­ Election of Members tary—L. de R. MacMillan, Chapel Hill. Treasurer— Leslie A. Heath, Charlotte. A r izo n a *George W. Johnson, Phoenix Oregon June 10, 1942. C a l if o r n ia President— Eric P. Van, Portland. Vice presi­ *A. Clayton Davis, San Francisco dent— Ernest Farnand, Portland. Secretary— *David Gindoff, Los Angeles Scire D. Buell, Portland. Treasurer—John F. Robert C. Langley, Los Angeles Lee, Portland. Frederick E. Witt, Los Angeles The Certified Public Accountant

D is t r ic t o f C o l u m b ia N o rth C a r o l in a *Frank D. Byrne, Washington, D. C, Carl von Kampen Mahler, Raleigh John M. Stoy, Washington, D . C. O h io G e o r g ia *Kenneth E. Brock, Toledo *Charles E. Williams, Jr., Savannah Paul E. Downend, Toledo Samuel D. Miller, Toledo I l lin o is George K. Moss, Findlay *Charles J. Albert, Chicago Eugene P. Rouge, Cleveland Frank J. Ceithaml, Chicago Harry A. Savage, Lima

I n d ia n a O r eg o n O. L. Hayes, Indianapolis *Carl G. Warnick, Portland *Karl Grant King, South Bend P ennsylvania L o u is ia n a *Charles Fisher, Philadelphia *Francis L . Durham, Shreveport *David R. Gettlin, Philadelphia *Francis R. Guinan, Philadelphia M a r y l a n d George A. Hewitt, Philadelphia *William L. Lucas, Middle River Nicholas Komlyn, Pittsburgh *William G. Muchow, Pittsburgh M assachusetts Alfred F. French, Boston S o u th C a r o l in a *Bernard Kolman, Boston Belton R. O’Neall, Greenville Ellwyn A. Mitchell, Boston George J. Place, Lynn T e x a s *Paul E. Tierney, Boston Herbert J. Hauser, Dallas *Wemyss L. Horton, Houston M ic h ig a n George H. Marsh, Midland Leon G. Angleson, Detroit Edward C. Boss, Detroit W e s t V ir g in ia James I. MacKenzie, Detroit David S. Goldberg, Wheeling Cecil M. Miner, Detroit Norman E. Nobes, Detroit W isc o n sin *Louis C. Slay, Detroit *Adolf C. Heinze, Madison Joe C. Trepanier, Detroit *Harry H. Kind, Madison

M is s o u r i Roy E. Burke, St. Louis Bernard H. Dwight, of Manchester, N e w J e r s e y N. H., died June 2nd at the age of forty-six. *George S. Kleverstrom, Bendix *Clyde D. Yeomans, Newark A native of Manchester, Mr. Dwight was graduated from the Manchester High N ew Y o r k School and from the University of New Charles B. Allen, New York Hampshire. He held various accounting William T. Bingham, New York Edwin M. Bush, New York positions in New Hampshire and Massa­ Harry N. Case, New York chusetts for four years after graduation Hugh Ewart, Jr., Niagara Falls from the University, and in 1920 was elected George D. Fish, New York a permanent teacher of mathematics at *William H. Gesell, Jr., New York *Eugene D. Gunsard, New York Manchester Central High School, where he *Samuel M. Jemison, New York remained until the time of his death. He *Mitchel Kass, New York was a certified public accountant of New Arthur E. Lindstrom, New York Hampshire, a member of the New Hamp­ *Joseph Loutit, New York F. Joseph Mack, New York shire Society of Certified Public Account­ Harry E. Rabey, New York ants, and had recently become a member Milford E. Reiner, Buffalo of the American Institute of Accountants. *Eli A. Sherwood, New York *Albert W. Stern, New York Harold H. Post, of Sherwood, Ore., died Philip F. Stevralia, New York April 29th, the Institute has just learned. Franklin W. Walker, New York Mr. Post was for some years engaged in * Admitted as associates. banking and building-and-loan activities in The Certified Public Accountant 15

San Francisco, Calif. He was a certified Society of Certified Public Accountants, public accountant of Alaska and of Cali­ and had been a member of the American fornia. He was a member of the California Institute of Accountants since 1928.

Announcements

The following firm announcements have recently H a r t m a n , A n d o r f e r & K o e n e m a n , of Fort been receivedfrom members of the Institute. Wayne, Ind., announce that D o n a ld H . B o r g e r is now associated with their firm. B a r r o w , W a d e , G u t h r ie & Co. announce the w ith d raw al o f F r a n k S h o r t , o f San F ra n cisco , G. R. J. L e G a r d e u r and C o m p a n y announce the from the copartnership. V. B a l f o u r J a m e s , w ho withdrawal from the firm of Frank Youngman, has been manager of their San Francisco office junior partner, and the admission in his place of for the past five years, will hereafter be in charge L lo yd R. M a r k s . of that office. L o u is R . L o p e z , surviving partner of Perley H a r v e y C a r d w e l l announces his withdrawal Morse & Company; E d w in J. E d w a r d s of E . J. from the firm of Cotton & Eskew, and the re­ Edwards & Company; P e t e r J. F r a n k ; and V in ­ moval of his office to 1510 Kentucky Home Life c e n t J. D e l V e c c h ia , all New York certified Bldg., Louisville, Ky., where he will practice public accountants, announce the formation of a accounting under his own name. new firm under the name of L o p e z , E d w a r d s & W il l ia m W. C o n d r a y and C l a r e n c e N. C o m p a n y , with offices at 165 Broadway, New H a l l m a r k announce the formation of a partner­ York, N. Y. ship under the firm name of Condray and Hall­ mark, with offices in the Lubbock National R a l p h B. M a yo & C o m p a n y , of Denver, Bldg., Lubbock, Texas. Colo., announce the admission of V ic t o r E . T r o u t f e t t e r and R a l p h M . M a y o as members O. M. C o r d l e announces that he has pur­ of the firm. chased Mr. Haselmire’s interest in the firm of Haselmire, Cordle & Co., and henceforth will F lo r io n P l a n t e announces the removal of his practice as a sole proprietorship, continuing with offices to 2537 Book Tower, Detroit, Mich. the same staff as heretofore, at 211 Consolidated Royalty Bldg., Casper, Wyo. A. Lee Rawlings & Company announce the removal of their offices to 621 Monroe Bldg., 2 54 E r n s t & E r n s t announce the removal of their Granby St., Norfolk, Va. Memphis, Tenn., office to 1105 Union Planters National Bank Bldg. C a r l D. T h o m y announces the formation of a partnership to continue practice under the firm J. H. G i l b y & C o m pa n y announce the opening name of C a r l D. T h o m y and C o m p a n y , with of an office at 700 Tenth St., N. W., Washington, offices at 1416 Temple Bldg., Rochester, N. Y. D. C ., and the association of B. L. J en n in g s with the partnership. W e s t , F l in t & Co., of New York, N. Y., an­ nounce that W a l t e r A. H u r l e y resumed his F r a n k S. G l e n d e n in g and L . L y n n Mc­ association with that firm July 1st. M a n u s , of Philadelphia, Pa., announce the admission of R ic h a r d J. G a l l a g h e r to partner­ G l e n n O. W il l ia m s announces the formation ship in the firm. of a partnership to continue practice under the H e n r y H a l p e r n announces the removal of firm name of G l e n n O. W il l ia m s & Co., with his office to 26 Court St., Brooklyn, N. Y. offices at 1023 Lincoln-Alliance Bank Bldg., Rochester, N. Y. E d w in W . H a r t , H a r o ld A. W a l b u r n , G e o r g e W a l t e r s , and R o b e r t D. S e a g r a v e s F r a n k Y oun g m an announces his association announce the formation of a partnership under with Peat, Marwick, Mitchell & Co., New Or­ the firm name of H a r t , W a l b u r n & C o m pa n y , leans, La., as manager of the tax department and with offices at 1616 Walnut St., Philadelphia, Pa. supervisor. 16 The Certified Public Accountant

The following article by a member of the Institute J o s e p h J. K l e i n , New York; “ Current Tax recently appeared in the publication indicated. Problems from the Taxpayer’s Point of View”; Controllers’ Congress, National Retail Dry J o s e p h J. K l e i n , New York; “ The Credit Goods Association, Chicago. Man’s Interest in ‘Lifo’ ”; in Credit Executive, official publication of the New York Credit Men’s Association. The following notices of appointments and elec­ tions of members have been received recently. The following addresses were delivered recently H a r r y C oon, Pennsylvania; appointed a by members of the Institute. member of the local rationing board, Allegheny County, Pennsylvania. C l e m W. C o l l in s , Colorado; “ Price Control and Rationing”; Employees of the City and J. E w in g M it c h e l l , New Jersey; appointed County of Denver. “ How Price Control Will chairman of the Northern New Jersey Group of Affect the Retail Merchant”; Denver Retail the Maple Leaf Fund, Inc. Merchants Association. “ Workings of the M a r y E . M u r p h y , New York; elected treas­ O.P.A.”; Kiwanis Club. “ The Work of the urer of Hunter College Chapter of American O.P.A.”; Trade meeting sponsored by the O.P.A. Association of University Professors, and mem­ “ Price Control”; Manufacturers Association of ber of executive council. Colorado; Retail Lumber Dealers. H a r r y W u n sc h , New York; reappointed G ordon J. R a a b , Wyoming; “ Price Ceilings”; treasurer of the Village of Port Chester, New Casper Lions Club, Casper, Wyo. York, for fourth annual term. RUMFORD PRESS CONCORD. N. H. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

AMERICAN INSTITUTE OF ACCOUNTANTS A u g u s t 1942 LIBRARY

Nominations

Annual Meeting

Simplifying Questionnaires

War Agencies Call for Accountants

Supplemental Gasoline Rations

Admission to War Plants

State Legislation

15¢ a Copy Published Monthly $1 a Year

V o l. 22 No. 8

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authorities, business­ men, and others.

Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred—35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢

Auditing Examination of Financial Statements by Independent Public Accountants...... 15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢

Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Refunded. 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment— Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the War...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢

Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 1 — The Auditor’s Opinion on the Basis of a Restricted Examination...... 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued).. 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies.. 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon...... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar In­ vestments under the Investment Company Act of 1940...... 10¢ No. 10 — Auditing Under Wartime Conditions...... 10¢ American Institute of Accountants

Nominations Charles, Missouri; Lincoln G. Kelly, Utah; The committee on nominations has Edward J. McDevitt, Jr., Massachusetts; nominated the following members of the Oscar Moss, California. American Institute of Accountants for the several offices for the fiscal year 1942-1943 Activities of the Month — to be voted upon at the 1942 annual In accordance with a suggestion of Selec­ meeting at Chicago, Illinois, beginning tive Service Headquarters, the Institute September 29, 1942: recently recommended that presidents of President state societies communicate with directors George S. Olive, Indiana of Selective Service in their respective states Vice presidents and offer to form advisory committees to George P. Ellis, Illinois assist occupational advisors in determining Victor H. Stempf, New York the qualifications of individual accountants Treasurer whose employers have requested occupa­ Samuel J. Broad, New York tional classification under the provisions of Auditors Occupational Bulletin No. 10, recently is­ Gordon M. Hill, New York sued by Selective Service. The text of this Howard A. Withey, New York bulletin was reprinted in the August issue The committee also proposes the follow­ of The Journal of Accountancy, beginning on ing for election as members of council: page 188. For a term of three years Walter A. Cooper, chairman of the Insti­ Albert J. Watson, California tute committee on federal taxation, wrote J. B. Scholefield, California to the Honorable Robert L. Doughton, Arthur L. Baldwin, Colorado chairman of the House Ways and Means J. William Hope, Connecticut Committee, on July 10th, opposing provi­ Fred J. Duncombe, Illinois sions of the pending tax bill which would William M. Madden, Indiana make changes in the law and in tax rates ap­ Fred J. Peterson, Iowa Charles W. Hatter, Maryland plicable to fiscal years beginning in 1941 Homer N. Sweet, Massachusetts and ending in 1942. These provisions were Ernest H. Fletcher, Michigan retained by the House. The Institute com­ Earl A. Waldo, Minnesota mittee plans, however, to oppose their en­ Parry Barnes, Missouri actment in a statement to be presented Carman G. Blough, New York before the Senate Finance Committee. Russell C. Harrington, Rhode Island Copies of a number of communications Hilary H. Osborn, Tennessee from Institute members and state societies Harry R. Howell, West Virginia to senators and representatives, opposing The official report of the committee on this portion of the bill, have been received nominations will be submitted to the mem­ at Institute headquarters and referred to bership with the call for the annual the committee on federal taxation. One meeting. state society, at least, has recommended Members of the committee on nomina­ that its members write to their Congress­ tions are as follows: C. Oliver Wellington, men, urging that a three-months right of chairman, New York; J. A. Phillips, Texas; extension for filing tax returns be incorpo­ Arnold L. Barrett, Michigan; William rated in the new legislation.

1 2 The Certified Public Accountant

Walter A. Cooper, chairman of the Insti­ Members of the Institute Engaged tute committee on federal taxation, pre­ in War Activities sented a statement on the pending tax bill before the Senate Finance Committee on Rosecrans Baldwin, Chicago, Ill.—Lt., U. S. August 11th. Naval Reserve, Bureau of Aeronautics, At the request of federal tax officials, the Washington, D. C. Institute has recently, on two occasions, Thomas H. Carroll, Philadelphia, Pa.—Lt., provided information concerning account­ U. S. Naval Reserve, Office of Procure­ ing problems related to tax administration. ment and Material, Cost and Audit De­ Representatives of the editorial depart­ partment, Washington, D. C. ments of two leading financial newspapers E. C. Friedel, Chicago, Ill.—Officers Train­ have recently discussed proposed references ing School, Ft. Benjamin Harrison, Ind. to accounting and taxation, in advance of Lawrence R. Goldfarb, Baltimore, Md.— publication, with members of the Institute Chief Petty Officer, U. S. Naval Reserve, staff and with a committee chairman. Baltimore, Md. The committee on auditing procedure is J. Edwin Hanson, Kansas City, Mo.—Lt. considering the independent accountant’s Junior Grade, Supply Corps, U. S. Naval responsibility in relation to reserves of face- Reserve. amount certificate companies. Such organ­ Jesse F. Kaufmann, New York, N. Y.— izations are classified by the Securities and Supervisory Auditor, Cost and Audit Exchange Commission as a type of invest­ Branch, Office of Procurement and ment company and, in certain circum­ Material, Third Naval District. stances, they are subject to provisions of the Joseph I. Lubin, New York, N. Y.—Deputy Investment Company Act of 1940. Chief of Investigations, Inventory Sec­ The staff of the Institute research de­ tion, Compliance Branch Priority En­ partment is making a study of certificates forcement, Bureau of Priorities, Bureau and signatures of corporate officials ap­ of Industry Operations, War Production pearing in published financial statements of Board, Washington, D. C. corporations. Another topic now under Sol Masch, New York, N. Y.—Lt., U. S. consideration by the research staff is the Naval Reserve, Field Production Divi­ theory and practice of consolidated financial sion, Brooklyn, N. Y. statements. Edmund L. O’Brien, Providence, R. I.— Suggestions from Institute members re­ State Accountant (R. I.), O.P.A. ferring to simplification of questionnaires Roy V. Rester, Houston, Texas—1st Lt., issued by the War Production Board have Army Air Corps, Miami Beach, Fla. been forwarded to the chairman of the Elmer W. Ross, Kansas City, Mo.—Lt. advisory committee recently appointed to Commander, Supply Corps, U. S. Naval assist W.P.B’s committee for the review of Reserve. Technical Assistant to the data requests in industry. Activities of this Supervisory Cost Inspector, Fifth Naval committee are described elsewhere in this District, Norfolk, Va. issue. W. W. Rostet, Tulsa, Okla.—1st Lt., U. S. Walter A. Staub, chairman of the Insti­ Army. tute committee on accounting procedure, John P. Rutherfurd, New York, N. Y.—Lt. is the author of an article entitled “The Junior Grade, Supply Corp, U. S. Naval Difficulty of Measuring Profits in a War­ Reserve, Seattle, Wash. time Economy,” which was published in Clarence S. Springer, Brattleboro, Vt.— the July issue of Dun's Review. First Assistant to the Cost Inspector, Frank A. Gale, assistant secretary, at­ U. S. Navy Department, Providence, R. I. tended the midsummer meeting of the A. Ernest Stein, St. Louis, Mo.—Office of Connecticut Society of Certified Public Quartermaster General, Washington. Accountants in New London on August Carbis A. Walker, Winston-Salem, N. C.— 6th, at which committees were organized Lt. Commander, Supply Corps, U. S. and activities for the coming year discussed. Naval Reserve, Mobile, Ala. The Certified Public Accountant 3

Annual Meeting president, Illinois Society of Certified Public Accountants The Illinois Society of Certified Public Report of council of the American Institute Accountants, as host to the American In­ Presentation of Elijah Watt Sells awards stitute of Accountants, and the committee Report of the president of the American on meetings of the American Institute, have Institute practically completed arrangements for the fifty-fifth annual meeting, to be held Addresses at the Palmer House, Chicago, September “Accounting Problems in Price Con­ 28th-October 1st. trol,” Dr. Herbert F. Taggart, Washing­ Among the speakers who have accepted ton, D. C., Director of Acounting Divi­ invitations to participate in this program sion, Office of Price Administration; are Dr. Herbert F. Taggart, Director of the member, American Institute Accounting Division, Office of Price Ad­ “Accounting Reports by Industry to the ministration, and president of the American War Production Board,” Joseph I. Lubin, Accounting Association; Dr. Thomas H. War Production Board; member, Ameri­ Sanders, Chief, Cost Analysis Section, Pur­ can Institute. chases Division, War Production Board; Joseph I. Lubin, Deputy Chief of Investi­ 2:00 to 5:00 P.M. gations, Inventory Section, Compliance Session on “Technical Accounting Prob­ Branch Priority Enforcement, Bureau of lems Arising from the War” Priorities, Bureau of Industry Operations, Chairman; Donald M. Russell, Michigan; War Production Board; Dr. Steuart Hender­ member American Institute son Britt, Consultant, National Roster of Control of Government Expenditures (to Scientific and Specialized Personnel; Frank­ be discussed by government repre­ lyn B. Snyder, president of Northwestern sentatives) University; and a large number of Institute A. Renegotiation of contracts: Dr. members from all parts of the country. Thomas H. Sanders, Washington, The advance program follows: D. C., Chief, Cost Analysis Section, Purchases Division, War Produc­ M o n d a y —S e p t e m b e r 2 8 t h tion Board B. Auditing of contractors’ costs — 9:30 a . m . to 12:30 P.M. Council of the American Institute (execu­ (speakers to be announced) tive session) C. Procedure of Comptroller General — Advisory Council of State Society Presi­ (speaker to be announced) dents (executive session) War Accounting Problems of the Client A. Problems in the distribution of over­ 2:00 to 4:15 P.M. head expenses on cost-plus-fixed-fee Accountancy Examiners (open session) contracts: M. C. Conick, Pennsyl­ 2:15 to 4:00 P.M. vania, member, American Institute Advisory Council of State Society Presi­ B. Plant accounting for government- dents (open session) owned property: James H. Barrett, Michigan, assistant secretary and 4:15 P.M. Accountancy Examiners (executive session) assistant treasurer, Murray Cor­ poration of America C. Problems of accounting for materials T u e s d a y —S e p t e m b e r 29T H furnished by prime contractors to 9:30 a . m . t o 12:30 p . m . fixed-price subcontractors: Julian General Session A. Hawk, Ohio; member, American Chairman: Commander Norman Loyall Institute McLaren, California, president, Ameri­ can Institute of Accountants Session on “ Effective Use of Technical Address of welcome: Frank Ahlforth, Personnel in War” 4 The Certified Public Accountant

Chairman: Carman G. Blough, New (Speakers at the tax session will sum­ York, member, American Institute of marize prepared papers which will be Accountants printed in full in the proceedings of the Speaker: Dr. Steuart Henderson Britt, annual meeting. This arrangement will Washington, D. C., Consultant, Na­ allow time for speakers to answer ques­ tional Roster of Scientific and Special­ tions submitted in writing in advance of ized Personnel the session.) “Question Box” 2:00 to 5:00 P.M. Chairman: Edward B. Wilcox, Illinois, Session on “Auditing” member of council, American In­ Chairman: George P. Ellis, Illinois, mem­ stitute of Accountants ber, committee on auditing procedure, Panel of experts: The following mem­ American Institute of Accountants bers of the American Institute of Auditing standards: Ira N. Frisbee, Cali­ Accountants: Parry Barnes, Mis­ fornia, member, American Institute of souri; Samuel J. Broad, New York; Accountants Howard C. Greer, Indiana; Harry E. Accountants’ liability: Saul Levy, New Howell, Rhode Island; Lewis Lilly, York, member, American Institute of California; Maurice E. Peloubet, Accountants New York; J. S. Phillips, Texas; Internal-control questionnaire: Russell H. Sidney G. Winter, Iowa Morrison, Illinois, member, American Institute of Accountants W e d n e s d a y —S e p t e m b e r 30 T H Inventories and receivables in relation to 9:30 a . m . to 12:30 P.M. monthly and quarterly audits: John J. Session on “ Federal Income and Excess- Lang, Missouri, member, American In­ Profits Taxes” stitute of Accountants Chairman: William L. Ashbaugh, New Use of client’s staff, from client’s viewpoint: York, member, American Institute of Frank S. Hecox, Oregon, member, Amer­ Accountants ican Institute of Accountants Report of the committee on federal taxa­ Use of client’s staff, from practitioner’s tion, American Institute of Accountants: viewpoint: Frank S. Calkins, Virginia, Walter A. Cooper, New York, chairman member, American Institute of Ac­ Contrasting costs and expenses for govern­ countants ment contracts with ordinary and neces­ sary expenses for tax purposes: Leslie T h u r s d a y —O c t o b e r 1 s t Mills, New York, member, committee on 9:15 a .m . to 12:30 P.M. federal taxation, American Institute of Election of officers—Selection of 1943 Accountants meeting place—Unfinished business Proposed technical changes in the tax law Address: “ Professional Training in Time including relief provisions: Troy G. of War,” Franklyn B. Snyder, Illinois, Thurston, Indiana, member, committee president, Northwestern University on federal taxation, American Institute 2:00 to 5:00 P.M. of Accountants Round tables: Accelerated depreciation, amortization, and How much test-checking is enough? Robert obsolescence: Clarence L. Turner, Penn­ H. Prytherch, New York, member, sylvania, member, committee on federal American Institute of Accountants taxation, American Institute of Ac­ Effect of the war on financial statements: countants James L. Dohr, New York, Director of War-time effects on inventories, including Research, American Institute of Ac­ discussion of “ lifo”; proposed inven­ countants tory reserves and post-war credits: Tax accounting: T. Dwight Williams, Charles F. Strandberg, North Carolina, Oklahoma, member, American Institute member, American Institute of Accountants The Certified Public Accountant 5

Defense accounting: Jackson W. Smart, Illinois, member, American Institute of W a r Ag encies Call fo r Accountants. Ac c o u n t a n t s The United States Army and Navy, Sons of Institute Members the Army Specialist Corps, the War Production Board, the Office of Price with the Armed Forces Administration, and other government The following sons of members now oc­ war agencies continue to ask the as­ cupying official positions in the American sistance of the American Institute in Institute are serving with the armed forces securing the services of experienced ac­ of the United States: countants. In response to a reference to the Army Specialist Corps in the July Douglas George Cochrane, Corporal, Coast issue of T h e C e r tifie d P u b l ic A c­ Artillery, United States Navy. co u ntan t, more than a hundred Malcolm J. Cochrane, Armed Medical requests have been received for forms Battalion, Medical Corps, United States and information sheets describing the Army. Frederick H. Hurdman, Jr., Yeoman, requirements of that organization. Be­ United States Navy. lieving that many other accountants John C. Hurdman, Lieutenant, Signal not now engaged in work which they Corps, United States Army. consider “ essential,” and members of George Scott Olive, Jr., Technician, Fourth their staff s, m ay wish to devote all or Grade, attending Officers Training School, part of their time to the war effort— United States Army. either for the duration or for a shorter Roger U. Wellington, Ensign, United period— the Institute has recently sent States Navy. questionnaires requesting information about qualifications, experience, inter­ Depreciation of Group Properties ests, salary requirements, and avail­ ability for government service to all The Iowa Engineering Experiment Sta­ members. From these questionnaires, tion at Iowa State College recently pub­ it is hoped to develop a useful roster of lished Bulletin No. 155 entitled “ Deprecia­ professional accountants available for tion of Group Properties” by Robert war work. Winfrey, valuation engineer. Following ex­ tensive research, the author of this 131- page text concludes that depreciation is often calculated incorrectly because theo­ Admission to War Plants ries developed for single-property units are applied to group properties. The bulle­ A recent communication from the War tin presents procedures for determining the Department informs the Institute that depreciation of group properties and dem­ there is no general regulation, at present, onstrates discrepancies which result when requiring public accountants to carry an identical formula is applied to a unit photographs or identification cards when property and to a group. A companion visiting offices of industrial concerns pro­ bulletin—No. 156—entitled “ Condition- ducing war material to conduct audits. Percent Tables for Depreciation of Unit This communication states, however, that and Group Properties,” recently prepared if the work of the accountant requires ac­ by the same author, consists entirely of cess to the plant or examination of classified tables indicating correct application of documents, he must obtain clearance various depreciation methods. Both bulle­ through the office of the ordnance district tins are available from the Iowa Engineer­ responsible for the establishment. Such ing Experiment Station, Ames, Iowa— clearance is usually granted in response to a No. 155, without charge; No. 156, at a request presented on the stationery of the price of $3.00. accounting firm. 6 The Certified Public Accountant

New Committee to Formulate Sim p l if y in g Q uestionnaires “P.R.P.” Policies Joseph I. Lubin, chairman of the War Production Board committee for Appointment of a committee in the Bu­ the review of data requests from indus­ reau of Priorities to formulate policies and try, and a member of the American supervise administration of the production Institute of Accountants, recently ap­ requirements plan and the allocation classi­ pointed an advisory committee con­ fication system was announced by Donald sisting of W. J. Donald, president of M. Nelson, chairman of the War Produc­ the American Trade Association Ex­ tion Board, on July 7th. This committee, ecutives, chairman, and the following which includes representatives of the W.P.B., members: Earl Constantine, chairman, and of the Army and Navy Munitions manufacturing trade association group Board, will attempt to simplify form PD- of the national council, National Asso­ 25A, for use in applications for the fourth ciation of Manufacturers; Stuart Fitz­ quarter of 1942. Other responsibilities as­ patrick, manager, trade division, Uni­ signed to the committee include establish­ ted States Chamber of Commerce; ment of time schedules for all P.R.P. opera­ C. Oliver Wellington, immediate past tions, routing of P.R.P. applications within president of the American Institute of the W.P.B., and implementing decisions of Accountants; W. P. Thornton, a direc­ the requirements committee with respect to tor of the Controllers Institute of the acquisition of materials for production America. by industry. The function of this advisory com­ mittee is to encourage manufacturers, Controllers’ Annual Meeting wholesalers, and retailers to suggest The annual meeting of the Controllers how questionnaires, forms, and reports Institute of America will be held at the may be eliminated, combined, or sim­ Palmer House, Chicago, September 21st plified without sacrificing information to 23rd, a few days before the fifty-fifth essential to the War Production Board. annual meeting of the American Institute Approximately 1200 trade associations of Accountants. Among the topics sched­ have been asked to cooperate in this uled for discussion at general sessions are undertaking by assembling specific federal taxation, cooperation with the war suggestions from their members and program, and post-war controllership prob­ forwarding them to the advisory com­ lems. mittee. The latter group will consoli­ date the suggestions and forward them U. S. Navy Cuts Paper Work to the W.P.B. committee, which in­ cludes representatives of the materials In a campaign reflecting the recent trend division, statistics division, bureau of toward elimination of red tape, the United industry branches, and bureau of States Navy has abolished about 500 re­ priorities; the War and Navy Depart­ ports since June 1st. Many others have ments; and the Bureau of the Budget. been simplified and a number of forms are The advisory committee is not con­ now required at less frequent intervals. Of cerned with the merits of W.P.B. 50 quarterly reports from ships for property regulations, but only with forms pro­ accounting, approximately two-thirds have vided for their execution. been discontinued. As a basis of determin­ A representative of the American In­ ing which forms might be eliminated with a stitute of Accountants recently met minimum loss of information, supervisory with Chairman Lubin of the W.P.B. employees of the Navy Department were committee, and members of the ad­ asked to list reports which they prepared visory committee, to discuss details of but considered of questionable value and the proposed program. reports which they received but did not read. The Certified Public Accountant 7

W.P.B. Calls for Typewriters Because the number of typewriters avail­ SUPPLEMENTAL GASOLINE able through trade channels are inadequate R a t io n s to supply the wartime needs of the armed Ration Order No. 5A reads in part forces of the United States, the War Pro­ as follows: “The mileage driven in a duction Board has asked about 24,000 of passenger automobile or motorcycle, the nation’s largest business corporations necessary for carrying out one or more to sell their surplus machines for this pur­ of the following purposes shall be pose. More recently, several hundred com­ deemed preferred mileage: panies have been warned that typewriters “ (1) By engineers, architects, techni­ may be requisitioned unless they are sur­ cians, supervisors, repair and main­ rendered voluntarily. W. P. B. is attempt­ tenance men or other workers (but not ing to purchase from business concerns and including salesmen) to enable them to individuals, through typewriter dealers, render services or to transport mate­ about 600,000 machines manufactured since rials and equipment necessary for January 1, 1935, at prices equivalent to construction, repair, installation, or standard factory trade-in allowances as of maintenance work (other than the re­ February 1 , 1941. An officer of the National pair or maintenance of portable house­ Office Management Association has ex­ hold appliances); or for rendering in­ pressed the opinion that, although the sur­ dispensable services of a specialized render of as many as 25 per cent of the type­ nature to agricultural, extractive, or writers now in use would not necessarily industrial establishments.” create an undue hardship for industry as a In reply to a member’s request, for whole, it would require drastic modifica­ information, counsel for the Institute tion of office methods including establish­ suggests the following procedure: ment of centralized stenographic depart­ “ Form R-535 should be filed with ments in many large and medium-sized the local rationing board. A letter organizations. should accompany this application, stating in greater detail the necessity Canadian Accountants Meet for a supplemental gasoline ration book. If the decision of the local ra­ The annual meeting of the Dominion tioning board is not satisfactory, the Association of Chartered Accountants will applicant should then appear in person be held at Calgary, Alberta, August 17th to before the board. If their decision is 19th. Because of the pressure of wartime still adverse, he may then take an ap­ demands upon members of the profession in peal to the state rationing board. Canada, the program is limited to the coun­ “The letter submitted with the ap­ cil meeting and a half-day general session. plication should state in some detail the nature of the work in which the S.E.C. Decisions and Reports accountant is engaged and the nature of his client’s business. If he is handling The Securities and Exchange Commis­ accounting work for various clients, sion recently announced publication of Vol­ some of whom are not engaged in work ume 8 of its Decisions and Reports, contain­ essential to the war effort, it will prob­ ing all S.E.C. findings and opinions from ably be necessary for him to state how September 1, 1940, to March 31, 1941, to­ much of his work is in connection with gether with an index-digest of the cases and industries essential to the war effort. a table of cases citing sections of the Acts Whether an accountant is able to ob­ involved. This volume, priced at $2.00, can tain a supplemental gasoline ration be obtained only from the Superintendent book will depend on the nature of the of Documents, United States Government establishment which he is serving.” Printing Office, Washington. 8 The Certified Public Accountant

Air Raid Protection for Federal Tax Institute Valuable Records New York University will conduct a An informative pamphlet bearing this Federal Tax Institute for accountants, title, based on a recent report by the attorneys, corporate officials, trust officers, committee on protection of records of the and others concerned with tax matters, National Fire Protective Association, has after Congress has completed the details been published by Byron Weston Com­ of the pending tax bill. This program is pany, Dalton, Massachusetts. Stating tentatively scheduled for the first two that fire is the greatest single threat to weeks in October, with morning and eve­ business records, either in peace or war, the ning sessions only. Nationally known author­ booklet suggests that one of the simplest ities on federal taxation will lead discussion methods of record-protection is to place and representatives of the Treasury De­ copies of vital records in a remote location, partment are expected to participate. preferably in another city. Records may be Further information may be secured from duplicated by photographic or photostatic the Division of General Education, New reproduction, or by preparing carbon copies York University, Washington Square, on a typewriter or duplicating machine. The New York. pamphlet recommends surveying all exist­ ing material, classifying each item accord­ S.E.C. and Securities Industry ing to its relative importance, and providing Consider Accounting Problems an adequate degree of protection for each Two topics scheduled for discussion by classification. An interesting feature of the representatives of the securities industry text is a “Schedule for Retention of Records and the Securities and Exchange Commis­ for Large Establishments,” suggesting pe­ sion are of special interest to accountants— riods of time during which various types of “ uniform reporting to federal and state records should be preserved. agencies and others” and “ standards of corporate accounting.” These subjects were W.P.B. Clarifies Restrictions on among seven developed at an initial “ war­ Typewriters and Office Machinery time ” conference arranged at the suggestion of Ganson Purcell, chairman of S.E.C., on W.P.B’s Director of Industry Operations recently issued interpretation No. 3 of July 20th. At a second meeting, on July Conversion Order No. L-54-a in which he 29th, simplification and uniformity in fi­ defined the term “ billing and continuous nancial statements of investment houses were discussed. forms handling typewriters,” as used in Section 1112.2 of the Order, as follows: Women Accountants Plan “ (1) Continuous forms handling ma­ Joint Program chines, typewriter principle, having carbon paper handling devices The American Woman’s Society of Certi­ constructed as an integral part of fied Public Accountants and the American the machine. Society of Women Accountants will hold (2) Billing machines, accounting prin­ their joint annual convention at the Palmer ciple, and collateral equipment.” House, Chicago, on September 25th, 26th, Equipment thus defined is exempt from and 27th, immediately preceding the an­ Order L-54-a, which refers to typewriters, nual meeting of the American Institute. but is subject to General Limitation Order This program, which is the tenth annual L-54-c, which refers to various types of meeting of the A.W.S.C.P.A., will be de­ office machinery. Any other typewriters voted primarily to consideration of op­ having devices for billing or continuous portunities and responsibilities of women forms handling are included within the term accountants—especially with respect to es­ “ typewriter,” as defined in subparagraph sential war activities. Among the topics to (a) (4) of L-54-a, the typewriter order. be presented are legislation affecting women The Certified Public Accountant 9

accountants, transfer of women account­ State Legislation ants to positions vital to the war effort, tax­ ation, and reports to government agencies. D i s t r i c t o f C o l u m b i a Guest speakers will include Miss B. Fain The House District Committee of the Tucker, president of the Woman’s Bar As­ District of Columbia has been requested to sociation of Chicago, who will discuss legal draft a bill defining the functions of a problems resulting from the war, and John “ bookkeeper,” an “ accountant,” and a L. Carey, secretary of the American Insti­ “certified public accountant” in the Dis­ tute. The participating organizations cor­ trict of Columbia. The purpose of this bill, dially invite members of the Institute, and it is reported, is not to amend present aca­ others who are interested, to attend their demic or practical requirements for admis­ sessions. sion to the accounting profession but to define those requirements in a single stat­ ute. The District Committee will refer a STATE SOCIETY ELECTIONS draft of the proposed bill to the District of Kentucky Columbia Institute of Certified Public July 10, 1942 Accountants for an expression of opinion President—Robert Miller, Louisville. First vice before legislation is enacted. president—Orville D. Harris, Louisville. Sec­ ond vice president—Robert N. Dennis, Louis­ L o u i s i a n a ville. Secretary-Treasurer—Charles M. Wheeler, Louisville. The Louisiana legislature recently en­ acted a statute (Act No. 13 of 1942), ap­ New Hampshire proved by the Governor on July 2nd, which June 20, 1942 establishes a state department of occupa­ President—Clarence I. Drayton, Sr., Manches­ tional standards, to assume all functions of ter. Honorary president—J. Ben Hart, Man­ state boards regulating admission to speci­ chester. Vice president—Arthur W. Johnson, Durham. Secretary-Treasurer—H. A. B. Sha­ fied professions and their practice within piro, Manchester. the state. The original draft of this bill listed the State Board of Public Accountants of W isconsin Louisiana among the groups to be dis­ June 16 , 1942 placed. This provision was later excluded, President—A. W. Kimball, Madison. Vice presi­ at the request of the Society of Louisiana dent—H. L. Kunze, Milwaukee. Secretary— T. A. Bruett, Milwaukee. Treasurer—A. F. Certified Public Accountants. In the opin­ North, Milwaukee. ion of the state society, the act does not en­ croach in any way upon the powers of the State Board. News from State Boards On July 12th, the Governor of Louisiana Following extension of the reexamination approved a bill (Act No. 229 of 1942) re­ period for candidates in the armed forces mitting annual or renewal fees of profes­ by the American Institute board of sional men serving in the armed forces of examiners, the University of Illinois com­ the United States. Section 1 of this Act mittee on accountancy advises that if a provides “That the annual or renewal fee candidate is called into military service be­ that would otherwise be due under pres­ fore he has opportunity to present himself ently existing laws by a member of any for examination under Rule 33, his privi­ profession, in the State of Louisiana to any lege will be extended to cover the period of state board, commission, department or his service. agency for any such member to continue R. J. Shipway of Sioux City became to be entitled to practice or exercise his said chairman of the Iowa Board of Account­ profession, in this State is hereby remitted ancy, and R. C. Patrick of Mason City to and in favor of any such member of a was reappointed secretary-treasurer, as of profession, who is or shall become enlisted July 1st. Louis J. Muehle of Des Moines is and serving in any of the armed forces of the the third member of the Board. United States of America, provided that the 10 The Certified Public Accountant remission of such annual or renewal fees board of directors of the Illinois Society herein provided shall apply to any annual has passed a resolution assuming the dues or renewal fees as shall not already have be­ of those members who enter the armed come delinquent at the time of the said forces of the United States during the enlistment of any such member of a pro­ present emergency. Undertaking an in­ fession and to such additional or renewal ventory of employees and staffs of public fees as would otherwise thereafter fall due accountants in the state, Texas Society’s unless and until any such member of a pro­ committee on research and statistics has fession shall have been honorably dis­ asked all public accounting partnerships charged from any of the said armed services and individual practitioners represented in for two calendar years following the year in the Society membership to submit single- which he receives his honorable discharge.” page histories of each principal and em­ ployee. Illinois Society, through its special committee on wartime problems, offers to STATE SOCIETY NEWS assist members entering war service to con­ serve their clientele so that they may re­ In recognition of the activities of the sume normal professional activities after Illinois Society, the Illinois State Council the war with a minimum of difficulty and of Defense adopted on May 4 , 1942, a resolu­ delay. Members and firms wishing to vol­ tion reading in part as follows: “That the unteer to care for the practice of fellow Illinois State Council of Defense hereby members, and those desiring to obtain such commend and acknowledge its sincere ap­ assistance, are invited to register with the preciation to the Illinois Society of Certified office of the secretary. The Society assumes Public Accountants, its officers and mem­ no responsibility for agreements made by bers for their voluntary and most helpful members under this plan. The board of di­ cooperation with respect to the trade and rectors of the Texas Society recently civilian sugar rationing registration in the accepted an offer from John B. Allred, sec­ furtherance of our national war effort.” retary of the State Board of Public Account­ In a recent announcement to the press, the ancy of Texas, to establish a Society award chairman of the Fairfield County (Conn.) for candidates securing the highest distinc­ War Price and Rationing Board, acknowl­ tion in the Board’s C.P.A. examinations. edged the cooperation of Harry W. Babi­ Recent releases in the series issued by neau, president of the Connecticut Society, New York State Society’s special commit­ in arranging for members to assist in review­ tee on wartime problems include No. 13 ing applications for supplementary gaso­ entitled “Auditing Under Wartime Condi­ line rations. A letter received by District tions,” enclosing “ Statement on Auditing of Columbia Institute from the chairman Procedure No. 10” of the American Insti­ of the local war price and rationing board tute of Accountants, which is a joint report expresses appreciation for the cooperation by committees representing the Institute of its members in the sugar-rationing and the State Society; No. 14, “Selective registration. Service Bulletin Relating to Accountants,” At the first meeting of New York State reprinting Selective Service System’s “Oc­ Society’s recently formed committee on cupational Bulletin No. 10”; No. 15, “A priorities, the following immediate activi­ Call to War Service,” urging all members to ties were proposed: To ascertain W.P.B. and O.P.A. requirements with respect to participate actively in some phase of the financial reports and those referring to war effort; No. 16, “Tax Return Exten­ priorities and inventories; to invite mem­ sions,” emphasizing the importance of in­ bers of the several boards representing these cluding in pending legislation adequate pro­ organizations to meet with the committee vision for extension of time for filing federal and discuss their objectives; to request corporate tax returns. suggestions from Society members con­ Harrisburg Chapter of Pennsylvania cerning the work of the committee. The Institute held its summer organization The Certified Public Accountant II meeting, July 15th. Newly elected officers Election of Members were inducted by J. F. W. Heinbokel of C a l if o r n ia Scranton, president of Pennsylvania Insti­ Harry G. Busby, Los Angeles tute. Alexander Cohn, state O.P.A. repre­ *Walter J. Calverly, Los Angeles sentative, discussed “The Price Control *Wilbur C. Moore, Los Angeles Program.” Seattle Chapter of Washing­ Fred Miles Morrison, Watsonville ton Society held its annual meeting on *Jack M. Pope, San Francisco May 20th. Rodney White reported on Arnold R. Ternquist, San Francisco the recent meeting of council of the Ameri­ C o n n e c t ic u t can Institute. Spokane Chapter held Jeremiah S. Buckley, Bridgeport its annual meeting on May 19th; Tacoma D is t r ic t o f C o l u m b ia Chapter on June 2nd. District of Colum­ bia Institute installed its recently elected *Thomas P. Ficklin, Washington officers at a meeting on June 29th. At a I l lin o is luncheon meeting of California Society, *WiIIiam N. Anspach, Chicago in Los Angeles, July 20th, Harry M. Bardt, Carl I. Gustafson, Chicago vice president and trust officer of the Paul F. Johnson, Chicago *Gordon B. Rockafellow, Chicago Bank of America, and a member of the Harry E. Snyder, Chicago committee on taxation, trust division, Harry E. Taylor, Chicago American Bankers Association, discussed *Lorin A. Torrey, Chicago current trends in the taxation of estates and Kenneth J. Williams, Chicago trusts. The Colorado Society presented I n d ia n a certificates to twelve new certified public Ida S. Broo, Indianapolis accountants at a meeting in Denver on July *James A. DeWald, Fort Wayne 20th. Allen Redeker, a member of the state Lawrence M. Henderson, Indianapolis Alvah O. LaBerteaux, Muncie board of accountancy, was the principal *Horace M. Read, Indianapolis speaker. At the Connecticut Society's thirty-fifth annual meeting, held in New K a n sa s Haven June 17th, it was voted that the *Homer J. Henning, Emporia president appoint a committee on inter­ K e n t u c k y relations with other accounting societies or Edward T. Alexander, Owensboro associations. *Robert S. Hall, Louisville F. L. May, Owensboro Visitors at Institute Offices L o u is ia n a *Junius H. Payne, Jr., Alexandria Paul M. Anderson, Binghamton, N. Y. *Armand F. Quere, Jr., Destrehan Maurice A. Brewster, Oil City, Pa. William F. Connelly, Newark, N. J. M a r y l a n d Clarence I. Drayton, Manchester, N. H. Arthur W. Eisenhart, Baltimore Edwin D. Frost, New York, N. Y. J. Clyde Hyatt, Baltimore Grover C. Greweling, Louisville, Ky. Edgar V. Loweree, Baltimore E. L. Grimes, Milwaukee, Wis. Joseph E. Robertson, Baltimore J. William Hope, Bridgeport, Conn. T. J. Horuff, Indianapolis, Ind. M assachusetts Frederick H. Hurdman, New York, N. Y. *Richard Claybourne, Boston William H. James, Atlanta, Ga. Charles Kershenbaum, Washington, D. C. *Charles E. Hennessy, Boston Dr. Joseph J. Klein, New York, N. Y. G. Winthrop Wilson, Springfield C. C. Lewis, Baltimore, Md. M ic h ig a n Louis D. MacMillan, Chapel Hill, N. C. William R. Murray, New York, N. Y. David P. Zack, Detroit

Carl Mur, New York, N. Y. M in n e s o t a Frank J. Pekar, Wilmington, Del. W. Havard Perkins, St. Louis, Mo. Vernon O. Aanenson, Minneapolis Nicholas Picchione, Providence, R. I. *Verner A. Rydberg, Duluth Ernest Reckitt, Chicago, Ill. Robert H. Rissinger, Philadelphia, Pa. * Admitted as associates. 12 The Certified Public Accountant

M is s o u r i V ir g in ia Walter E . Braeckel, St. Louis Arthur N. Kemp, Richmond O. Ruffin Crow, Jr., St. Louis Joseph R. Roszel, Norfolk ♦Paul P. Cusack, St. Louis ♦Edward J. Dillon, Kansas City W a sh in g t o n August C. Tietjen, St. Louis * Carl H. Schoenfeld, Seattle *W. G. Tate, Tacoma M o n tan a ♦Louis A. Lanouette, Great Falls C a n ad a Fred Page Higgins, Toronto N e w J e r s e y * Walter A. Peterson, Jersey City

N e w Y o r k George W. Moore, of Worcester, Mass., *Remick V. Behrens, New York *Charles B. Brutsche, New York died March 2, 1942, at the age of 54. He *Howard L. Clark, New York was a member of the firm of Tupper & Frank X . Denier, New York Moore. Mr. Moore was born in Salisbury, *Carl Gerdes, New York Md., later moving to Washington, D. C., Frank S. Harman, New York Edward Isaacs, New York where he studied accounting at the Pace *Benjamin S. Kalvin, New York Institute. He held a C.P.A. degree from Samuel D. Kligler, New York Massachusetts and one from North Caro­ *Iver T. Lindquist, New York lina. Mr. Moore served his apprenticeship *George D. MacKenzie, New York *William J. McNulty, New York as a junior accountant with Price, Water­ *Joseph J. Mehl, New York house & Co. in New York City, later *Howard D. Murphy, New York resigning to enter World War I. He was *Robert C. Plumb, New York stationed at Dow Chemical Co. and at *William P. Porch, Brooklyn *Milton J. Robinson, New York Edgewood Arsenal. At the close of the war *John P. Rogers, New York he was made assistant chief of the special *Peter T. Rudden, New York assessment section of the Bureau of Internal †P. Gerard Von der Lieth, New York Revenue in Washington, D. C. In 1922 he O h io came to Worcester, Mass., to specialize in Edward A. Guelde, Lancaster tax accounting, conducting his business ♦Martin Conner Harris, Cincinnati under his own name until 1940 when he ♦John R. Kiessling, Lockland formed a partnership with Frank Tupper. ♦Charles L. Schmidt, Cincinnati Edward H. Southwick, Cleveland He was a member of the Massachusetts Society of Certified Public Accountants, P ennsylvania and had been a member of the American Leslie A. Carfrey, Philadelphia Institute of Accountants since 1926. William A. Crichley, Pittsburgh Richard J. Gallagher, Philadelphia Amos Sorensen, of Chicago, Ill., died Robert M. Harper, Uniontown recently, the Institute has just learned. Herbert T. Lorentz, Pittsburgh He was 39 years of age. A native of Moor­ George C. Myers, Pittsburgh head, Iowa, Mr. Sorensen attended the pub­ Samuel J. Needleman, Philadelphia ♦James A. Richards, Pittsburgh lic schools of that city and Walton School ♦Fred J. Smith, Pittsburgh of Commerce at Chicago, and subsequently taught in the public schools of Iowa and S o u t h C a r o l in a Montana. He entered the practice of ac­ Leslie S . Dickert, Rock Hill William A. Searson, Spartanburg counting in 1925 and held various account­ ing positions until 1931 when he became T e n n e s s e e associated with Price, Waterhouse & Co. of * Benjamin F. Wilson, Memphis Chicago, where he remained until the time T e x a s of his death. Mr. Sorensen was a certified Herbert Cushman, Corpus Christi public accountant of Illinois, and had been *Howard G. Patterson, Fort Worth a member of the American Institute of Accountants since 1934. * Admitted as associates. † Advanced to membership. Announcements

The following firm announcements have recently tional Bank Bldg., Joplin, Missouri; and Com­ been received from members of the Institute. merce Bldg., Pittsburg, Kansas. B l e d s o e & M a y g in n e s , Tulsa, Okla., an­ T upper, M oore & Co., of Worcester, Mass., nounce the dissolution of their partnership. announce that George F. Shannon and E inar A r t h u r H. M a y g in n e s is now auditor for Re­ W . Sundberg have been admitted to partnership construction Finance Corporation, Defense in the firm, and that the firm name, formerly Plant Corporation Division, Springville, Utah. Tupper & Moore (of which the late George W. T om F. C a r e y , of Oklahoma City, Okla., an­ Moore was a member), has been changed to nounces the removal of his offices to 1103 Col­ Tupper, Moore & Co., with offices at 390 Main cord Bldg. St., Worcester. G l e n n Y. D a v id so n and E d w a rd P. Ross announce the formation of a partnership under The following article by a member of the Insti­ the firm name of Davidson, Ross & Co., with offices in the Gulf Bldg., Houston, Texas. tute recently appeared in the publication named. D e l o i t t e , P l e n d e r , G r if f it h s & Co., an­ G e o r g e T. B a l l a r d , New York; “ Suggestions nounce the opening of an office in the Carew for Tax Records” ; American National Retail Tower, Cincinnati, Ohio, in charge of O l iv e r W. Jewelers Association Bulletin. Se i f e r t , as resident manager. E r n s t & E r n s t announce the removal of their The following notice of appointments of mem­ Seattle, Wash., office to 1202 Northern Life Tower. bers of the Institute have recently been received. F r e d e r ic k A. T h u l in , Illinois; instructor in a G e o r g e H. K in g s l e y & C o m p a n y , of New condensed and preparatory course in “ The Ele­ York, N. Y ., announce that A lt o n M. S n ip e s is now associated with the firm. ments of Navigation,” offered by the Central Y.M.C.A. of Chicago, which began May 27th to L a u r a M e n n , of Boston, Mass., announces the continue for twelve weeks. removal of her office to Second National Bank Bldg., 75 Federal St. K e n n e t h G. V a n S c iv e r , New York; ap­ pointed for 21st consecutive year as District E . Ober P ride and E dward H . Ober an­ Clerk for the Board of Education of the Town nounce their association as partners in the firm of of Mamaroneck, N. Y. Edwin L . Pride and Co., with offices at 40 Cen­ tral St., Boston, Mass. E d w in H. W a g n e r , S r ., Missouri; appointed member of the Finance and Admissions Com­ S c o v e l l , W e l l in g t o n & C o m p a n y an n ou n ce mittee of the St. Louis War Chest, and of the that the following men have been admitted to Victory Fund Committee of the 8th Federal partnership in the firm: R a l p h R. B r u s t e r , Reserve District. B o sto n ; J o h n W. D ix o n , Cleveland; B e n ja m in E. G r a n t , B o s to n ; W il l ia m W. J o h n sto n , Springfield. The following address was delivered recently by a S am W. S in d e r s o n , G e o r g e L i t t l e , C l i f f C. member of the Institute. St e v e n s o n , an d E u g e n e M. L a S h e l l ann ou nce E d w in H. W a g n e r , Sr., Missouri; “Hospital the consolidation of their practices under the firm Accounting and General Aspects of the Business name of Sinderson, Little & LaShell, with offices Administration of a Hospital Institute on Hos­ in Brotherhood Block, Kansas City; Joplin Na­ pital Administration, St. Louis.

13

RUMFORD PRESS CONCORD, N. H. THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

S e p t e m b e r , 1942

Annual Meeting

Gasoline for Accountants

Longer Examination Period

Accountants under Selective Service

Army Revises Audit Procedure

Fall Examination Schedule

Elijah Watt Sells Awards

15¢ a Copy Published Monthly $1 a Year

V ol. 22 No. 9

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC. PAMPHLETS FOR DISTRIBUTION These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authori­ ties, businessmen, and others.

Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They M ean...... 1¢ Please Check Your Account...... per hundred — 35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢

A uditing Examination of Financial Statements by Independent Public Accountants.. .15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢

Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Re­ funded ...... 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢ No. 15 — The Renegotiation of War Contracts...... 10¢

Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination. .10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued) 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon.. .10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar Investments under the Investment Company Act of 1940...... 10¢ No. 10 — Auditing Under Wartime Conditions...... 10¢ American Institute of Accountants

Activities of the Month Consequences of Renegotiation of Con­ Carman G. Blough, chairman of the tracts.” committee on selective service, and John N. A. Leitner of New York repre­ L. Carey, secretary of the Institute, re­ sented the Institute at a dinner meeting cently discussed with Selective Service on August 12th at which Beardsley officials at Washington the status of pub­ Ruml, proponent of the “pay as you go” lic accountants under Selective Service income-tax plan, explained his proposal to Occupational Bulletin No. 10, which lists representatives of trade associations and “accountants” among a number of “crit­ professional societies. ical” occupations. Following this discus­ The Institute committee on accounting sion, a letter was received from an procedure recently issued Accounting Re­ official at Selective Service Headquarters, search Bulletin No. 15, on “The Rene­ stating that “in the opinion of this Head­ gotiation of War Contracts.” Several quarters, the designation of accountants members of the committee, assisted by the was specifically intended to cover account­ Institute research staff, are studying the ants in professional public practice.” effect of war contracts on financial state­ The complete text of this letter is quoted ments, with special attention to account­ in a recent communication to presidents ing for cost-plus-fixed-fee contracts and of state societies, referring to the status advance payments on contracts. of accountants under selective service, re­ The committee on auditing procedure printed on page 4 of this bulletin. is drafting a statement concerning con­ The secretary and H. T. Winton, assis­ sistency in the application of accounting tant secretary, recently met with the com­ principles and comparability of financial mittee on meetings, in Chicago, to assist statements, a project suggested by S.E.C. in completing final arrangements for the release No. 32, accounting series, an­ fifty-fifth annual meeting of the Institute. nouncing an opinion of the chief account­ The secretary of the Institute and ant relating to certain requirements of James L. Dohr, director of research, have Regulation S-X. This committee has re­ recently conferred informally with repre­ cently been asked to consider modification sentatives of the Bureau of Economic of the phrase “on the authority of such Research concerning the development of firm as experts,” when used in reference a questionnaire to be used in securing to certifying public accountants in regis­ accounting information for the Bureau’s tration statements filed with the Securities study of corporate financial statements. and Exchange Commission. A subcommit­ A meeting of the executive committee tee recently submitted to the full com­ of the Institute was held in New York mittee a report on the auditor’s responsi­ on August 17th. bility for inventories in audits of public Walter A. Cooper, chairman of the warehouses and confirmation of clients’ Institute committee on federal taxation, inventories located in such warehouses. participated in conferences held by the George N. Farrand, research assistant, Tax Foundation, Inc., in New York on represented the Institute at the War Pro­ August 4th and 5th, as a member of the duction Board’s Training Conference subcommittee for discussion on “Tax held in New York on August 11th and 1 2 The Certified Public Accountant

12th for the purpose of explaining amend­ dents have been invited to comment on a ments to priorities regulation No. 10, possible revision of Rule No. 10 of the which substitutes a “Production Code” Institute’s Rules of Professional Conduct for the earlier allocation classification which would prohibit all advertising, in­ system, and discussing other problems re­ cluding the publication of so-called lated to priorities and allocations. Prin­ “cards.” Responses received to date indi­ cipal topics considered, in addition to the cate a divergence of opinion. Production Code, included organization of W.P.B. and functioning of its com­ pliance branch; Production Requirements Members of the Institute Engaged Plan; priorities-appeals procedure; cen­ in War Activities sorship of industrial data. This confer­ C. W ilbur Cissel, College Park, Md.— ence, the first of its kind, was attended Lieutenant, Junior Grade, Supply by prominent national regional officials of Corps., U. S. Naval Reserve, Wash­ the War Production Board and by repre­ ington. sentatives of professional societies, cham­ bers of commerce, and trade associations Martin S. Dembo, Pittsburgh, Pa.—Lieu­ throughout the United States. The Insti­ tenant, Junion Grade, Bureau of Naval tute was among the organizations invited Supplies and Accounts, U. S. Navy, to participate by Donald M. Nelson, Washington. chairman of the War Production Board. Harold B. Eversole, Iowa City, Iowa— In a recent letter addressed to adminis­ Assistant Regional Accountant, Office trative officials of the principal war agen­ of Price Administration, Chicago, Ill. cies employing civilian accountants and Joseph Geringer, San Diego, Calif—Per­ auditors, the secretary of the Institute sonnel Section, 69th Coast Artillery, suggested that in view of the shortage San Diego. of qualified accountants and the policy of Selective Service Headquarters, as ex­ Clarkson Hill, Atlanta, Ga.—Lieutenant, pressed in Occupational Bulletin No. 10, Junior Grade, Supply Corps, U. S. these agencies as well as industries and Naval Reserve, Assistant Accounting the profession should request deferment Officer of the Navy Yard, Charleston, of essential accountants who cannot be S. C. replaced. Replies received indicate, in Arnold R. Jones, Topeka, Kansas—First general, that a policy of deferment for Lieutenant, Barrage Balloon, Coast qualified accountants is favored and that Artillery Corps, Battery “A,” Battalion deferment has been requested in a number 311, U. S. Army, Camp Tyson, Tenn. of instances. Frederic W. Kilduff, New York, N. Y.— The Institute board of examiners met Major, U. S. Army Air Corps, Brook­ in New York on August 24th. November lyn, N. Y. examination schedules were announced Simon W. Levitan, Washington, D. C.— and winners of the Elijah Watt Sells Lieutenant, Senior Grade, Supply medals in the May examinations named. Corps., U. S. Naval Reserve. Dates of the fall examinations and a list of the medalists appear elsewhere in this Saul Levy, New York, N. Y.—Expert issue. The Board voted to inaugurate, in Consultant, Accounting and Audit May, 1943, the two and one-half day ex­ Supervisory Branch, Fiscal Division, amination schedule, previously approved Headquarters, Services of Supply, War by the Association of Certified Public Department. Accountant Examiners. Leslie Mills, New York, N. Y.—Lieu­ At the suggestion of the committee on tenant, Supply Corps, U. S. Naval Re­ professional ethics, members of the Ad­ serve, Office of Procurement and Ma­ visory Council of State Society Presi­ terial, Washington. The Certified Public Accountant 3

L. C. Peppell, San Francisco, Calif.— Lieutenant Commander, Supply Corps, F ifty -fifth A n n u a l M eeting U. S. Naval Reserve, Executive As­ sistant to Supervisory Cost Inspector, The fifty-fifth annual meeting of Twelfth Naval District. the American Institute of Accoun­ tants will be held at the Palmer House, E. W. Renker, Topeka, Kansas—First Chicago, from Monday, September Lieutenant, Seventh Corps Area, Post 28th, through Thursday, October 1st. Exchange Officer, Omaha, Neb. There will be no general or technical John Roli, New York, N. Y.—Signal sessions on the first day. Every sub­ Corps, Replacement Training Center, ject to be presented is directly related Fort Monmouth, N. J. to the war effort. Entertainment Alwin F. Rosslow, San Francisco, Calif. features have been eliminated. The —Major, Infantry, on foreign service. registration fee is six dollars for all J. Harold Stewart, Boston, Mass.—Pro­ sessions, or one dollar for technical moted to Lieutenant Commander, Sup­ sessions only. An advance program ply Corps., U. S. Naval Reserve, Tech­ appeared in the August issue of this nical Assistant to the Supervisory Cost bulletin and in a pamphlet which has Inspector, First Naval District. been distributed to Institute members Ralph B. Stratford, Portland, Ore.— and associates. Interest already ex­ Major, Accounting and Auditing Su­ pressed in the meeting indicates a pervisory Branch, Fiscal Division, large attendance. Members who have Headquarters, Services of Supply, War not yet secured rail and hotel accom­ Department. modations are urged to make reserva­ tions immediately. John C. Winn, Greenville, S. C.—Cap­ tain, Fourth Service Command, U. S. Army. Dates on Membership Certificates Sons of Institute Members with Membership certificates of the Ameri­ the Armed Forces can Institute of Accountants, by vote of the executive committee on August 17th, David Charles Klein (son of Joseph J. may indicate the date on which the mem­ Klein, of New York, N. Y.)—Lieu­ ber was admitted to any organization tenant, Coast Artillery Corps. which subsequently became part of the John I. Cole, III (son of Viott Myers Institute, through merger or otherwise. Cole, of New York, N. Y .)—Private, Present certificates will be replaced, on 165th Field Artillery Battalion. request, at a nominal fee.

Roster for War Service Examiners to Discuss Longer Examination Period Approximately 500 copies of the ques­ tionnaire recently sent to Institute mem­ Questions resulting from the adoption bers to determine their availability for of the two and one-half day examination war service have been returned. Informa­ period, effective in May, 1943, will be tion thus provided will be extremely use­ among the more important topics con­ ful in responding to inquiries from sidered at a joint meeting of the Associa­ various federal agencies and branches of tion of Certified Public Accountant Ex­ the War Department which request as­ aminers and the Institute board of sistance in securing qualified accountants for special duties, from time to time. In examiners at the Palmer House, Chicago, addition, approximately 300 members on Monday afternoon, September 28th. have requested application forms for ap­ Members of state boards of accountancy pointment to the Army Specialist Corps. are urged to attend this meeting. 4 The Certified Public Accountant

that representatives of each state society A rm y R evises A u d it explain to the state director of Selective P rocedure Service the relationship of accounting to the war effort as described in the Institute The following item, based upon an letter of March 6, 1942, to Selective announcement by the War Depart­ Service Headquarters. ment at Washington on August 27th, appeared in The New York Times, August 28th: To Presidents of State Societies “The War Department said today of Certified Public Accounts that a simplified auditing procedure Gentlemen: for cost-plus-a-fixed-fee supply con­ tracts with the Army has been pre­ Subject: Status of Accountants under pared by the Fiscal Division of the Selective Service Services of Supply. You are familiar with Selective Service “The new system is a selective Occupational Bulletin No. 10, dated June auditing procedure which has the en­ 18, 1942, which lists accountants among dorsement of a special committee of critical occupations in the field of scien­ the American Institute of Account­ tific and specialized personnel in which a ants. shortage has been found to exist and in “Audits of cost-plus-a-fixed-fee which, therefore, trained and experienced contracts are necessary, the War De­ individuals engaged in essential activities partment said, for the purpose of may be considered for occupational ascertaining that contractors’ in­ classification. voices certified as correct by them, It was the clear understanding of the are in accordance with contract pro­ Institute’s committee that worked on this visions and are substantiated by ac­ matter that the term “accountant” as counting records.” used in Bulletin No. 10 was intended by This revised audit procedure, en­ National Headquarters of Selective Ser­ dorsed by a committee of the Amer­ vice to include accountants engaged in ican Institute, was described in an professional public accounting practice as well as those employed by government editorial captioned “Auditing Costs or industry. However, some draft boards of Army Contractors” in the Septem­ in various parts of the country were re­ ber issue of The Journal of Account­ ported to have ruled that public account­ ancy and the complete text of the ants were not covered by the terms of War Department directive authoriz­ Bulletin No. 10. Accordingly the Insti­ ing the new procedure was reprinted tute’s committee made direct inquiry of in the Findings and Opinions section National Headquarters of the Selective of the same issue. Service System and has received the fol­ lowing reply: “This will acknowledge your letter of August 24 in which you wish to be informed as to whether Occuptional Status of Accountants under Bulletin No. 10, which includes ac­ Selective Service countants among the list of occupa­ tions designated as critical, was in­ A recent letter from the chairman of tended to apply to accountants in the Institute committee on selective ser­ professional public practice as well as vice to the presidents of all state soci­ to those in the employ of government eties, reprinted below, quoted a com­ agencies or industries. “You are advised that in the opinion munication from National Headquarters of this Headquarters, the designation of Selective Service stating that Occupa­ of accountants was specifically intended tional Bulletin No. 10 was intended to to cover accountants in professional include public accountants, and suggested public practice as well as accountants The Certified Public Accountant 5

employed by agencies and institutions. rarest cases can be expected to reverse You are well aware of the fact, I am the local authorities. It now seems clear, sure, that the inclusion of accountants therefore, that if accounting personnel is in the list of critical occupations does to be utilized to best advantage of the not in any sense constitute a group nation in the war effort, state societies deferment. It is necessary in each case must take aggressive action. in which an accountant’s deferment is In accordance with an earlier recom­ sought to substantiate the claim by mendation of the Institute, most state convincing evidence to the effect that societies have offered their assistance to the individual is a ‘necessary man’ state occupational advisors in evaluating under standards enunciated in our the qualifications of individual account­ Memorandum to State Directors I-405, ants for purposes of classification. For as amended, a copy of which has been the most part the replies have been for­ provided you. mal and less than encouraging. Now we “Accountants in professional public believe it desirable that representatives practice were definitely meant to be of each state society call in person upon included within the term ‘accountants’ the State Director of Selective Service since it is a generally known and and explain to him, or to the official accepted fact that many industrial con­ whom he may designate for the purpose, cerns engaged in war production the relationship of accounting to the war depend to a major extent upon profes­ effort as set forth in the Institute’s com­ sional public accountants for account­ munication to National Headquarters of ing advice and service, and do not Selective Service dated March 6, 1942 maintain an employed staff of account­ (see The Journal of Accountancy, April, ants sufficient to meet all requirements 1942, page 344). Attention should also be for such advice and service. drawn to Occupational Bulletin No. 10 For The Director, and the letter interpreting it, which we have just quoted. The offer should then E m m e t t G. S o l o m o n , be renewed to set up a committee which Captain, Specialist could act as a sieve through which mem­ Manpower Division.” bers of the state society might submit While this interpretation may be help­ what they believed to be worthy requests ful in some cases, experience indicates for occupational deferment which had that because of their unfamiliarity with been denied by local boards and appeal the relationship of accounting to produc­ boards. The State Director should be tion some draft boards may continue to willing to review such cases if assured refuse occupational deferment to public that a committee of the state society had accountants even though they come scrutinized them and believed them to be squarely within the terms of Occupational sound. This procedure has already been Bulletin No. 10—“Careful consideration followed in one state and it is believed for occupational classification should be will result in considerable benefit to all given to all persons trained, qualified or concerned. skilled in these critical occupations and One further point deserves mention. who are engaged in activities necessary We believe it would be helpful if you to war production or essential to support would advise your members that, in filing of the war effort.” Form 42-A (employer’s request for occu­ Because the administration of the pational classification of a registrant), Selective Service Act is so highly decen­ in the case of a public accountant there tralized through the local draft boards should be attached a detailed statement and appeal boards, it is impossible for naming the clients for whom the regis­ the Institute to take steps which will trant has been working, is working, and assure proper application of Occupa­ is expected to work, indicating those tional Bulletin No. 10 to individual cases. which are engaged in war production and National Headquarters of Selective Ser­ those which are engaged in other activ­ vice, with which the Institute must work, ity essential to support of the war effort, cannot consider individual cases in all and showing also the approximate time parts of the country, and only in the devoted by the registrant to the affairs 6 The Certified Public Accountant of each client. We have been informed practice and contradictory opinions con­ that in many instances application for cerning the meaning of the present law. occupational classification of public ac­ After reviewing available evidence, the countants may have been denied because committee concludes that an individual they were supported only by general may be selected as auditor and sign his assertions by the employer that the regis­ trant was devoting all or a substantial own name; that an individual who is a portion of his time to the affairs of essen­ member of a partnership may be selected tial industries. and sign his own name or that of his The Institute committee believes that firm; or that a partnership may be se­ this whole subject is one of increasing lected and use the partnership name. importance. It believes that having secured a clear statement of the national policy with regard to accountants under Gallup Survey Cites Tax Selective Service, it can do little more Committee Statement than advise state societies with regard to specific problems which may arise. The A recent survey by the Institute of state societies themselves must now as­ Public Opinion, of which George Gallup sume the responsibility for seeing to it is the director, included the following that the expressed national policy is prop­ reference to the statement which Walter erly interpreted and administered by local A. Cooper, chairman of the American authorities. Institute committee on federal taxation, Yours sincerely, presented before the Senate Finance C a r m a n G. B l o u g h , Chairman, Committee on August 11th: Committee on Selective Service. “The public’s recognition that every­ one must pay more taxes has shown a sharp upward trend during the last year Certificate of Condition and a half. In December, 1940, a year A revised form of certificate of condi­ before Pearl Harbor, the idea of an in­ tion, issued by the State of Massachu­ come tax for everybody was approved by a bare majority in an Institute survey. setts in the spring of 1942, omits the Today that majority has grown to over­ words “in my opinion” from the audi­ whelming proportions, as indicated in the tor’s certificate and provides an affidavit following survey on the identical pro­ for the signatures of corporate officers posal. indicating that the auditor was duly elected and qualified. 1940 Today The executive committee of the Mas­ Favor income tax for all sachusetts Society of Certified Public families not on relief... .51% 70% Opposed ...... 41 25 Accountants, concurring with previous Undecided ...... 8 5 expressions of the American Institute of Accountants, recommends that account­ “In Senate Committee hearings on the ants insert the words “in my opinion” or tax bill last week, W alter A. Cooper of “in our opinion” when signing the certifi­ the American Institute of Accountants cate. The committee also recommends advocated the elimination of all personal exemptions in order 'to directly impose that the auditor, upon being notified of some small measure of responsibility on his election, take oath before a notary every person in the United States.’ It is that he will faithfully perform his du­ clear from the survey that an increasing ties and send a copy of this oath to his number of Americans endorse this idea client. and are willing to make the sacrifice With reference to the appointment of which it involves.” partnerships as auditors and the use of This survey was published in approxi­ partnership signatures in oaths, the exec­ mately one hundred newspapers through­ utive committee finds wide variation in out the United States. The Certified Public Accountant 7

Examinations Fall examinations of the American In­ P rogress in S im plify in g stitute of Accountants will be held No­ W. P. B. FORMS vember 12th and 13th; cooperating state boards of accountancy will hold simul­ Joseph I. Lubin, chairman of the taneous sessions. Following is the sched­ W.P.B. committee for the review of ule : data requests from industry and a member of the Institute, in a recent T h u r s d a y , N o v e m b e r 12, 1942 address before the Society for the 9 :00 a .m . to 12:30 p .m . Auditing. Advancement of Management, re­ 1 :30 to 7 :30 p . m . Accounting theory and ported several important develop­ practice. Part I. ments in the simplification of W.P.B.

F r i d a y , N o v e m b e r 13, 1942 forms. Since July 1st, according to Mr. Lubin, all new forms and re­ 9:00 a . m . to 12:30 p .m . Commercial law. prints of old forms have been reduced 1:30 to 7 :30 p .m . Accounting theory and to a size which permits insertion in practice. Part II. a standard-carriage typewriter. In several instances, duplicate forms "War Facts” have been eliminated at the sugges­ The War Production Board has re­ tion of representatives of the indus­ cently issued a handbook with this title, try concerned. Overlapping forms which presents authoritative statements have been consolidated and com­ on war production and conservation, panies have been notified, sometimes and describes priorities machinery. Al­ by telegram, to discontinue certain though prepared especially for speakers, unnecessary reports. Each branch of this handbook is also of interest to W.P.B. is reviewing its forms with writers, research workers, and others experts representing the industry con­ who wish to acquaint themselves with cerned and requesting their recom­ wartime production problems. Copies are mendations. In a series of confer­ available from the Bureau of Public In­ ences, representatives of the chemical quiries, Office of W ar Information, 1400 industry and W.P.B. officials re­ Pennsylvania Avenue, N.W., Washing­ viewed and unanimously approved ton, D. C. a proposed standardized form. Al­ though new forms will be required occasionally as additional materials Cooperative Accountants Meet become critical, and their control be­ The National Society of Cooperative comes essential to the war effort, Mr. Accountants, whose members are en­ Lubin assures industry that informa­ gaged in accounting and auditing work tion requested will be reduced to a for cooperatives, recently held its sev­ minimum. enth annual meeting in Plymouth, Wis­ consin. The Society’s committee on ter­ minology reported progress in the stand­ ardization of cooperative financial reports Stockholders’ Access to Books through increased use of uniform ac­ counting terms. A committee was ap­ Restricted pointed to submit plans for a national Stockholders’ access to the books of cooperative auditing service to interested a corporation will be restricted for the organizations. It was agreed to publicize duration, according to an announcement the advantages of natural fiscal closing by Colonel Richard A. Magee, Chief, dates for local and regional cooperatives. Committee for Protection of Informa­ 8 The Certified Public Accountant tion, Public Relations Bureau, War De­ quired to grant pro rata refunds or to partment, in an address before the War issue credit for unexpired portions of Production Board’s training conference rental periods subsequent to August 31st. in New York on August 12th. A stock­ Used portable typewriters, and used holder, Colonel Magee said, will be per­ standard machines manufactured before mitted to examine the books if his re­ January 1, 1935, may be rented for quest is cleared through the War De­ periods not exceeding three months. Obso­ partment’s Committee for Protection of lete models of the standard type and Information. He also suggested that certain light portables, which are consid­ trade associations submit to this Com­ ered unsuitable for the Army and Navy, mittee, in advance of publication, any or for essential civilian requirements, are statistical information of possible value released for unrestricted sale. to the enemy, and that questionnaires re­ questing such data be marked “confiden­ Gasoline for Accountants tial” and bear a notation referring to applicable provisions of the Espionage Counsel for the Institute, in a recent Act. letter to a national official of the Office of Price Administration, stated that many News from State Boards members have been unable to secure through local war price and rationing Recently elected officers of the Florida boards supplementary rations of gasoline State Board of Accountancy are Leonard necessary to provide essential services L. Abess of Miami, chairman, and W. F. for their clients, including war indus­ Milton of Miami, secretary. tries. This letter requested an interpreta­ Joseph Thieberg of Paterson has been tion of Ration Order No. 5A to the effect reappointed a member of the New Jersey that accountants, upon presentation of State Board of Public Accountants for the proper evidence, should be regarded his fourth consecutive three-year term. as “workers” or “technicians” whose ser­ Julius E. Flink of Newark has been ap­ vices are indispensable to industrial estab­ pointed a member of the Board to succeed lishments, within the provisions of sec­ James F. Hughes of Jersey City, whose tions 1394.506 (k) and (l). term expires October 7th. The Oregon State Board of Account­ Columbia Accounting Institute ancy has elected the following officers for the current year: A. L. Amacher, Hills­ Columbia University will hold its boro, chairman; T. H. Carstensen, M. D. fourth accounting institute, October 19th Wells, and R. C. Kneeland, Portland, and 20th, at the Pennsylvania Hotel, vice chairmen; Herbert W. McIntosh, New York, N. Y. The American Insti­ Portland, secretary and treasurer. tute of Accountants, New York State Society of Certified Public Accountants, and the National Association of Cost Typewriter Rental Curbed Accountants are cooperating in this pro­ Rental of all new typewriters and of gram. Topics scheduled for discussion in­ used nonportable machines manufactured clude accounting problems resulting from since January 1, 1935, was banned by the war contracts, with special emphasis on Office of Price Administration in amend­ allowable costs and renegotiation; oper­ ment 4 to revised rationing order 4, ating-cost control within limits set by issued August 25th. This amendment pro­ price ceilings, in relation to war con­ vided that all nonportable typewriters on tracts and the manufacture of civilian loan which were manufactured in 1935 goods; federal tax problems under the or later years should be returned on or new tax law; and the post-war outlook for before September 15th. Dealers were re­ the accounting profession. The Certified Public Accountant 9

Elijah Watt Sells Awards vices. Copies are available from the Na­ tional Association of Manufacturers, 14 Winners of the Elijah Watt Sells West 49th Street, New York, N. Y., at one scholarship prizes in the May, 1942, dollar, as long as the supply lasts. C.P.A. examinations are listed below: First prize (gold medal) Marvin Leon Stone, Denver, Colo. Advisory Council of State Second prize (silver medals) Society Presidents Charles H. Lundquist, Portland, Ore. The annual meeting of the Advisory Lawrence N. Jolma, Eugene, Ore. Council of State Society Presidents will Honorable mention be held on Monday, September 28th, in Carl J. Shreck, Des Moines, Iowa. Chicago. Included in a list of possible Verden R. Draper, St. Louis, Mo. topics for discussion, submitted in ad­ These men obtained the highest grades vance for the consideration of state soci­ among 1420 candidates examined in 39 ety presidents, are the following: state states and territories and the District of society administration and activities; per­ Columbia, which use the American Insti­ sonnel problems resulting from the short­ tute of Accountants standard examina­ age of qualified accountants; professional tions. A tie for second place required the conduct, with special reference to com­ award of two silver medals. Winners of petitive bidding and restrictions on ad­ the gold and silver medals have been in­ vertising; attitude of state societies vited to attend the annual meeting of the toward new legislation in wartime; prior­ Institute. ities, as they affect accountants; auditing activities of government agencies and New Reporting Form for Securities their relation to the work of the public Brokers and Dealers accountant. The National Association of State Se­ curties Commissioners, early in September Comment on Council Meeting discussed a standard form for reporting A state society representative who at­ financial condition of securities dealers tended the May meeting of council at the and brokers. The American Institute of invitation of the Institute commented on Accountants, through its committees on this session, in the state society publica­ auditing procedure and cooperation with tion, as follows: investment bankers, responded to a request “To those who are honored by being of the Association for criticism of pre­ invited to attend the spring council meet­ liminary drafts. The S.E.C. plans to re­ ing must come full realization of the con­ vise rule X -17A-5, referring to reports to tinuous constructive efforts being put be made by certain exchange members, forth by the American Institute on its brokers, and dealers, in accordance with own behalf and in complete cooperation the new form. with the various state societies, for the benefit of the profession, which inevitably Handbook on War Production leads to the greater benefit of the public The National Association of Manufac­ served. This was the dominant tone of turers published in August a 184-page all committee reports—which in some “Handbook on War Production” de­ cases were presented by men who had signed to aid manufacturers in meeting traveled 3,000 miles for that specific pur­ war-production quotas and solving con­ pose. And it was quite evident that the version problems. The text analyzes pro­ committees appointed last September had cedure in obtaining war contracts with really worked. There were no ‘progress’ government agencies and describes the reports, all of them were packed with functions of the various contracting ser­ valuable material.” 10 The Certified Public Accountant

countants in explaining technical sub­ jects to laymen at meetings and hear­ A c c o u n t a n t s A id ings, in private conferences with clients, R a t io n in g B o ards and in ordinary conversation. Utah The Office of Price Administra­ Association recently awarded a “distin­ tion reports a gratifying response guished key” to the outstanding account­ to an announcement in the July, ing graduate of each of the three state 1942, issue of this bulletin indicat­ universities. Each of these keys was pre­ ing that O.P.A. would welcome aid sented by a member of the Association from certified public accountants at a meeting attended by a large number able to devote part of their time, of students. on a voluntary basis, to assist local Transmitting the text of a letter from war price and rationing boards in Walter A. Cooper, chairman of the In­ reviewing applications for supple­ stitute committee on federal taxation, mentary allotments of gasoline. In­ the president of the Minnesota Society dicating that O.P.A. officials in the urged members to write their Sena­ southeast are especially interested in tors and Representatives concerning pro­ securing such assistance, H. F. Tag­ posals for automatic extension of time gart, director of the Accounting Di­ for filing corporate tax returns and other vision, Office of Price Administra­ provisions of the pending revenue bill tion, recently wrote to Institute head­ of interest to public accountants. New quarters as follows: York State Society recently distributed “The Atlanta office is taking very Release No. 17 in the series prepared seriously the idea that accountants by its special committee on wartime would make ideal volunteer workers problems. This release is in the form for local war price and rationing of a report on the War Production boards. They want to take the mat­ ter up directly with the state soci­ Board’s production-requirements plan, eties and I shall appreciate any help prepared by the Society’s technical com­ you can give me.” mittee on priorities. The Institute responded by for­ Tennessee Society held its eleventh warding names and addresses of state annual meeting in Memphis, August society officers in this area. 26th. Because of transportation restric­ tions and other wartime conditions, the program consisted exclusively of busi­ ness sessions. Minnesota Society held a State S o ciety N ew s dinner meeting in Minneapolis on Au­ gust 25th. Topics considered in round­ Massachusetts Society, through its table discussions under the leadership of education committee, initiated on Sep­ various Society members included ac­ tember 11th a seminar in audit training countant’s fees, government contracts, for new staff employees of junior grade. internal control and internal auditing, Weekly sessions will continue through income taxes, and audit programs. The October, with the curriculum consisting Board of Trustees of the Georgia So­ of audit work on a set of books and dis­ ciety held its first meeting of the cur­ cussions led by Society members. Each rent fiscal year, in Savannah on the af­ student will use forms and procedures ternoon and evening of August 29th, adopted by his own firm, and will sub­ with Society members from all parts of mit his work papers and final report to the state in attendance. At a dinner meet­ the firm at the conclusion of the course. ing of the Harrisburg Chapter of the New York State Society has resumed Pennsylvania Institute, August 19th, its speaking clinic, designed to assist ac­ Harold Dudley Greeley, of New York, The Certified Public Accountant 11

N. Y., presented an address on “Some Im­ Troy G. Thurston, Indianapolis, Ind. portant Changes in the Pending Revenue Virgil S. Tilly, Tulsa, Okla. Max Waldman, Louisville, Ky. Bill.” Representatives of the local chap­ Franklin W. Walker, Brooklyn, N. Y. ter of N.A.C.A., business executives, and Irving Yaverbaum, Harrisburg, Pa. revenue agents attended this meeting. In view of the war situation, President Election of Members Joseph A. Sweeny of the Florida Insti­ tute has asked all committee chairmen A l a b a m a and members, unless prevented by urgent * Chester H. Knight, University personal obligations, to serve in the same A r k a n s a s capacity during the current fiscal year. * George W. Thompson, Little Rock

C a l i f o r n i a Visitors at Institute Offices * David W. Chappuis, Oakland Ruth Grove Kimball, Santa Cruz John B. Allred, Wichita Falls, Texas *Edmond J. Rush, San Francisco George D. Bailey, Detroit, Mich. *Robert Sutro, Los Angeles Henry M. Besser, Newark, N. J. Ambrose C. Brady, New York, N. Y. C o n n e c t ic u t Robert P. Briggs, Ann Arbor, Mich. Milton C. Calechman, New Haven Robert H. Brissinger, Philadelphia, Pa. *Carl R. Johnson, Bridgeport Warren M. Brown, Hartford, Conn. *Nicholas J. Nardi, Jr., Norwalk Eric A. Camman, New York, N. Y. D. C. Chorpening, San Antonio, Texas D is t r ic t o f C o l u m b i a John F. Cody, Bridgeport, Conn. Charles B. Hellerson, Washington Walter A. Cooper, New York, N. Y. *James G. Jester, Washington Thomas J. Dolan, Toledo, Ohio Jules Englander, New York, N. Y. G e o r g ia Percy R. Everett, New York, N. Y. *Clinton F. Thompson, Macon Andrew C. Frommelt, Paterson, N. J. M. G. Furman, Miami, Fla. I l l i n o i s Charles Gehler, Cincinnati, Ohio William T. Clarke, Chicago Joseph Getz, New York, N. Y. *Walden C. Cummins, Jr., Chicago J. H. Gilby, Chicago, Ill. *Murray M. Mendell, Chicago David Gordon, Boston, Mass. Nels C. Nelson, Chicago Spencer Gordon, Washington, D. C. Irwin Newman, Chicago Henry M. Haesloop, New York, N. Y. Theodore A. Perlmutter, Chicago Clyde F. Hart, Summit, N. J. *William F. Reves, Chicago Charles Katz, Newark, N. J. *Daniel H. Sanders, Chicago M. Herbert King, Baltimore, Md. *Charles J. Schaniel, Chicago Abraham J. Leonard, Philadelphia, Pa. Elton C. Loucks, Omaha, Neb. K e n t u c k y Victor Markwalter, Augusta, Ga. Austin H. Gresham, Louisville John H. Meyer, New York, N. Y. *Robert B. Lancaster, Louisville Conrad F. Mills, Philadelphia, Pa. Samuel Clay Otis, Ashland William H. Moberly, Wichita, Kansas George A. Owen, New York, N. Y. L o u is ia n a Archie M. Peisch, Hanover, N. H. *Cyril H. Barrios, New Orleans Marino Possidente, New Haven, Conn. Mark E. Richardson, Philadelphia, Pa. M a r y l a n d Earl T. Risser, Allentown, Pa. Lenning A. Davis, Baltimore Donald M. Russell, Detroit, Mich. W. A. Sanders, Washington, D. C. M assachusetts Louis A. Searson, Columbia, S. C. *William F. Seward, Boston John J. Sellers, Knoxville, Tenn. *John A. Steen, Boston Otto A. Shults, Rochester, N. Y. Gerald L. Walsh, Boston Max A. Simionescu, Teaneck, N. J. Roy W. Snyder, Paterson, N. J. M i c h i g a n A. Frank Stewart, Richmond, Va. Albert J. Grundy, Detroit Clyde B. Stovall, Washington, D. C. Ralph E. Thorn, New York, N. Y. * Admitted as associates. 12 The Certified Public Accountant

M in n e s o t a O k l a h o m a *Benjamin H. Flesher, Minneapolis William W. Furnell, Bartlesville

M is s o u r i P ennsylvania *Paul J. Adam, Kansas City ♦Clarence F. K. Apple, Pittsburgh *Ludwig M. Priebat, St. Louis ♦William B. Gamble, Jr., Pittsburgh *William A. Robertson, Kansas City ♦Clare J. Owens, Pittsburgh † Francis E. Teel, Kansas City *William E. Ward, Kansas City R h o d e I s l a n d ♦Carl A. Challberg, Providence N e w Y o r k Russell E. Drummond, Providence ♦Robert W . Anderson, New York Armand L. Bruneau, Jr., New York T e n n e s s e e Herbert P. Greenwood, New York Wilbur R. Williamson, Memphis ♦Lester J. Kohn, New York William H. Sanders, New York V ir g in ia Clark Sloat, New York Roy W . Davis, Richmond ♦Harold E. Williams, New York W a s h in g t o n O h io * Earl W . Costello, Seattle Henry W . Rosewater, Cleveland *Charles M. Harris, Ardenvoir Frederic H. Roth, Cleveland *Ralph M. Peterson, Seattle *Earl C. Sauerhammer, South Columbus Rudolph A. Phillips, Seattle

♦*Admitted as associates. W is c o n s in † Advanced to membership. * Frans G. Larson, Appleton

William B. Connor, of Paris, Texas, public accountant of Massachusetts and died August 16th, at the age of eighty- a member of the Massachusetts Society two. Mr. Connor was born in Crawford, of Certified Public Accountants. He had Mississippi, and attended the University been a member of the American Institute of Columbus (Miss.) and the Southwest­ of Accountants since 1922. ern Baptist University at Jackson, Ten­ Lewis Wintermute, of Cleveland, Ohio, nessee. He later attended the Eastman died August 20th in Yuma, Michigan. National Business College at Poughkeep­ He was 61 years old. A native of Mans­ sie, New York, and the Walton School of field, Ohio, Mr. Wintermute attended the Commerce at Chicago, Illinois. Mr. Con­ Toledo public schools and the Ball Busi­ nor had practiced accounting under his ness College at Muncie, Indiana. From own name since 1917. He had been a 1908 to the time of his death, Mr. Win­ member of the American Institute of termute had practiced accounting under Accountants since 1929. his own name. He was for nine years Joseph LeVine, of Boston, Massachu­ also an instructor in the Accountancy setts, died July 30th. Mr. LeVine was School of the Cleveland School of Tech­ graduated from Harvard College in 1909 nology. Mr. Wintermute was a certified cum laude. In 1912 he established the public accountant of Ohio. A member of accounting firm of Joseph LeVine & Co., the American Institute of Accountants in Boston, where he practiced as sole since 1917, he served on a number of its proprietor and partner until the time of committees, and from 1926-1929 was a his death. Mr. LeVine was a certified member of council of the Institute. Anno uncements

The following firm announcements have C h a r l e s W. T u c k e r and N o r m a n H. S. been received recently from members of the V i n c e n t announce their affiliation in the Institute. firm of Charles W. Tucker & Company, with M o r r is M. B e r m a n and G eo r g e A. offices at 464 Commonwealth Ave., Boston, P a y n e announce the formation of a partner­ Mass. ship, under the firm name of M. M. Berman & Company, with offices in the Grand Rapids National Bank Bldg., Grand Rapids, Mich. The following articles by a member of the H a n n i s T. B o u r g e o is announces the dis­ Institute recently appeared in the publication solution of the firm of Bourgeois & Lee and indicated. the removal of his offices to 605 Roumain J o s e p h J. K l e i n , New York; “Pros and Bldg., Baton Rouge, La., with the following Cons of ‘Last-in, First-out’ Inventorying” ; staff: The Controller. “World War II Canons of J. H . B e r n a r d , Jr., L o u is J. B o n n e c a z e , Taxation”; Taxes—The Tax Magazine. G e r t r u d e C a r p e n t e r , L . J. H e b e r t , Jr., E l a i n e H u d g in s , a n d D o u g la s W e s l e y . I d a S. B roo announces the removal of her offices to 519 Indiana Trust Bldg., Indian­ The following address was delivered re­ apolis, Ind. cently by a member of the Institute. C h a r l e s T. B r y a n and E r n e s t R. W i l d ­ J o s e p h J . K l e i n , New York; “Account­ b r e t t announce their withdrawal from the ants’ Investigation in Minority Stockholders’ firm of Eppler & Company, New York, N. Y. Suits” ; Practising Law Institute, New York C h a r l e s T. B r y a n , W a l t e r R. W e g e , County Lawyers Association. and E r n e s t R. W il d b r e t t announce the for­ mation of a partnership under the firm name Charles T. Bryan & Company, with offices at 41 Park Row, New York, N. Y. The following notices of appointments and H a s k i n s & S e l l s announce the acquisi­ tion of the accounting practice of J o e l H u n ­ elections of members of the Institute have been received recently. t e r , J r ., who will hereafter be associated with their office at 67 Broad St., New York, R a y m o n d J. H a n n o n , New York; elected N. Y. a trustee of the Troy Savings Bank, Troy, A r t h u r W. H u t c h i n s o n and M a r k H . N. Y. B loodgood, of El Centro and Glendale, Calif., S a m u e l D. L e id e s d o r f , New York; re­ announce the admission of P a u l G. T a y l o r elected treasurer of the Commerce and In­ and N o b l e D. H a m p t o n to the firm of dustry Association of New York, Inc. Hutchinson and Bloodgood. J. E. M i t c h e l l , New Jersey; appointed a J. R. M c C a r t a n & Co. announce that D. member of the Chamber of Commerce com­ B o y l e has become associated with them in mittee to report on the review of New Jer­ their Pittsburgh office. sey State Constitution.

13

CHAS. FRANCIS PRESS, INC. NEW YORK CITY THE

C e r t i f i e d P u b l i c

A c c o u n t a n t

A Bulletin of The American Institute of Accountants

O c t o b e r , 1942

Annual Meeting

State Society Programs

Fall Examination Schedule

Renegotiation of War Contracts

Change in Rules of Conduct

New Members of Council

Election of Officers

15¢ a Copy Published Monthly $1 a Year

Vol. 22 No. 9

V

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC PAMPHLETS FOR DISTRIBUTION

These pamphlets may be obtained from the Institute for distribution by state societies and members of the Institute to bankers, government officials, tax authori­ ties, businessmen, and others. Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢)...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred — 35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢ A uditing Examination of Financial Statements by Independent Public Accountants.. .15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Engagement of Auditors for Governmental Bodies...... 3¢ Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Re­ funded ...... 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7— Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢ No. 15 — The Renegotiation of War Contracts...... 10¢ Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination. .10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued) 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar Investments under the Investment Company Act of 1940...... 10¢ No. 10 — Auditing Under Wartime Conditions...... 10¢ No. 11 — The Auditor’s Opinion on the Basis of a Restricted Examination (No. 2) ...... 10¢ American Institute of Accountants

Renegotiation of War Contracts A n n u a l m e e t in g The executive committee of the Amer­ ican Institute of Accountants, at a meet­ The fifty-fifth annual meeting of ing in Chicago, September 30th, adopted the American Institute of Account­ a resolution urging retention of renegotia­ ants was held at the Palmer House, tion procedure in preference to limitation Chicago, from September 28th of profits on war contracts. This resolu­ through October 1st. Attendance to­ tion was conveyed by telegraph to the taled 1178, exceeding expectations. chairman and members of a subcommittee On the three days devoted to general of the Senate Finance Committee then and technical sessions more than 25 considering renegotiation of war con­ papers were presented, most of them tracts, as follows: referring to technical accounting problems arising from the war, effec­ “Following consideration of practi­ tive use of personnel in war, federal cal accounting and business problems involved in profit limitations in war income and excess-profits taxes, and contracts at annual meeting of Ameri­ auditing problems. Round-table dis­ can Institute of Accountants now in cussion groups considered the extent session Chicago its executive com­ of test checking desirable under war­ mittee passed following resolution. time conditions, effects of the war on Strongly urge retention of renego­ financial statements, and special prob­ tiation procedures in preference to lems in taxation and wartime ac­ change to fixed percentage of profits counting. on war contracts. Renegotiation law needs amendments particularly short­ Of particular interest to many en time within which to act, pro­ members of the profession was a vide for only one renegotiation in session at which representatives of absence of fraud, and provide for so- the Army, Navy, General Account­ called overall treatment of war con­ ing Office, and War Production tract profits, all as proposed by Un­ Board discussed accounting and au­ der Secretary Patterson. Accountants diting problems involved in govern­ see endless difficulties in the sort of mental activities under their super­ determination of profits required un­ der a law imposing fixed percentage vision. Addresses presented at this limitations, believe such difficulties session will be reprinted in the No­ would be much more disturbing to vember issue of The Journal of the war effort than present proce­ Accountancy. All papers prepared dures designed to determine reason­ for the annual meeting program, with able profits. Although Treasury De­ the exception of remarks at informal partment adequately staffed to de­ round-table sessions, will be pub­ termine aggregate taxable profits of lished in a volume of proceedings, en­ a business, it has no experience or titled “Wartime Accounting,” which precedents for determining profits in­ volving allocations between contracts will be distributed to all Institute or between war and non-war busi­ members and associates. ness and under fixed percentage profit limitation many years would 1 2 The Certified Public Accountant

be required for settlement of such For a term o f one year (to fill a vacancy) questions thereby aggravating un­ George Cochrane, New York certainties of business. Renegotiation Seven members of the executive com­ procedures afford opportunity for mittee were elected for the fiscal year recognition of widely varying char­ 1942-1943. The president, vice presidents, acteristics of different businesses, which is essential to equitable treat­ and treasurer are members ex officio. The ment and which is impossible under committee includes the following: any single formula of percentage George S. Olive, president, Indiana profit limitation. Percentage limita­ George P. Ellis, vice president, Illinois tions fixed by law embody evils in­ Victor H. Stempf, vice president, New herent in the old cost-plus contracts. York We urge your Committee to reject Samuel J. Broad, treasurer, New York fixed percentage limitation, and re­ T. Coleman Andrews, Virginia tain flexible renegotiation principle George D. Bailey, Michigan amended to assure prompt and final Homer L. Dalton, Ohio determination of profits.” Charles W. Jones, Illinois Robert H. Montgomery, New York Copies of the telegram quoted above Rodney F. Starkey, New York were also sent for information to the C. Oliver Wellington, New York President of the United States, to the The following committee on profes­ Under Secretaries of War and the Navy, sional ethics was elected for the current and to the Chairman of the Maritime fiscal year: Commission. Joseph J. Klein, New York, chairman George Cochrane, New York Election of Officers Frederick H. Hurdman, New York The following members of the Ameri­ Ross T. Warner, Oklahoma Edward B. Wilcox, Illinois can Institute of Accountants were elected at the fifty-fifth annual meeting, in Chi­ The following were elected to the board cago, on October 1st to serve as officers of examiners for a term of three years: for the year 1941-1943. Roy Andreae, Illinois J. Cyril McGarrigle, Pennsylvania President—George S. Olive, Indiana Kenneth M. Montgomery, New York Vice presidents—George P. Ellis, Illinois; Victor H. Stempf, New York The following were elected to the com­ Treasurer—Samuel J. Broad, New York mittee on nominations: Auditors—Gordon M. Hill, New York; Elected by council at its meeting, Septem­ Howard A. Withey, New York ber 28th: The following were elected members of Clifton H. Morris, Texas, temporary council: chairman Earl A. Waldo, Minnesota For a term o f three years Arthur L. Baldwin, Colorado Elected by the membership at large, Octo­ Parry Barnes, Missouri ber 1st: Fred J. Duncombe, Illinois Francis P. Farquhar, California Ernest H. Fletcher, Michigan P. W. R. Glover, New York Russell C. Harrington, Rhode Island Julian A. Hawk, Ohio Charles W. Hatter, Maryland Alfred D. Peabody, Colorado J. William Hope, Connecticut John H. Zebley, Jr., Pennsylvania Harry R. Howell, West Virginia A n n u a l M eeting Com m ittees William M. Madden, Indiana Committee on Meetings Warren W. Nissley, New York Frank Ahlforth, Illinois, ch a irm a n Hilary H. Osborn, Tennessee Charles A. Bondeson, Illinois Fred J. Peterson, Iowa Robert C. Brown, Illinois J. B. Scholefield, California Stephen A. Gilman, Illinois Russell H. Hassler, Illinois Homer N. Sweet, Massachusetts Donald R. Jennings, Illinois Earl A. Waldo, Minnesota Lloyd Morey, Illinois Albert J. Watson, California Cyril Talbot, Illinois The Certified Public Accountant 3

Committee on Technical Sessions turns prepared or reviewed which were Stephen A. Gilman, Illinois, chairm an filed on time and the number for which Charles T. Bryan, New York Dixon Fagerberg, Jr., Arizona the firm, or its clients, requested exten­ Thomas W. Leland, Texas sions. Analysis of 963 replies, received up Donald M. Russell, Michigan Roscoe L. Thomas, Montana to the time when this bulletin went to Committee on Credentials press, indicated that 97 per cent of the Charles W. Jones, Illinois, chairm an returns were filed before the March 15th Frederick B. Andrews, Illinois Robert C. Brown, Illinois deadline. Sub-committees of the Committee on Meetings Bulletin No. 11 in the series of state­ Banquet and Entertainment ments issued by the committee on audit­ Charles A. Bondeson, chairm an J. William Didriksen ing procedure, entitled “The Auditor’s C. Alvin Koch Opinion on the Basis of a Restricted Ex­ Russell H. Morrison George B. Sellery amination (No. 2),” has recently been Banquet Seating distributed to Institute members and as­ Russell H. Hassler, chairm an sociates. This statement, which bears a H. E. Nichols Ralph E. Petering title similar to that of Bulletin No. 2 in Ruth P. Waschau the same series, refers to confirmation of Printing and Publicity Donald R. Jennings, chairm an receivables of savings-and-loan associa­ Ivan L. Beaman tions. R. L. Gerdes At a meeting of the committee on audit­ John O. Latta Samuel A. Sakol ing procedure, on September 14th at In­ R ecep tio n stitute headquarters, the committee ap­ Robert C. Brown, chairm an Lewis E. Ashman proved publication of Bulletin No. 11 Henry T. Chamberlain in the series of statements on auditing E. C. Christensen procedure, briefly described above, and Charles W. Jones Homer L. Miller similar statements on the following sub­ Jackson W. Smart jects: reserves of face-amount certificate Registration Cyril Talbot, chairm an companies, the auditor’s responsibility for Edward W. Koehler illegal or improper transactions of a client Carroll White corporation, case studies on inventories, Ward M. Willits Ladies’ Committee confirmation of receivables of public-util­ Mrs. George P. Ellis, chairm an ity companies, consistency and compar­ Mrs. Roy Andreae Mrs. Fred Andrews ability in auditors’ reports. The committee Mrs. Henry T. Chamberlain also authorized publication in The Journal Mrs. Fred J. Duncombe of Accountancy of a statement by a sub­ M rs. J . H . Gilby Mrs. Russell H. Hassler committee referring to confirmation of Mrs. D. R. Jennings inventories in public warehouses. Mrs. Charles W. Jones Mrs. Harold L. Klagstad A meeting of the committee on account­ Mrs. Lloyd Morey ing procedure was held at Chicago on Mrs. J. Leonard Penny Mrs. John Queenan September 28th, the opening day of the Mrs. Hiram T. Scovill Institute’s annual meeting. Topics dis­ Mrs. John Stolp cussed included accounting for cost-plus- Mrs. Cyril Talbot Mrs. Edward B. Wilcox fixed-fee contracts, accounting for in­ Mrs. George Wolf, Jr. come taxes, consolidated statements, sur­ Mrs. Jessie Barnes, social secretary plus, and a report of the subcommittee on inventories described briefly in the fol­ Activities of the Month lowing paragraph. Earle C. King, of The committee on federal taxation, with Philadelphia, assistant chief accountant the approval of council, recently sent to of the Securities and Exchange Commis­ accounting firms represented by Institute sion, attended this meeting. members questionnaires requesting infor­ The subcommittee on inventories re­ mation concerning the number of tax re­ cently presented to the chairman of the 4 The Certified Public Accountant committee on accounting procedure a re­ the Ohio Society of Certified Public Ac­ port summarizing and commenting on the countants, in Columbus, September 18th. results of a questionnaire sent to 104 in­ On September 26th, Mr. Carey addressed dustrial concerns, referring to cost-price a dinner meeting of the American Wo­ relationships and related inventory pro­ man’s Society of Certified Public Ac­ cedures. The subcommittee on cost-plus- countants and the American Society of fixed-fee contracts, at a meeting held on Women Accountants in Chicago. On September 17th at Institute headquarters, October 5th, he discussed accounting and discussed methods of presenting income the war effort at a meeting of the Min­ from cost-plus-fixed-fee contracts in the nesota Society of Certified Public Ac­ income statement and the effect on finan­ countants, in Minneapolis. cial statements of advances, inventories, Among the speakers participating in and expenditures to be billed under such the twenty-fourth annual series of lec­ contracts. tures currently being conducted by the Warren W. Nissley, chairman of the Practising Law Institute, New York, committee on cooperation with stock ex­ N. Y., are Walter A. Cooper, Charles B. changes and a member of the committee Couchman, and Dr. Joseph J. Klein. on accounting procedure, attended a meet­ The secretary of the Institute; Frank ing arranged by the Securities and Ex­ A. Gale, assistant secretary; and Victor change Commission on September 11th at H. Stempf, chairman of the public infor­ which presentation of various items in mation committee, recently discussed cur­ financial statements, qualifications in au­ rent activities and problems of the ac­ ditors’ certificates, and other corporate counting profession with the financial accounting practices were discussed. Or­ editor of a New York newspaper at an ganizations represented at this session in­ informal luncheon conference. cluded the Investment Bankers Associa­ An article entitled “Effects of War on tion, National Association of State Financial Statements,” by George N. Far­ Securities Commissioners, National Asso­ rand, research assistant of the Institute, ciation of Cost Accountants, and the originally presented as a paper at the Controllers Institute. ninth annual regional conference of the George S. Olive, recently elected presi­ New York State Society of Certified dent of the Institute, addressed a luncheon Public Accountants, and published in of the Chicago Association of Commerce The Journal of Accountancy, has been on September 30th. C. Oliver Wellington, reprinted in Credit and Financial Man­ a past president, participated in a panel agement, official organ of the N.A.C.M., discussion on the same program. and in the B ulletin of the Robert Morris Victor H. Stempf, vice president, ad­ Associates. Excerpts from this article dressed Louisville, Kentucky, Chapter of also appeared in a recent issue of The N.A.C.A., September 21st, and the Management Review, published by the Youngstown, Ohio, Chapter on Septem­ American Management Association. ber 23rd on “Current Inventory Prob­ lems and Practices.” Treasury Tax Savings Notes Samuel J. Broad, treasurer of the In a recent circular addressed to certi­ American Institute, addressed New York fied public accountants in the second fed­ Chapter of N.A.C.A., September 22nd, eral reserve district, which includes all of on “Influence of Priorities and Other New York State and parts of Connecticut Government Regulations on Inventory and New Jersey, the executive manager Control and Valuation.” of the United States Victory Fund Com­ John L. Carey, secretary, discussed the mittee for this area asks their assistance status of accountants under the Selective in calling to the attention of clients the Service Act at the annual meeting of merits of Treasury Tax Savings Notes. The Certified Public Accountant 5

NEW LY ELECTED OFFICERS

1 9 4 2 - 1 9 4 3 Elected October 1 , 1942, by the Members of the Amer­ ican Institute of Accountants at Its Fifty-fifth Annual Meeting, in Chicago again from 1937 to 1941, he was a mem­ ber of council of the Institute. Mr. Olive is a vice president of the Indiana State Chamber of Commerce and chairman of its tax committee. He has been a member of the board of di­ ll® rectors of the Indianapolis Chamber of Commerce for many years, having served as president in 1936 and 1937, and as chairman of its industrial commission.

GEORGE S. OLIVE P resident Mr. Olive is senior partner of George S. Olive & Co., Indianapolis, Indiana. Born in Lebanon, Indiana, in 1881, Mr. Olive has lived in Indianapolis since 1891. In 1903, he was graduated from Harvard College with the A.B. degree. After broad experience in teaching, manufacturing, mining, newspaper, and W alinger public-utility work, he entered the prac­ tice of public accounting in 1913. He GEORGE P. ELLIS holds the Indiana C.P.A. certificate, and Vice President has served as treasurer and as president Mr. Ellis is a partner in Wolf and of the Indiana Association of Certified Company, Chicago. Born in Chicago in Public Accountants. 1888, Mr. Ellis was educated at North­ A member of the American Institute western University. He is a certified of Accountants since 1919, Mr. Olive was public accountant of several states and vice-president of the Institute in 1941- a member of several societies of certi­ 1942 and chairman of the committee on fied public accountants. war activities. From 1922 to 1929, and Mr. Ellis, a past president of the Amer­ 6 The Certified Public Accountant

ican Society of Certified Public Account­ vice-president of the American Account­ ants, was for five years a member of ing Association. council of the Institute, three years a Mr. Stempf, a member of the Ameri­ member of the executive committee, and can Institute of Accountants since 1922, six years a member of the committee on has been a member of council and chair­ governmental accounting. He has also man or a member of several committees. served on the committee on auditing pro­ cedure and several other committees. SAMUEL J. BROAD Mr. Ellis has been president of the Treasurer Illinois Chamber of Commerce and chair­ Mr. Broad is a partner of Peat, Mar- man of its committee on federal taxation. wick, Mitchell & Co., New York, N. Y. He is also a member of the National Committee on Municipal Accounting.

VICTOR H. STEMPF Vice President Mr. Stempf is a partner in the firm of Touche, Niven & Co., New York, N. Y. Born in Minneapolis in 1893, Mr. Stempf received the degree of B.C.S. from the School of Commerce, St. Louis University, in 1915. Subsequently, he

Blackstone Born in England in 1893, and educated both in that country and in Canada, Mr. Broad holds the A.B. degree from Queens University, Kingston, Ontario. A certified public accountant of New York and several other states, Mr. Broad was formerly a director, of the New York State Society of Certified Public Ac­ countants. For several years he has been a member of the Committee on Griev­ ances under the New York C.P.A. law. He is a member of the Institute of taught auditing and accounting at that Chartered Accountants of Alberta. university for several years. A member of the American Institute A certified public accountant of New of Accountants since 1921, Mr. Broad York and several other states, Mr. Stempf served as vice president in 1940-1941 and is a past president of the New York State as treasurer since that time. He has been Society of Certified Public Accountants, a member of several Institute committees past president of the National Associa­ and chairman of the committee on audit­ tion of Cost Accountants, and a former ing procedure for the past three years. The Certified Public Accountant 7

New Members of Council and Accountancy, and past president of the Colorado Society of Certified Public Ac­ Institute Auditors countants. Mr. Baldwin has been a mem­ Following are brief biographies of the ber of the American Institute of Ac­ auditors of the Institute and of the new countants since 1925. members of council, elected at the gen­ eral session of the Institute’s annual P a r r y B a r n e s meeting in Chicago, Illinois, on October Mr. Barnes is a partner of Lunsford, 1 st: Barnes & Company, Kansas City, Mis­ souri. Born in Kansas City, Kansas, in G o r d o n M. H i l l , A u ditor 1892, he has been in public practice since Mr. Hill is a partner in the firm of 1918. He is a certified public accountant Haskins & Sells, New York, N. Y. He of Missouri, Kansas, Oklahoma, and New was born in Atlanta, Georgia, in 1893, York; past president of the Missouri and attended the Georgia School of Tech­ Society of Certified Public Accountants, nology. Mr. Hill early entered the prac­ and a member of the Kansas and New tice of accountancy and, after a varied York State societies. He has been a experience in this field, joined his pres­ member of the American Institute of Ac­ ent firm in 1918. He holds C.P.A. cer­ countants since 1924 and a member of its tificates of the states of New York, committees on state legislation, disciplin­ Florida, Louisiana, South Carolina, and ary procedure, trade associations, natural Texas, and is a member of several of business year, and membership. state societies of certified public account­ ants. Mr. Hill has been a member of G eorge C o c h r a n e the American Institute of Accountants Mr. Cochrane, of Deloitte, Plender, since 1926. Griffiths & Co., New York, N. Y., is senior partner of that firm in North Howard A. W ithey, A u ditor America. Born and educated in Great Mr. Withey is a partner of Franke, Britain, he served his professional appren­ Hannon & Withey, New York. Born in ticeship in Chester and Liverpool, Eng­ Bolivar, New York, in 1903, he was grad­ land. He is a certified public accountant uated from the University of Pennsyl­ of New York and Texas, and has been a vania, receiving the B.S. degree. En­ director of the New York State Society gaged in public accounting practice since of Certified Public Accountants. He is a 1928, Mr. Withey became associated with member of the Institute of Chartered his present firm in the following year. Accountants in England and Wales, the He is a certified public accountant of Dominion Association of Chartered Ac­ New York and a member of the New countants, and the Society of Chartered York State Society of Certified Public Accountants of the Province of Quebec. Accountants. He has been a member of A member of the American Institute of the American Institute of Accountants Accountants since 1923, he served pre­ since 1933. viously as a member of council in 1938- 1941 and as vice president in 1941-1942. A r t h u r L. B a l d w i n He has been chairman of Institute com­ Mr. Baldwin is engaged in the prac­ mittees on professional ethics and by­ tice of public accounting in his own laws, and a member of its committees on name in Denver, Colorado. He is a grad­ war activities, accounting procedure, uate of Denver Normal Institute and budget and finance, federal legislation, studied at the University of Denver. In public relations, cooperation with stock public practice since 1918, he is a cer­ exchanges, fiftieth anniversary celebra­ tified public accountant of Colorado, a tion, and revision of the Federal Reserve member of the Colorado State Board of Bulletin. 8 The Certified Public Accountant

F red J. D u n c o m b e since graduation from college, he is a cer­ Mr. Duncombe is a partner of George tified public accountant of Maryland and Rossetter & Co., Chicago, Illinois. Born Pennsylvania, and a member of the Mary­ in Whitewater, Wisconsin, in 1895, he is land Association of Certified Public Ac­ countants and the Pennsylvania Institute a graduate of the State Teachers College in that city. He served in the United of Certified Public Accountants. He has States Army with the rank of Battalion been a member of the American Institute of Accountants since 1930 and a member Sergeant Major in 1918 and 1919, and in of its committee on natural business year. the latter year entered the practice of public accounting. Mr. Duncombe is a J. W illiam Hope certified public accountant of Illinois, Mr. Hope is a partner of J. Wm. Hope New York, Wisconsin, and Iowa, and & Company, Bridgeport, Connecticut. past president of the Illinois Society of Born in Bridgeport in 1895, he attended Certified Public Accountants. He has Wharton School of Commerce and been a member of the American Institute Finance, University of Pennsylvania, of Accountants since 1925, and a member leaving in 1917 to enter the United States of its committees on auditing procedure, Army. He is a certified public accountant cooperation with the S.E.C., and social- of Connecticut, past president of the Con­ security act. necticut Society of Certified Public Ac­ R u s s e l l C. H a r r i n g t o n countants, a member of the Connecticut State Board of Accountancy, and has been Mr. Harrington is a partner of Ernst in public practice since 1922. He has been & Ernst, resident in Providence, Rhode a member of the American Institute of Island. Born in Taunton, Massachusetts, Accountants since 1927, a member of the in 1890, he attended Massachusetts State board of examiners, and of several com­ College. He is a certified public ac­ mittees, including those on by-laws, mem­ countant of Rhode Island and president bership, and natural business year. of the Rhode Island Society of Certified Public Accountants. Engaged in public H a r r y R . H o w ell practice since 1918, Mr. Harrington has Mr. Howell is a partner of Howell been associated with Ernst & Ernst since and Paterno, Charleston, West Vir­ 1920 and came to the Providence office ginia. Born at Letart, West Virginia, in in the following year. He is president of 1892, he secured his education at East­ the Providence Chamber of Commerce man College, Poughkeepsie, New York, and a director of the Providence Y. Washington School of Accountancy, M.C.A. He has been a member of the and at other educational institutions. He American Institute of Accountants since is a certified public accountant of West 1938 and a member of its committees on Virginia and president of the West Vir­ membership and natural business year. ginia Society of Certified Public Ac­ countants. He has been a member of the C h a r l e s W. H a t t e r American Institute of Accountants since Mr. Hatter is a partner of Hatter & 1923 and a member of its committees on Macnab, Baltimore, Maryland, and of accounting machinery, membership, and Hatter, Harris & Beittel, Lancaster, development of the profession. Pennsylvania. Born in Baltimore in 1905, he was graduated with the B.S. degree W il l ia m M . M a d d e n from the University of Maryland, and Mr. Madden is a partner of W. M. also studied at Johns Hopkins University, Madden & Company, Indianapolis, In­ at Washington College ( Chestertown, diana. He is a graduate of the Evans­ M d .) , and at the Baltimore Polytechnic ville (Indiana) Business College, a cer­ Institute. Continuously in public practice tified public accountant of Indiana, and The Certified Public Accountant 9 a past president of the Indiana Associa­ Society of Certified Public Accountants. tion of Certified Public Accountants, and He is a past president and past secretary has been in public practice since 1919. of the Iowa Society of Certified Public He has been a member of the American Accountants, and on June 30th completed Institute of Accountants since 1923 and his second term as a member of the Iowa a member of its committee on arbitration. Board of Accountancy. He has been a member of the American Institute of W a r r e n W . N is s l e y Accountants since 1930 and a member of Mr. Nissley is a general partner of its committee on membership. Arthur Young & Co., New York, N. Y. Born at Middletown, Pennsylvania, in J. B. SCHOLEFIELD 1893, he is a graduate of Princeton Uni­ Mr. Scholefield is a partner of Mc­ versity. He is a certified public accountant Laren, Goode & Co., resident in Los of Pennsylvania and New York, and has Angeles, California. Born in Liverpool, been a director of the New York State England, in 1880, he came to the United Society of Certified Public Accountants. States to engage in accounting work in Engaged in public practice since 1919, 1906, and has been in public practice since Mr. Nissley has been a member of the 1911. He is an associate in the Institute American Institute of Accountants since of Chartered Accountants in England and 1925, and has served the Institute as au­ Wales and a member of the California ditor, member of the board of examiners, Society of Certified Public Accountants, chairman of the committee on cooperation and has been a member of the American with stock exchanges and the committee Institute of Accountants since 1922, serv­ on education, and a member of several ing on its committees on development of other committees including those on ac­ the Institute, meetings, and nominations. counting procedure, war activities, and cooperation with the Securities and Ex­ H o m e r N. S w e e t change Commission. Mr. Sweet is a partner in the firm of Lybrand, Ross Bros. & Montgomery, resi­ H il a r y H . O sb o r n dent in Boston, Massachusetts. A graduate Mr. Osborn is a partner of Osborn of Brown University, he is a certified pub­ and Page, Nashville, Tennessee. Born in lic accountant of New York, Pennsyl­ Sebree, Kentucky, in 1894, he secured his vania, Massachusetts, and Michigan, and education at Clark College, Worcester, past president of the Massachusetts So­ Massachusetts. He is a certified public ciety of Certified Public Accountants. He accountant of Indiana and Tennessee, a has been a member of the American In­ member of the Tennessee Society of Cer­ stitute of Accountants since 1915 and has tified Public Accountants, and has been been chairman of the Institute’s committee in public practice since 1930. He has on cooperation with the S.E.C. and a been a member of the American Institute member of its committees on federal leg­ of Accountants since 1932 and a mem­ islation, meetings, cooperation with bank­ ber of its committees on bankruptcy and ers, and federal corporation law. state legislation. A l b e r t J. W a t s o n F red J. P ete r so n Mr. Watson is a partner of Peat, Mar- Mr. Peterson is a partner of Wolf and wick, Mitchell & Co., resident in San Company, resident in Des Moines, Iowa. Francisco, California. He received the He has been engaged in public practice degree of Chartered Accountant, in Scot­ since 1918, at which time he became as­ land, in 1907, and joined the New York sociated with his present firm two years office of Peat, Marwick, Mitchell & Co. later. He is a certified public account­ in the following year. Later, he opened ant of Iowa and a member of the Iowa the Kansas City office and remained as 10 The Certified Public Accountant manager until 1917. In World War I, he Edwin P. Noell, Cleveland, Ohio—Lt., was in active service overseas as a Major Supply Corps, U. S. Naval Reserve, in the 342nd Field Artillery, 89th Divi­ Washington. sion. Since 1919, he has been in charge Charles J. Oraftik, New York, N. Y.— Private, Army of the United States, of the Pacific Coast offices of his firm. Camp Pickett, Virginia. Mr. Watson is a past president of the James P. O’Shaughnessy, Washington, California Society of Certified Public D. C.—Captain, Headquarters, Army Accountants. He has been a member of Air Forces, Washington. the American Institute of Accountants W. Ingram Parke, Berkeley, Calif.—Cap­ and predecessor organizations since 1911, tain, Army Air Forces, Officers Train­ chairman of the Institute’s committee on ing School, Miami Beach, Fla. cooperation with bankers, and a mem­ Leonard Price, New York, N. Y.—Cost ber of its committees on cooperation with inspector, Cost Analysis Division, Quartermaster Corps. investment bankers, state corporation Joseph J. Pugh, New York, N. Y.—Lt. laws, inventories, and natural business Commander, Supply Corps, U. S. Naval year. ______Reserve, Washington. E. H. Schuck, Chicago, Ill.—Captain, Carman G. Blough of New York, fol­ Control Division, Office of the Chief of lowing his nomination as a member of Finance, Washington. council, accepted a position with the War W. Ernest Seatree, New York, N. Y.— Production Board and retired from public Assistant to Deputy Director, Division practice. At the request of Mr. Blough, of Industry Operations, War Produc­ his name was withdrawn by the nominat­ tion Board, Washington. ing committee, and the name of Warren Frank E. Seidman, Grand Rapids, Mich. W. Nissley of New York was substituted. —Economic Adviser, Furniture Indus­ try Branch, War Production Board. Philip K. Seidman, Memphis, Tenn.— Members of the Institute Engaged Lt., U. S. Naval Reserve, Office of the in War Activities Supervisory Cost Inspector, Eighth Naval District, New Orleans. Edred C. Benton, Jr., West Point, Ga.— Frederic H. Smith, Washington, D. C.— 1st Lt., Army Exchange Branch, Director of Naval Communications, Atlanta, Ga. U. S. Naval Reserve, Washington. Paul E. Blocher, Washington, D. C.— Wallace N. Vreeland, Jr., New York, Lt. (j.g.), U. S. Naval Reserve, Wash­ N. Y.—Lt. Commander, Supply Corps, ington. U. S. Naval Reserve, Office of Procure­ Walter E. Brown, Boston, Mass.—Lt. ment and Material, Washington. Commander, Bureau of Supplies and George Walters, Philadelphia, Pa.— Accounts, Navy Dept., Washington. Major, Cost Analysis Section, Fiscal James J. Hastings, Newark, N. J.—Tech­ Division, Headquarters, Services of nical assistant to the Supervising Cost Supply War Department, Washington, Inspector, Third Naval District, Supply D. C. Corps, New York, N. Y. Richard C. Kennedy, Cincinnati, Ohio— Captain, Army Air Force. Sons of Institute Members with Manson McCormick, Washington, D. C. —Lt. (j.g.), Purchases Division, Bu­ the Armed Forces reau of Supplies and Accounts, Navy Richard H. Crook, Jr. (son of Richard Department, Washington. R. S. McIver, Philadelphia, Pa.—Com­ H. Crook, Philadelphia, Pa.)—U. S. mander, U. S. Naval Reserve, Wash­ Naval Midshipmen’s School. ington. Martin T. Powers, Jr. (son of Martin T. Theodore B. Nickson, Washington, D. C. —Lt. Commander, U. S. Naval Re­ Powers, Charleston, S. C .)— Cadet, serve, Supply Corps, Bureau of Sup­ Navy Preflight School, University of plies and Accounts, Washington. Georgia, Athens, Ga. The Certified Public Accountant 11

War Courses A report on war courses offered by col­ C h a n g e in R ules of legiate schools of business and depart­ C o n d u c t ments of economics was recently issued by the Bureau of Foreign and Domestic Members of the Institute, at the re­ Commerce of the United States Depart­ cent annual meeting, voted to approve ment of Commerce. The purposes of this an amended draft of rule No. 13 of report, which supplements an earlier edi­ the Rules of Professional Conduct tion published in April, are described in prepared by the committee on pro­ the opening paragraph as “to aid . . . in fessional ethics in accordance with a organizing courses which deal with sub­ resolution adopted by council at its jects of importance to the war effort” and meeting on May 11, 1942. The amended “to suggest war courses to those schools rule No. 13 reads as follows: which have yet made only a modest be­ ginning in offering such instruction.” “A member or an associate shall not express his opinion on financial The report lists 322 courses, including statements of any enterprise financed 58 in accounting. Of these 58 accounting in whole or in part by public distri­ courses, 34 are included in the “Engi­ bution of securities, if he owns or is neering, Science and Management War committed to acquire a financial in­ Training Program,” with the United terest in the enterprise which is sub­ States Office of Education assuming ac­ stantial either in relation to its capital tual costs in order to alleviate manpower or to his own personal fortune, or if shortages in occupations essential to the a member of his immediate family war effort. Forty-four of the 58 courses owns or is committed to acquire a substantial interest in the enterprise. are conducted on the premises of educa­ A member or an associate shall not tional institutions and 22 offer credit to­ express his opinion on financial state­ ward scholastic degrees. Enrolment in ments which are used as a basis of the various accounting courses ranges credit if he owns or is committed to from six to 1220. acquire a financial interest in the enterprise which is substantial either in relation to its capital or to his Wisconsin Fall Conference own personal fortune, or if a mem­ ber of his immediate family owns or “Accounting and the War Effort” was is committed to acquire a substantial the theme of the fall meeting of the Wis­ interest in the enterprise, unless in consin Society of Certified Public Ac­ his report he discloses such interest.” countants held October 2nd on the campus of the University of Wisconsin, at Madi­ son, with the cooperation of the school of commerce. Speakers included T. Cole­ man Andrews, Richmond, Virginia, mem­ Typewriter Restrictions Revised ber of council of the American Institute The Office of Price Administration in of Accountants, who discussed “War a release dated September 17th (OPA- Accounting and Auditing” ; James L. 723) announced Amendment 5 to Revised Dohr, New York, N. Y., director of re­ Rationing Order 4, effective September search of the American Institute, whose 2 1st, permitting additional classes of buy­ subject was “The Effect of the War on ers to secure standard or portable type­ Financial Statements” ; Ira N. Frisbee, writers. Principal establishments affected C.P.A., Beverly Hills, California; W. are contractors engaged in war work, the Bayard Taylor, Wisconsin state price- merchant marine, labor unions, employ­ control officer; and Vern G. Zeller, direc­ ers’ associations, and agencies auxiliary tor of the state department of securities. to the war effort such as the United Ser­ 12 The Certified Public Accountant vice Organizations, the United Seamen’s Harrisburg Clinic Service, and the Red Cross. Purchasers in these classes whose op­ The fifth annual accounting clinic erations fulfill the conditions specified sponsored by Harrisburg Chapter of may obtain standard typewriters upon Pennsylvania Institute of Certified Pub­ application to their local war price and lic Accountants, with the cooperation of rationing board. Those previously eligible other chapters of the Institute, Harris­ to purchase portables, and those who be­ burg Chapter of the National Associa­ came eligible to purchase portables under tion of Cost Accountants, and Pennsyl­ this amendment, may also buy standard vania State College extension services, machines manufactured before 1938. was held October 9th and 10th. Nor­ In addition, the amendment provides mally conducted at State College, this that persons selling, for use by the gov­ program was transferred to Harrisburg ernment, typewriters manufactured since because of transportation restrictions. January 1, 1935, may purchase at the same Discussion was devoted primarily to war­ time and from the same supplier, without time problems of business and account­ obtaining a rationing certificate, an equiv­ ancy including taxation, price control, alent number of machines produced be­ and inventory practices. Speakers in­ fore January 1, 1928. cluded Herbert F. Taggart, director of the accounting division, Office of Price Administration; Victor H. Stempf, vice president of the American Institute of Accountants; William Traut, Jr., Assis­ C h icag o Lu n c h e o n s a n d tant Treasurer of Harrisburg Steel Com­ C onferences pany; and several state tax officials. The recent annual meeting of the American Institute provided an op­ War Finance Conference portunity for several groups of ac­ The Investment Bankers Association countants to arrange informal lunch­ of America will hold a “war finance con­ eons and discussion programs. Ap­ ference” in New York, October 19th and proximately 30 members of the Navy 20th, in place of its customary five-day Panel of Supervising Auditors attend­ annual convention. Prominent among ed a luncheon arranged by George P. topics scheduled for discussion is the dis­ Auld, Chief of the Navy Depart­ tribution of government securities. Speak­ ment’s Cost and Audit Branch, and ers will include Rear Admiral Emory Commander Norman Loyall McLaren, Scott Land, chairman of the United retiring president of the Institute. States Maritime Commission; Daniel W. Among other groups which assem­ Bell, Under Secretary of the Treasury; bled were Advisory Council of State and Joseph C. Grew, former United Society Presidents, council of the In­ States Ambassador to Japan. stitute, board of examiners, ex­ ecutive committee, committee on pro­ fessional ethics, committee on ac­ Scrap Campaign counting procedure, and committee A recent communication from the on cooperation with S.E.C. George American Industries Salvage Committee S. Olive of Indianapolis, incoming refers to the urgent need for cooperation president of the Institute, was the from business and industry in the scrap- guest of honor at a luncheon given by salvage campaign conducted by the War the Indiana Association of Certified Public Accountants, on October 1st. Production Board. The Board, through its Industrial Salvage Section, has organ­ ized Industrial Salvage Executive Com­ The Certified Public Accountant 13 mittees in nearly 500 of the principal in­ Unauthorized Practice of Law dustrial communities throughout the The American Bar Association com­ United States. At the request of these committees, salvage executives have been mittee on unauthorized practice of the appointed in many localities to assume law recently announced a new book pre­ responsibility for converting every pound senting reports of all cases on unauthor­ of scrap in the form of iron and steel, ized practice since the publication of nonferrous metals, and rubber, in indus­ Brand’s Unauthorized Practice Decisions trial plants and offices into material for in 1937, citations and references to all cases involving unauthorized practice, the manufacture of guns, tanks, ships, and other implements of war. Many pub­ statements o f principle and policies, and lic accountants and their clients have co­ important opinions of attorneys general and administrative tribunals. This com­ operated with their local organizations to pendium is available at one dollar, postage insure the success of this program. prepaid, from F. B. H. Spellman, Box Accountants in Venezuela Form 299, Alva, Okla., a member of the bar Association association committee. The following letter, announcing the Women Accountants Meet formation of an accountants’ association The American Woman’s Society of in Caracas, Venezuela, was recently re­ Certified Public Accountants and the ceived at Institute headquarters: American Society of Women Account­ “We have just established in Venezuela ants held a joint convention in Chicago an Accountants Association under the on September 25th, 26th, and 27th, at­ name o f: tended by 55 women engaged in account­ COLEGIO NACIONAL DE TECNICOS EN ing from ten states. Principal topics pre­ CONTABILIDAD sented by speakers and discussed at in­ and it is our desire to establish relations formal round-table sessions included civil­ with Accountants’ Associations abroad. It ian war work undertaken by members of will be a pleasure for us to receive what­ the two societies, vocational guidance, ever assistance you may be in a position and a survey of women in accounting with to render to us. particular emphasis upon qualifications of “We are highly interested in books and Society members for positions vital to the other literature for our Library, as well as Periodicals and Manuals. By recent prosecution of the war. enactment, an Income Tax Law will be in effect in Venezuela January 1st, 1943 Examinations and it would be a privilege for us if you Fall examinations of the American In­ can forward to us information books dealing on Income Tax Practice and Ac­ stitute of Accountants will be held No­ counting. vember 12th and 13th; cooperating state “We shall highly appreciate your boards of accountancy will hold simul­ courtesy and assistance, and in the light taneous sessions. Following is the sched­ of Good Neighborhood it is a privilege ule : for us to extend our hand and greet a Thursday, November 12, 1942 major sister organization from the Land 9:00 a .m . to 12:30 p.m . Auditing. of the Free. p.m . M. E. Lopez Aneiro, 1 :30 to 7 :30 Accounting theory and practice. Part I. Executive Director." In reply, the secretary has assured the Friday, November 13, 1942 executive director of the Venezuela as­ 9 :00 a .m . to 12:30 p.m . Commercial Law. sociation that the Institute will be glad to 1 :30 to 7 :30 p.m . Accounting theory and cooperate in any way possible. practice. Part II. 14 The Certified Public Accountant

turers’ association; and by officers in STATE SOCIETY NEWS the fiscal branches of the Army and Navy. Speakers at a meeting of New State Society Elections York State Society on October 5th were Dr. John R. Sly, O.P.A. regional price Kansas executive; Dr. Herbert F. Taggart, di­ September 29, 1942 rector of O.P.A.’s accounting division; President—S. W. Sinderson, Kansas City. and William W. Werntz, consultant to Vice president—Ivan M. West, Wich­ O.P.A. and chief accountant of S.E.C. ita. Secretary-Treasurer—Albert R. This program was arranged by the So­ Wood, Hutchinson. ciety’s committees on wartime problems and on priorities. Tennessee An address on “Activities of the War August 26, 1942 Production Board” was presented at the President—J. H. Hardy, Chattanooga. September 24th meeting of Colorado Vice president—H. B. Crump, Nash­ Society by Leslie A. Miller, former gov­ ville. Secretary—J. B. Carlin, Jr., ernor of Wyoming and regional director Memphis. Treasurer—E. N. Backus, of W.P.B. Colorado announces a series Johnson City. of informal weekly luncheons in Denver. Virginia Maryland Association opened the season with a dinner meeting in Baltimore, Sep­ September 12, 1942 tember 8th, addressed by Dr. R. G. Stein­ President—Thomas L. Thrasher, Rich­ meyer, associate professor of political mond. Vice president—James A. Dan­ science at the University of Maryland. iels, Newport News. Secretary-Treas­ urer—James A. Leach, Jr., Richmond. Harrisburg Chapter of Pennsylvania Institute and the county bar association Ohio Society held its thirty-ninth an­ held a joint dinner meeting on September nual meeting at Columbus, September 16th, with an address by John C. Arnold, 17th, 18th, and 19th, with Columbus president of the state bar association. Chapter as host. The program was planned Guests included distinguished representa­ to aid accountants to contribute more ef­ tives of the legal and accounting profes­ fectively to the war effort. Speakers in­ sions from various parts of the state. cluded William W. Werntz, chief ac­ Chapter members invited attorneys of countant of S.E.C. and consultant to their acquaintance in their own communi­ O.P.A.; Clifford L. James, O.P.A. re­ ties. A. J. Watson, of San Francisco, a gional price executive; and James L. past president of the California Society of Wicks, economic analyst. J. A. Phillips, Certified Public Accountants, addressed of Houston, Texas, past president of the Kansas City Chapter of Missouri So­ Texas Society and a member of council ciety, October 9th, on the subject, “The of the American Institute, discussed Public Accountant Adjusts His Practice “Auditing Standards” at Kansas So­ to Meet Wartime Conditions.” An ad­ ciety’s annual meeting, September 20th. dress on “Foreign Exchange Problems Eric A. Camman, chief of W.P.B.’s During War Times” was presented at accounting and distribution advisory the September 14th meeting of Los An­ branch, addressed a dinner meeting of geles Chapter of California Society by the Connecticut Society, in New Haven, Gustav Riedlin, assistant vice president September 18th, on renegotiation of war of Bank of America, National Trust & contracts. This meeting, open to every­ Savings Association. The chapter’s com­ one interested in the topic discussed, was mittee on practice procedure has sched­ attended by members of N.A.C.A., Con­ uled a series of weekly luncheon meetings trollers Institute, and the state manufac­ throughout the year. Cincinnati Chapter The Certified Public Accountant 15 of the Ohio Society held its annual meet­ Charles W. Hatter, Baltimore, Md. ing and election, September 2nd. Helmut Holz, Berkeley, W. Va. William C. Kirkpatrick, Washington, D. C. The president of the Colorado Society Tobias Klein, Brooklyn, N. Y. has appointed a selective service com­ John A. Lindquist, New York, N. Y. mittee, consisting of three members, Paul Mestern, New York, N. Y. which is available to assist state Selective Robert L. Miller, Lebanon, Pa. Edward Moeran, Yonkers, N. Y. Service authorities in determining draft William P. Mooney, Bridgeport, Conn. deferments for accountants. A special James A. Noon, Boston, Mass. committee of fifteen members was re­ Stanley Pembridge, Jackson Hts., L. I., N. Y. cently appointed to cooperate in the Sep­ Peter H. Rustin, Washington, D. C. Max A. Simionescu, Teaneck, N. J. tember Victory Bond Campaign. Ohio Jackson W. Smart, Chicago, Ill. Society’s committee on state tax legisla­ Louis Spector, Manchester, N. H. tion recently discussed the Ohio personal- Abner J. Starr, Cincinnati, Ohio property tax with the assistant tax com­ Homer N. Sweet, Boston, Mass. F. M. Thudson, New York, N. Y. missioner and suggested methods of fa­ James H. Wren, New York, N. Y. cilitating preparation of returns. Several of these methods have subsequently been adopted. The president of Oregon State Election of Members Society recently appointed a committee on cooperation with the American Insti­ A la b a m a tute of Accountants. * Ralph A . Harold, Mobile “Status of Accountants under Selective A r iz o n a Service” is the title of release No. 18, * Max A. Millett, Phoenix issued by New York State Society’s spe­ C a l if o r n i a cial committee on wartime problems, Sep­ * Thomas J. Ennis, San Francisco tember 14th. President Harold C. Utley John W. Hartung, Los Angeles of the Minnesota Society addressed a Connecticut letter “to all practicing accountants” in *Joseph T. Farley, East Hartford the state, urging them to attend the an­ D istrict of Columbia nual meeting of the American Institute †Paul E. Blocher, Washington in Chicago and enclosing detailed infor­ *David Brooks, Washington mation about railroad schedules and fares. * Thomas J. Capossela, Washington Michigan Association announces the * Francis X. Mallgrave, Washington opening of an office, to be occupied jointly *Alexander J. Sternberg, Washington with the Michigan State Board of Ac­ F lorida countancy, at 1332 Book Building, Detroit. *Wm. Jackson Callahan, Miami Western Chapter of Michigan Associ­ G e o r g ia ation reports that its membership now John M. Read, Rome includes every eligible certified public I l l in o is accountant in its section of the state. *James H. Balch, Chicago * Theodore A. Jones, Chicago Gordon L. Laidlaw, Chicago Visitors at Institute Offices *Herbert J. Lowing, Chicago A. Henry Baum, New York, N. Y. * Thurlow E. McBride, Chicago Franklin M. Beall, Baltimore, Md. *James C. McGoey, Chicago G. Robert Becker, Cincinnati, Ohio Bernard Meyer, Chicago Henry M. Besser, Newark, N. J. K e n t u c k y W. H. Chipps, Yonkers, N. Y. William D. Cranstoun, New York, N. Y. * Henry S. Fish, Louisville Gordon M. Dickinson, Deland, Fla. * G. Lane McCroskey, Louisville Fred Feasel, Albuquerque, N. M. * Henry T. Rowland, Louisville William E. Freeman, Berkeley, Calif. *Joseph Di Rosa, New Orleans R. H. Gould, Bellingham, Wash. * Admitted as associates. Clyde F. Hart, Summit, N. J. † Advanced to membership. 16 The Certified Public Accountant

M assachusetts North Carolina * Eunice G. Donovan, Springfield ♦Raymond H. Kees, Winston-Salem Wilfred G. Larocque, Boston O h io * David H. Lindsay, Boston Charles Gehler, Cincinnati * Harold K. McKay, Boston ♦Dale E. Rose, Toledo M ississippi O k l a h o m a †Bernard H. Hirsberg, Clarksdale ♦Samuel R. Kowler, Tulsa M is s o u r i O regon Albert A. Armstrong, Kansas City ♦Donald B. Carmichael, Portland *David M . Finley, St. Louis Pennsylvania Wayne A. Henderson, Joplin ♦J. Herbert Carson, Pittsburgh John H. Moriarty, Kansas City Eugene A. Conniff, Pittsburgh *Kermit M . Pennington, St. Louis ♦Frank G. Crispen, Pittsburgh M o n t a n a ♦Jerome A. LaManna, Reading Rhode Island * William K. Good, Billings Ralph R . Fielding, Providence N e w Y o r k U t a h * Floyd H. Daehn, New York ♦Lincoln S. Kelly, Salt Lake City Isadore J. Drucker, New York ♦Lawrence S. Olsen, Salt Lake City * Peter Guy Evans, New York V i r g i n ia *John J. Knowlan, New York †Adam J. Rathgeber, New York Thomas B. Wells, Richmond Robert J. Rooney, New York W a s h i n g t o n Samuel Shechet, New York ♦S. William Murray, Seattle Raymond L. Ward, New York ♦Hilliard L. Riebe, Seattle W is c o n s in * Admitted as associates. † Advanced to membership. ♦Ernst F. Augustine, Milwaukee

Roscoe H . Belknap, of Boston, Massa­ uated from Harvard College in 1911, with chusetts, died July 15th, at the age of 66. the A.B. degree, and from the Harvard A native of Framingham, Massachusetts, Graduate School of Business Administra­ Mr. Belknap attended public school in tion in 1912. From 1912 to 1915 Mr. that city. In 1897 he received the A.B. Byerly was with the firm of Stone & degree from Brown University, and in Webster of Boston. In 1915 he became 1907 the LL.B. degree from Northeastern associated with Price, Waterhouse & Co., College. Mr. Belknap had been associated and remained with that firm until the with the firm of Herbert F. French & time of his death. He had been a partner Co., of Boston, since 1910. A certified in the firm for 15 years and a senior part­ public accountant of New Hampshire and ner for five. Mr. Byerly had been man­ Massachusetts, he had been a member of ager of the Chicago and Philadelphia the American Institute of Accountants offices of the firm, but had been in the since 1921, and had served for two years main office in New York for the past on its committee on arbitration. five years. For six months last year he served as an accounting adviser for one Francis P. Byerly died suddenly on of the government emergency agencies in September 4th, at his home near Media, Washington, D. C. Mr. Byerly held the Pennsylvania. He was 52 years old. A na­ C.P.A. certificate from the states of tive of Cambridge, Massachusetts, Mr. Illinois, Louisiana, New York, Pennsyl­ Byerly received his early education in the vania, and Tennessee, and was a member public schools of that city. He was grad­ of the New York State Society of Cer­ The Certified Public Accountant 17 tified Public Accountants. A member of the public schools there. Later he attended the American Institute of Accountants Temple University Evening School of since 1921, Mr. Byerly had served during Accounts. He held accounting positions 1931-1933 as auditor for the Institute. in various firms until 1921, when he He was for five years chairman of the joined the staff of Lybrand, Ross Bros. committee on cooperation with Bar Asso­ & Montgomery, where he remained until ciation, and also served on the committee the time of his death. Mr. MacGarrigle on publication and the committee on war was a certified public accountant of Penn­ activities. sylvania and a member of the Pennsyl­ vania Institute of Certified Public Ac­ Edward D. Farmer, of Indianapolis, countants, and had been a member of the Indiana, died September 20th, at the age American Institute of Accountants since of 67. Born near Bloomington, Indiana, 1930. Mr. Farmer attended Central Normal College and Indiana University. From Fred M. Morrison, of Watsonville, 1910 to 1917 he served on the State Board California, died August 24th. Mr. Mor­ of Accounts, and from 1917 to 1918 was rison was born in New Mexico in 1901. with the Federal Trade Commission. Mr. He received his early education in the Farmer was budget commissioner of In­ public schools of Colorado, and later at­ diana for four years. He had been a field tended Denver University and St. Louis examiner of the State Board of Certified University. Mr. Morrison held positions Accountants of Indiana for twenty-six in a number of accounting firms until years, and served six years as deputy 1932, when he entered public practice state examiner. A certified public ac­ under his own name in Watsonville, Cali­ countant of Indiana and Pennsylvania, fornia, where he remained until the time Mr. Farmer was a member of the Indiana of his death. A certified public account­ Association of Certified Public Account­ ant of Missouri and California, he was a ants and of the American Institute of member of California Society of Certified Accountants. Public Accountants and a member of the American Institute of Accountants. Walter G. Fatchett, of Minneapolis, Minnesota, died August 21st. He was Hazen P. Philbrick, of Boston, Mass­ born in Elvira, Iowa, in 1886, and studied achusetts, died July 15th. Mr. Philbrick law for three years at the Minnesota was born in New Salem, Massachusetts, College of Law. From 1911 to 1915 Mr. in 1877, and received his early education Fatchett was associated with Willis Pirie in the public schools of Portsmouth, New & Co., chartered accountants. From 1915 Hampshire. He was graduated from to the time of his death he had been prac­ Harvard College in 1898 with the A.B. ticing under his own name. Mr. Fatchett degree, and a year later received the was a certified public accountant of Min­ A.M. degree. A certified public account­ nesota and a member of the Minnesota So­ ant of New Hampshire and Massachu­ ciety of Certified Public Accountants. He setts, Mr. Philbrick had been a member had been a member of the American In­ of the American Institute of Accountants stitute of Accountants since 1932. and predecessor organizations since 1913, and had served on the Institute’s com­ Robert L. MacGarrigle, Jr., of Up­ mittees on nominations and by-laws. He per Darby, Pennsylvania, died April 6th, was the author of the Massachusetts sec­ the Institute has just learned. Mr. Mac­ tion of the books, 1914 C.P.A. Problems Garrigle was born in Philadelphia in and Solutions and 1915 C.P.A. Problems 1896, and received his early education in and Solutions. Anno uncements

The following firm announcements have W a ld r o n H. Rand & Company, Boston, been received recently from members of the Mass., announce that the firm will now com­ In s titu te . prise the following partners: A llan Baker, Rudolph Bergman announces the opening A l e x a n d e r L. C a r n e , and K a t h e r i n e of offices for the practice of accountancy un­ Philbrick. The firm also announces the re­ der his own name, at 110 East 42nd St., moval of its offices to 60 Congress St., New York, N. Y. Boston. Charles S. Rockey & Co., Philadelphia, F. Gordon Blackstone & Co. announce the removal of their offices to 20 Exchange Pa., announce the admission of L e s t e r W ichterman and C l a r e n c e Q. W e s t to Place, New York, N. Y. partnership in the firm. K a r l E. B l o m q u i s t announces the re­ F r e d e r ic k W. S c h o l z , formerly senior moval of his office to the Hotel Jamestown partner of the firm of Quinn, Berran & Co. B ld g ., Jamestown, N. Y. —dissolved as of August 31, 1941—is now O. I. B o e k le announces the removal of his senior partner of the firm of Sproull, Scholz office to 3426 Barium Tower, Detroit, Mich. & Co., 17 East 42nd St., New York, N. Y. Elkins and Durham of Richmond, Va., L a w r e n c e J. S e m e n z a and W i l l i a m B. announce the admission of A r t h u r N. K em p K o t t i n g e r announce the formation of a to partnership in the firm. partnership under the firm name of S e m e n z a H a r r y C. F i s c h e r announces the removal & Kottinger, with offices in the Title In­ of his office to Garfield Bldg., 403 W. 8th St., surance Bldg., 29 East First St., Reno, Nev. Los Angeles, Calif. David Smith announces the removal of L u t h e r B. G r i f f i t h and F r e d R. H e t t ­ his office to 1610 Book Tower, Detroit, Mich. l e r announce the formation of a partnership Benjamin A. W ilson announces the pur­ under the firm name of Griffith & H ett­ chase of the business of Walker, Wilson & l e r , with offices at 825 Ardis Bldg., Shreve­ Company, the business to be continued un­ port, L a. der the name B e n j a m i n A. W i l s o n , 1211 Hurdman and Cranstoun, New York, Reynolds Bldg., Winston-Salem, N. C. N. Y., announce that the following have been C a r lo s R. Zener, C. A. Andrews, and admitted to partnership in the firm: C a r l H . B e r t W. L o c k h a r t announce the removal Forsberg, Charles A. Hoyler, Edward F. of their offices to 506 Lloyd Bldg., Seattle, McCormack, George A. Owen, Everett J. Wash. P e n n y , and Leopold Roeder. Lunsford, Barnes and Company, Wich­ ita, Kansas, announce the admission of H u g h Frank Wilbur Main, Pittsburgh, Pa., P. H a r t l e y to partnership in the firm. gave a radio talk over WJAS September Lybrand, Ross Bros. & M ontgomery an­ 15th on the subject, “The Certified Public nounce the appointment of B e n E. B e c k e r Accountant and the War.” as manager of their Houston, Texas, office. M a r y E. M u r p h y , New York, N. Y., is J o h n E. M e a l s and W. Bruce Jones an­ the author of two articles on “The Ameri­ nounce the formation of a partnership under can Accountant and the S.E.C.,” which ap­ the firm name of M eals & Company, with peared in the July and August, 1942, issues offices at 1411 Fourth Ave., Seattle, Wash. of the British magazine Accountancy.

CHAS. FRANCIS PRESS, INC. NEW YORK CITY THE Ce r t ifie d Public A c c o u n t a n t A Bulletin of The American Institute of Accountants

N o v e m b e r , 1942

Annual Meeting—1943

Vote on N ew Rule of Conduct

Army Specialist Corps Discontinued

Changes in Wage-Hour Enforcement

State Societies Aid Selective Service

Institute Activities, 1941-1942

Wage and Salary Stabilization

15¢ a Copy Published Monthly $1 a Year

V ol. 22 N o. 10

copyright 1942 by a m e r ic a n institute p u b l is h in g co., i n c . PAMPHLETS FOR DISTRIBUTION

These pamphlets may be obtained from the Institute fo r distribution by state societies and members of the Institute to bankers, government officials, tax authori­ ties, businessmen, and others. Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred — 35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢ Auditing Examination of Financial Statements by Independent Public Accountants.. . 15¢ Competitive Bidding for Audit Engagements...... 1¢ Audit of Savings and Loan Associations by Independent Certified Public Ac­ countants ...... 25¢ Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Re­ funded ...... 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢ No. 15 — The Renegotiation of War Contracts...... 10¢ Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor's Opinion on the Basis of a Restricted Examination.. 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on “Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued) 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar Investments under the Investment Company Act of 1940...... 10¢ No. 10 — Auditing Under Wartime Conditions...... 10¢ No. 11 — The Auditor’s Opinion on the Basis of a Restricted Examination (No. 2) ...... 10¢ No. 12 — Amendment to Extensions of Auditing Procedure...... 10¢ Complete set of 16 Accounting Research Bulletins and 12 Statements on Auditing Procedure ...... $1.40 American Institute o f Accountants

Activities of the Month ness, Columbia University. Mr. Farrand discussed “Accounting Problems Arising George S. Olive, president of the Out of the War” at a meeting of Mu American Institute of Accountants, was Chapter of Beta Alpha Psi, New York the principal speaker at the Third Annual University, November 5th. Symposium on Accounting and Taxation The executive committee held a meet­ sponsored by the North Carolina Associa­ ing in New York, November 6th. This tion of Certified Public Accountants in was the first meeting of the new commit­ cooperation with Duke University and tee for the fiscal year 1942-1943. Names the University of North Carolina, at of members are listed on page 16 of this Chapel Hill, N. C., November 12th, 13th, bulletin. and 14th. His topic was “The Impact of The committee on cooperation with the War Regulations on Accounting Prob­ S.E.C. held a meeting in New York, lems.” November 5th. Mr. Olive was the guest of honor at The committee on auditing procedure a dinner meeting of the Illinois Society of the American Institute, in a supple­ of Certified Public Accountants in Chi­ mentary report to council issued in May, cago, October 28th, and spoke briefly, recommended an amendment to the state­ congratulating successful candidates in ment on “Extensions of Auditing Pro­ the May C.P.A. examinations. John L. cedure.” This supplementary report, Carey, secretary of the Institute, dis­ which was approved by the membership cussed “Wartime Accounting” on this of the Institute at the 1942 annual meet­ occasion. Gold and silver medals were ing, has recently been published as No. 12 presented by the Illinois Society to candi­ in the series of Statements on Auditing dates receiving the highest and second Procedure issued by the committee. highest grades, respectively. Questions currently being considered Victor H. Stempf, vice-president of by the committee on auditing procedure the American Institute of Accountants, include the necessity for disclosure in the addressed Philadelphia Chapter of N. A. auditor’s report of uncertainties in finan­ C. A. on “Wartime Inventory Problems cial statements, such as that resulting and Practices,” October 15th. from the possibility that war contracts H. T. Winton, assistant secretary, re­ may be renegotiated; the effect upon the cently discussed with officials in Wash­ auditor’s report of the omission of physi­ ington the requirements of the War cal inventories in war industries; and Department for experienced accounting problems resulting from the inability to personnel and qualifications of account­ secure confirmation of accounts receiv­ ants available for possible assignments. able due from the government. James L. Dohr, director of research, The annual report of the committee on addressed Springfield (Mass.) Chapter terminology to council of the American of N.A.C.A., October 21st. Institute, discussing “depreciation,” has George N. Farrand, research assistant, been published as Accounting Research is the instructor in a course in analysis of Bulletin No. 16 and distributed to all In­ financial reports at the School of Busi­ stitute members and associates. 1 2 The Certified Public Accountant

Accounting aspects of post-war re­ Twenty-seven special communications funds of excess-profits taxes under the were sent from the Institute during the new revenue act were discussed by mem­ year to state society presidents. Three bers of the committee on accounting pro­ regional conferences scheduled for last cedure at an informal meeting in New spring were cancelled due to war con­ York, October 26th. Problems in account­ ditions. ing for the new series of tax-anticipa­ tion notes were considered at the same Professional Conduct meeting. The committee may issue ac­ Sitting as a trial board at Chicago, counting research bulletins referring to council heard complaints against three both of these topics in the near future. members. Two were suspended for A revised statement on accounting for periods of twelve months and one was income taxes is also under consideration. expelled. The subcommittee on cost-plus-fixed- Membership present at the council fee contracts of the committee on ac­ meeting approved and recommended for counting procedure discussed the account­ submission to the entire membership by ing treatment of income from such con­ mail ballot, an amendment to rule 13 of tracts at a meeting on October 19th. the rules of professional conduct so as J. A. Phillips, chairman of the com­ to make it clear that financial interest in mittee on federal taxation of the Ameri­ client corporations would be regarded as can Institute of Accountants, addressed substantial if found significant either in the Texas Personnel Conference on Oc­ relation to the outstanding capital stock tober 31st; Corporate Fiduciaries on Oc­ of the company or in relation to the per­ tober 30th; and participated in a radio sonal fortune of the accountant or his broadcast describing treasury tax notes immediate family. on October 29th. The ethics committee reported upon the cases referred to it and presented a Activities of the Institute 1941-1942 summary of inquiries and responses to questions dealt with by the committee Midyear and annual reports of the In­ during the year. stitute’s committees will be published in full in the yearbook. However, this ac­ Exam inations count will summarize briefly the more important developments within the pro­ The Association of Certified Public fession as revealed in reports presented Accountant Examiners held a joint meet­ at the May meeting of council in New ing with the Institute’s board of exam­ York and the annual meeting in late iners at Chicago. New by-laws were September at Chicago. adopted by the Association. Plans were laid for introduction of the S t a t e S o c iet y C o o p e r a t io n two and one-half day examination in Forty-five members of the Advisory May, 1943. At the May meeting of coun­ Council of State Society Presidents met cil, the board of examiners’ rules were in Chicago for an entire day. Recom­ modified so as to eliminate the require­ mendations leading to more effective ments that the board give interviews and cooperative effort between the Institute oral examinations in all cases to certified and state societies were made by the Ad­ public accountants who passed examina­ visory Council in its report to the In­ tions other than those of the Institute. stitute’s council. J. Arthur Marvin of New York was W artime Activities elected chairman of the Advisory Council A substantial number of Institute mem­ and Eric P. Van of Oregon was elected bers, including the immediate past presi­ secretary. dent, are in the armed forces. A roster The Certified Public Accountant 3 of members available for war service is T e r m in o l o g y maintained at the Institute’s office and The committee on terminology, which has proven effective in procuring well works in close cooperation with the re­ qualified accountants for Army and Navy search department, has submitted a re­ commissions, and government war agency port on depreciation which, with the ap­ positions. An Institute committee has had proval of the committee on accounting conferences with National Headquarters procedure, has since been published as a of Selective Service System which re­ special research bulletin. sulted in adoption of a policy that ac­ countants may be considered for occupa­ A u d i t i n g P r o c e d u r e tional classification if sufficiently experi­ Three auditing procedure bulletins enced to be considered necessary men and were issued during year, including one on are engaged in essential work. auditing under wartime conditions. The Special mailings, such as the following, annual meeting adopted committee on have kept Institute members currently in­ auditing procedure’s recommendation that formed of developments in wartime econ­ report on “Extensions of Auditing Pro­ omy: Selective Service Bulletin No. 10; cedure,” dated October 18, 1939, be O.P.A. financial reports A and B ; Ex­ amended to provide that disclosure be re­ planation of Principles for Determination quired in the short form of independent of Costs under Government Contracts. accountant’s report or opinion in all cases Special committees cooperated with in which the extended procedures regard­ War Department, Navy and Maritime ing inventories and receivables set forth Commission on problems of auditing in “Extensions of Auditing Procedure” costs of contractors under cost-plus-fixed- are not carried out, regardless of whether fee contracts. they are practicable and reasonable and War Department, due largely to efforts even though the independent accountant of professional accountants in the Army, may have satisfied himself by other with the assistance of Institute commit­ methods. tees, adopted selective audit procedure. F e d e r a l T a x a t i o n Institute committees cooperated with Recommendations of the committee on W.P.B. in study of data requests to in­ federal taxation for revision of federal dustry and questions relating to priorities income and excess-profits tax laws have control and flow of materials into war been summarized in The Journal of Ac­ production. countancy. Institute committee on cooperation with At the request of the committee the Controllers Congress prepared on behalf Treasury Department last winter returned of Army Exchange Service, a voluminous to local collectors the right to grant report dealing with Post Exchange activ­ extensions of time for filing returns in ities, reports, accounts, and operating appropriate cases. A survey conducted by forms. the committee revealed that of more than 200,000 individual and corporate returns A c c o u n t i n g P r o c e d u r e filed by members of the Institute, more Committee on accounting procedure than 97 per cent were filed by the due date assisted by the research department pub­ without a request for extension. The com­ lished three bulletins dealing with war mittee has given attention to a proposal to reserves, United States Treasury tax tax fiscal-year corporations under two notes, and renegotiation of war contracts. rates; proposal for automatic extension Study of inventories has continued and of time for filing corporate returns; and a number of projects related to problems proposal to change the name of the Board arising from the war have been advanced. of Tax Appeals. 4 The Certified Public Accountant

S e c u r i t i e s a n d E x c h a n g e C o m m i s s i o n countants. The entire meeting was de­ On December 2, 1941, the president ap­ voted to accounting and the war effort. peared before the House Committee on Papers presented have been published Interstate and Foreign Commerce in op­ under the title, Wartime Accounting. A position to a proposal to amend the complimentary copy of the proceedings liability provisions of the Securities Acts. has been sent to each member and asso­ The committee on cooperation with ciate. Securities and Exchange Commission has I n t e r n a l A f f a i r s reviewed several forms drafted by the Commission. Membership in the Institute is at the The findings and opinion of the Se­ highest point in its history, 6,453, repre­ curities and Exchange Commission in the senting a net gain over a year ago of 731. matter of Associated Gas and Electric Through careful budgeting and careful Corporation were referred to the commit­ management, income exceeded expenses by tee on professional ethics and to the ex­ something over $8,000. A plan for re­ ecutive committee, which requested the duction of activity during the war, which committees on accounting procedure and would reduce expenses by about 15 per auditing procedure to study the opinion cent was considered by council at its with regard to particular questions of spring meeting. It was the sense of coun­ interest to each of them and report their cil that there should be no curtailment of findings to the incoming executive com­ activities until circumstances forced it. mittee. Resolutions were passed expressing sorrow in the loss to the profession of P u b l i c I n f o r m a t i o n Francis P. Byerly, for many years chair­ Nearly 600,000 public information man of the Institute’s committee on coop­ pamphlets prepared by the Institute were eration with bar association, and Frank distributed during the year. Two pam­ Broaker, fifth president of the American phlets, “Please Check Your Account,” Association of Public Accountants and and “The Natural Business Year,” were pioneer in the effort to bring about enact­ published. ment of the first C.P.A. law. Speakers bureau was active in placing Resolutions of regret were adopted up­ members of the Institute on programs of on learning of the death of J. Harry Cov­ meetings throughout the country. ington, who was retained as counsel for the Institute in 1920, and whose firm has

P ublications continued in that capacity to the present time, and the death of Judge Moses H. The Journal of Accountancy circulation Grossman, of New York, who had con­ reached 16,852, and more than 82,000 mis­ cellaneous pamphlets were sold during the tributed substantially to the cause of com­ mercial arbitration. past year.

L ib r a r y Commander McLaren Heads Cost The library staff answered 16,427 in­ and Audit Branch quiries during the year and lent thou­ sands of books and pamphlets to members. Commander Norman Loyall McLaren, Every effort was made by the library to immediate past president of the American have on hand printed accounting material Institute of Accountants, has recently pertaining to the war. been appointed Chief of the Cost and Audit Branch, Office of Procurement and A n n u a l M e e t i n g Material, Navy Department. Commander The fifty-fifth annual meeting held in McLaren succeeds George P. Auld who Chicago was attended by nearly 1,200 ac­ resigned because of ill health. The Certified Public Accountant 5

Members of the Institute in War William J. McNulty, New York, N. Y.— Activities Lieutenant, Supply Corps, United States Naval Reserve. Gilbert O. Baker, Jr., Seattle, Wash.— Ensign (SC) United States Naval Re­ Raymond F. Murphy, Rochester, N. Y.— serve. Assistant to Supervisory Cost Lieutenant, Officer in Charge, Branch Inspector, 13th Naval District. Office, Supervisory Cost Inspector, United States Navy. Andrew Barr, Washington, D. C.—Pro­ moted to L t Colonel, appointed Assist­ William A. Newman, Jr., New York, ant Chief of Staff, G-2. N. Y.—Area Auditor, Army Air Forces, Contract Audit Section— Carman G. Blough, New York, N. Y.— A.A.F. Materiel Center, Eastern Pro­ Chief of the Contract Review Branch, curement District. War Production Board, Washington, Dermot A. Noonan, Norfolk, Va.—En­ D. C. sign (SC) United States Naval Re­ Darcy R. Bonner, Dallas, Texas—Re­ serve. Assistant to Supervisory Cost gional Accountant, Office of Price Ad­ Inspector, Fifth Naval District. ministration, Fifth Region. Frederic A. Powers, Cincinnati, Ohio— James B. Burleson, Dallas, Texas—Re­ Territorial Accountant heading O.P.A. gional Statistician, War Production accounting staff in Hawaii; also, mem­ Board, Eighth Region. ber of the executive staff of the Ter­ ritorial Director. Henry T. Chamberlain, Chicago, Ill.— Technical Assistant to the Supervising Leon E. Smith, Dallas, Texas—Lieuten­ Cost Inspector, Ninth Naval District. ant, Supply Corps, Bureau of Supplies and Accounts, Cost Inspection Division, Francis T. Donahue, New York, N. Y.— United States Naval Reserve. Second Lieutenant, United States Army. Herbert E. Tucker, Boston, Mass.— Supervising Auditor, Office of Pro­ M. G. Furman, Miami, Fla.—First Lieu­ curement and Material, Cost and tenant, United States Army Air Corps. Audit Branch, First Naval District. Frank W. Harris, Philadelphia, Pa.— Maxwell A. H. Wakely, Brooklyn, N. Y. United States Coast Guard. —Captain, Army of the United States. In charge, Operation Control Section, Bernard B. Isaacson, Wilmington, Del.— Army Exchange Branch. Cost Auditor, Army Air Forces, Con­ tract Audit Section, Eastern Procure­ Morris W. Whitaker, Lynchburg, Va.— ment District. Promoted to Lieutenant Commander, United States Naval Reserve. Julius John Jakobi, Cleveland, Ohio— First Lieutenant, United States Army Air Force. Sons of Institute Members with the Armed Forces Donald E. Kern, Fort Wayne, Ind.— Army Air Corps, Materials Division. A. Crawford Clarkson, Jr. (son of A. Crawford Clarkson, Columbia, S. C.) Abraham Kraditor, New York, N. Y.— —Lieutenant (J.G.) Active sea duty. Cost Inspector, United States Navy. United States Naval Reserve. Stewart Y. McMullen, Glencoe, Ill.— William R. Cobun (son of Charles C. Lieutenant (J. G.) United States Cobun, Los Angeles, Calif.)—United Naval Reserve. States Army Air Force. 6 The Certified Public Accountant

William R. Curtis (son of George E. Four Sons in the Nation’s Service Curtis, Norwalk, Conn.)—Training for signal service. Among the members of the American Institute of Accountants who have four Maurice Edwards (son of Edwin J. Ed­ sons now serving with the armed forces wards, New York, N. Y .)—Medical of the United States are Albert L. Detachment, Army Air Force. Schneider, Pittsburgh, P a.; and E. E. Edwin Kalbfleish, Jr. (son of Edwin Staub, Detroit, Mich. Names of these Kalbfleish, St. Louis, Mo.)—Second eight young men are listed below: Lieutenant, Coast Artillery. Albert L. Schneider, Jr., Corporal, A.A. Jack Kramer (son of Nathaniel Kramer, School. New York, N. Y .)—Private, First Edward F. Schneider, Lieutenant, Air Class, United States Army. Corp Adm. Edwin H. Morse (son of H. S. Morse, James T. Schneider, Ensign, United New York, N. Y.)—Warrant Officer States Navy. (J.G.), Inspector General’s Office, Robert E. Schneider, Corporal, Cavalry. Headquarters, 80th Division, Army of the United States. David E. Staub, Ensign, United States Naval Reserve. Hilary H. Osborn, Jr. ( son of Hilary H. Osborn, Nashville, Tenn.)—Staff Ser­ E. Milton Staub, M.D., Lieutenant (S.G.) geant, Glider Pilot, Army Air Force. United States Naval Reserve. Graham D. Pattinson, Captain, F.A., In­ Gordon J Staub, Ensign, United States structor, Gunnery School, F.A.S., and Naval Reserve. Paul D. Pattinson, Second Lieutenant, O.T.C. (Sons of I. Graham Pattinson, W. Arthur Staub, United States Navy. Los Angeles, Calif.) A. J. Watson, Jr. and David F. Watson Record Keeping for Small Stores (sons of A. J. Watson, San Francisco, A manual entitled “Record Keeping for Calif.) — Lieutenant, United States Small Stores,” describing records needed Naval Reserve; and First Lieutenant, by small retailers and explaining how they United States Army, respectively. may be kept with a minimum of time and effort, has recently been prepared by two Missing in Action—Arrives Home representatives of the United States De­ partment of Commerce for the use of the Second Lieutenant Archie M. Smith, special Senate committee to study prob­ Jr., Marine Corps flier, son of Archie M. lems of American small business. In the Smith of New Orleans, member of the preface, the chairman of this committee American Institute of Accountants was observes that war has created a need for reported “missing in action” a few weeks more detailed records and expresses the ago following an air battle in the South hope that this text and others in prospect Pacific area. Lieutenant Smith and his will help the small producer and distribu­ gunner made a forced landing in the sea tor to adjust their operations to the de­ after dark, but reached shore and re­ mands of war production and essential mained in concealment five days. Later, civilian requirements. The pamphlet con­ natives notified an Allied base and sisting of 93 pages and containing 38 illus­ Lieutenant Smith and his companion trations, many of them reproducing book­ were rescued by airplane. The lieutenant keeping forms, is available from the Gov­ arrived home November 3rd on furlough. ernment Printing Office, Washington. The Certified Public Accountant 7

Accounting Research Bulletins and Statements on Auditing An n u a l M eetin g 1943 Procedure The executive committee, on No­ vember 6th, voted to hold the fifty- Complete sets of accounting research sixth annual meeting of the Ameri­ bulletins and statements on auditing pro­ can Institute of Accountants in New cedure issued by the committees on ac­ York City late in October, 1943. This counting procedure and auditing pro­ meeting is subject to postponement cedure of the Institute, respectively, are or cancellation only if subsequent de­ now available at a price of five cents each velopments in the war situation, or $1.40 for the sixteen accounting re­ which cannot now be foreseen, should search bulletins and twelve statements on make such a program impracticable. auditing procedure published to date. The committee approved a meeting Titles of these bulletins and statements of the same general type as that re­ are listed on the inside front cover of cently held in Chicago. this publication. Individual bulletins and statements are priced at ten cents each. Internal Auditors First Annual Regulation W Amended Conference The first annual conference of The In­ Amendment No. 9 to Regulation W, stitute of Internal Auditors was held in applying to consumer credit, was an­ New York City, November 8th, 9th, and nounced by the Federal Reserve Board on 10th, with many business executives and October 15th and became effective Oc­ certified public accountants in attendance. tober 26th. This amendment effects minor Speakers included Jesse F. Kaufmann technical and administrative changes in and Captain Victor Z. Brink, members of the regulation of charge accounts. Among the American Institute of Accountants, them are the following: and Nathaniel Royall, Chief Auditor, Re­ 1. A retailer is forbidden to send certain construction Finance Corporation. listed articles to a customer on ap­ proval if his account is in default Survey of American Listed under the regulation. If an instalment Corporations sale is contemplated, the seller must The Securities and Exchange Commis­ obtain at or before the time of de­ sion recently issued the first of a series livery a deposit equal to the required of industry reports described as the “Sur­ down payment. vey of American Listed Corporations.” 2. Small listed articles priced at five These reports will present balance-sheets dollars or less may be delivered to a and profit-and-loss statements, expressed customer without checking his ac­ both in dollars and percentages, as well as count, but the merchant must promptly request any customer whose account surplus reconciliations, financial ratios, is later found to be in default to re­ and security issues outstanding for indi­ turn or pay for the merchandise. vidual companies and for industry groups. They refer to the calendar years 1940 3. Credit sales to customers whose ac­ counts are in default by amounts less and 1941, thus extending an earlier series than two dollars are permitted. of comparable reports which generally covered the period from 1934 to 1940. Amendment No. 4 to Regulation W, The first report in the new series refers placing important restrictions upon con­ to 37 companies in the oil-refining indus­ sumer credit, was summarized on page try. Single copies may be secured with­ 485 of The Journal of Accountancy for out charge from the publications unit of June, 1942. the S.E.C. in Philadelphia. 8 The Certified Public Accountant

which is reproduced on page 379 of The V ote o n N ew R ule o f Journal of Accountancy for October, 1942, and is the subject of a leading edi­ Co n d u c t torial in that issue. The executive committee urges “We have no reason to believe that the every member of the Institute who same policy will not be followed when has not already done so to vote on gasoline rationing becomes nationwide. the proposal to amend Rule No. 13 of We shall endeavor to keep in touch with the Rules of Professional Conduct, the situation and keep you informed of any changes which may occur. prohibiting members and associates “It may be desirable for representa­ from expressing a professional tives of your state society to discuss the opinion on financial statements of situation with the state rationing authori­ corporations in which such members ties as soon as possible, in order that or associates, or members of their misunderstanding and confusion among immediate families, hold or are com­ local war price and rationing boards may mitted to acquire a substantial finan­ be avoided, if possible, by interpretations cial interest. The amendment was from state headquarters.” approved at the annual meeting, sub­ ject to vote of the entire member­ Senators Endorse Curb on ship by mail ballot. Ballots were Business Queries mailed from the Institute’s office Oc­ tober 21, 1942, and votes to be valid A bill to coordinate federal reporting must be received at the Institute’s services, to eliminate duplication and re­ office not later than December 21, duce the cost of such services, and to 1942. minimize the burdens of furnishing re­ ports and information to governmental agencies (S. 1666) has been favorably Gasoline Rationing reported by the Senate Committee on Education and Labor and is on the Senate To inform members of the profession calendar, with early consideration ex­ throughout the country concerning the pected as this bulletin goes to press. Sec­ present status of gasoline rationing, as it tion 2 of this bill, in its present form, applies to public accountants, the secre­ reads as follows: tary of the American Institute sent the following letter to the presidents of all “It is hereby declared to be the policy state societies of certified public ac­ of the Congress that information which countants on November 4th: may be needed by the various Federal agencies should be obtained with a mini­ “We have received a number of in­ mum burden upon business enterprises quiries from accountants in the states to which gasoline rationing will be applic­ (especially small business enterprises) able in the near future, asking whether and other persons required to furnish anything can be done to secure supple­ such information, and at a minimum cost mental rations for purposes of getting to to the Government, that all unnecessary clients’ establishments which are not ac­ duplication of efforts in obtaining such cessible except by automobile. information through the use of reports, "We had discussed this problem with questionnaires, and other such methods respect to accountants in the states on the should be eliminated as rapidly as prac­ Eastern Seaboard, in which gasoline ra­ ticable ; and that information collected tioning has been in effect for some time. As a result of these discussions, the As­ and tabulated by any Federal agency sistant General Counsel of the Office of should insofar as is expedient be tabu­ Price Administration wrote a letter to lated in a manner to maximize the use­ counsel for the American Institute of fulness of the information to other Fed­ Accountants, dated September 11, 1942, eral agencies and the public.” The Certified Public Accountant 9

Cost Accounting Procedure for occupations, merely because some draft boards and Selective Service authorities Military Construction may not fully understand the facts. The War Department recently issued Individual draft boards will inevitably Chapter II of its Cost Accounting Man­ differ widely in their interpretation of the ual, relating to military construction. This national policy of Selective Service re­ chapter, prepared by the Fiscal Branch, garding accountants. In some cases ap­ Office of the Chief of Engineers, has been peals from their decisions will be neces­ sary, and as a practical matter, it seems approved by the Commanding General, that the State Director of Selective Ser­ Services of Supply. It is prescribed for vice is the last resort. use by War Department contractors oper­ While National Headquarters (i.e., the ating under cost-plus-fixed-fee contracts, Director of Selective Service) has the and by the Corps of Engineers, for all power to make an appeal to the President types of military construction within the in occupational cases, it is quite clear that United States. Auditing procedures here this will be done only in the most excep­ described apply to all projects initiated tional cases. The State Director seems to after the date of their publication and to be the key point in the administrative the greatest extent possible to projects plan. He has the power to advise draft then in process, subject to the judgment boards, and to appeal to the President from their decisions. It therefore is of the of the Division Engineer. utmost importance that he and his staff fully understand the kind of work which public accountants do, its relation to war Accountants under Selective production and other activity essential Service to support of the war effort, and the type and length of training and experience re­ Following discussions with national Se­ quired to produce a competent public ac­ lective Service officials and further study countant. of the contribution which professional ac­ Some state societies have already countants can make to the war effort, the undertaken to establish this kind of rela­ secretary of the American Institue of Ac­ tionship with the State Director, with countants with the approval of the chair­ considerable success. man of the committee on war activities The entire policy regarding occupa­ sent the following letter to presidents of tional deferment is naturally becoming all state societies of certified public ac­ tighter and tighter as manpower short­ countants on October 22nd: ages become evident. Occupational bulle­ tins issued by Selective Service are be­ In the light of experience of account­ ing continually reviewed and revised in ants with draft boards, and discussions the light of experience, and it seems with federal government officials, it likely that Occupational Bulletin No. 10, seems necessary that State Directors of in which accountants are indicated as Selective Service and their staffs be in­ eligible for occupational classification, if formed personally of the relation of pub­ they are necessary men engaged in essen­ lic accounting to the war effort. tial activities, may be superseded by an­ It must be made clear on all occasions other pronouncement narrowing the group that the profession is not seeking group to which occupational classification may deferment (which is impossible), and has be extended, not only in accounting but no desire to keep any accountant out of in other technical and scientific fields as the Army unless the authorities are satis­ well. fied that he is making a greater contribu­ With this in mind, it becomes of in­ tion to the war effort in his present occu­ creasing importance that whatever na­ pation than he would as a soldier. Our tional policy regarding occupational sole purpose is to avoid so far as possible classification of accountants may be in the drafting of accountants who are mak­ effect at a given time should be admin­ ing greater contributions in their present istered so that those who under that 10 The Certified Public Accountant policy should be kept in essential jobs 3rd, without the approval of the desig­ will actually be kept there. nated administrative agency. Approval The Institute, therefore, urges each is not required, however, for increases state society to make personal contact made in accordance with the terms of a with the State Director and his staff, and salary agreement or salary rate schedule, make every effort to obtain his coopera­ and as the result of one of the following tion in utilizing the accounting manpower of the state in such a manner that the conditions: Nation at war will be best served. The establishment of cooperative rela­ (a) individual promotions or reclassifi­ tions with the State Director may not be cations, a simple task. It will probably not be ac­ (b) individual merit increases with es­ complished by writing a few letters, nor tablished salary rate ranges, by one or a few brief interviews. It may (c) operation of an established plan of be necessary to persist over a period of salary increases based on length of months, with frequent conferences—prob­ service, ably by more than one representative of the state society—in order to bring about (d) increased productivity under incen­ a mutual understanding of the situation tive plans, between the State Headquarters of Selec­ (e) operation of a trainee system, or tive Service and the state society. The status of professional accounting (f) such other reasons or circumstances under Selective Service may be of great as may be prescribed in orders, rul­ importance as a precedent if legislation is ings, or regulations, promulgated adopted later authorizing the transfer of under the authority of the order. civilians from their present occupations to others regarded as more “essential.” It is specified that no increase "shall Any information, advice or assistance result in any substantial increase of the which this office may render your Society level of costs or shall furnish the basis in carrying out the suggestions contained either to increase price ceilings of the in this letter is available on request. commodity or service involved or to re­ P. S.—The October, 1942, issue of The sist otherwise justifiable reductions in Journal of Accountancy contains an article, “Status of Accountants Under such price ceilings.” Selective Service Act,” which interprets Salaries under $5000 as of October 3, the present national policy regarding ac­ 1942, for any particular work, may not countants, and outlines administrative pro­ be decreased below the highest salary cedures related thereto. See also “A Com­ rate paid for such work performed be­ munication to Selective Service,” April, tween January 1, 1942, and September 1942, Journal, page 344, which includes 15, 1942, “unless to correct gross in­ a suggested description of an “essential equities or to aid in the effective prose­ accountant.” cution of the war.” Salaries of $5,000 or more as of October 3rd may be de­ Wage and Salary Stabilization creased, but if the reduced salary is less than $5000, the validity of the decrease On September 27th, regulations ap­ below $5000 shall be determined by pro­ plicable to the stabilization of wages and visions of the order. salaries issued by Economic Stabilization The War Labor Board has jurisdiction Director James F. Byrnes, were approved over the adjustment of all wages and of by the President of the United States. salaries up to $5000 a year, except those In general these regulations, which apply of supervisory or professional employees to all employers of more than eight per­ who are not represented by recognized sons, forbid any increase in a salary of unions. The Treasury Department has $5000 or less, as of October 27th, or a jurisdiction over the adjustment of all salary of more than $5000, as of October other salaries. The Certified Public Accountant 11

In general, the recent order forbids tions under Government Contracts” and payment to any employee of a salary Willard L. Thorp, economist with Dun which, after deduction of federal income and Bradstreet and editor of Dun’s R e­ taxes, would exceed $25,000 for the year view, whose topic was “Post-War Prob­ 1943. Additional payments are permitted, lems of Business.” Coöperating organiza­ under specified conditions, to provide for tions included the American Institute of customary contributions to charity, past- Accountants, the New York State Society due income taxes, premiums on life in­ of Certified Public Accountants, and the surance in effect on October 3, 1942, and National Association of Cost Account­ other fixed obligations existing at that ants through its Brooklyn, Greenwich, date. and New York Chapters. John L. Sullivan, Assistant Secretary of the Treasury, is reported to have stated Accounting in the News on October 29th that doctors, lawyers, and other professional persons employed on A column headed “Investors’ Guide” a full-time basis by private concerns in the Chicago Tribune for October 18th clearly would be subject to these salary carries the following reference to recent regulations, but that the same profes­ activities of the accounting profession sional people, if serving individual clients under the caption “Tentative Reports” : on a fee basis, probably would not. He “Corporate financial statements are be­ acknowledged that there would be many coming more tentative in nature with borderline cases which would have to be each new government wartime restriction determined by investigation. and regulation affecting business. Ac­ countants who prepare the statements have expressed concern over the in­ Technical Valuation Society vestors’ reaction to them. “The American Institute of Account­ The Technical Valuation Society will ants at its recent annual meeting urged hold its annual forum on December 12, members to get every available fact into 1942, in New York City. At the morning corporation statements to reduce the num­ session prominent economists, appraisers, ber of tentative elements. The practice of and valuation engineers will present pa­ taking refuge in footnotes advising stock­ pers and direct discussion on pressing val­ holders that the information is only tenta­ tive was criticized as harmful to the ac­ uation problems, particularly in their re­ counting profession and to the corpora­ lation to the war effort. Following a tion.” luncheon, with guest speakers, the after­ noon session will consist of committee Municipal Audit Requirements in meetings and the annual business meet­ ing of the Society. Further information New Jersey can be secured from the office of the The Local Government Board of New Society, 33 West 39th Street, New York, Jersey recently issued a revised edition of N. Y. the text, Requirements of Audit. This publication contains a specimen audit re­ port, a description of New Jersey’s legal Columbia Accounting Institute audit requirements, and a discussion of The Fourth Accounting Institute, spon­ audit procedures. Although it was pre­ sored by Columbia University, School of pared primarily for the use of registered Business, was held in New York City on municipal accountants in the state, copies October 19th and 20th. Speakers in­ may be purchased by other interested cluded Carman G. Blough, chief of the officials from G. C. Skillman, Supervising War Production Board’s Contract Review Auditor and Secretary, Department of Branch, who discussed “Profit Limita­ Local Government, Trenton. 12 The Certified Public Accountant

qualifications set forth under either 1 or 2 A rm y Specialist Corps below: D iscontinued 1. (A) Has a certified public accountant certificate, or has received a de­ The War Department announced gree from a recognized college on October 31st that the Army Spe­ or university based upon an ac­ cialist Corps had been abolished as a counting major, and separate agency and that it would be merged with the Army Officer Pro­ (B) Has had not less than four years’ experience in accounting or curement System as a part of the auditing work requiring famili­ regular Army. This action, accord­ arity with the general and cost ing to the official announcement, was accounts of industrial concerns. taken in the interest of efficiency, uni­ formity of operations, discipline, and 2. Has had not less than seven avoidance of duplicated effort. It was years of experience in account­ ing or auditing work requiring stated that the civilian specialists, familiarity with the general and numbering more than 1000, who have cost accounts of industrial con­ been appointed since the Corps was cerns, of which not less than initiated in February will be offered three years shall have been while regular Army commissions “with the in the employ of a public ac­ concurrence of the chief of the countant.” branch to which they are assigned for It is not intended that the provisions of duty and if otherwise found quali­ this description shall be applied inflexibly, fied.” but that the circumstances surrounding each individual case shall be carefully studied and that this description shall be State Societies Aid regarded as a guide. It is planned to furnish members of Selective Service the Michigan Association with printed A number of state societies are coop­ copies of this definition and to suggest erating with Selective Service authorities that they be attached to all copies of in their respective states by providing Form 42-A which is a request for occu­ information which may assist draft pational classification by local draft boards in the occupational classification boards. This procedure has been approved of certified public accountants. The by Michigan Selective Service Head­ Michigan Association, for example, quarters. through a special advisory committee The Washington Society has also ar­ on occupational deferment has prepared ranged for representatives to confer with a bulletin addressed to State Selective the Director of Selective Service in that Service authorities which includes the state. following description of an “essential” public accountant. Caution Urged in Corporate “One now rendering public accounting Reports services to industrial concerns engaged in war production or essential to the support The War Department recently re­ of the war effort or public accounting quested companies engaged in war pro­ services concerned with activities essen­ duction to avoid publication of detailed tial to the support of the war effort, who operating statements or reports which either performs such services himself as might reveal rates of production or other a principal or directs or reviews the ac­ information of value to the enemy. The counting work of others and possesses the following recommendations were made: The Certified Public Accountant 13

Sales and costs of sales should be omitted when they would disclose pro­ O. P. A. Sim plifies r e p o r t in g duction rates or totals of specific war items. Forms Sales of war items should be grouped The Office of Price Administration in one gross sum. recently announced simplification of Inventories of raw materials, ma­ the financial reporting forms cur­ terials in process, and finished products rently submitted by about 25,000 should be grouped together. companies on a voluntary basis, pro­ viding information for price-control Terms of war contracts should not be given. studies. The principal modification in these forms is elimination of the Advances on contracts should be requirement for reporting salaries of stated in one amount. individual officers and employees re­ Production processes and new de­ ceiving $25,000 a year or more. As velopments which might affect the con­ an alternative, information is re­ duct of the war should not be disclosed. quested concerning the range of In spite of these restrictions, the War salaries and the number of individ­ Department expressed the opinion that uals whose salaries are within each it would be possible for companies to of several specified classifications. provide sufficient information to meet all Another change in these reporting reasonable requirements of investors, forms, effective January 1st, is a pro­ financial institutions, and stock exchanges. vision in the profit-and-loss schedule for reporting separately charges es­ News from State Boards tablished to provide wartime re­ serves. The State Board of Accountancy of Accomplishments of the W ar Pro­ Arkansas recently elected the following duction Board’s Committee for the officers: Lyle B. Croft, Little Rock, presi­ Review of Data Requests from In­ dent; Walter B. Cole, Fayetteville, secre­ dustry in eliminating and simplifying tary; Asa Standley Fox, Little Rock, W.P.B. forms were summarized in treasurer. the “Current Notes” section of the Mississippi State Board of Public Ac­ November Journal of Accountancy. countancy recently elected the following officers: J. A. Rogers, Jackson, chair­ man; Dick D. Quin, Jackson, secretary; A. D. Morris, Laurel, vice-chairman. Procedure Changed in Membership of New Hampshire Board of Accountancy is as follows: Wage-Hour Enforcement Clarence I. Drayton, Manchester, chair­ To speed enforcement of current com­ man ; Arthur W. Johnson, Durham, secre­ pliance with the wage-and-hour law and tary-treasurer; Robert M. Bruce, Ports­ bring its benefits to workers in more es­ mouth. tablishments, L. Metcalfe Walling, Ad­ Julius E. Flink, Newark, New Jersey, ministrator of the Wage and Hour and has been appointed a member of the New Public Contracts Divisions of the United Jersey State Board of Public Account­ States Department of Labor, announced ants, succeeding James F. Hughes of on October 22nd that he had instructed Jersey City. the field force of the Divisions to confine Don S. Griffth, of Seattle, was recently its inspection activities to the period since elected chairman of the Washington State October 24, 1940, except in cases where Accountancy Examining Committee. John the violation of the act has been flagrant H. Benson, Seattle, was elected secretary. and particularly where there has been 14 The Certified Public Accountant falsification of records. This action does control in flagrant cases or where records not impair the rights of employees not have been falsified. Moreover, in crim­ paid in accordance with the act to sue for inal and litigated cases the payment of double the amount withheld since the ef­ restitution is a matter for the court’s de­ fective date of the act, October 24, 1938, termination which would not be affected plus reasonable attorney fees. It will re­ by my administrative policy.” sult, however, in the Department not seeking “restitution” prior to October 24, Women C.P.A.’s As Revenue 1940, except in cases of flagrant viola­ tion or falsified records. Mr. Walling Agents said: The United States Bureau of Internal “Heretofore much of the time of our Revenue has recently indicated an in­ inspection force throughout the country terest in the possibility of employing has been taken up in making computa­ qualified women certified public ac­ tions of back wages due and in many countants as revenue agents, because of cases this task was complicated by the the limited number of men now available absence of adequate records during the for these assignments. Treasury officials early days of the law. are reported to have said that 5,500 addi­ “The educational and informational tional persons will be required to ad­ work carried on by the Division which minister the 1942 revenue act. started only a month before the law be­ came effective, had not then reached all of the employers in the country in time to promote uniform voluntary compli­ State So ciety N ews ance. While the failure of employers to acquaint themselves with the provisions Michigan Association and the School of this law in no way excuses their of Business Administration of the Uni­ failure to comply nor impairs the rights versity of Michigan were joint sponsors of employees who were not properly paid, of the annual Michigan Accounting Con­ it seriously complicated the administra­ tive work of enforcement. ference, held in Detroit on November 7th. “Our inspections will be limited to Detroit Institute of Technology, Uni­ October 24, 1940, because it was on that versity of Detroit, Wayne University, and date that the standard under the Act, Walsh Institute cooperated in arranging after which overtime must be paid, the program. At morning and afternoon reached 40 hours per week. On the same sessions, prominent members of the pro­ day the present regulations defining ex­ fession discussed income and excess- ecutive, administrative, professional, and profits tax problems, accounting aspects of outside salesmen, as these terms are used price control, and war contracts. The to describe exempt types of employees luncheon speaker was Malcolm W. Din- were promulgated. By October 24, 1940, there was no excuse for any employer gay, editorial director of the Detroit not keeping his records in accordance Free Press, whose subject was “Current with the regulations issued. All of these Events.” The entire conference was considerations prompt this change in our geared to wartime needs of the profes­ inspection procedure. It will expedite the sion, providing accountants with useful work of our inspectors and enable them information applicable to their daily prac­ to cover many more establishments than tice. Staff members and students in would be the case if the practice of go­ accounting schools were invited to attend. ing back to the effective date of the Act were continued.” Maryland Association held its annual The new instructions to the inspection dinner meeting in Baltimore on November force will apply only in case of future 10th. Dr. Joseph J. Klein, New York, inspections, Mr. Walling declared, add­ N. Y., member of council of the American ing, “Of course, this limitation would not Institute of Accountants, spoke on “Fed­ The Certified Public Accountant 15 eral Taxation: Yesterday, Today, Tomor­ Thurston of Indianapolis, Indiana, mem­ row,” emphasizing business problems re­ ber of the committee on federal taxation sulting from the new federal tax law. The of the American Institute of Accountants, program was attended by members of who discussed the new federal tax law. Baltimore chapters of N.A.C.A. and Connecticut Society’s dinner meeting in Robert Morris Associates, and many busi­ New Haven, October 23rd, was addressed ness executives. Montana Society held its by William J. Casey, tax attorney, econ­ annual meeting in Butte, October 22nd omist, and chairman of the Board of and 23rd. Speakers included Dr. Francis Editors of the Research Institute of A. Thomson, president of Montana School America, who discussed “Wartime Prob­ of Mines, and representatives of the lems and the Certified Public Accountant.” federal Internal Revenue Department New York State Society’s meeting on and the Office of Price Administration. November 9th was devoted to the subject West Virginia Society held its annual of state taxation. Speakers were Hon­ meeting in Huntington, October 23rd and orable Abbot Low Moffat, chairman of 24th. Among the speakers was Frederick the Ways and Means Committee of the L. Pearce of Washington, D. C., whose New York State Assembly, whose topic topic was “Federal Taxation.” was “Some Financial Problems Affecting New York State” ; John J. Ronan, Ad­ Massachusetts Society recently an­ ministrative Supervisor of the Income nounced two forum meetings for the dis­ Tax Bureau, who discussed “Some cussion of wartime problems, to be held Aspects of the Unincorporated Business in Boston on November 4th and 18th. Tax” and Benjamin Harrow, chairman At the first of these sessions, the effect of of the Society’s committee on state taxa­ the war on the audit program was con­ tion, who spoke on “Current Decisions sidered with special emphasis on the and Changes in the State Tax Law.” increased volume of work and the reduc­ tion in trained personnel. The second Minnesota Society’s special commit­ session will be devoted to discussion of tee on educational work is sponsoring a special accounting problems arising from series of nine weekly lectures and discus­ the war, including compliance with sions at the University of Minnesota, W.P.B. and O.P.A. regulations and other arranged primarily for new certified pub­ wartime requirements of clients. The lic accountants but open to members and principal speaker at the Utah Associa­ staffs of all public accounting firms. tion’s meeting on October 7th was T. Among the topics listed for presentation Coleman Andrews of Richmond, Virginia, by practitioners are duties of the junior member of council of the American Insti­ accountant, audit programs and working tute of Accountants, who discussed the papers, methods of verification, and pre­ contribution of the accountant to the war sentation of financial statements. Chair­ effort and to post-war rehabilitation. men of New York State Society’s stand­ Colorado Society’s dinner meeting on ing and technical committees, members October 29th was addressed by Lieutenant of the board of directors, and past presi­ Victor E. Troutfetter, US NR, Assistant dents attended a dinner meeting, Septem­ to Supervisory Cost Inspector, Twelfth ber 17th. President J. Arthur Marvin Naval District. Lieutenant Troutfetter’s and vice-presidents Saul Levy and Henry subject was “Allowable Costs Under War A. Horne described the Society’s program Contracts with the United States Govern­ for the ensuing year and prospective com­ ment.” mittee activities. Los Angeles Chapter of California Society recently announced The principal speaker at the November a series of weekly luncheons, sponsored 6th meeting of Kansas City Chapter of by its committee on practice procedure, the Missouri Society was Troy G. for consideration of important new pro­ 16 The Certified Public Accountant visions in the recent federal tax law. on wartime problems. The title of this Tennessee Society’s public relations release is “Scarcity in Staff Assistants committee sponsored a series of three and How to Meet the Problem.” The newspaper articles referring to the new Minnesota Society is considering the 1942 revenue act, discussing the personal possibility of studying existing demands income tax, corporation taxes, new excise for accountants in that state, in co­ taxes, and changes in federal gift and öperation with the University of Min­ estate taxes. New York State Society re­ nesota, and proposing methods of cently distributed Release No. 19 in the alleviating the present shortage of ex­ series prepared by its special committee perienced accounting personnel.

Institute Committees, 1942-1943 E x e c u t iv e C o m m it t e e T. Dwight Williams, Oklahoma The President, Chairman Sidney G. Winter, Iowa The Treasurer C o m m it t e e o n A c c o u n t in g U nder S tate The Vice Presidents H ig h w a y C onstruction C o ntr a c ts T. Coleman Andrews, Virginia J. R. Nelson, Texas, Chairman George D. Bailey, Michigan William E. Baird, Missouri Homer L. Dalton, Ohio L. I. Boone, Kentucky Charles W. Jones, Illinois K. J. Carpenter, Indiana Robert H. Montgomery, New York Aloysius Congdon, Nebraska Rodney F. Starkey, New York Richard C. Kennedy, Ohio C. Oliver Wellington, New York Henry S. Owens, District of Columbia Henry M. Thomson, California C o m m it t e e o n A c c o u n t a n t s ’ L ia b il it y C o m m it t e e o n A r bitr a tio n a n d L ia b il it y I n s u r a n c e J. Percy Goddard, Utah, Chairman Norman J. Lenhart, New York, Chairman Eugene D. Cronk, Missouri Harold B. Simpson, New York Edward J. deVerges, Louisiana Rodney F. Starkey, New York James F. Hughes, New York Mary Ellen Lewis, California C o m m it t e e o n A c c o u n t in g M a c h in e r y William M. Madden, Indiana Hugh E. Wall, Ohio J. Andrew Crafts, New York, Chairman William Whitfield, Oregon H. Ashlin Dykes, Missouri Roland W. Gleason, New York C o m m it t e e o n A u d it in g P rocedure Arno R. Kassander, New York Samuel J. Broad, New York, Chairman Edward Q. Kruchten, Illinois J. N. Aitken, Pennsylvania Percival F. Brundage, New York C o m m it t e e o n A c c o u n t in g P rocedure Fred J. Duncombe, Illinois George P . Ellis, Illinois Walter A. Staub, New York, Chairman Ira N. Frisbee, California George D. Bailey, Michigan P. W. R. Glover, New York Archibald Bowman, New York Edward A . Kracke, New York William D. Cranstoun, New York Norman J. Lenhart, New York William Eyre, New York John A . Lindquist, New York Stephen Gilman, Illinois Frank Wilbur Main, Pennsylvania Anson Herrick, California Victor H. Stempf, New York Henry A. Horne, New York George Wagner, New York Paul K. Knight, New York Edward A. Kracke, New York Com m ittee o n B a n k r u p t c y George O. May, New York Charles S. J. Banks, Illinois, Chairman Warren W. Nissley, New York J. D. Cloud, Ohio William A. Paton, Michigan Orville E. Johnson, Tennessee Maurice E. Peloubet, New York Joseph K. Moyer, District of Columbia Hiram T. Scovill, Illinois Raymond Edward North, New York Francis Small, Pennsylvania Michael Peyser, New York Jackson W. Smart, Illinois Guy M. Scott, Virginia Charles H. Towns, New York Paul R. Smoak, Florida Edward B. Wilcox, Illinois Arthur C. Upleger, Texas The Certified Public Accountant 17

C o m m it t e e o n B udget a n d F in a n c e August J. Saxer, Missouri Rodney F . Starkey, New York, Chairman Edward J. Stegman, Maryland Samuel J. Broad, New York Clarence L. Stone, Washington George P. Ellis, Illinois Virgil S. Tilly, Oklahoma

C o m m it t e e o n B y - l a w s C o m m it t e e o n C o o pe r a tio n w it h Harold A. Mock, Massachusetts, Chairman I n v e s t m e n t B a n k e r s Harry W. Cuthbertson, Ohio Robert C. Brown, Illinois, Chairman Alexander J. Lindsay, Colorado William J. Carter, Georgia Walter A. Musgrave, Connecticut F. F. Hahn, California John A. Peyroux, Louisiana Hubert F. Ravenscroft, Pennsylvania Edwin H. Wagner, Missouri C o m m it t e e o n C o o pe r a tio n w it h B a n k e r s Albert J. Watson, California, Chairman C o m m it t e e of C o o pe r a tio n w it h S .E .C . Kins S. Collins, Michigan J. H. Zebley, Jr., Pennsylvania, Chairman Oscar R. Davis, Oklahoma T. Coleman Andrews, Virginia Arthur C. Droegemueller, Illinois Samuel J. Broad, New York Russell C. Everett, Connecticut Lewis Lilly, California Rene J. LeGardeur, Louisiana Homer N. Sweet, Massachusetts Eustace LeMaster, Washington Harvard L. Mann, Massachusetts C o m m it t e e o n C o o pe r a tio n w it h Vernon J. Moore, Ohio S tock E x c h a n g e s J. M. Neumayer, Missouri Warren W. Nissley, New York, Chairman Warren W. Nissley, New York William H. Bell, New York Charles S. Rockey, Pennsylvania Percival F. Brundage, New York Edward P. Tremper, Jr., Washington William R. Donaldson, New York John F . Forbes, California C o m m itte e o n C o o pe r a t io n w i t h B a r Percy M. Hendrie, Massachusetts Association Walter M. LeClear, Illinois William Charles, Missouri, Chairman Prior Sinclair, New York A. DeWitt Alexander, California Raymond D. Ashman, Ohio C o m m it t e e o n C ooperatives James W. Bartrop, Michigan Lewis Lilly, California, Chairman Hal Canary, Tennessee Clarence H. Benton, Wisconsin F. H. Hurdman, N ew York Walter L. Bradley, New York Clarence L. Johnson, Connecticut John J. Harrington, Massachusetts A. William Morris, Washington Walter A. Musgrave, Connecticut A d rian F. Sanderbeck, Pennsylvania Robert L. Persinger, Virginia Harry J. Williams, Louisiana C o m m it t e e o n E d u c a t io n C o m m it t e e o n C o o pe r a tio n w it h B u r e a u For three years of E c o n o m ic R e se a r c h Carl W. Christiansen, Rhode Island Charles H. Towns, New York, Chairman T. W. Leland, Texas Percival F. Brundage, New York Maurice E . Peloubet, New York For two years Paul K. Knight, New York, Chairman C o m m it t e e o n C o o pe r a tio n w it h Frank Ahlforth, Illinois C o ntroller s' C o n g r ess John A. Lindquist, New York, Chairman For one year Hermon F. Bell, New York Roy B. Kester, New York Francis R. Brodie, Missouri J. P. Friedman, New York C o m m it t e e o n F ederal T a x a t io n J. A. Phillips, Texas, Chairman C o m m it t e e o n C o o pe r a tio n w it h A. DeWitt Alexander, California C redit M e n William L. Ashbaugh, New York Simon Loeb, New York, Chairman Maurice Austin, New York Clinton W. Bennett, Massachusetts William L. Clark, Oklahoma Maurice L. Blanchard, Connecticut Walter A. Cooper, New York Walter C. Burer, Texas James A. Councilor, District of Columbia James B. Carson, Georgia Harry E. Howell, Rhode Island Roland J. Christy, Pennsylvania Charles Melvoin, Illinois E. R. Ellenberger, Ohio Robert Miller, Kentucky Harry Judd, Nebraska Troy G. Thurston, Indiana James A. Rennie, Virginia Louis C. Weiss, Ohio 18 The Certified Public Accountant

C o m m it t e e o n G overnmental A c c o u n t in g Carl W. Lutz, Illinois George P. Ellis, Illinois, Chairman C. F. Milledge, Texas T. Coleman Andrews, Virginia Spencer Over, Rhode Island Fayette H. Elwell, Wisconsin J. Carle Parry, Jr., Pennsylvania G. Charles Hurdman, New York Weldon Powell, California Eric L. Kohler, Illinois Dick D. Quin, Mississippi Elton C. Loucks, Nebraska Anthony J. Yocis, New York Lloyd Morey, Illinois C o m m it t e e o n S tock B rokerage C o m m it t e e o n P u b l ic a t io n A c c o u n t in g F. H. Hurdman, New York, Chairman Murdock N. MacRae, New York, Chairman I. Russell Bush, Pennsylvania Thomas W. Byrnes, New York Percy R. Everett, New York M. Tyndall Hiatt, New York Albert E. Hunter, Massachusetts Robert H. Rissinger, Pennsylvania A. P. L. Prest, New York Walter H. Rohe, Illinois James A . Runser, California C o m m it t e e o n P u b l ic I n f o r m a t io n Frederick S. Todman, New York Victor H. Stempf, New York, Chairman Frederick W. Wulfing, New York Edward A. Kracke, New York Saul Levy, New York C o m m it t e e o n T e c h n ic a l S e s s io n s Stephen Gilman, Illinois, Chairman C o m m it t e e o n P u b l ic U t il it y A c c o u n t in g Donald M. Russell, Michigan Henry A. Horne, New York, Chairman Maurice Stans, Illinois Harry Boggs, Indiana W. M. Coursen, New York C o m m it t e e o n T er m in o lo g y H. W. Goodson, Texas George O. May, New York, Chairman Donald M. Livingston, Pennsylvania Anson Herrick, California J. Arthur Marvin, New York Walter A. Staub, New York Edward J. Murnane, Illinois

C o m m it t e e o n S a v in g s a n d L o a n A c c o u n t s Visitors at Institute Offices Thomas A . Williams, Louisiana, Chairman Denis A. Barry, New Orleans, La. Harry P. Baumann, Illinois G. S. Battelle, Dayton, Ohio Guy A . Douglass, Texas Victor Beckreck, Newark, N. J. Helen H. Fortune, Kentucky Emile Benedict, Prague, Czechoslovakia Theodore Krohn, New Jersey Hyman Besser, Newark, N. J. Emil J. Monde, Connecticut William Blackie, Peoria, Ill. F. Ralph Wheeler, Pennsylvania A. W. Burket, Richmond, Va. Darrell R. Cochard, Cleveland, Ohio C o m m it t e e o n S o cial S ec u r it y A ct John L. Cody, Bridgeport, Conn. F. A. Shallenberger, Maryland, Chairman Stanley A. Frederick, Albany, N. Y. Lee V. Brinton, Texas Spencer Gordon, Washington, D. C. W. Vincent Hall, New York W. L. Grinstead, Kansas City, Mo. Byron Harris, Georgia Henry Knust, Hartford, Conn. Theodore Koos, Pennsylvania E. L. Kohler, Wilmette, Ill. Glenn A. Railsback, Arkansas Arthur H. Lang, Chicago, Ill. John Wiseman, West Virginia John A. Lindquist, New York, N. Y. Oscar Moss, Los Angeles, Calif. C o m m it t e e o n S tate L eg isl a t io n John B. Norberg, Los Angeles, Calif. T. Dwight Williams, Oklahoma, Chairman Walter C. Otto, Clinton, Iowa James L. Benson, Maryland Robert Peck, Washington, D. C. F. Tillman Brownne, Colorado John F. D. Rohrbach, Passaic, N. J. Gilbert F. Dukes, Alabama J. B. Scholefield, Los Angeles, Calif. George H. Emery, North Carolina Eugene Sebulsky, Memphis, Tenn. Samuel W. Eskew, Kentucky Homer N. Sweet, Boston, Mass. Ellsworth Fulk, Nebraska D. L. Trouant, Philadelphia, Pa. Brooks Geoghegan, Georgia Eric P. Van, Portland, Ore. Don S. Griffith, Washington Albert J. Watson, San Francisco, Calif. James E. Hammond, California C. P. White, New York, N. Y. Lyle W. Hines, Minnesota Charles N. Whitehead, San Francisco, Calif. Roland B. Keays, Michigan C. W. Wiendieck, New York, N. Y. Procter H. Kerr, Missouri Daniel A. Young, Glen Ridge, N. J. Theodore Krohn, New Jersey J. I. Young, Decatur, Ill. The Certified Public Accountant 19

Election of Members N e w Y ork C. Ross Bannister, New York A r iz o n a Gregory Drake, New York *Frederick H. Woodward, Phoenix Malcolm S. Kerr, New York *Joseph T. Kropp, New York C a l if o r n ia *Kenneth B. Wackman, New York

*Owen Boal, Los Angeles N orth C a r o l in a *Lloyd G. Smith, Los Angeles *Paul E. Warnick, San Francisco Theodore N . Grice, Raleigh O h io D ist r ic t of C o l u m b ia *Richard Binkowski, Toledo *Gordon D . Horsburgh, Washington *Norwood C. Geis, Cincinnati *William F. Parker, Washington Walter W. Peters, Cincinnati Albert L. Schultz, Akron F lorida *Earl M. Zeigler, Cincinnati O. J. Oosterhoudt, Jacksonville O regon G eorgia *Norman E. Swanson, Portland *Theodore S. Mauldin, Atlanta P ennsylvania H a w a i i George H. Auffort, Philadelphia Robert G. A. Crowe, Honolulu *Wilmot A. Martel, Philadelphia *George Scott, Clearfield I l l in o is *John Ewing Kane, Chicago T e n n e s s e e *David W. Morgan, Peoria *E. Theodore Couch, Memphis *Frank Perry Walker, Rockford T e x a s I n d i a n a *Walter J. Crawford, Houston *Clarence W. Long, Indianapolis William G. Eads, Wichita Falls *Robert M. Trueblood, Peru Robert H. Irving, Jr., Houston *John McBrady, Midland L o u is i a n a Sam A. Merrill, Houston *Jacques A. Livaudais, New Orleans U t a h M assachusetts *James G. Fay, Salt Lake City *Joseph Finer, Boston Herman H. Golding, Boston V ir g in ia *Nathan Paris, Boston Cary W. Burkholder, Richmond

M ic h ig a n W a s h in g t o n Thomas R. Minshull, Muskegon *Edwin P. Allen, Jr., Tacoma *William J. Riley, Detroit

M in n e s o t a State Society Elections *John P. Fitzgerald, Minneapolis *Robert A. Kratt, Minneapolis Iow a Edouard E. Noreen, Minneapolis *Elmer V. Peterson, Brainerd October 10, 1942 President—L. H. Keightley, Sioux City. M i s s i s s i p p i Vice president — Sidney G. Winter, Fred T. Neely, Greenwood Iowa City. Secretary-Treasurer—Ed­ M is s o u r i gar S. Gage, Jr., Mason City. *Ellsworth H. Brown, Kansas City O hio N e b r a s k a *John H. Becker, Omaha September 18, 1942 President—Julian A. Hawk, Dayton. Vice N e w J e r se y president—Robert P. Nelson, Toledo. Philip B. Brooks, Montclair Secretary-Treasurer—Russell S. Will­ *Admitted as associates. cox, Columbus. 20 The Certified Public Accountant

Frank A. Bardeen, of Cleveland, Ohio, State Society of Certified Public Ac­ died March 9, 1942, at the age of 46. He countants, Mr. Pomerantz had been a was born in Otsego, Michigan, and re­ member of the American Institute of Ac­ ceived his early education in Milwaukee, countants since 1937. Wisconsin. He receved the A.B. degree from the University of Wisconsin in 1924 and the M.B.A. degree from Cleveland James Lawrence Ridgway, of New College of Western Reserve University York, N. Y., senior member and founder in 1937. Mr. Bardeen held positions in a of the firm of Patterson and Ridgway, number of accounting firms until 1933 certified public accountants, died on Octo­ when he became an instructor at Dyke ber 31st. Born on Staten Island 77 years School of Commerce, Cleveland, where he ago, Mr. Ridgway was named for an remained until 1937. From 1937 to the illustrious ancestor, Captain James Law­ time of his death he was instructor at rence, naval hero of the War of 1812, John Carroll University, Cleveland. A renowned for his exhortation, “Don’t certified public accountant of Ohio, he Give Up the Ship.” Mr. Ridgway was a was a member of the Ohio Society of vice president and a director of H. Reeve Certified Public Accountants and an as­ Angel & Co., paper merchants; treasurer sociate of the American Institute of Ac­ and a director of Gramager Bros., Inc.; countants. and a vestryman of St. Luke’s Episcopal Church, Brooklyn. He was a director of the Accountants Club of New York and Austin H. Carr, M.A., C.A., Secre­ a member of numerous organizations in­ tary-Treasurer of the Dominion Associa­ cluding the Institute of Radio Engineers, tion of Chartered Accountants and editor American Geographic Society, Naval of The Canadian Chartered Accountant, Militia Veterans, Acanthus Masonic died in Toronto, Canada, October 26th. Lodge, and the Shakespeare Association. Mr. Carr was widely known among mem­ He had been a member of the American bers of the profession in the United Institute of Accountants since 1916. States.

Harry Ruple, of Bronson, Michigan, Morris Pomerantz, of Newark, New died August 7th, at the age of 71. Mr. Jersey, died September 11th as the result Ruple was born in Matteson Township, of an accident. Mr. Pomerantz was born Branch County, Michigan, but, with the in New York, New York, in 1899, and exception of a few years, had lived in received his education in the public Bronson since he was seven years old. schools of this city and at New York He attended business college at Ypsilanti, University. From 1918 to 1925 he held and in 1905 passed the first examination accounting positions in New York, and for certified public accountants ever held in 1925 entered the practice of public in Michigan. After practicing account­ accounting in New Jersey. At the time ing for nearly twenty years, Mr. Ruple of his death he was a partner of Zeitlin, retired, due to ill health. He was a certi­ Pomerantz & Co., in Newark. A certified fied public accountant of Michigan and public accountant of New York and New had been a member of the American In­ Jersey and a member of the New York stitute of Accountants since 1906. Announcements

The following firm announcements have The following notices of appointments and been received recently from members of the elections of members of the Institute have Institute: been received recently. B arrow , W ade, G u t h r ie & Co., New D a v id B erdon, New York, N. Y., is in York, N. Y., announce the admission of charge of the Accountants Division in the Messrs. J o s e p h A. M a l o n e y , T h o m a s J. 1942 campaign of the New York and Brook­ G r e e n , J o se p h B . J a n v r i n , and H e n r y T . lyn Federation of Jewish Charities. K ir k e b y e to general partnership in the firm. F r a n c is R. B rodie and F r a n c is A. E r n s t & E r n s t announce the appointment W r ig h t , Kansas City, Mo., were vice chair­ of H a rry C. B r o w n and R u s s e l l E . D r u m ­ men of the recent local War Chest Com­ m o n d as assistant managers of their Provi­ munity Fund Campaign. dence, R. I., office. M r s. G race A. D im m e r , Detroit, Mich.; The firm o f H art, W a l b u r n & C o m p a n y elected president of the American Woman’s was dissolved on August 31, 1942. Society of Certified Public Accountants at the recent annual business meeting of that E d w i n W a r r e n H art, G eorge W a l t e r s, organization in Chicago. and R obert D. S eagraves announce the W . W aller G rogan, Louisville, Ky., is formation of a partnership under the firm teaching a course in taxation which the name of H art, W a l t er s & S ea g ra ves, with Jefferson School of Law in that city has offices at 1616 Walnut S t., Philadelphia, Pa. recently included in its required curriculum. H arold H. J acobs announces the removal The faculty of the school has previously of his office to room 659, 1060 Broad St., been composed exclusively of practicing Newark, N. J. attorneys. F r a n k H. J o n e s announces the removal E. C. G r u e n , Tonawanda, N. Y., ap­ of his office to 226 Peoples Savings Bank pointed chairman of the finance committee, Bldg., Port Huron, Mich. Erie County Council, Boy Scouts of E. L a n g d o n & S o n , Columbus, Ohio, America. announce the removal of their offices to 626- P a u l R. H agelbarger, Seattle, Wash., is 28 Beggs Bldg., 21 East State S t. state accountant, Office of Price Adminis­ O ver, O r m is t o n & C o m p a n y , Providence, tration. R. I., announce the removal of their offices R ayford W. L e m l e y , Chicago, Ill., re­ to 506-507 Hospital Trust Bldg. appointed a member of the committee on R obertso n, B r o w n and D r u m m o n d , federal taxation, Illinois Bar Association. Albuquerque, N. M., announce the forma­ F red J. P e t e r so n , Des Moines, Iowa, was tion of a partnership with offices at 207 chairman of the auditing committee for the North Third St. Partners are Gid E. recent united Des Moines Community and R o bertson, J a m e s B . B r o w n , L. L eo n a r d War Chest drive. D r u m m o n d , and A. J. G roebner. H a r r y I. P r a n k a r d , 2nd., New York, N. Y.; appointed member of the Navy De­ A l l e n R. S m a r t & Co., Seattle, Wash., announce the admission of E d w ard P. partment’s panel of supervisory auditors. T r em pe r , J r., as a partner in the firm. C h a r l e s W. T u c k e r and N o r m a n H. S. The following books and articles, prepared V in c e n t announce their affiliation in the by Institute members, were recently pub­ firm of C h a r l e s W. T u c k e r & C o m p a n y , lished: with offices at 464 Commonwealth Ave., C la r e n c e L. C oe, Salina, Kan., is joint Boston, Mass. author of Regulation W —H ow to Use It, by R obert J. W a l k e r and W il l ia m R . Cook and Coe, published by Cook & Cook, R ogers announce the formation of a part­ Concordia, Kan. nership under the firm name of W a l k e r , Peter Guy Evans, New York, N. Y., is R ogers & C o m p a n y , 405 Dickson Bldg., a co-author of the 1943 edition of For Per­ Norfolk, Va. sonal Income Tax, by Evans and Halperin. 21 22 The Certified Public Accountant

H e n r y B. F e r n a ld , in an article entitled O. W. D ie h l , Decatur, Ill., addressed “Paying for the War,” published early in Illinois Association of Park Districts, at October in the Washington (D. C.) Post Evanston, on “Preparation of Annual Appro­ and the Houston (Texas) Post, referred to priation and Tax Levy Ordinance.” the federal revenue bill then pending and to H ow ard C. G reer, Indianapolis, Ind., ad­ tax problems generally. dressed the American Meat Institute, Chi­ H e n r y T. M a s c h a l , San Francisco, Calif., cago, on management’s needs from the is the author of a series of articles on accounting department. “Hotel Accounting and Control” published J. A. H a w k , Dayton, Ohio, addressed in the Western Hotel Reporter. Beta Alpha Psi Chapter at Miami Uni­ Perry Mason, Berkeley, Calif., is the versity, Oxford, Ohio, on “Present Day author of Fundamentals of Accounting, pub­ Accounting Problems and Opportunities.” lished by Foundation Press, Chicago. W i l l i a m J. von Minden, New York, H e n r y T. M a s c h a l , San Francisco, N. Y., is a co-author of Introductory Calif., addressed two meetings of the Cali­ Accounting, by Kennedy, Esterly, and von fornia State Hotel Association on “Current Minden, published by the Ronald Press. Readjustments in Hotel Operation” and “Have You Surveyed Your Hotel?” N ic h o l a s P ic c h io n e of Providence, R. I., The following addresses were delivered re­ addressed the Stationers Square Club of cently by members of the Institute: New York on “The Negative Side of the M a u r ic e A u s t i n and W a lter A . C ooper, Ruml Plan.” New York, N. Y., recently discussed “The A. L. S c h n e id e r , Pittsburgh, Pa., ad­ Federal Revenue Act of 1942” at the dressed the Business Club of Allegheny weekly wartime symposium conducted by the Y.M.C.A. on “Higher Education” and Du­ New School for Social Research. M r. Cooper is also one of the lecturers participating in a quesne Chapter of Beta Alpha Psi on series of discussions of the new excess-profits “Problems Ahead.” tax law currently being conducted by the F r a n k E. S e id m a n addressed the Amer­ Practising Law Institute, New York, N. Y. ican Meat Institute, Chicago, and the Na­ W il l ia m A. C o c h r a n , Cleveland, Ohio, tional Tax Association, Cincinnati, on cooperated with D a l e B l a c k , certified pub­ “Wartime Taxation.” lic accountant, of that city in discussing E. A r nold S u n s t r o m , Knoxville, Tenn., “1942 Income Taxation” at a meeting of the addressed the Eastern Tennessee Power Greater Cleveland Council, Smaller Business Accountants Association on “Accounting of America, Inc. Problems of Distribution of T.V.A. Power.”

CHAS. FRANCIS PRESS, INC. NEW YORK CITY THE C e r t ifie d Public A c c o u n t a n t

A Bulletin of The American Institute of Accountants

D e c e m b e r , 1942

OPA Rulings

War Program Committees

1943 Annual Meeting Committees

Possible Delay in Annual Statements

Michigan Selective Service Bulletin

Restrictions on Office Machinery

SEC Requires Brokers’ Reports

Gasoline Rationing

15¢ a Copy Published Monthly $1 a Year

V ol. 22 N o. 12

COPYRIGHT 1942 BY AMERICAN INSTITUTE PUBLISHING CO., INC PAMPHLETS FOR DISTRIBUTION Public Information Accounting and Your Pocketbook (Orders of less than ten, 5¢) ...... 2¢ Financial Statements — What They Mean...... 1¢ Please Check Your Account...... per hundred — 35¢ The Natural Business Year — Its Advantages to Business Management...... 3¢ Auditing Examination of Financial Statements by Independent Public Accountants.. . 15¢ Competitive Bidding for Audit Engagements...... 1¢ Accounting Research Bulletins No. 1 — General Introduction and Rules Formerly Adopted...... 10¢ No. 2 — Unamortized Discount and Redemption Premium on Bonds Re­ funded ...... 10¢ No. 3 — Quasi-Reorganization or Corporate Readjustment — Amplification of Institute Rule No. 2 of 1934...... 10¢ No. 4 — Foreign Operations and Foreign Exchange...... 10¢ No. 5 — Depreciation on Appreciation...... 10¢ No. 6 — Comparative Statements...... 10¢ No. 7 — Reports of Committee on Terminology...... 10¢ No. 8 — Combined Statement of Income and Earned Surplus...... 10¢ No. 9 — Report of the Committee on Terminology...... 10¢ No. 10 — Real and Personal Property Taxes...... 10¢ No. 11 — Corporate Accounting for Ordinary Stock Dividends...... 10¢ No. 12 — Report of Committee on Terminology...... 10¢ No. 13 — Accounting for Special Reserves Arising Out of the W ar...... 10¢ No. 14 — Accounting for United States Treasury Tax Notes...... 10¢ No. 15 — The Renegotiation of War Contracts...... 10¢ No. 16 — Report of the Committee on Terminology...... 10¢ No. 17 — Post War Refund of Excess Profits T ax...... 10¢ No. 18 — Unamortized Discount and Redemption Premium on Bonds Re­ funded (Supplement) ...... 10¢ Statements on Auditing Procedure No. 1 — Extensions of Auditing Procedure...... 10¢ No. 2 — The Auditor’s Opinion on the Basis of a Restricted Examination. . 10¢ No. 3 — Inventories and Receivables of Department Stores, Instalment Houses, Chain Stores, and Other Retailers...... 10¢ No. 4 — Clients’ Written Representations Regarding Inventories, Liabilities, and Other Matters...... 10¢ No. 5 — The Revised S.E.C. Rule on ‘‘Accountants’ Certificates” ...... 10¢ No. 6 — The Revised S.E.C. Rule on “Accountants’ Certificates” (continued) 10¢ No. 7 — Contingent Liability under Policies with Mutual Insurance Companies 10¢ No. 8 — Interim Financial Statements and the Auditor’s Report Thereon... 10¢ No. 9 — Accountants’ Reports on Examinations of Securities and Similar Investments under the Investment Company Act of 1940...... 10¢ No. 10— Auditing Under Wartime Conditions...... 10¢ No. 11— The Auditor’s Opinion on the Basis of a Restricted Examination (No. 2 ) ...... 10¢ No. 12 — Amendment to Extensions of Auditing Procedure...... 10¢ No. 13 — The Auditor's Opinion on the Basis of a Restricted Examination (No. 3)—Face Amount Certificate Companies...... 10¢ No. 14 — Confirmation of Public Utility Accounts Receivable...... 10¢ Complete set of 18 Accounting Research Bulletins and 14 Statements on Auditing Procedure ...... $1.60 American Institute of Accountants

Activities of the Month Institute of Accountants on December 9th, Henry E. Mendes was elected chair­ George P. Ellis, vice president of the man for the current fiscal year. The American Institute of Accountants, ad­ Board also discussed the May, 1943, ex­ dressed the St. Louis Chapter of Missouri aminations. Society of Certified Public Accountants, The committee on auditing procedure November 19th, on “Auditing under War considered an agenda of twenty items at time Conditions.” a meeting in New York on November 13th. Victor H. Stempf, vice president of Publication of two additional bulletins the American Institute of Accountants in the series of statements on auditing and chairman of the committee on pub­ procedure was authorized. These bulletins lic information, is quoted at length in a will discuss reserves of face-amount cer­ feature article entitled “Companies Study tificate companies, and confirmation of Tax Loss on Properties Hit by War,” public-utility accounts receivable, respec­ which appeared in the November 27th tively. Proposed bulletins on the follow­ issue of the New York Journal of Com­ ing topics were referred to subcommittees merce. This article is based upon an in­ for revision: reference in the auditor’s terview in which the writer asked Mr. report to consistency of accounting prin­ Stempf how corporations which have ciples, the auditor’s position with respect suffered losses to foreign properties, as to illegal and improper transactions of a result of the war, should interpret and clients, case studies in inventories, and apply relief provisions of the 1942 Fed­ the phrase “on the authority of such firm eral Revenue Act. as experts,” as generally used in A-2 James L. Dohr, director of research of registration statements. The committee the American Institute of Accountants, agreed to give further consideration to the addressed New Haven (Connecticut) following subjects : uncertainties in finan­ Chapter of N.A.C.A., November 24th, on cial statements resulting from wartime probable postwar accounting problems. conditions, confirmation of government George N. Farrand, research assistant receivables, and omission of physical in­ of the American Institute of Accountants, ventories in war plants. and C. Oliver Wellington, chairman of The committee on accounting procedure the committee on priorities and alloca­ is reviewing a proposed amendment to tions, attended a conference sponsored by SEC’s Regulation S-X, relating to plant WPB’s New York-Northern New Jersey accounts in consolidated balance-sheets of regional office on November 24th for the public-utility holding companies. This purpose of explaining the operation of committee is also considering whether the the Controlled Materials Plan. This pro­ new Series C tax notes, issued by the cedure, scheduled to replace the Produc­ United States Treasury, are properly sub­ tion Requirements Plan, will be described ject to the accounting treatment suggest­ in an early issue of The Journal of A c ­ ed for tax notes of Series A and Series B countancy. in Accounting Research Bulletin No. 14, At an organization meeting of the published in January, 1942. Other topics Board of Examiners of the American currently receiving the attention of the 1 2 The Certified Public Accountant committee are whether “V” loans may be C o m m i t t e e o n P r i o r i t i e s a n d properly regarded as current liabilities, A l l o c a t i o n s and corporate problems resulting from C. Oliver Wellington, Chairman, N. Y. the New York State dividend law. A . D. Strandberg, New York. The Institute’s advisory committee on F. H. Hurdman, New York. investment-company accounting discussed C o m m i t t e e o n A c c o u n t i n g a n d with representatives of the Association S t a t i s t i c a l R e p o r t s b y I n d u s t r y of Investment Companies, on November C. Oliver Wellington, Chairman, N. Y. 30th, SEC release No. 36, accounting George Cochrane, New York. series, relating to interest received on Warren W. Nissley, New York. bonds in default. Results of this discus­ sion were transmitted to the Institute’s C o m m i t t e e o n P r i c e C o n t r o l committee on accounting procedure. George P . Ellis, Chairman, Illinois. The committee on federal taxation, at W. R. Donaldson, New York. a meeting in New York on November Harry E. Howell, Rhode Island.

23rd, discussed recent changes in tax C o m m i t t e e o n A c c o u n t i n g M a n p o w e r legislation and problems in tax adminis­ John A . Lindquist, Chairman, N. Y. tration. Leland G. Sutherland, Dist. of Col. The committee on cooperation with the Frank Wilbur Main, Pennsylvania. Securities and Exchange Commission met with members of the Commission, The chairman of the committee on gov­ the chief accountant, and the assistant ernment audit of contractors’ costs has chief accountant, in Philadelphia on discussed current problems with repre­ November 18th. Several broad problems sentatives of government agencies. The of mutual interest to the SEC and to the chairman of the committee on methods accounting profession were informally of limiting war profits, with the secre­ discussed. tary of the Institute, conferred December 4th at Washington with several govern­ American Institute War Program ment officials dealing with contract re­ The executive committee of the Ameri­ negotiation. can Institute of Accountants, at its meet­ ing on November 9th, adopted a new war Members of the Institute in War activities program which is described in Activities the December issue of The Journal of Accountancy, beginning on page 536. Ivan D. Allred, Wichita Falls, Texas— To assist in the execution of this pro­ First Lieutenant, U. S. Army, 8th gram, the following committees have been Corps Area. appointed by the president of the Insti­ Joseph B. Baerncopf, Indianapolis, Ind.— tute to continue the work of the general Supervising Auditor, Cost and Audit committee on war activities which has Division, Office of Procurement and been dissolved: Material, Ninth Naval District. Martin Lee Black, Jr., Durham, N. C.— C o m m i t t e e o n M e t h o d s o f L i m i t i n g Associate Chief Accountant, Office of W a r P r o f it s Victor H. Stempf, Chairman, N. Y. Price Administration. George D. Bailey, Michigan. Fred A. Burgoyne, Portland, Ore. — Prior Sinclair, New York. Second Lieutenant, Anti-aircraft Ar­ tillery, Army of the U. S. C o m m i t t e e o n G o v e r n m e n t A u d i t o f Charles J. J. Cox, New York, N. Y.— C o n t r a c t o r s ’ C o s t s George D. Bailey, Chairman, Michigan. Lieutenant (J. G.), Supply Corps, U. S. Rodney F. Starkey, New York. Naval Reserve. Assistant to the Super­ Charles W. Jones, Illinois. visory Cost Inspector, Fourth Naval Donald M. Russell, Michigan. District. The Certified Public Accountant 3

Walter J. Goggin, Jamaica Plain, Mass.— OPA Rulings and Interpretations Vice President and Treasurer, New England Aircraft Schools, Inc. En­ A new pamphlet assembling digests of gaged in training airplane mechanics important rulings interpreting the Gen­ for the U. S. Army Air Force. eral Maximum Price Regulation has re­ Chester Martin, Liberty, N. Y.—Princi­ cently been issued by OPA in coopera­ pal Auditor, Reconstruction Finance tion with the Office of War Information. Corporation, assigned to Defense Plant This manual, described as OPA-1146, Corporation. supplements an earlier edition issued in L. Clifford Myers, Williamsport, Pa.— August. Although interpretations on Office of the Supervisory Cost Inspec­ which the text is based are subject to tor, Fourth Naval District. reconsideration and revision, they reflect John S. Roth, Hartford, Conn. — Lieu­ the opinion of responsible officials at the tenant, U. S. Navy. time when they were issued. M. A. Simionescu, Teaneck, N. J.—Cost Proprietors of all businesses now sub­ Auditor, Army Air Corps. ject to price control under Maximum Edward M. Stewart, Denver, Colo.—Ap­ Price Regulation No. 165—Services are prentice seaman, U. S. Navy. required to preserve current records of Robert Sutro, Los Angeles, Calif.—Cap­ the type which they customarily keep, tain, 7th Motorized Division, U. S. under amendment No. 10 to that Regula­ Army. tion, effective December 3rd. Service Paul E. Tierney, Boston, Mass.—Asso­ businesses which may become subject to ciate Administrator for State of Mas­ the Regulation in the future will be re­ sachusetts, on War Savings Staff of quired to preserve such records from the Secretary of the Treasury. date when it applies to their operations. Harry H. Wade, Iowa City, Iowa—Cap­ tain, Coast Artillery. Printers and publishers whose annual Norman E. Webster, New York, N. Y.— sales of price-controlled products and Chief Supervising Auditor, Third services are less than $75,000, or less Naval District. (Mr. Webster replaces than 20 per cent of their total sales, may Prior Sinclair, resigned.) be exempted from OPA requirements for Ralph A. Young, Springfield, Mass. — filing financial reporting forms A and B Major, U. S. Army. after an appropriate review of the cir­ cumstances. OPA asks each printer or publisher to acknowledge its initial in­ Sons of Institute Members quiry for financial information by sub­ with the Armed Forces mitting the data requested or a letter in­ dicating the basis on which exemption James W. Bontems, Jr., U. S. Army Air is claimed. Such a letter should state Force; and Edward E. Bontems, U. S. that the company’s gross sales of products Naval Reserve (sons of James W. and services not subject to price control Bontems, Los Angeles, Calif.). are less than $75,000 or less than 20 per A. Gordon Bowman (son of Archibald cent of its total sales. Bowman, New York, N. Y.)—Lieu­ tenant, Adjutant General’s Department, U. S. Army. Gasoline Rationing William F. Loflin, Jr., Corporal; and Since nationwide gasoline rationing be­ Robert L. Loflin, Staff Sergeant (sons came effective on December 1st, a num­ of William F. Loflin, Columbus, Ga.). ber of inquiries have been received at E. A. Markwalter (son of Victor Mark­ Institute headquarters concerning its ap­ walter, Augusta, Ga.)—Naval Train­ plication to public accountants. An offi­ ing School. cial opinion on this question appears in 4 The Certified Public Accountant the text of a letter from the assistant in the term “accountants” as used in this general counsel of OPA to counsel for bulletin. It points out that the Michigan the Institute, reproduced on page 379 of Association of Certified Public Account­ The Journal of Accountancy for October, ants has been advised that individual 1942. certified public accountants or accounting The letter states that a. public account­ firms, when submitting to local boards ant is entitled to supplemental rations if requests for occupational deferment, he can show that he is a worker or tech­ should include on Form 42-A a compre­ nician traveling to industrial, extractive, hensive statement of the registrant’s em­ or agricultural establishments essential ployment. to the war effort (as specified in the The memorandum lists the names and regulations) for purposes necessary to addresses of members of the special ad­ the operation or functioning of such es­ visory committee on selective service tablishments or facilities; or that he is appointed by the Michigan Association a technician who requires the use of a and states that this committee is fully passenger automobile to perform highly cognizant of its obligation to Selective skilled services necessary to the opera­ Service and its responsibility, under the tion or functioning of such establish­ high ethical standards imposed by the ments or facilities. If a local ration profession, to present objectively and im­ board reaches a conclusion different from partially all available facts in any given that of the applicant for supplemental claim for deferment. The bulletin in­ rations, an appeal may be made to the dicates that occupational advisors, acting state ration board. Some public ac­ for the state Selective Service authorities, countants in eastern states have been will use the facilities provided by this granted supplemental rations under the committee and urges local boards to adopt regulations. the same procedure. A brief article entitled “Gasoline Ra­ The Michigan Association of Certified tioning,” on page 8 of T h e C e r t i f i e d Public Accountants has sent copies of P u b l i c A c c o u n t a n t for November, this Selective Service memorandum to all quotes the text of a letter from the sec­ members, with a letter from its special retary of the Institute to presidents of all advisory committee on occupational de­ state societies suggesting that it may be ferment summarizing the committee’s desirable for representatives of each so­ activities on behalf of the membership ciety to discuss the situation with state and enclosing the following items: rationing authorities, in the hope of es­ tablishing a uniform policy as a guide to 1. Bulletin addressed to state Selective rationing boards. Service authorities containing a state­ ment of the committee’s objective, the relation of public accountants to the Michigan Selective Service war effort, a description of the “es­ Issues Bulletin on Accountants sential accountant,” and a discussion of the existing shortage of “essential Michigan State Headquarters for accountants.” Selective Service issued on November 12th Memorandum M-417 on the subject 2. Suggested procedures to be followed of “Classification of Public Accountants,” in filing claims for occupational de­ addressed to local draft boards, boards ferment on Form 42-A. of appeal, and government appeal agents. This memorandum cites Occupational 3. Summary of regulations governing appearances before local board, re­ Bulletin No. 10, issued in June by na­ opening classification, and appeals. tional headquarters of Selective Service, and the subsequent ruling that account­ 4. Summary statement as to the basis ants in public practice are included with­ for occupational deferment. The Certified Public Accountant 5

5. Questionnaire form to be filed with come and excess-profits-tax problems have the Michigan Association’s commit­ placed a severe strain upon available ac­ tee, containing information with counting personnel. respect to registrant for whom oc­ Reference is made in his communica­ cupational deferment is being claimed. tion to the persistent effort of the account­ This will serve as the basis for the committee’s recommendation to Selec­ ing profession to solve these wartime tive Service. problems by recruiting and training new personnel and by spreading auditing work Copies of the memorandum, with the throughout the year. Relief which can be enclosures listed above, have been dis­ obtained from these sources, however, is tributed by the American Institute of inadequate to permit the completion of Accountants to presidents of all state auditing work within the usual period societies of certified public accountants, after the year-end. Emphasis is placed for their information, upon the conviction of the accounting profession that there should be no relaxa­ Shortage of Accountants tion of standards of professional work May Delay Annual Statements and that established auditing procedures should be maintained. The chairman of the committee on au­ Regulations of the New York Stock Ex­ diting procedure of the American Insti­ change now provide that listed companies tute of Accountants, in a recent letter must file annual reports to stockholders at to the acting director of the department least fifteen days in advance of their an­ of stock list, New York Stock Exchange, nual meetings and not more than three asked the Exchange to modify its require­ months after the close of their fiscal years. ments concerning the period within Approximately 75 per cent of all listed which annual meetings of listed compan­ companies keep their accounts on a calen­ ies must be held and annual reports and dar-year basis. audited financial statements issued. This In response to a previous communica­ request was made because of the increas­ tion from the committee on auditing pro­ ing shortage of accountants, in the em­ cedure last Spring, the Exchange indi­ ploy of corporations whose securities are cated that, if the manpower situation in listed on the Exchange and on the staffs the accounting profession should become of public accounting firms which audit as critical toward the end of the calendar their books and records, due to Selec­ year as then seemed likely, an appropriate tive Service and to the requirements of modification of its regulations would be government war agencies for experienced considered. Acknowledging the Institute’s accountants and auditors. recent communication, the Exchange The communication points out that agreed to extend the time limit for issu­ many listed companies are now engaged ance of formal annual reports to stock­ in the production of war materials or holders under specified conditions. other essential goods and services. These activities have required conversion of productive facilities, new plant construc­ Restrictions on Office Machinery tion, increased payrolls, and other adjust­ An amendment to the War Production ments incidental to the manufacture of Board’s General Limitation order L-54-c, new products. In addition, government further restricting production and sale control over inventories of scarce mate­ of office machinery, was issued on No­ rials, record-keeping and reporting re­ vember 11th. Items subject to this order, quirements under widespread government as amended, are classified according to regulations, auditing requirements under the following groups: government contracts, contract renegotia­ List A: Machines which may not be tion, and the complexities of federal in­ manufactured after December 31, 1942, 6 The Certified Public Accountant

except that assembly of parts into fin­ SEC Rule Requires ished machines may continue for one year. This list includes adding machines, Brokers’ Reports microfilm machines, shorthand-writing The Securities and Exchange Com­ machines, time-stamp machines and col­ mission, on November 27th, announced lateral equipment. the adoption of Rule X-17 A-5, requir­ List B : Machines which may be pro­ ing all registered brokers and dealers, duced throughout 1943, subject to quota and members of national securities ex­ limitations. Purchase and manufacture changes who do business with the public, of new parts for these machines are to file annual reports of their financial limited to 25 per cent of total production condition. These reports must be pre­ quotas from June 1, 1942, to December sented on a standard form which has been 31, 1943. Parts for new calculating or developed through discussions among computing machines cannot be purchased the SEC staff and representatives of a or fabricated after March 31st. Included number of other organizations, including are accounting, bookkeeping, billing, ad­ the American Institute of Accountants. dressing, calculating and computing, This rule describes certain circumstances punch-card-tabulating, and time-record­ under which the reports must be certi­ ing machines and collateral equipment. fied by an independent accountant and List C : Machines which may be manu­ describes qualifications required of the factured only to fill approved purchase certifying accountant and the informa­ orders. In this classification are dictat­ tion to be included in his certification. ing machines and payroll-denominating Although the new regulation became ef­ machines. fective immediately upon its announce­ List D : Machines which may not be ment, reports need not be filed before manufactured under any circumstances. January 1st. These items include autographic reg­ isters ; equipment for handling cash, coins, and checks; envelope machinery; Typewriters Called to the Colors postal-permit-mailing; and stamp-affixing machines. The Army, Navy, and key war agen­ Purchasers have been warned that ap­ cies need 600,000 more standard type­ plications for restricted items will not be writers, built since January 1, 1935, ac­ considered unless “full utilization” of cording to a recent announcement by the existing equipment can be demonstrated. War Production Board. Since the pro­ duction of typewriters practically ceased Mortgage Bankers on October 31st, most of this equipment must be secured from business organiza­ Endorse Tax Integration tions. It is estimated that 2,400,000 ma­ Legislation providing for a Commis­ chines of the type required are now in sion on Tax Integration to study local, use. One quarter of them are needed by state, and federal tax systems with a the government. view toward eliminating duplication, Typewriters will be purchased from sponsored by Representative Coffee of private owners who offer them by the Washington, will be supported by the Procurement Division of the Treasury Mortgage Bankers Association of Amer­ Department. A standard trade-in allow­ ica, according to a recent announcement ance has been established, based on the by its president, following a vote by the manufacturer’s trade-in allowance as of Association’s membership. This an­ February 1, 1941. Dealers in new and nouncement asserted that more than 165,­ used typewriters have been designated by 000 government units with taxing power the Treasury as official United States could be reduced by 90 per cent. Typewriter Purchase Depots and are per­ The Certified Public Accountant 7 mitted to display appropriate insignia. Austin H. Carr The dealer is instructed to issue to the seller an official Treasury Procurement The November issue of this bulletin Division receipt and to affix to the type­ included a brief notice of the sudden writer a label reading “Property of the death, on October 26th, of Austin H. U. S. Government—severe penalty for Carr, Secretary-Treasurer of the Do­ minion Association of Chartered Ac­ unlawful use.” countants. In recognition of the services which Mr. Carr had rendered to the pro­ Payroll Savings Plans fession of accounting, the executive com­ Nearly two million more workers mittee of the American Institute of pledged part of their earnings for the Accountants adopted the following reso­ purchase of War Savings Bonds, in lution at its meeting on November 6th: October, increasing the total number “R e s o l v e d , The Executive Committee participating in payroll savings plans to of the American Institute of Accountants has learned with the deepest regret of 23,300,000. During that month $287,­ the death of A. H. Carr who as secretary 000,000 or 7.7 per cent of total earnings, of the Dominion Association of Chart­ was devoted to the purchase of war bonds ered Accountants had made a substantial on this basis. The Treasury Department, contribution to the development of cordial in cooperation with leaders of manage­ relations between the accountancy pro­ ment and labor, initiated on November fession in Canada and in the United 16th a campaign to increase the number States. Mr. Carr, as a frequent visitor of participants in payroll-savings plans at annual meetings of the American In­ to 30,000,000 and to increase deductions stitute, and as a gracious host to officers authorized for bond buying to more than of the American Institute at meetings of 10 per cent of payrolls, before the end the Dominion Association, had won the of the year. esteem and regard of many members of the profession in the United States. “The Executive Committee is also WPB Grants AA-1 Rating aware of his loyal and untiring efforts for Essential Repairs as secretary of the Dominion Associa­ tion, and editor of the Canadian The Requirements Committee of the Chartered Accountant, to the advance­ War Production Board has authorized ment of his profession in his own coun­ application of the top priority rating— try, and realizes the extent of the loss AA-1—to “essential repairs and main­ which the Dominion Association has suf­ tenance.” This ruling, which becomes ef­ fered in losing him. The Executive Com­ fective as a basic policy in the first mittee hereby extends its sincere sym­ quarter of 1943, relates to essential re­ pathy to Mr. Carr’s family and his pairs and maintenance for productive professional associates.” facilities, utilities, housing, and con­ sumers’ durable goods. Its objective is to permit vital factories, mines, refineries, OPA Form Q-20 and other industrial facilities to continue Doubt has recently been expressed con­ effective production of both munitions of cerning the nature and purpose of Form war and essential civilian goods. Com­ Q-20, issued by OPA. Information re­ munication and transportation systems, ceived from OPA headquarters reveals and facilities for distribution of gas, oil, that this questionnaire which requests in­ and water are assured of materials re­ formation constituting profit-and-loss quired in the performance of their essen­ statements for corresponding months of tial functions. Companies wishing to consecutive years, based on existing ac­ apply this rating must secure the ap­ counting records and practices, has been proval of their WPB district office. sent to about 200 oil companies. 8 The Certified Public Accountant

Institute on Federal Taxation Revenue Act of 1942 A series of lectures by tax authorities, Applied to Investment Companies accompanied by informal discussions, de­ The National Association of Invest­ scribed as the Institute on Federal Taxa­ ment Companies recently issued a nine­ tion, was conducted by the Division of teen-page pamphlet entitled “The Revenue General Education, New York Univer­ Act of 1942; Its Application to Invest­ sity, November 30th to December 11th. ment Companies.” This text summarizes As this bulletin goes to press, advance general provisions of the Act applicable registration for this program totals more to investment companies; reprints Sup­ than 150 accountants, lawyers, and tax plement Q (Sections 361 and 362) of the specialists from 17 states. Treasury De­ Internal Revenue Code, referring to reg­ partment representatives participating in ulated investment companies, as amended the program included the Hon. Randolph by section 170 of the 1942 Act; defines a E. Paul, general counsel, and Stanley S. “regulated investment company” and Surrey, associate tax legislative counsel. other relevant terms. While the supply Thomas Tarleau, until recently legisla­ lasts, copies are available on request to tive counsel to the Treasury Department, members of the American Institute of Ac­ was also one of the speakers. Members countants. of the American Institute of Accountants included among the lecturers were New York City Manual Maurice Austin, Walter A. Cooper, Peter Guy Evans, Benjamin Harrow, J. K. of Accounts Lasser, Leo Mattersdorf, Max Rolnik, The office of the Comptroller of New Nathan F. Ross, Isidor Sack, Paul D. York City recently issued a publication Seghers, and Clarence L. Turner. entitled Manual of Accounts, supple­ menting the Manual of Expenses pub­ American Accounting Association lished in July, 1941. Reflecting Comp­ troller McGoldrick’s belief that the object Cancels Annual Meeting basis of municipal accounting permits Because of the war, the American Ac­ more effective budgetary control than the counting Association has canceled its an­ use basis, the supplement lists additional nual meeting which is usually held shortly objects of expenditure. Provision is after Christmas. Several social science made for charging each specific object to groups, which normally meet at the same a single expense account on the basis of time, have also canceled their programs its nature or major purpose. This theory this year. is applied as consistently as possible, with deviations permitted only when major Directory of War Agencies distortion in the accounts would result. A bulletin entitled “Directory of War Manual on Agencies,” issued by the War Service Accounts Receivable Loans Division of the Chamber of Commerce of the United States, lists names and American Bankers Association’s Bank addresses of federal government agencies Management Commission recently issued participating in the war program to­ Commercial Bank Management Booklet gether with field offices of a number of No. 25, for the purpose of explaining these agencies. Copies of this directory to bankers credit requirements and op­ are available without charge from the erating procedure involved in lending on War Service Division, Chamber of Com­ accounts receivable. Topics discussed in merce of the United States, Washington, this manual include notification and non­ D. C. notification plans, examination of appli­ The Certified Public Accountant 9 cations, determining amount of loan, Canadian Taxation rates, forms, appraisal of the borrower, procedure for the borrower, credit ap­ and Salary Control provals, internal-operations report of A brief review of taxes imposed under collections, verification of accounts, the Canadian Income War Tax Act and audits of the borrower’s books and rec­ the Excess Profits Tax Act, together with ords, and service charges. a condensed description of the Canadian Wartime Salaries Order, introduced No­ Texas Accountants Assist vember 27, 1941, has recently been pre­ Victory Fund Committee pared by the Society of Chartered Ac­ countants and the Chartered Accountants At a meeting with representatives of Students’ Society of the Province of the Victory Fund Committee for the Quebec. Copies are available from that Eleventh Federal Reserve District, San organization, 430 Canada Cement Build­ Antonio accountants agreed to cooper­ ing, Montreal, at a price of twenty-five ate in the distribution of Tax Savings cents. Notes to the extent of becoming familiar with the advantages of these securities as an investment and discussing their Iowa Society Bulletin purchase with clients in appropriate cir­ "Volume 1, Number 1” cumstances. "The Bulletin” of the Iowa Society of Certified Public Accountants made its NEMA Distributes first appearance in November, bringing Institute Reprints to the number of twenty-seven the peri­ odical publications now issued by state The National Electrical Manufac­ societies. turers Association recently distributed to its entire membership reprints of two papers presented at the fifty-fifth annual Annual Meeting Committees meeting of the American Institute of The following committees have been Accountants: “Renegotiation of Contract appointed to arrange the details of the Prices,” by Dr. T. H. Sanders, and “Fact fifty-sixth annual meeting of the Ameri­ Finding for War Department Price Ad­ can Institute of Accountants, to be held justment Board,” by Lieutenant Colonel at the Hotel Waldorf-Astoria, New York, Morris C. Troper. N. Y., October 18-21, 1943:

Practising Law Institute C o m m i t t e e o n M e e t i n g s Tax Lectures William B. Franke, New York, Chair­ man The Practising Law Institute, New Ralph H. Galpin, New York York, initiated on November 10th a Alvin R. Jennings, New York series of nine lectures analyzing the new Raymond E. North, New York. excess-profits-tax law for lawyers, ac­ Robert H. Prytherch, New York countants, and others engaged in tax Committee on T echnical Sessions work. Among the lecturers participating Stephen Gilman, Illinois, Chairman in this program are Walter A. Cooper, Donald M. Russell, Michigan member of the committee on federal Maurice H. Stans, Illinois taxation of the American Institute of Committee on Credentials Accountants; Harold Dudley Greeley, Chester W. DeMond, New York, Chair­ editor, and member of the Columbia Uni­ man versity faculty; and Howe P. Cochran, Walter N. Dean, New York author of several volumes on taxes. Joseph Getz, New York 10 The Certified Public Accountant

Publications Relating to the War Inspection Bulletin Treas. 1-4 1 ; TD 5000, Treasury Regulations Relating to The following list of pamphlets and Excess Profits on Contracts for Naval books, referring to various wartime ac­ Vessels and Army and Navy Aircraft. counting problems, has been compiled by Washington, D. C., Navy Department, the library of the American Institute of Bureau of Supplies and Accounts, Jan­ Accountants for the convenience of read­ uary 1941. 26 mimeographed pages. ers of this bulletin. It is not exhaustive United States War Department. and includes none of the numerous maga­ Manual for Administrative Audit of zine articles on this general subject Cost-Plus-a-Fixed-Fee Supply Contracts. which have recently appeared. August 14, 1942. Washington, Govern­ ment Printing Office, 1942. 44p. United States War Department. Corps Pamphlets. of Engineers. Cost Accounting Manual; prepared in the Office of the Chief of American Institute of Accountants. Engineers, revised September 15, 1938. Wartime Accounting 1942; papers pre­ Fort Humphreys, D. C., Engineer Re­ sented at the fifty-fifth annual meeting of production Plant ( 1938). 69p. and ap­ the American Institute of Accountants. pendices. 1942. 182p. United States War Department. American Management Association. Office of the Chief of Engineers. Cost New Accounting Techniques for War Accounting Manual; Chapter II, Mili­ Conditions; by Albion R. Davis, Walter tary Construction. Washington, D. C., A. Staub, and George W. Patterson. War Department, Office of the Chief of New York, American Management As­ Engineers, October, 1942. sociation, cl942, 31 p. (Financial Man­ War Production Board. Explanation agement Series No. 69.) of Principles for Determination of Costs American Management Association. Under Government Contracts. War De­ Wartime Problems of Financial Ex­ partment—Navy Department. Washing­ ecutives; by Roscoe Seybold, Harry E. ton, Government Printing Office, 1942. Howell, Bert H. White, Robert N. Miller, 26p. and Walter A. Cooper. New York, American Management Association, War Production Board. Priorities and Industry. Washington, D. C., War Pro­ cl942. 51p. (Financial Management Series No. 70.) duction Board, Division of Information, August, 1942. 84p. Chamber of Commerce of the United States. War Service Division. Directory of War Agencies, June 15, 1942. Wash­ Books ington, D. C., Chamber of Commerce of Bollinger, Lynn L. Financing Defense the United States, 1942. 49p. (War Orders. New York, McGraw-Hill Book Service Bulletin, No. 61.) Company, Inc. 1941. 172p. Metropolitan Life Insurance Company, Crum, William Leonard; Fennelly, John Policyholders Service Bureau. Subcon­ F .; Seltzer, Lawrence Howard. Fiscal tracting for Defense. New York, Metro­ Planning for Total War. New York, Na­ politan Life Insurance Company. 67p. tional Bureau of Economic Research, National Association of Manufac­ 1942, 358p. turers. N .A .M . Handbook on War Pro­ Lawrence, W. B. Cost Accounting for duction. New York, National Association War Production. New York, Prentice- of Manufacturers, Aug. 1942. 184p. Hall, Inc., 1942. 350p. United States Maritime Commission. Research Institute of America, Inc. Regulations Prescribing Method of De­ War Economics Division. Government termining Profit; adopted May 4, 1939, Contract Problems. New York, Research by the United States Maritime Commis­ Institute of America, Inc., cl942. sion, including amendments and annota­ Research Institute of America, Inc. tions to September 1, 1941. 23p. War Economics Division. Wartime Pur­ United States Navy Department, chasing Procedures. New York, Re­ Bureau of Supplies and Accounts. Cost search Institute of America, Inc. 1942. The Certified Public Accountant 11

of taxation and other technical wartime Sta te So ciety N ews problems. Certified public accountants from all parts of the state were luncheon State Society Elections guests of Atlanta Chapter. Representa­ tives of the Treasury Department, State Montana Department of Revenue, and members October 23, 1942 of NACA attended the meeting, at the President—B. F. Holcomb, Livingston. invitation of the State Society. Vice president—William B. Finlay, New York State’s annual upstate ac­ Great Falls. Secretary-Treasurer — counting conference, sponsored jointly by R. L. Watkins, Helena. Buffalo, Rochester, Syracuse, and Al­ bany Chapters was held in Syracuse, De­ O klahom a cember 5th. At the morning session, Car­ October 29, 1942 man G. Blough, chairman of the Contract President—John T. Steed, Ardmore. Review Section, Procurement Policy Di­ First vice president—A. W. Cory, Ok­ vision of the War Production Board, dis­ lahoma City. Second vice president— cussed “Renegotiation of Government L. Clark Hawkins, Tulsa. Secretary— Contracts” from the point of view of the H. O. Reyburn, Tulsa. Treasurer—F. government, J. Arthur Marvin, president Graham Smith, Okmulgee. of the New York State Society, described his own experience in renegotiation. In West Virginia the afternoon, Maurice Austin, chairman October 24, 1942 of the Society’s committee on federal President—Linwood T. Holt, Hunting­ taxation, and Vincent H. Maloney, a ton. First vice president—H. S. Hut­ member of that committee, discussed the zell, Wheeling. Second vice president “Revenue Act of 1942.” The dinner —Okey K. Hayslip, Huntington. Sec­ speaker was Andrew B. Trudgian of New retary—M. C. Paterno, Charleston. York, N. Y., attorney at law, whose sub­ Treasurer—J. Earl Beatty, Charleston. ject was “Problems under Economic Sta­ bilization Orders.” Ohio Society’s federal tax committee New York State Society, in announc­ sponsored a federal tax conference in ing a prize essay contest, offers three Columbus, December 4th and 5th. The prizes in the amounts of $150, $100, and primary purpose of this program, con­ $50, respectively, for essays on a subject sisting of five informal round-table ses­ of interest to the accounting profession sions, was to familiarize Society mem­ and suitable for publication in The New bers with essential features of the new York Certified Public Accountant. Con­ tax law and to provide an opportunity for testants must submit their entries on or general discussion of those provisions of before June 1, 1943, and comply with special interest to public accountants. conditions listed in the November issue of The New York Certified Public Mississippi Society’s annual fall meet­ Accountant. ing on December 12th was addressed by William L. Clark of Tulsa, Oklahoma, a New Jersey Society held a special tax member of the committee on federal tax­ meeting arranged by its committee on ation of the American Institute of Ac­ taxation, November 27th, based on the countants, who discussed the new federal theme “The 1942 Tax Changes.” Five revenue law. tax experts presented brief “down-to- earth” discussions of the following Georgia Society held its semiannual topics: new excess-profits-tax provisions, meeting in Atlanta, November 20th. The new income-tax provisions affecting in­ entire program was devoted to discussion dividuals, new income-tax provisions af­ 12 The Certified Public Accountant fecting corporations, new estate-tax pro­ Utah Association’s November meet­ visions, and new rulings referring to ing featured a round-table discussion of pension trusts. the revenue act of 1942. Three discus­ Illinois Society’s dinner meeting on sion leaders considered the individual in­ December 15th was addressed by Troy G. come tax, the corporation tax, and the Thurston of Indianapolis, a member of the excess-profits tax, respectively. committee on federal taxation of the Louisiana Society’s meeting on No­ American Insitute of Accountants. Mr. vember 19th was addressed by Charles E. Thurston discussed recent developments Dunbar, Jr., attorney at law, whose sub­ in federal taxation, with special reference ject was “The History and Status of to tax problems of companies engaged in Federal Tax Legislation as It Affects war production. Community Property States.” The presi­ Minnesota Society’s dinner meeting dent of Louisiana Society has appointed on November 30th was addressed by four a committee consisting of Thomas A. Wil­ speakers who discussed various aspects liams and Otis J. Chamberlain to discuss of recent legislation referring to indi­ with state Selective Service authorities vidual taxes, corporate income taxes, ex­ the status of certified public authorities cess-profits taxes; and possibilities of tax with respect to deferment. refunds. Harry C. Huston, Chief of the Iowa Society, through a recent con­ Income Tax Division, Treasury Depart­ tribution from Major I. B. McGladrey, ment, and William G. Burkman, Director has established a fund for accounting re­ of the Income Tax Division, Minnesota search. Tax Department, were the Society’s guests. Philadelphia Chapter of Pennsyl­ vania Institute was addressed on Octo­ Oregon State Society’s meeting on ber 20th by Richard Sheehan, Supervis­ November 18th featured a report by a ing Auditor, War Department, Army Air special committee appointed to study “the Forces, for the Philadelphia area. His biggest tax bill in history,” with every subject was “Principles Governing Selec­ member of this committee taking part. tive Audit Procedure.” Presentation of the report was followed by a general round-table discussion of Dallas Chapter of Texas Society problems anticipated as a result of recent conducted a tax clinic for members and changes in federal tax law. Portland their staff assistants on November 17th, members of NACA and the Controllers 18th, and 19th. Special emphasis was Institute attended. placed upon recent revisions in individual District of Columbia Institute, at its and corporate income taxes and excess- November 16th meeting, entertained as profits taxes. guests of honor Brigadier General Ar­ thur H. Carter, United States Army; Visitors at Institute Offices Commander Normal Loyall McLaren, United States Naval Reserve; and Col­ Elbridge A. Bollong, Boston, Mass. onel Andrew Stewart, United States Walter L. Bradley, Buffalo, N. Y. Oliver P. Cobb, Memphis, Tenn. Army. General Carter and Commander Harold V. Duckworth, New York, N. Y. McLaren spoke on the contribution of Percy R. Everett, New York, N. Y. accountants to the war effort. Stephen Gilman, Chicago, Ill. A. I. Grade, Chicago, Ill. Maryland Association’s program on Howard Jackson, Richmond, Va. December 8th featured an address on Ralph E. Mayers, New York, N. Y. “Renegotiation of War Contracts” by Thomas W. Miller, Baltimore, Md. Carman G. Blough, Chief, Contract Re­ John B. Norberg, Los Angeles, Calif. L. A. Ryan, Richmond, Va. view Branch, Procurement Policy Divi­ Edgar C. Salvesen, Berkeley Heights, N. J. sion, W ar Production Board. Homer N. Sweet, Boston, Mass. The Certified Public Accountant 13

Election of Members Robert C. Irving, New York Arthur W. Patterson, New York C a l i f o r n i a Morris Shindler, New York * Masten Spencer, Benicia Bernard E. Singer, New York * George E. Stacey, San Francisco * Philip L. Steers, Jr., New York Connecticut Samuel M. Stuckgold, New York Frederick R. Newport, Bridgeport *John L. Titus, New York F lo r id a †Jackson McC. Viol, New York George W. F. Dandelake, Gainesville O h io I l l i n o i s Raymond F. Scholl, Cleveland * William J. Stull, Chicago * Frederick M. Vaughan, Cincinnati Morton F. Swift, Chicago O k l a h o m a I n d ia n a *R. C. Norwood, Jr., Oklahoma City Manuel S. Cassen, Indianapolis O r e g o n Frank Higginbotham, Bloomington *John B. Taylor, Portland K a n s a s Pennsylvania *Oscar F. Belin, Wichita *Harold T . Bail, Philadelphia * Owen W. Markel, Salina John S. Cowing, Philadelphia *Bert H. Rush, Wichita Russel S. Hunsberger, Philadelphia L o u i s i a n a * Harry J. Mergner, Philadelphia * Cyril F. Hoormann, New Orleans South Carolina * Henry J. Winters, Jr., New Orleans Bradford E. Anderson, Summerville M i n n e s o t a T e n n e s s e e * Stanley L. Flesher, Minneapolis James C. Davis, Nashville Lawrence C. Miller, Rochester *David H. Hirsberg, Nashville * Francis D. Scott, Minneapolis * D. L. Lewis, Jr., Chattanooga M ississippi *Donald Montgomery, Knoxville *Alton G. Sadler, Columbus Meyer Winer, Chattanooga M is s o u r i T e x a s *Fletcher W. Carter, Jr., St. Louis *Joseph H. Dohm, Dallas *James W. Clark, St. Louis *A. M. Ewing, Fort Worth * Theodore H. Fenske, St. Louis V ir g in ia *Harry K. Sandhagen, St. Louis Francis L. Worcester, Richmond L . Ray Schuessler, St. Louis W a s h i n g t o n New Hampshire Emmett S. Harrington, Seattle Leonard D. Riccio, Manchester * Philip A. Huey, Seattle N e w J e r s e y *Bert W . Lockhart, Seattle * Franklyn S. Weinberg, Newark *John W. Soha, Seattle N e w Y o r k *James D. Chapman, New York * Admitted as associates, * Charles J. Eisen, New York † Advanced to membership.

John C. Coffin, of Clarksville, Ten­ Hugh L. Dickerson, of Richmond, nessee, died September 19th, at the age Virginia, died November 20th at the age of forty-six. He attended the University of forty-eight. Mr. Dickerson was born of Michigan at Ann Arbor, and the in Summerset County, Maryland, and re­ United States Naval Academy at An­ ceived his early education in Salisbury, napolis, Maryland. Mr. Coffin was asso­ Maryland. He was graduated from the ciated with Price, Waterhouse & Co. Salisbury College of Business. For a from 1919 to 1927, when he joined the while Mr. Dickerson lived in South staff of S. S. Kresge Company. At the America, where he was engaged in ac­ time of his death he was with the En­ counting work with a mining firm. In gineer Office of the War Department, in 1924 he went to Richmond, where he Clarksville. A certified public accountant founded the firm of Hugh L. Dickerson & of Michigan, Mr. Coffin had been a mem­ Co., public accountants, which he headed ber of the American Institute of Ac­ at the time of his death. Mr. Dickerson countants since 1931. was a certified public accountant of Vir­ 14 The Certified Public Accountant

ginia and a past president of the Virginia country he was graduated from Packard Society of Public Accountants. He had Commercial School in New York, and been a member of the American Institute in 1922 received the B.C.S. degree from of Accountants since 1936, and was on New York University School of Com­ the Institute’s committee on membership merce, Accounts, and Finance. Mr. Kon­ from 1939 to 1941. doleon held accounting positions in vari­ ous firms until 1929 when he went into David L. Grey, of St. Louis, Missouri, practice for himself. He was a certified died November 5th, at the age of sixty- public accountant of New York, and a seven. Mr. Grey was born in Edinburgh, member of the American Institute of Scotland, and was educated at George Accountants since 1936. Watson’s College and at Edinburgh Uni­ versity. He served his apprenticeship to Daniel A. Murray, of Milwaukee, A. & J. Robertson, chartered accountants, Wisconsin, died October 10th, at the age Edinburgh, and was admitted a member of fifty. He was born in Milwaukee of the Society of Accountants in Edin­ where he attended Marquette Academy, burgh in 1899. He came to this country and Marquette University. Mr. Murray in 1900, and joined the staff of Price, held accounting positions in a number of Waterhouse & Co., of St. Louis, in 1903. firms in Milwaukee and Chicago. At the In 1914 he was made a partner of the time of his death he was tax consultant firm and remained in charge of the St. with Arthur Young & Co. of Milwaukee, Louis office until a few years ago when where he had been since 1921. A certi­ he retired. He was a former president fied public accountant of Wisconsin, Mr. of the Missouri Society of Certified Pub­ Murray had been a member of the Ameri­ lic Accountants and served on the Mis­ can Institute of Accountants since 1935. souri State Board of Accountancy. Mr. Grey also held CPA certificates from the Herbert Wilson, of Philadelphia, states of Arkansas, Louisiana, Missis­ Pennsylvania, died suddenly on October sippi, New York, and Texas. He had 3rd at the age of fifty-four. He was a been a member of the American Institute graduate of Pace Institute in Washing­ of Accountants and predecessor organi­ ton, D. C., a member of the staff of zations since 1903, and served on the Brookings Institution from 1923 to 1932, Institute’s council from 1923 to 1928; and was assistant chief, Division of Es­ also on the committee on nominations timates, Bureau of the Budget, from 1932 and several other committees. to 1934. At the time of his death Mr. Wilson was associated with the Securi­ Anthony E. Kondoleon, of Forest ties and Exchange Commission in Phil­ Hills, New York, died October 22nd, at adelphia. He was a certified public ac­ the age of forty-eight. He was born in countant of North Carolina, and had Kythira, Greece, where he received his been an associate of the American In­ early education. After coming to this stitute of Accountants since 1926. Anno uncements

The following firm announcements have G e o r ge R. P o o le of Raleigh, N. C., an­ been received recently from members of the nounces the removal of his office to 1111 Institute: Insurance Bldg.

G eo r g e H . A b b o t t an d L . C l a r k H a w ­ W i l l i a m F. R o b in s announces that J o h n W . C r e e d k i n s announce the change of their firm name is now associated with him in the to A b b o t t & H a w k i n s , with offices in the practice of public accounting under the firm Beacon Bldg., Tulsa, Okla., and in the Cot­ name of R o b in s & C r e e d , with offices at 606 ton Exchange Bldg., Dallas, Texas. Bearinger Bldg., Saginaw, Mich. H a r o l d J. B e a i r s t o and C. N i c h o l a s J . J . S e l l e r s has become a member of the P r i a u l x announce the dissolution of the tax department in the New York office of P e a t , M a r w i c k , M i t c h e l l firm of R e e v e , B e a i r s t o & Co. and the con­ & Co. tinuation of their practice under the firm S e w a r d a n d M o n d e of New Haven, Conn., name of B e a r i s t o & Co., with offices at 50 announce the admission of C o n r a d S o d e r ­ East 42nd St., New York, N. Y. b l o m to partnership in the firm. C. A. B r o w n & C o m p a n y of Roanoke, V a ., R a l p h E. T h o r n announces the opening a n d R. L. Persinger & Company of Coving­ of an office to practice under his own name ton, Va., announce the consolidation of their at 40 Worth St., New York, N. Y. accounting practice and the association with T o u c h e , N i v e n & Co. announce the ad­ them of C h e s t e r J. S t u l l as a member of mission to partnership of E d w a r d L . P i t t , their staff. who will continue to direct the Cleveland J o h n H. E l d r id g e announces the removal office of the firm as resident partner. of his offices to Mills Tower, 220 Bush St., W o l f a n d C o m p a n y announce the open­ San Francisco, Calif. ing of an office at 342 Pine St., Williams­ E r n s t & E r n s t announce the appointment port, Pa., and the acquisition of the account­ G e o r g e K e l l y L a n e of and S. H. as assis­ ing practice of L. C l if f o r d M y e r s who is tant managers of their Minneapolis-St. Paul now attached to the Office of the Supervisory offices. G o r d o n D. S i m o n s , formerly in tax Cost Inspector, Fourth Naval District. and accounting practice in Kansas City, Kan., has joined the Minneapolis-St. Paul The following notice of appointment has organization of the firm. been received recently from a member of the H a a s & S c h l e s i n g e r o f New York, N. Y., Institute: announce the change of the firm name to J . E . M i t c h e l l of Newark, N. J ., has H a a s , S c h l e s i n g e r & M a y e r s . been appointed a member of the Newark H a r e , S c h e n c k & C o m p a n y of Philadel­ War Price and Rationing Board and chair­ phia, Pa., announce the admission of L e e K. man of the Fuel Panel of the Board. C a r r to partnership in the firm. F r a n k H. J o n e s of Port Huron, Mich., The following books and articles by mem­ announces the removal of his office to 226 bers of the Institute have recently been Peoples Savings Bank Bldg. published: O l d h a m , G o u w e n s & S w e e n e y announce the removal of their offices to One North P r o f e s s o r A. C. Littleton, Urbana, Ill. : LaSalle St., Chicago, Ill. Directory of Early American Public Ac­ P e a t , M a r w i c k , M i t c h e l l & Co. an­ countants. University of Illinois, Urbana. nounce the admission to partnership of 39 pages. Bureau of Economic and Business L e o n a r d P a r k , who will remain in the Research; Bulletin Series No. 62. Cleveland office of the firm. Mary E. Murphy, New York, N. Y.: J. A. P h i l l i p s C o m p a n y of Houston, “Wartime Concentration of British Indus­ Texas, announce that T h e o d o r e W. M o h l e try,” Quarterly Journal of Economics (Har­ has been admitted to partnership in the firm. vard University), November, 1942. W a y n e E. P o l l a r d announces the removal Robert Penn, Chicago, Ill. : “This System of his offices to 1010 Rockford Trust Bldg., Saves Posting,” The Modern Hospital, Oc­ Rockford, Ill. tober, 1942.

15 16 The Certified Public Accountant

W a l t e r A. S t a u b , New York, N. Y.: the individual taxpayer. Mr. Lasser recently Auditing Developments During the Present addressed the New Jersey Foundrymen’s Century. Harvard University Press, Cam­ Association on current tax problems. bridge, Mass. 99 pages. 1942. $1.25. T. W. L e l a n d of College Station, Texas, Fladger F. Tannery, Arlington, Va.: on October 27th addressed the Houston Con­ “Examination of Accountants,” Southwestern trol of the Controllers Institute of America Social Science Quarterly, September, 1942. on the subject, “Use of Accounting Data for Managerial Decisions.” The following addresses were delivered re­ Marvin McCarty, Boise, Idaho, repre­ cently by members of the Institute: senting the Idaho Society of Certified Public W a l t e r A. C ooper, of New York, N. Y., Accountants, explained the 1942 federal rev­ addressed the New York School for Social enue act at the annual taxation luncheon of Research October 20th on “The Revenue the Boise Retail Merchants Association. Act of 1942.” Dick D. Quin, Jackson, Miss., addressed J. M. Cunningham of New York, N. Y., the Jackson Association of Life Insurance recently addressed the New Jersey State Underwriters on “The Revenue Act of 1942 League of Municipalities on “Some Unusual —Its Effect upon Life Insurance,” end the Aspects of the Comptroller’s Office, City of local Kiwanis Club on “Changes in the Rev­ New York.” enue Act of 1942.” H e n r y B. F e r n a ld , New York, N. Y., ad­ O t t o C. S c h w e n k , Birmingham, Mich., dressed the Federal Tax Forum in that city addressed the National Time and Motion on “Depletion and Related Problems under Study Clinic of the Industrial Management the Revenue Act of 1942.” He also discussed Society, in Chicago, on “Time Standards an recent tax legislation at a meeting of the Important Tool in Estimating War Con­ Drop Forge Association, in Chicago. tracts.” David Himmelblau, Chicago, Ill., ad­ M. L. S e id m a n , New York, N. Y., dis­ dressed the Chicago Association of Credit cussed recent developments and prospects in Men on “The Biggest Tax Bill in Our His­ federal taxation at a meeting of the Asso­ tory.” ciation of Customers Brokers. R o b e r t T. K n i g h t , Tacoma, Wash., dis­ E d w a r d B. W i lc o x , Chicago, Ill., ad­ cussed the new federal tax law at a noon dressed a joint meeting of the American forum conducted by the local chamber of Woman’s Society of Certified Public Ac­ commerce. countants and the American Society of Wo­ J. K. L a s s e r , New York, N. Y., is dis­ men Accountants on “Current Trends in cussing income taxes in a series of weekly Accounting.” radio broadcasts over NBC’s blue network. G e o r g e D. W olf, Jr., of Chicago, Ill., re­ This series began on November 12th and will cently addressed the American Surgical continue for an indefinite period. Its pur­ Trade Association at Chicago on “Analysis pose is to simplify income-tax problems for of Annual Surveys 1937-1941.”