Accounting Historians Notebook

Volume 16 Number 1 Spring 1993 Article 19

Spring 1993

Accounting historians notebook, 1993, Vol. 16, no. 1 (spring) [whole issue]

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Part of the Accounting Commons, and the Taxation Commons

Recommended Citation (1993) "Accounting historians notebook, 1993, Vol. 16, no. 1 (spring) [whole issue]," Accounting Historians Notebook: Vol. 16 : No. 1 , Article 19. Available at: https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19

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Vol. 16, No. 1 ©Academy of Accounting Historians Spring, 1993 HALL OF FAME HISTORY CONFERENCE: A REPORT by Thomas J. Burns The Ohio State University The Academy held its annual research Lybrand); Yuji Ijiri (Carnegie-Mellon conference on "U.S. Accounting History: University); Charles T. Horngren (Stanford 1965-1990," an Accounting Hall of Fame University); Robert K. Mautz (Universities of symposium co-sponsored with The Ohio State Illinois and Michigan); Herbert E. Miller University (where the Hall is located) on (Michigan State University and University of November 20-21, 1992. The conference Georgia); Maurice Moonitz (University of consisted of three panel discussions; each one California); and David Solomons (London on U.S. accounting history from a different School of Economics and the Wharton School, perspective: academic, industrial, and profes­ University of Pennsylvania), the 1992 Hall sional. The distinguished panelists who helped inductee. Other panelists included the current create much of this history included ten CFO's of five large corporations: Eugene Accounting Hall of Fame members: Robert Flegm (General Motors); Gaylen Larson Anthony (Harvard University); Norton (Household International); Michael Sullivan Bedford (University of Illinois); Sidney (Sun Oil); Christopher Steffen (Honeywell); Davidson (University of Chicago); Philip and John Quindlen (DuPont). Panelists from DeFliese (Columbia University and Coopers & continued on page 23

The Accounting Historians Notebook, Spring, 1993 1 Published by eGrove, 1993 1 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 PRESIDENT'S MESSAGE ACADEMY COMMITTEES AND TASK FORCES The Academy year began with a productive start. The response to my request for committee participation was enthusiastic. All respondents were assigned to a committee of their choice. The committees have begun their tasks. In addition to the committees, two task forces have been named. The Centers Task Force is chaired by Richard Vangermeersch and is to evaluate options, risks, opportunities, and costs of operating the Academy-sponsored Centers now and in the future. The Strategic Organizational Task Force, chaired by Gary Previts, is to begin a study involving changing principal organizational functions of the Academy. 1980s). Some of the books are classics. Other Committees and task force chairs are to donations have come from Don Adams prepare a. preliminary report for the April 24 (AICPA), Stan Halper (Coopers & Lybrand), meeting of the Trustees, Officers, and Key and Robert Parker (historian for EDPAA). members in Atlanta. A complete list of Tommie is entering the contents of the committees and charges may be found collection into a computerized data base. elsewhere in this newsletter. Additional space has been requested in the ACADEMY MEETINGS planned new School of Accountancy building The Trustees, Officers, and Key Members at the University of Mississippi to house this have established that the agenda for the collection. Academy meetings this year should be as MAJOR ADDITION TO THE follows: Spring Meeting - strategic planning; VIDEOTAPE LIBRARY August Meeting - urgent business; and the The Videotape Library housed at The Fall Meeting - committee reports. The date University of Mississippi contained approxi­ and location of the Spring Meeting was chosen mately 50 tapes which featured interviews to coincide with the Southeast Regional with major accountants. These tapes are loaned Meeting of the AAA. The Fall Meeting will be out all over the world. Recently, Gerald held at the conclusion of the Conference on Searfoss of Deloitte & Touche arranged to have Biographical Research in Accounting to be 127 videotapes of the Dingell Commission held at the University of Mississippi on hearings donated to the Library. Dale Flesher December 3-4, 1993. A call for papers may be is the director of the Videotape Library. found in this newsletter. CONFERENCE ON BIOGRAPHICAL NATIONAL ARCHIVE FOR RESEARCH IN ACCOUNTING EDP AUDITING The highlight of the Academy year will be Another very exciting event in the life of the Conference on Biographical Research in the Academy occurred at the beginning of Accounting held at the University of 1993. A doctoral student at the University of Mississippi on December 3-4, 1993. The Mississippi, Tommie Singleton, has been purpose of this conference is to focus on the involved in an extensive research project importance of studying and assessing the locating early materials written about EDP influence of individuals on the development of auditing. He has interviewed the pioneers in accounting thought and practice. Please refer the field and asked them to donate their to the call for papers in this edition of the materials to a National Archive for EDP newsletter. The major airlines serve the Auditing to be housed at the University of Memphis International Airport which is Mississippi and sponsored by the Academy of slightly over an hour away from Oxford. Accounting Historians. Several donors have Transportation will be available on campus at made contributions of materials. The Academy the Alumni Hotel. More details regarding financed a trip and the rental of a truck to arrangements will follow. All Academy collect materials from Harold Weiss. Many of members are encouraged to submit papers and the documents are rare and include papers attend the Conference. from the Big Eight firms (1950s through Tonya Kay Flesher

2 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 2 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 CALL FOR PAPERS CONFERENCE ON BIOGRAPHICAL RESEARCH IN ACCOUNTING UNIVERSITY OF MISSISSIPPI DECEMBER 3-4, 1993 SPONSORED BY THE ACADEMY OF ACCOUNTING HISTORIANS

Statement of Purpose: The purpose of butions to the development of accounting this conference is to focus on the thought and institutions. The reason for importance of studying and assessing the this preference is that the conference is a influence of individuals on the prelude to the 1996 CPA Centennial development of accounting thought and program headed by James Don Edwards. A practice. The papers and the discussion will noninclusive list of possible candidates for include methodologies and assessment of biographical study whose lives have not the impact of individuals on the been extensively documented follows: development of accounting. Richard Baker Ralph C. Jones Andrew Barr Robert K. Mautz Conference Structure: Papers selected for Norton Bedford Herbert E. Miller presentation will be sent to participants in Harry C. Bentley Maurice Moonitz advance. Proceedings will not be published. Donaldson Brown Mary Murphy Editors of several academic journals plan to Percival F. Brundage Thomas A. Murphy attend. Papers which illustrate the use of Charles Coachman Weldon Powell biography or show the influence of an Sidney Davidson John W. Queenan individual on the profession of accountancy Carl Devine Earl A. Saliers are welcome. A. C. Ernst J. S. Seidman S. Paul Garner Charles E. Sprague Format: Papers must be in a form suitable Oscar Gellein Joseph E. Sterret for consideration by The Accounting Stephen Gilman Kenneth Stringer Historians Journal. Paul Grady Robert Trueblood Charles W. Haskins William Werntz Selection Panel: The panel that will select Henry R. Hatfield Arthur Wyatt the papers for the conference include: Ralph Johns Thomas J. Burns—The Ohio State University Doris Cook—University of Arkansas James Don Edwards-University of Georgia Submission Instructions: Submissions Eugene Flegm-General Motors Corporation should be postmarked by June 30, 1993. Dale L. Flesher-University of Mississippi Revised papers must be received by Gary J. Previts—Case Western Reserve University October 31 for prior distribution. Alfred R. Roberts-Georgia State University Inquiries and submission of papers to: Richard Vangermeersch—University of Rhode Island Tonya K. Flesher School of Accountancy Suggested Topics: Although biographical University of Mississippi subjects from throughout the world are University, Mississippi 38677 welcome, preference will be given to papers about U.S. academic and CPA practitioners Telephone: (601) 232-7468 who have made unique and valuable contri- Fax: (601) 232-7483

The Accounting Historians Notebook, Spring, 1993 3 Published by eGrove, 1993 3 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 SCHEDULE OF ACADEMY THE PACIOLI SEMINAR FUNCTIONS 1994 AND FESTIVAL OF AUGUST 8, 1993 ACCOUNTING San Francisco Marriott Hotel The Institute of Chartered Accountants of MEETING OF THE TRUSTEES AND OFFICERS Scotland (ICAS) is sponsoring a one-day Pacific Suite A Festival of Accounting in Edinburgh. Two themes of "Measurement, Mismeasurement, 8:30 - 9:00 a.m. Continental Breakfast and Stewardship" and "Accounting and 9:00 - 12:00 noon Reports and Discussion Information Technology" are the bases for 12:00-1:00 p.m. Lunch this Festival. This program will be held on March 4, 1994 in conjunction with the An agenda will be mailed to you in July, Netherlands Institut van Register- 1993 regarding the meeting. For accountants. There will also be an exhibition information, call Dr. Doris Cook, demonstrating the accountant's historical University of Arkansas, (501) 575-4051. and contemporary role in society. The Festival will be attended by leading PAST PRESIDENT'S DINNER accountants, business executives, and Redwood government officials. 6:00 - 8:00 p.m. The Academy has agreed to co-sponsor a one-day history seminar, Pacioli Seminar

SECOND ANNUAL ACADEMY OF 1994, to celebrate the five hundredth anniversary of the publication of Pacioli's ACCOUNTING HISTORIAN'S RECEPTION bookkeeping treatise which precedes the Sunset A & B Festival on March 3, 1994. The Academy's 8:00- 10:00 p.m. decision to work with ICAS to present this seminar is consistent with its goal of greater ALL MEMBERS OF THE ACADEMY are involvement in activities to promote invited to attend and enjoy the fellowship accounting history at an international level. of colleagues and friends, both old and ICAS's goal is to encourage greater partici­ new. For information, call Dr. Doris Cook, pation of leading accounting historians as University of Arkansas, (501) 575-4051. presenters and participants. The overall project, the Pacioli Seminar DECEMBER 3-4, 1993 1994 on March 3 and the Festival of The University of Mississippi Accounting on March 4, is managed by Moyra Kedslie (The University of Hull), CONFERENCE ON BIOGRAPHICAL RESEARCH Tom Lee (University of Alabama), and IN ACCOUNTING Aileen Beattie (ICAS) and under the general supervision of Nigel McDonald, President- Program and Registration materials to be Elect of the ICAS. Inquiries may be available in the Fall, 1993. For forwarded to one of these individuals. information, call Dr. Tonya Flesher, The University of Mississippi, (601) 232-7468. ***

DECEMBER 4. 1993 THE ACCOUNTING HISTORIANS NOTEBOOK The University of Mississippi Editor: Elliott L. Slocum School of Accountancy ANNUAL BUSINESS MEETING OF THE Georgia State University ACADEMY OF THE ACCOUNTING HISTORIANS University Plaza Atlanta, Georgia 30303 Agenda and meeting details will be mailed Secretary: Doris M. Cook in November, 1993. For information, call The Academy of Accounting Historians Dr. Doris Cook, University of Arkansas, Department of Accounting (501)575-4051. University of Arkansas Fayetteville, Arkansas 72701

4 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 4 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 CALL FOR MANUSCRIPTS THE ACCOUNTING HISTORIANS JOURNAL

The Accounting Historians Journal submission requirements is included in the encourages you to submit papers on subject guidelines mentioned in the previous matter related to the development of paragraph. accounting thought and practice. Papers on Submit Manuscripts to: biographical subjects and on historical Dale L. Flesher method are also acceptable. Guidelines on The Accounting Historians Journal research and a guide for submitting School of Accountancy manuscripts may be found in The Journal or University of Mississippi may be obtained from the Editors. University, Mississippi 38677 Manuscripts must be in English and of (601) 232-7623 acceptable style and organization for clarity of presentation. The manuscript should not For information and Other Matters, exceed 7,000 words. An abstract of not Contact: more than 200 words should separately William D. Samson accompany the manuscript. A submission The Accounting Historians Journal fee of $32 (U.S.) is required of non- Culverhouse School of Accountancy Academy members and $15 of Academy University of Alabama members. More detailed information Box 870220 concerning additional requirements Tuscaloosa, Alabama 35487-0220 regarding style, content, and the (205) 348-2903

THE COST HERITAGE

The Costing Heritage: Studies in Honor of S. The monograph is priced at $15 for Paul Garner, Monograph No. 6 was published individual members and $20 for insti­ in 1991 by the Academy of Accounting tutional affiliates. Orders and inquiries Historians to honor Dr. Paul Garner on the may be made to: Doris M. Cook, The occasion of his eightieth birthday and his Academy of Accounting Historians, contribution to accounting. The monograph Department of Accounting, University of is edited by O. Finley Graves of the Arkansas, Fayetteville, Arkansas, 72701, University of Mississippi. Its contents include USA. Checks should be made out to The the studies primarily in the history of cost Academy of Accounting Historians and accounting and two tributes to Dr. Garner. accompany the order.

The Accounting Historians Notebook, Spring, 1993 5 Published by eGrove, 1993 5 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 SCRIP: THE ALTERNATIVE UNIT-OF-MEASURE IN COMPANY TOWNS by Roxanne T. Johnson University of Scranton

The growth of industry in the United explosives plants in the west were located States evokes images of dynamic, vital, and far from populated areas (Allen 1966). aggressive men pursuing and finding a pot Although this is an obvious example, firms of gold at the end of some elusive rainbow. in other industries also found it necessary These men were variously described as to supply the needs of employee sagacious, daring visionaries with an eye to populations. Due to the isolated locations the future, and, sometimes simultaneously, of plants, mines, refineries, or raw money-grubbing, opportunistic robber materials, for example, firms built barons without a care for their employees. company towns and also provided all life's Indeed, the second description, and the basic necessities to employees isolated from resulting abuses of company employees, are any other sources of commodities. The the focus of this paper. The abuse of company stores helped to provide these company employees was especially evident necessities. Stores maintained by the firm in the company towns built to house the were operated as either departments or laborers who supplied the human resources subsidiaries of the "parent" company. essential to the company and the stores Alternatively, some companies contracted associated with these towns. These abuses with outsiders to operate the stores were masked, for a time, under the guise of (Company 1935). paternalism. Company stores, or "pluck-me's" or "grab- all's", were operated as an active component Influence of Paternalism of an entity on the basis of rational, The support of paternalism was based on managerial reasons (Rochester 1931). the belief that workers were not able to Among the various reasons for operating deal with the exigencies of existence and company stores, the most altruistic reasons required comprehensive care off the job as were based on the idea of paternalism. well as supervision at work (Chafee 1923). However, the moneyed purposes of the In the early nineteenth century, prior to entrepreneurs who ultimately ran the stores the growth of major companies, this also existed. Company stores afforded an attitude meant that firms operated opportunity to earn additional income and to essentially as banks for employees. Thus, exert control over workers' lives. the firms provided or paid for goods, services, or other eventualities. Use of Scrip When large, industrial firms began to In the latter half of the nineteenth develop, however, they were usually century and the early twentieth century, located far from population and company stores essentially used an commercial centers. For instance, I.E. alternative unit-of-measure called scrip. DuPont de Nemours & Company Scrip was issued by the company as

6 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 6 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 payment to the employees and was forced, in turn, to deal with the higher recognized within a particular geographic priced company store. This practice community as tender, a practice sometimes resulted in two different prices, introduced, fostered, controlled, and often one when scrip was used and one for cash mandated by the company. Its purpose transactions (Company 1935). seems to have been to keep the individual In some cases, the employee only tied to the company store. received a piece of paper called a "bob-tail Scrip could take many forms, but it was check" as payment for wages. This check always issued in lieu of cash. In one represented the amount earned as wages, instance, the Sonora Exploring and Mining less any expenses contracted through the Company, the owner of Tubac in Southern company store (Rochester 1931). The Arizona, issued cardboard rectangles or result, most often, was a zero or negative boletas in denominations denoted by the balance, another means of tying the pictures of animals (Allen 1966). The employee to the company. Due to this Kirby Lumber Company in Kirbyville, practice, easy credit was available to the Texas, issued merchandise checks. These employee and often kept him/her checks were pasteboard disks stamped with perpetually in debt to the company, an amount and the name of the company. whether out of necessity or, unlikely under These merchandise disks would never the circumstances, frivolity. Complicating become cash, however, unless discounted at this situation was the actual pay period, some unrelated store for 10% to 20% of which could range from weekly to monthly the face value of the disk (Creel 1915). In and, at its most abusive, semiannually. other instances metal tokens may have been Often implicit in the above scenario was used, or coupon books with detachable collusion between the company store and coupons, or various other kinds of specie the payroll department. Store personnel (Allen 1966). would often have ready access to the earnings records of the employees for Abusive Practices determining credit eligibility (Company There were instances where the 1935). To make matters worse, the discounts on scrip amounted to approxi­ employee was not able to seek employment mately 40% of par (Johnson 1952). elsewhere due to misfortune, gullibility, or Unfortunately, there were times company other reasons for indebtedness to the employees found it necessary to produce company store. Eventually, efforts were cash in this way. Employees leaving the made to rectify these abuses. These efforts company were paid in scrip and had to were not very effective, however. exchange it for cash that could be used elsewhere. Also, cash was needed to pay for Efforts to Reform services or merchandise which were not The first attempts to counteract the available at the company store. abuses evident in the company town The company store would only accept system occurred at the state level. The the company's scrip for merchandise, which Pennsylvania General Assembly passed an was habitually priced 5% to 20% higher act in 1881 which precluded the issuance than competitors'. The discount charged by of scrip that could not be redeemed at its other stores was partly due to the exchange face value, plus interest where appropriate, service offered by these other merchants for cash on demand. Later, in 1891, a law but was also because these merchants were continued on page 32

The Accounting Historians Notebook, Spring, 1993 7 Published by eGrove, 1993 7 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 IN MEMORIAL TO AN ACCOUNTING HISTORIAN Dr. Richard H. Homburger Dr. Richard H. Homburger, a charter Accounting and Business Education for member of the Academy and a member of the Wichita State in 1967 and continued to serve 1970 AAA History Committee, passed away until his retirement in 1979. in 1991. Dr. Gary Previts, Case Western Dr. Homburger was described by Ralph University, said of Dr. Homburger, "His Estes as "a delightful colleague who had a works were among those that sustained and pixie-ish, low-key sense of humor that could encouraged historians in the years before the produce wonderful surprises." Dr. Estes also Academy was formed." During his lifetime he wrote that Dr. Homburger's graduate made many valuable contributions to the "accounting theory" class was more like a accounting profession and accounting history, seminar in accounting history because a and it is because of these contributions that he business school could accept an accounting is being recognized now. theory class but: would have been confused by a Dr. Homburger was born in Karlsruhe, class on accounting history. Germany on August 15, 1914. He became a Dr. Homburger authored several profes­ banker there, but during Hitler's reign, Dr. sional publications over the years. Dr. Douglas Homburger and his wife fled from Germany. Sharp, also a colleague at Wichita State, Dr. Ralph Estes, a colleague at Wichita State provided along with other information, a University, wrote that this escape from Nazi selected list of Dr. Homburger's many Germany in the 1930s left Dr. Homburger publications. Notably among the first were with a deep distrust of authoritarian regimes "Study of History-Gateway to Perspective" and and is perhaps why he became a card-carrying "Forfeited Capital Stock Subscriptions" in the member of the ACLU and a devoted Unitarian Accounting Review in 1948 and 1949, respec­ when he arrived in the United States. tively. His other publications include "Sources Dr. Homburger completed his studies at of Accounting History," Supplement to 1979 the Sorbonne in 1934 and received his J.D. Accounting Review Supplement, "The Audit of from the Faculty of Law & Political Science, Historical Records as a Learning Device in University of Zurich in. 1937. He then later Studying Environmental and Socio-Economic furthered his education with a M.S. from the Influences on Accounting," Working Paper Graduate School of Business at Columbia #2, Academy of Accounting Historians, 1974, University in 1946. After receiving his M.S., "English Translation of Paper on the Dr. Homburger became the head of the Development of Auditing in Germany, by business administration department at West Rose-Elizabeth Gassman," Working Paper #4, Virginia State College and served there from Academy of Accounting Historians, 1974, and 1946-1956. In 1956 he moved to Wichita "English Translation of Paper on the State of State where he became first an associate Bookkeeping in Upper Germany at the Time professor of accounting and in 1961 a of the Fuggers & Welsers, by Prof. Dr. professor. Dr. Homburger became the Hermann Kellenbenz," Working Paper #7, Coordinator of Graduate Studies in Academy of Accounting Historians, 1974.

AHRC RECEIVES FIRST OF BEAMER PAPERS Elmer G. Beamer, retired partner of delineating the common body of knowledge Deloitte, Haskins & Sells, sent the first for beginning CPAs, and the need for five installment of papers donated to the years of college study to obtain the common Accounting History Research Center. Included body of knowledge. Copies of articles on are files related to the 1969 Report of the education requirements written by Beamer Committee on Education and Experience and some materials related to his years at Requirements for CPAs. This was commonly Haskins & Sells and DH&S were also included. known as the "Beamer Report". Among the Also of interest, were binders that contained major recommendations were the recognition photos and short bios of partners of H&S (e.g., of Horizons for a Profession as the basis for Foye, Carter, Queenan, and others).

8 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 8 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 TALK ABOUT MEMBERS TALK ABC BURNS RECEIVES PROFESSORSHIP Dr. Thomas J. Burns, Professor at The Ohio State University and Past President of the Academy, was named Deloitte & Touche Professor of Accounting in November, 1992. Chairman and Chief Executive Officer of Deloitte & Touche, J. Michael Cook, presented the Professorship to Dr. Burns at a breakfast held at the Hilton Inn North, Columbus, Ohio, on November 21, 1992. Many friends, including representatives of Deloitte & Touche, former students, and colleagues, were present to participate in the recognition of Dr. Burns' many years of service and accomplishment. Standards Committee of the Ministry of ARAI TO LECTURE IN UNITED STATES Education in Japan, and member of the Professor Kiyomitsu Arai, Waseda Advisory Committee on International University, has been selected as a 1993 Accounting Standards of the Japanese Institute Distinguished International Visiting Lecturer of CPAs. in the United States for the Fall, 1993. The The lecturer tour will take place in selections of the distinguished professors and October, 1993. Dr. Arai will visit and lecture the universities to be visited are made by the at Arizona State University, California State AAA's International Faculty Exchange University-Chico, University of Oregon, Committee. This very valuable AAA program University of San Diego, Stanford University, is financially supported by the Exxon and the University of Washington. Corporation. Dr. Arai is Professor of Accounting in the NEW TRUSTEES AND CHAIRMAN School of Commerce at Waseda University. He Three new Trustees of the Academy have received his master of commerce and doctorate been elected for the term of 1993-95. These from Waseda University. Dr. Arai has taught are Thomas J. Burns, The Ohio State at Waseda University since 1958, served as the University; Eugene H. Flegm, General Motors Director of the Research Institute for Industry Corporation; and Yoshihiro Hirabayashi, and Business at the University from 1980 to Osaka City University. Gene Flegm was also 1982, served as Dean of the School of unanimously elected to serve as the Chairman Commerce from 1982 to 1984, and served as of the Trustees, 1993-95. Dean of the Graduate School of Commerce from 1984 to 1986. He has also taught as a ZEFF AND FLESHER AAA HISTORY visiting scholar at the University of Florida. BOOKS AVAILABLE Dr. Arai has authored five books, translated The American Accounting Association several accounting textbooks into Japanese, announces that two books on the Association's and authored approximately 250 articles. His history are available from the AAA adminis­ professional affiliations are extensive and trative office. Stephen A. Zeff and Dale L. include the American Accounting Association Flesher, long-time members and contributors since 1960, the Academy of Accounting to the Academy of Accounting Historians, Historians since 1975, Beta Alpha Psi, and the each authored one of the books. The first, by Japan Accounting Association. His service Dr. Zeff, entitled, The American Accounting career includes Director of the Japan Association—Its First 50 Years 1916-1966, was Accounting Association, President of the written to celebrate the Association's 50th Japanese Association for International anniversary and has now been reprinted and Accounting Studies, member and Chairman of may be ordered. The second, The Third-Quarter the Business Accounting Deliberation Council Century of the American Accounting Association of the Ministry of Finance, Japan, member of 1966-1991, was written by Dr. Flesher in the Commercial Law Division of the celebration of the Association's 75th Legislative Council in Ministry of Justice in anniversary. Each volume may be ordered from Japan, member of the Science Council of the administrative office at a cost of $10 per Japan, member of the School Accounting copy or $15 when purchased as a set.

The Accounting Historians Notebook, Spring, 1993 9 Published by eGrove, 1993 9 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 ACCOUNTING HISTORY PAPERS AND PANELS PRESENTED AT REGIONAL AAA MEETING MID-ATLANTIC "Tax Legislation in Times of U.S. Military "The Use of Historical Analysis to Provide Involvement" Alternatives to Authoritative Justifications of Margaret Hoskins, Henderson State Accounting Standards" University James J. Tucker, Widener University Tonya K. Flesher, University of "Accounting for Unusual and Infrequent Mississippi Losses in the Mississippi Lumber Industry Dale L. Flesher, University of Mississippi 1906-1917: How Theory Follows Practice" "The Origins of EDP Auditing" Laurie Henry, University of Mississippi Tommie Singleton, University of "Double Entry Bookkeeping in the Lombard Mississippi Tradition The Bank of Andreotto Del Maino Dale L. Flesher, University of Mississippi 1394-1400" Judith Cassidy, University of Mississippi Alvato Martinelli, Appalachian State "John Sharp Williams' Contributions to University Early Tax Law" George Schmelzle, University of Detroit NORTHEAST Tonya K. Flesher, University of History Panel: "The Excitement of Mississippi Examining Old U.S. Textbooks in Thomas Buttross, Wayne State University Accounting from 1796 to 1900: Come "A History of the AAA Information Browse Through History" Systems/Management Advisory Services John Catchart, Bentley College Section" Richard Vangermeersch, University of Dale L. Flesher, University of Mississippi Rhode Island "Clay Tokens to Global Harmony: The SOUTHWEST Evolution of Accounting" "Stuart Cameron McLeod—Early Management Biagio Coppolella, University of Accounting Leader" Bridgeport Dale L. Flesher, University of Mississippi "Distribution Costs and the Dennison "Financial Statement Reporting: The Manufacturing Company: 1920-1950" Improvements Resulting from the Great Gloria Vollmers, University of Maine Depression" Horace Givens, University of Maine John B. Duncan, University of Mississippi "Isolating Culturally-Driven-Egyptian-Arab Dale L. Flesher, University of Mississippi GAAP as a Basis for Achieving the "Accounting in Africa, 1837" International Harmonization of Accounting Michael F. van Breda, Southern Methodist Standards" University Samir Bibawy Fahmy, St. John's "A Review of the Financial Reporting University Standards Preceding the Savings and Loan William Thomas Stevens, St. John's Crisis" University Cynthia L. Taylor, University of Arkansas, Little Rock OHIO Vicky Arnold, University of Arkansas, "A Historical Perspective on the Influence of Little Rock the Annual Operating Budget on Local Government Financial Reporting" WESTERN James R. Emore, The University of Akron "The Tax Burden of Employees and Self- Employed Individuals 1960-1990" SOUTHEAST Michael Calegari, University of Arizona "Andrew Barr and the SEC: 1938-1972" "Transformation of a Stereotype; 30 years of Dale L. Flesher, University of Mississippi Accountants In The Movies" Gary John Previts, Case Western Reserve Victoria Beard, University of North University Dakota

10 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 10 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 ACCOUNTANTS' WRITING TOOLS

Kenneth S. Most Florida International University Thanks to Professor Denise Schmandt- and iron were attempted in different parts Besserat, we now believe that we of the world. Nations lucky enough to understand the origins of writing, and possess lead found it easier to work, accountants are eager to associate their art although its weight persuaded them to with early attempts to demonstrate postpone the creation of a postal system. accountability. Very little attention, Flat shells proved useful, and the Athenian however, has been devoted to the medium, practice of ostracism arose from the custom as distinct from the message, and in of inscribing certain votes on oyster shells. particular, to the tools and materials It was secrecy, however, and not economy accountants use. One hundred years ago an that caused Histiaeus to shave a man's head English journalist pronounced "In so far as and engrave a message on his skull. After the perfection of materials for writing is the hair grew back, the man was sent to concerned, we may have little to hope for in Miletus to be shaved and read; a true this country." Paper and ink, he thought, locomotive letter. were so perfectly adjusted to their purpose Leaves suggested themselves first in the that it: was hard to imagine how they could orient, where many large, smooth varieties be improved. There is an area here for are to be found. The Cumaean Sybil's accounting research. prophecies were said to have been written Did our primitive ancestors first scratch on leaves. The inconvenience of this observations on a tree, or a rock? If so, they medium for permanent records is evident, must have discovered that twigs wear out and the drier bark of trees was also used, quickly, and this may have given impetus especially thin, smooth inner bark which is to the adaptation of flint and later iron, coherent, strong and durable. The Saxons usually attributed to the need for better are said to have used the bark of the beech weapons. We are now accustomed to the tree, called by them "boc," and this may be fact that the beginnings of civilization are the origin of the word "book." The Latin recorded in commercial documents, rather word for a book certainly means "the inner than histories of great battles or love affairs, bark" and thus "library" reminds us of old so that this conjecture is not beyond belief. forms of writing materials. Bark tablets Thousands of years later an unknown were prepared by polishing, and a genius, discouraged by the prohibitive cost celebrated king of Persia is said to have (in labor) of shaping engraving tools, had entertained himself in the field with bark the economical idea of making marks on and knife. soft clay and then baking it hard, so that Domestication of bees to produce honey the record would survive at least until the led man to discover the literary uses of wax. tablet was broken. Widely used by The idea of spreading wax over a thin accountants, this technique has been board, to give it strength, came compara­ referred to as the earliest example of tively late. Themistocles is reported to have cooking the books. Many such commercial written on wax tablets, but he apparently records have been found in the Middle East, knew it to be a perishable material, because including bills of lading made out in this his letter to the Ionians was written on way, which cannot have aided sea captains stone. The Romans never found this out, to negotiate the dangers of Peleponnesus. and much of their written output has been Perhaps this explains why ships so often lost. Wax tablets were inscribed using a failed to make it to their destinations. continued on page 22 Other inexpensive alternatives to stone

The Accounting Historians Notebook, Spring, 1993 11 Published by eGrove, 1993 11 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 WILLIARD E. STONE LIFE MEMBER OF THE ACADEMY In August, 1991, The Academy of Accounting Historians in 1973. He was Accounting Historians elected Dr. Manuscript Editor of The Accounting Williard E. Stone to Life Membership in Historians Journal from 1973 to 1980. recognition of his long service to the While Williard was a frequent Academy and to the community of contributor to the accounting literature scholars in Accounting History. At that since 1956, it was only in 1969 that he time, only a brief notice of the election started to publish historical work with was published. Dr. Richard "Antecedents of the Accounting Vangermeersch was commissioned to Profession" published in The Accounting provide the following comments in honor Review. With the start of the Academy, of Dr. Stone. Williard also began to produce a prolific Williard Stone rose through the ranks stream of historical pieces. An example of in accounting academics the old-fashioned these are "Accounting Records Reveal way—through hard work over a long History: The Virginia Cobbler" in the period of time. A mathematics graduate of July, 1976 issue of the Journal of Penn State in 1933, he joined the Accountancy. In 1982, he and Gary Previts accounting field as an auditor for the served as editors of the Yushodo American Commonwealth of Pennsylvania in that Historic Accounting Literature. Williard year. He was a principal auditor with the also conveyed his personal library of over a U.S. General Accounting Office in 1943. thousand books to the Osaka Genkins Williard received the CPA Certificate in Stone Library at the University of Osaka. 1945. In 1947, he became a partner in Many of his books were autographed. Stone and Fisher, CPAs, in Philadelphia Williard continues to be an active and started his teaching career with the contributor to the literature of Wharton School, in which he received his accounting. He was recently ranked as the M.A. in Finance in 1950 and a Ph.D. in eighth most prolific writer in 24 academic Management and Economics in 1957. journals. From 1950 to 1952, he also was assistant Williard helped to make historical to the President and Controller for Rollie research in accounting an acceptable Manufacturing Co. In 1960, Williard academic endeavor. Those who were not became Chairman of the Accounting present in the 1960s and early 1970s Department at the University of Florida. probably fail to realize the struggle it was He chaired that department for 14 years to publish pieces in accounting history. and retired from the University of Florida Williard's efforts and lifetime interests in in 1980. He held visiting posts in such history and geology have been successful, schools as the University of New South and here we are today. Personally, as a Wales, The University of Virginia, the Ph.D. graduate of the University of University of Port Elizabeth in South Florida, I am proud to write these Africa, the University of Kentucky, and comments in honor of a fine gentleman Deakin University in Australia. and scholar, Williard E. Stone. Williard, along with Dr. Gary Previts Richard Vangermeersch and Paul Garner, founded the Academy of University of Rhode Island

12 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 12 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 HISTORY IN PRINT Extensive research in accounting history is Accounting, Osaka: Nihon-Shoseki, Ltd., published in periodicals and books other than 1991, originally published Edinburgh: those of The Academy. The knowledge of these William Green & Sons, 1903-1907, pp. works can be of value to Academy members for 4,076, 8 vols. personal development and research. Readers of Barbara D. Marino, Alan G. Mayper, and Ram The Notebook are encouraged to help the editor S. Sriram, "Audits in the United States in to locate the many publications involving 1927: A Critical and Historical accounting history which should be listed in Perspective," Third Interdisciplinary this column. Readers in Asia and Australia may Perspectives on Accounting Conference, send their suggestions to Dr. Robert Gibson, Volume Two, July 8-10, 1991. School of Management, Deakin University, Third Interdisciplinary Perspectives on Victoria 3217 AUSTRALIA, who graciously Accounting Conference, Volume One, acts as intermediary. July 8-10, 1991, (Selected Articles): Accounting History, Vol. 4, No. 2, 1992, Teresa A. Hammond, "The Marginalization of (Selected Articles): African-American Public Accountants Maria Appla, "History of Accountancy at La 1900-1965," Article 5. Trobe," pp. 33-39. Herbert G. Hunt III and Raymond L. Hogler, Gary D. Carnegie and Graeme L. Wines, "An Institutional Analysis of Accounting "Inconsistent Standard Setting: The Growth and Regulation in the United Case of Asset Recognition Criteria in States," Article 9. Australia (1970 to 1992)," pp. 23-32. Third Interdisciplinary Perspectives on John H. Cooney, "State Grants and the Accounting Conference, Volume Three, July Common Interest," pp. 47-56. 8-10, 1991, (Selected Articles): David Smith, "Historical Error and the James G. Guthrie and Lee D. Parker, Status of Absorption Costing," "Performance Auditing in the pp. 1-22. Australian Federal Public Sector: A Victoria J. Wise, "PROFILE OF A Mutable Masque," Article 3. BUSINESS DISCIPLINE: A profile of Graham Thompson, "Accounting for the School of Business at the Phillip Economics and the Economy: A Institute of Technology, Melbourne preliminary exposition," Article 9. and the development of the Bachelor of Third Interdisciplinary Perspectives on Business program," pp. 41-45. Accounting Conference, Volume Four, July 8- Critical Perspectives on Accounting, Vol. 1, No. 3, 10, 1991, (Selected Articles): September 1990, (Selected Articles): Peter Armstrong, "The Influence of Michel D. A. R. Forrester, "Rational Administration, Foucalt on Historical Research in Finance and Control Accounting: Accounting". The Experience of Cameralism," pp. Patricia Arnold and Theresa Hammond, 285-317. "The Role of Accounting in Ideological W. N. Funnell, "Pathological Responses to Conflict: Lessons from the South Accounting Controls: The British African Divestment Movement," Commissariat in the Crimea 1854- Article 2. 1856," pp. 319-335. Derek Bailey, "Rise and Decline of Soviet C. Humphrey, P. Moizer and S. Turley, "The Accounting," Article 14. Audit Expectations Gap-Plus ca Change, Linda M. Kirkham and Anne Loft, "When Plus c'est la Meme Chose?" Critical is the Accountant not an Accountant? Perspectives on Accounting, Vol. 3, No. 2 Gender and Professionalism in (June, 1992), pp. 137-161. England and Wales 1870-1930," D. M. Lawrenson, "Britain's Railways: The Article 7. Predominance of Engineering Over Stephen A. Zeff, "Arthur Andersen & Co. and Accountancy During the Inter-war the Two-Part Opinion in the Auditor's Period," Critical Perspectives on Accounting, Report 1946-1962," Contemporary Vol. 3, No. 1 (March, 1992), pp. 45-60. Accounting Research, Vol. 8, No.2, George Lisle, Editor, Encyclopaedia of (Spring, 1992), pp. 443-467.

The Accounting Historians Notebook, Spring, 1993 13 Published by eGrove, 1993 13 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 ACCOUNTING PROCEDURES AND TECHNIQUES IN THE LATE EIGHTEEN HUNDREDS

John S. Ribezzo Community College of Rhode Island INTRODUCTION "basic" record-keeping are covered. Following Upon browsing through a stack of books at is a description of each step in the accounting a used book sale, I came upon the New Bryant cycle as outlined in the chapter. & Stratton Counting-House Book-Keeping, copyright 1878. Out of curiosity, I purchased Day-Book this book and placed it on my bookshelf for The Day-Book is a chronological listing of future reference. transactions, explaining in narrative form, the The textbook was written by Silas Packard specifics of each. An example of a typical entry for use in the curriculum of the chain of Bryant in the Day-Book is as follows: and Stratton Business Colleges. It was a Date Record of Transaction Consideration revision of Bryant and Stratton's Counting- June 1 Sold H. M. Brown for Cash: House Book-Keeping, first published in 1863. 100 Brls. Flour @12.50 1250.00 The curriculum of the college was designed to 50 Bush. Wheat @2.25 112.50 1362.50 educate students in the field of Office Practices. Science of Accounts was the title of Journal the core program, which included the The journal that is illustrated in this following courses: bookkeeping, business law, chapter is in the form of a General Journal. commercial arithmetic, practical penmanship, However, in later chapters, more complex and business correspondence (Quinney). record-keeping procedures are introduced. The I would like to share my findings on the transactions are taken directly from the Day- accounting procedures and techniques used to Book and recorded in debit and credit form in instruct students of that period. In so doing, I the journal. Packard described two types of will present a problem illustrating the transactions. The first type, called business accounting methods utilized at that time. It transactions, were "those which affect the will be shown that certain procedures then in progress of the business, having in them the use differ substantially from those required by elements of gain or loss." The second type, current Generally Accepted Accounting called transactions of convenience, were Principles (GAAP). "those which simply change the personnel of the resources or liabilities without adding to or Pedagogical Approach taking from the net worth." Packard stated the object of his book as In regards to recording entries in debit and follows: "The aim has been to make thoughtful credit form, it is interesting to note that and intelligent book-keepers, rather than Packard believed that it was significant only to routing clerks; to have each step so clearly the record entries for Personal Accounts (Accounts expression of an idea that the interest once Receivable and Accounts Payable) in this awakened will not grow lax, but rather manner. However, he stated that for all other increase to the end." accounts, the recording of transactions in debit He gave four reasons to justify why business and credit form had been established by records should be maintained: (1) to provide custom, and thereafter became the rule. an interesting and instructive history of the business, (2) to promote order and exactness, Ledger of Accounts (3) to maintain control over business The type of account used in the textbook is operations, and (4) to provide a satisfactory in the form of a two-column account, with means for determining the financial condition the debit entries entered on the left-hand side of the business. and the credit entries entered on the right- hand side. A Procedural Approach Presents the Accounts are of two classifications. The first Application class was the Business accounts "which Chapter four, entitled Business Record, is the represent the earning activities of the focal point of the entire textbook, because the business...and exhibit the separate gains and topics of double-entry bookkeeping and losses." The second class were the Finance

14 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 14 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 accounts which measure the worth of the illustrates the steps taken in the Accounting business and "contain such of the resources and Cycle. Following is a reconstruction of that liabilities as can be shown in a continuous problem. record." The first step is the recording of the transactions: Financial Statements April 1—Record beginning balances for the Two statements are presented. The month of April. Business Statement illustrates the individual DEBIT CREDIT gains and losses, along with the Net Gain or Merchandise 2150 Net Loss. The items in this statement Real Estate 10000 originate from either separate entries recorded Cash (on Hand) 2500 during the accounting period, or revaluation of Commercial Bank 3500 certain account balances at the end of the (on Deposit) accounting period. Accounts Receivable: The Financial Statement presents the Samuel Smith 700 Resources and Liabilities of the business. The James Parker 500 Resources (Assets) include the following Bills Receivable accounts: (6%, issued April 1) 300 1. Merchandise. Claims-New York Central 2. Real Estate. Railroad Co. Stock 4500 Accounts Payable: 3. Cash on Hand. Robert Johnson 725 4. Personal Credits: Bills Payable 1375 a. Open Accounts: include Accounts Stock (Owner's Equity) 22050 Receivables and amounts on TOTALS 24150 24150 deposit with financial institutions (checking and savings accounts). April 2—Sold merchandise for $1314 cash. b. Bills Receivable: written promises Cash 1314.00 made to the company in the form Merchandise 1314.00 of notes or drafts. April 3—Paid $143.75 cash for office supplies. 5. Claims: investments in corporate securities. Expense 143.75 The Liabilities include the following accounts: Cash 143.75 1. Open Accounts: Accounts Payable. April 4—Received $700 cash on account from 2. Bills Payable: written promises made by Samuel Smith. the company in the form of notes Cash 700.00 or drafts. Samuel Smith 700.00 3. Stock (Owner's Equity or Net Worth): April 5—Sold merchandise for $176 on credit although Packard defines Net to A. Wakeman. Worth as the difference between A. Wakeman 176.00 Resources and Liabilities, he Merchandise 176.00 makes the point that the equity of April 8—Received $300 cash for the service of the owner is a liability because the purchasing and shipping goods to a customer. business is obligated to the owner Cash 300.00 for this amount. He does mention Commission 300.00 that it is proper to make a April 15—Paid $25 cash for the clerks' wages. distinction between outside Expense 25.00 liabilities and the obligation to Cash 25.00 the owner because the net worth April 20—Paid Bills Payable 54 days in "exactly covers the difference advance of due date-June 13, $1362.62 cash. between the resources of the Bills Payable 1375.00 business and the liabilities to Cash 1362.62 outside parties." Interest 12.38 Included with the statements is a separate April 24—Received $175 cash for rent of real "Corroboration" which presents a reconcil­ estate. iation of the Net Worth for the Accounting Cash 175.00 period. Real Estate 175.00 April 27—Issued check for $150 for property taxes on real estate. Illustrative Problem Real Estate 150.00 Chapter Four presents a problem which Commercial Bank 150.00

The Accounting Historians Notebook, Spring, 1993 15 Published by eGrove, 1993 15 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 April 29—Received $301.40 representing 3. New York Central R.R. Stock: principal and interest on outstanding Bills Estimated value of stock 4950 Receivable. Less: Beginning Balance 4500 Cash 301.40 Gain 450 Bills Receivable 300.00 Claims-New York Central Interest 1.40 R.R. Stock 450 April 30—Deposit $3500 of cash in Gain 450 Commercial Bank account. Commercial Bank 3500.00 The final step illustrated is the preparation Cash 3500.00 of the financial statements as presented below:

Business Statement The next step is the preparation of the Trial For the Month Ended April 30 Balance. Losses Gains Trial Balance - April 30 Merchandise 40.00 DEBIT CREDIT Real Estate 25.00 Merchandise 660.00 New York Central R.R. Stock 450.00 Real Estate 9975.00 Expense 168.75 Cash (on Hand) 259.03 Commission 300.00 Commercial Bank 6850.00 Interest 13.78 (on Deposit) Net Gain 660.03 Accounts Receivable: 828.78 828.78 James Parker 500.00 A. Wakeman 176.00 Financial Statement Claims-New York Central April 30 Railroad Co. Stock 4500.00 Resources Liabilities Accounts Payable: Property From Estimates: Robert Johnson 725.00 Merchandise 70700.00 Stock (Owner's Equity) 22050.00 Real Estate 10000.00 Commission 300.00 Railroad Stock 4950.00 Interest 13.78 From Ledger Accounts: Expense 168.75 Cash 259.03 TOTALS 23088.78 23088.78 Commercial Bank 6850.00 James Parker 500.00 From the Trial Balance, Adjustments are A. Wakeman 176.00 prepared. Robert Johnson 725.00 Net Worth: 22710.03 Adjustments - April 30 DEBIT CREDIT 23435.03 23435.03 1. Merchandise: Corroboration Returns from Sales 1490 Net Worth at beginning Estimated value of (as per Stock Account) 22050.00 unsold goods 700 2190 Net Gain Less: (as per Business Statement) 660.03 Beginning Balance 2150 Net Worth at the close Gam 40 (as per Financial Stmt.) 22710.03 Merchandise 40 Gain 40 Conclusion The accounting for Merchandise, Real 2. Real Estate: Estate, and New York Central R.R. Stock Returns from rent 175 reflects the effects of changes in current costs. Estimated value However, the gains are reported as recognized of property 10000 10075 and not unrealized as they would have been Less: under current GAAP. In determining a Property Tax 150 current value for the above items, Packard Beginning Balance 10000 10050 gives the following explanation. "In placing a Gain 25 value upon property, for the mere purpose of Real Estate 25 Gain 25 continued on page 28

16 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 16 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 THE ACADEMY OF ACCOUNTING HISTORIANS Trustees Meeting Hilton Inn North Worthington (Columbus Suburb), Ohio Sunday, November 22, 1992

Present: Ashton C. Bishop, Thomas J. regarding a CPE session prior to the annual Burns, Doris M. Cook, James Don Edwards, AAA meeting. Edward N. Coffman, Eugene H. Flegm, Dale 7. Gary Previts indicated that Elmer Beamer L. Flesher, Tonya K. Flesher, Barry Huff, Patti has offered to donate files regarding A. Mills, Gary J. Previts, Alfred R. Roberts, education issues with which he has been William D. Samson, Elliott L. Slocum, Rasoul involved. A motion was made and seconded H. Tondkar, Michael van Breda, and Richard to accept the donation subject to Beamer's G. Vangermeersch. documentation that the donation is the 8:35 a.m.: Dick Vangermeersch, Chairman property of the Academy. The Academy will of the Board of Trustees, called the meeting to assist with the transportation cost to the order. AHRC. The motion passed unanimously. 1. Gene Flegm was elected unanimously to Also, Tonya Flesher reported historical serve as Chairman of the Board of Trustees material related to EDP auditing before for period 1993-1995. 1970 has been offered to the Academy. The 2. Dick Vangermeersch, Chairman of Trustees material is located in Washington, D.C. 1990-1992, presented his outgoing report. 8. Future issues that need to be addressed are 1) His report touched on 1) establishing a establishing a permanent office with a full- Video History Research Library at The time Director for the Academy, 2) entering University of Mississippi, 2) considering a into some form of formal relationship with name change to the International Academy the AAA, and 3) defining the role and policy of Accounting Historians, 3) accepting of the AHRC and the THRC with respect to VISA for sales and membership dues, 4) archival materials—donations, solicitations, "translating" non-English articles and clearing house for primary research books, 5) commissioning articles for the materials, etc. Tom Burns will talk to Tonya Accounting Historians Journal, 6) "piggy­ Flesher about setting up a task force for the backing" on programs of other organi­ latter item. zations, 7) establishing a relationship with 9. The meeting adjourned at 9:15 a.m. each AAA region, 8) increasing membership in Europe, 9) appointing Respectfully Submitted, "Fellows" for the AHRC and THRC, and Ashton C. Bishop, Secretary 10) appointing committees for a three year term to establish continuity. 3. Tom Burns (Ohio State University) and Gene Flegm (General Motors) were Policy Statement formally recognized for putting together an James Don Edwards outstanding program for the Hall of Fame In recognition of limited resources for Conference. research at some members' institutions, the Academy of Accounting Historians wishes to 4. Dick Vangermeersch and Dale Flesher have encourage and promote accounting history made inquiries regarding the IMA's 75th research projects by providing limited grant anniversary in 1994. They will keep us funding. These research grants should be informed about their plans and if any role viewed as "seed" money, which because of the develops for the Academy. small resources of the Academy, will be 5. James Don Edwards presented a policy occasional in granting and limited in amount. statement with regards to guidelines for Such grant money will be expected to be used funded research and conference proposals. A by the investigator to acquire research data, motion was made and seconded to accept equipment, or research-related travel. The the proposal subject to minor editorial funding is not intended as compensation for changes. The motion passed unanimously. the investigator. In the application, the 6. Tonya Flesher is working with Tony Tinker investigator must include that funding from

The Accounting Historians Notebook, Spring, 1993 17 Published by eGrove, 1993 17 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 Other sources was not available by having been then the funding will be considered at the next rejected by these other sources. Those (August, November-December, March-April) receiving funding will be held to strict meeting of the Board and by members for accountability with particular expectation that approval of the expenditures. Thus, a six a manuscript that is publishable in The month lead time in proposing is necessary. Accounting Historians Journal or presented at an If a major amount of funds is requested, Academy or American Accounting Association then advance notice of 18 months is necessary meeting will be produced in reasonable time so that the Endowment Committee can after the funds are granted. consider the proposal after it has been approved by the Ad Hoc Research Committee Application Procedure of the president, president-elect, and editor of Members with unique, well-thought out The Accounting Historians Journal. projects may apply for a grant. Proposals For research projects funded by the should be submitted to the Academy president Academy, 50% of the requested funds will be in triplicate. Projects will be funded on the granted upon approval of the application, and basis of quality of the research proposal with the remainder will be paid at the completion emphasis on the benefit to the Accounting (submission of finalized paper) to one of the Historian community, and the availability of previously mentioned outlets for public funds. The Academy president, the president­ dissemination of the findings. In the paper, elect and the editor of the Accounting Historians there should be an acknowledgement that the Journal will decide if the proposal is worthy of project received funding support from the Academy resources. If a majority approves, Academy.

THE ACADEMY OF ACCOUNTING HISTORIANS Annual Business Meeting Hilton Inn North Worthington (Columbus Suburb), Ohio Sunday, November 22, 1992

1. President Tom Burns called the meeting to seminar, PACIOLI SEMINAR 1994, to be order at: 9:30 a.m. held on March 3-4, 1994 in Edinburg. A 2. The minutes for the previous Annual one-day accounting history seminar to Business Meeting of August 12, 1991 were celebrate the five hundredth anniversary of approved. Pacioli's bookkeeping treatise is planned for 3. Treasurer Ross Tondkar reported that the March 3. Lee indicated that the ICAS would financial position of the Academy is sound. like for the Academy to co-sponsor this event Tondkar was formally recognized for his through providing expertise and access to its dedicated service and outstanding membership. By unanimous vote, the ICAS performance as Treasurer from 1989 invitation was accepted. On March 4, a through 1992. Festival of Accounting is planned on two 4. James Don Edwards suggested that we not-unrelated themes, Measure, Mismeasurement, consider moving some funds from the and Stewardship and Accountancy and general fund to the endowment fund. This Information Technology. The Festival will be matter will be studied by the trustees, and a held in conjunction with the Netherlands recommendation will be forthcoming. Institut van Registeraccountants. 5. Gene Flegm was formally recognized for 7. Dick Vangermeersch announced that the raising significant funds for 1992 activities trustees have elected Gene Flegm to serve as which made possible the Hall of Fame Chairman of the board of Trustees for the Conference among other things. In this Period 1993-1995. connection, Barry Huff of Deloitte & 8. Dick Vangermeersch presented Tom Burns Touche was thanked for his firm's with a plaque in recognition of his substantial contribution. leadership and service as 1992 President of 6. Tom Lee, representing the Institute of the Academy. Chartered Accountants of Scotland (ICAS), 9. Dale Flesher indicated the forthcoming presented information about a proposed issue of the Accounting Historians Journal

18 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 18 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 (Fall 1992) is the best issue of his adminis­ Management Among Early 19th Century tration. Number of submissions and quality U.S. Textile Manufacturers." Berry and of papers continue to be high. Bill Samson, her committee have begun work associated the other Editor, announced that his tenure with the 1993 Vangermeersch Manuscript will be completed with the forthcoming Award. issue. 18. Michael van Breda noted that the 10. Elliott Slocum reported that the Notebook Education Committee would like to have (32 page issue) will be mailed during some suggestions for involvement in the December. education area. One suggestion was to use 11. Finley Graves indicated that 150 copies of education as a conference theme sometime the Garner Monograph (#6) have been in the future. Tom Burns stated that he sold. A motion was made and seconded to still plans to develop a short paper send trustees and officers complimentary suggesting that the second chapter in copies of this monograph. The motion Ph.D. dissertations be devoted to passed unanimously. Graves reported that historical development of the topic area. Monograph 7, Motyka Monograph, is in 19. Gene Flegm reported that the Endowment production at Garland Publishing and will Committee has received one request for be available in January. Several next year. manuscripts are under review for 20. Tom Burns reported for the Membership evaluation as possible monographs. Committee in the absence of Tom 12. Ashton Bishop had to leave the meeting, Nessinger. They have a letter drafted to and Doris Cook assumed the responsibility send to prospective members which will for recording the minutes for the be sent along with an Academy brochure. remainder of the meeting. 21. Gary Previts reported that the task force 13. Gary Previts stated there was no report on accreditation project has made no from the Classics Series. progress, but he will keep working. 14. Officers elected for 1993 were as follows: 22. Tonya Flesher noted that she will follow President: Tonya K. Flesher (University of through with obtaining the EDP Mississippi); President-Elect: Ashton C. historical papers for the Academy (see Bishop (James Madison University); First minutes of Trustees Meeting on Vice President: Maureen H. Berry November 22, 1992). Cost of moving (University of Illinois); Second Vice them from Washington, D.C. to Oxford, President: James Don Edwards (University Mississippi will be paid from the of Georgia); Treasurer: Michael F. van Breda President's discretionary budget. (Southern Methodist University); 23. Al Roberts noted that the new location of Secretary: Doris M. Cook (University of the AHRC would result in a new configu­ Arkansas). ration for the Center. There will be a 15. Trustees elected for 1993-95 were as separate conference room and a separate follows: Thomas J. Burns (Ohio State stack area for collections. This will make University); Eugene H. Flegm (General operations and storage a bit difficult. As a Motors Corporation); Yoshihiro result, the use of the conference space will Hirabayashi (Osaka City University). probably have to be shared at times with 16. Gary Previts and James Don Edwards gave seminars offered at the School. an informational report on their Project 24. Dale Flesher reported that the video and 100, which is planned to include the top audio tape library has expanded, primarily 100 CPAs in the United States in the last from a grant by the governmental century. It will be similar to the Life accountants. magazine publication of the top 100 25. There was some discussion of future Americans in the last century. This project nominees for the Hourglass Award. is not sponsored by the Academy, but they 26. President-Elect Tonya Flesher made a few plan to tie it in with the next Academy remarks concerning 1993. She and her conference. transition team have three areas of 17. Tonya Flesher read Maureen Berry's emphasis: committee report on the Vangermeersch 1) Membership-Alan Mayper has been Manuscript Award. The 1992 winner of appointed chairman of the Membership the Award was Thomas Tyson of St. John Committee, and they plan to increase Fisher College for his manuscript entitled, membership. "The Nature and Environment of Cost 2) Committee Involvement-Letters have

The Accounting Historians Notebook, Spring, 1993 19 Published by eGrove, 1993 19 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 been sent to ask for volunteers for conference on Biographical Research is to be committees (response has been good). held at The University of Mississippi on 3) Organizational Structure-She plans to December 3-4. appoint task forces to consider the 28. The meeting adjourned at 11:10 a.m. organizational structure and problem with space for the archives. Respectfully Submitted, 27. The Academy's Fall 1993 research Ashton C. Bishop, Secretary

ACADEMY COMMITTEES FOR 1993 President Tonya Flesher has reported that Billie Cunningham — Collin County responses to requests of members to Community College participate in the committees of the Academy Margaret Hoskins — Henderson State were enthusiastic. Many of the committees University have been at work since early in the year, and H. Elliott Lipschultz — Northbrook, Illinois preliminary reports are expected by the April Cheryl McWatters — The University of 24, meeting in Atlanta. Final reports are to Calgary be submitted for the Annual Business Fred Neumann — University of Illinois Meeting to be held on December 4, at The John Ribezzo — Community College of University of Mississippi. Rhode Island The committee chairs and members are Stanley C.W. Salvary — Canisius College provided below for your information if you Jaroslav Sokolov — Engels Soviet Trade have need to communicate with one or more Institute of the committees and to encourage your Suzanne Pinac Ward — University of future participation in the activities of the Southwestern Louisiana Academy. Task force chairs, members, and Research Committee charges are also provided. Committee chairs Chair: Haim Falk — McMaster University report to one of the Academy Vice-Presidents Dale Buckmaster — University of Deleware as follows: Michael Chatfield — Southern Oregon State Committee Reporting Responsibilities: College First Vice-President—Maureen Berry, John K. Courtis — City Polytechnic of Hong University of Illinois Kong Education Catherine Craycrafty — University of New Research Hampshire Endowment Guo Daoyang — Zhongnan University of Second Vice-President—James Don Edwards, Finance and Economics University of Georgia Richard K. Fleischman — John Carroll Public Relations University Membership Giuseppe Galassi — Universita Degli Studi Regional Programs Di Parma Education Committee Gary Giroux — Texas A & M University Chair: Philip Siegel — University of Joseph M. Hagan — Louisiana State Houston—Downtown University Joel Amernic — University of Toronto Alicja A. Jaruga — University of Lodz Vahe Baladouni — University of New J. Edward Ketz — Pennsylvania State Orleans University Roderick S. Barclay — Arkansas College Barbara T. Oliver — Omaha, Nebraska Ronald Beckman — Sam Houston State Terry Sheldahl — Savannah State College University Adrianne Slaymaker — Detroit, Michigan George M. Blankenbeckler — Central Wilbur H. Stevens - Salinas, California Connecticut State University Jim Tucker — Widener University Robert Bloom — John Carrol University Endowment Committee Garry D. Carnegie — Deakin University Chair: Gene Flegm — General Motors Gyan Chandra — Miami University Corporation

20 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 20 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 Richard Vangermeersch —University of Orleans Rhode Island Dieter Schneider — Ruhr-Universitat Public Relations Committee Bochum Chair: Kathleen Sinning — Western Paul Shoemaker — University of Nebraska- Michigan University Lincoln Victoria Beard — University of North Nominations Committee Dakota Chair: Tom Burns — Ohio State University Sandra Bryd — Southwest Missouri State Lee Parker — Flinders University University Barbara Merino — University of North Texas Bab Carstens — Montgomery, Alabama Gary Previts — Case Western Reserve Joann Noe Cross — University of University Wisconsin—Oshkosh Horace Givens — University of Maine David Franz — San Francisco State Vangermeersch Manuscript University Award Committee Jeanette M. Sanfilippo — St. Louis, Missouri Chair: Maureen Berry — University of Cidgem Solas —Concordia University Illinois Membership Committee Dale L. Flesher (ex officio) — University of Chair: Alan Mayper— University of North Mississippi Texas Tonya K. Flesher (ex officio) — University of Sue Atkinson —Tarleton State University Mississippi Hans J. Dykxhoorn — Western Michigan O. Finley Graves — University of Mississippi University Mary S. Stone — University of Alabama Walker Fesmire — University of Michigan- Accounting History Graduate Flint Research Grant Tatsuto Fujii — Tohoku Gakuin University Chair: Lee D. Parker — The Flinders Leonard Goodman — Rutgers University University of South Australia James Guthrie — University of New South Centers Task Force Wales Chair: Richard Vangermeersch — University Mary E. Harston — St. Mary's University of Rhode Island David C. Hay — Lincoln University Dale Flesher — University of Mississippi Khaled A.M. Hegazy — Cairo University Al Roberts — Georgia State University James H. Honea — University of Southern Elliott Slocum — Georgia State University Mississippi Charge: To evaluate options, risks, Sara Kenny — University of Utah opportunities and costs of operating the Z. Jun Lin — The University of Lethbridge Academy-sponsored Centers now and in the Anne Loft — Copenhagen Business School future. LuAnn G. Bean Mangold — Bella Vista, Strategic Organizational Task Force Arkansas Chair: Gary John Previts — Case Western Robert G. Morgan — East Tennessee State Reserve University University Maureen Berry — University of Illinois Salme E. Nasi — University of Tampere Ashton C. Bishop — James Madison Donald S. Rueschhoff — Topeka, Kansas University Jack Truitt — Washington State University Edward N. Coffman — Virginia Common­ Thomas N. Tyson — St. John Fisher College wealth University Loren Wenzel — Mankato State University James Don Edwards — University of Georgia Regional Programs Committee Dale Flesher — University of Mississippi Chair: Hans Johnson — Arkansas Tech Roxanne T. Johnson — University of University Scranton Jeremy Cripps — Heidelberg College William D. Samson — University of Horace Givens — University of Maine Alabama Finley Graves — University of Mississippi Hanns-Martin Schoenfeld — University of Jean Harris — Penn State University- Illinois Harrisburg Charge: To evaluate options, risks, and Lyle Jacobsen — St. Helena, California costs of changing principal organizational Joseph R. Razek — University of New functions of the Academy.

The Accounting Historians Notebook, Spring, 1993 21 Published by eGrove, 1993 21 Tools: continuedAccounting from page 11 Historians Notebook, Vol.to 16mak [1993],e paper No. from 1, ragsArt., 19which cheapened it skewer-like instrument they called a stylus, considerably, and finally, during the or style. The violent nature of Roman nineteenth century, discovered that tree pulp society eventually led to arms control; could be used for even cheaper grades, which forbidden to carry weapons, Romans carried is more or less where we are at the moment. styles, demonstrating repeatedly that the The history of recording instruments pen can be as lethal as the sword. When (flints, chisels, styles, reeds, quills, iron- Julius Caesar was attacked, he wounded one knibbed pens, fountain pens, ball-point of the conspirators with a style, and the fact pens) and the related development of inks, that such use was common may lie at the seems of little relevance to us in the age of root of the Italian word "stiletto." computers and printers. It is instructive, It was the Egyptians who, in this as in so however, to reflect on the influence of many other areas, took the decisive step technology on accounts and accounting toward modern writing materials. After statements. Although the Babylonian finding out how to make linen, they soon scribes used the bilateral form of accounts, hit upon the idea of using white linen for joining the debit and credit tablets with portable inscriptions. But even this genial copper rings like some monstrous ring invention was superseded by the discovery binder, the Egyptians found papyrus too that the peeling of a common reed, "byblos" narrow and started to super-impose credit or "papyrus," could be used like tree bark and debit entries vertically, a method yet was cheaper to produce. From the Greek known by the Italians as "a sezione "byblos" came the Greek work for a book, sovrapposte." Paper liberated accountants and hence our name for the Holy Scriptures. from this constraint, but the problem arose Papyrus grew abundantly in lakes and again when mechanical and electro­ marshlands. About ten feet high, its stem is mechanical bookkeeping devices were two or three inches in diameter, yielding introduced, because of printer output about twenty layers when peeled. Each strip limitations. I have audited accounts in was laid out flat, and two strips glued which all entries were printed together, their fibers crossed, gave a "sovrapposte," credits being distinguished sufficiently strong material for writing. A by appearing in red, or with an asterisk number of strips were gummed and beaten against them. (The contemporary bank together at the edges to form a papyrus statement uses minus signs for debits.) sheet of any size, which was then Perhaps the most striking instance of the impregnated with cedar oil to preserve it impact of materials and tools on accounting from decay. practice, however, is the report form of the The impetus that this gave to the art of financial statements. This has become so writing can be imagined, and the papyrus ubiquitous that students find it difficult to plant became increasingly scarce. For this perceive that the income statement is a reason, a king of Pergamus with literary profit and loss account, and the balance inclinations encouraged his scribes to sheet a summary of account balances. experiment with the skins of animals. These Printers of annual reports observed that were smoothed and dried and, in spite of there are typically many more items on the being more expensive than papyrus, this debit side of the income statement than on pergamon (or pergament, or parchment) the credit, and (vide Abraham Briloff) many recommended itself because of its fineness more balance sheet debits than credits. and durability. It was also called vellum, Printers do not like to see paper devoid of from the Latin word for calf, but this refers print, and we therefore obliged them by now to a superior quality paper. Papyrus reverting to "a sezione sovrapposte." One remained in general use until the invention unforeseen consequence is that accountants of a process for making paper out of cotton, are now questioning the very basis of the probably between 500 and 600 A.D. It took accounting model and seeking to liberate another thousand years before man learned themselves from the discipline of accounts. •

22 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 22 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 History: continued from page 1 Session I-Accounting Educators the profession included leaders of five of the The academics, in their session, emphasized "Big Six" firms: J. Michael Cook (Deloitte & that there has been a growth of accounting Touche); Robert Elliott (KPMG Peat research in universities by professors during Marwick); Duane Kullberg (Arthur Andersen this historical period and that new Ph.D.'s are & Co.); Raymond Lauver (Price Waterhouse); increasingly better trained in interdisciplinary and Philip DeFliese (Coopers and Lybrand). techniques (although most often accompanied Ray Groves (Ernst & Young), scheduled to by diminishing major interest in accounting participate, was unable to attend. Moderators problems and the frequent disappearance of for the sessions were Robert K. Mautz, Steve accounting theory/concepts subject matter Zeff (Rice University), and James Don from Ph.D. seminars). Many argued that, Edwards (University of Georgia). Special typically, U.S. academic researchers often guests at the conference included Dennis seemed to search for a problem to apply a Beresford (Chairman, FASB). research technique to instead of researching Members of The Ohio State University major accounting problems. The increased Beta Alpha Psi chapter served as aides during prestige of accounting research among other the conference. The current Academy disciplines within the university (with president (Thomas J. Burns, The Ohio State improved promotion and tenure prospects for University) presided, and four former accounting professors) was accompanied by a Academy presidents and many other sharp decline in the knowledge of and interest Academy officers were present (including the in accounting institutions by younger secretary-elect Doris Cook, University of professors. One exception might be accounting Arkansas and the treasurer-elect Michael regulation. Most acknowledged readily that to van Breda, Southern Methodist University). undertake a historical Ph.D. dissertation at Following the two-day meeting, many their institution would not be seriously considered by most junior faculty and many attended the big game (Michigan vs. Ohio senior faculty. Most accounting researchers are State) which resulted in a tie, pleasing no now identified by practicing one of three one. The academy held its annual business major research techniques: empirical, meeting the following day. All conference analytical, and perhaps behavioral. Other types sessions were videoed and recorded; the of research receive a relatively minor academy expects to publish the proceedings. appreciation, including perhaps the "critical J. Michael Cook, Chairman, Deloitte & thinkers" movement. Although field studies Touche, announced the appointment of the (most frequently called case studies) have had a Academy president as a Deloitte & Touche recent revival, young researchers attempting professor.

(l/r) Davidson, Zeff, Moonitz; (2) Horngren, Solomons, Bedford, Anthony.

The Accounting Historians Notebook, Spring, 1993 23 Published by eGrove, 1993 23 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 such research would increase significantly Session II—Financial Executives their risk of not being promoted or tenured; The financial executives agreed that they since this research technique is not favored by are not only preparers of financial statements, university (or often even college) promotion but extensive users, as well. The greatest and tenure committees. change in accounting during this period from Although there are now many more their viewpoint was the enactment of FASB teaching prizes for professors than previously, 106 on post retirement benefits. All agreed and teachers are now more likely to bring with the principle enacted and its social, their research into their classroom, partic­ economic, and political benefits, but they were ularly the younger and often more research- not as satisfied with its complexity and cost. active faculty, teaching is now much more However, they believed that this change was subordinated to researching than in earlier the "high" of the period; the "low" expressed periods. However, as always, the best research by several was FASB 96 on deferred taxes, investigations often come out of classroom which was, of course, eventually altered. discussions with students. However, new When asked why they had not Ph.D.'s often learn a particular accounting implemented the principle of FASB 106 subject the first time they teach such a before the FASB, several replied they had done course. so internally but could not do so externally The panelists agreed that managerial because of competition. If a single corporation accounting has shown the greatest had enacted this change lowering profits on improvement during this period, whereas public statements, their stock prices would financial accounting has not changed much. have declined immediately in the stock Little change (except in size) has occurred in market. financial accounting texts, whereas finance A consensus was reached that the chief texts have changed drastically. Introductory value of standard-setters was to enact needed texts were much more criticized by the changes uniformly, which otherwise could not panelists, most of whom have authored be accomplished. They reported satisfaction renowned texts. Complaints were made about with the FASB rule-making process (given the the need to supply a suitcase of teaching change from 4-3 to 5-2 for standard approval) materials nowadays to an instructor (instead considering the alternative of government of a text and a solutions manual) probably standard-setting. But they felt the extensive because over half of introductory courses are agenda (and numerous rules) of the FASB was taught in community colleges by part time much driven by the threat of liability and was instructors who often have full time jobs increasingly concerned with compliance. elsewhere. Intermediate texts devote less In discussing accounting for stock options, space to models and concepts but more, they argued that the current controversy over much more space to FASB rules. this subject is a policy issue, not really an Those who teach in MBA programs report accounting issue. The failure to communicate few MBA's go into public accounting firms, sufficiently what accounting does (and does except maybe for consulting, although not do) is a real problem. They also reported MBA's are now much older than previously that their global corporations had major (Stanford reports the average age of an problems with harmonization. entering MBA at 27). Undergraduates, The benefits received from participating in particularly the brighter ones, are less likely all stages of the standard-setting process were to go into public accounting than previously. discussed. The executives stressed the The academic input to the rule-making advantages of actively participating in profes­ agencies was still slight, even by tenured sional organizations such as the FEI. The professors. There is a major decline in articles informal networks with their counterparts at on or debates of controversial accounting other corporations and the learning about subjects. There was discussion of tenure (and accounting practices from each other were very possible legal vulnerability), professors important. The advance of internal auditing serving as expert witnesses, and whether after the establishment of audit committees professors were continuing to be independent was reported to be a major change in industrial of their funding. accounting in the last 25 years. Large

24 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 24 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1

(l/r) Quindlen, Larson, Steffan, (2) Edwards, Sullivan, Flegm.

computers helped make internal auditing environment are neither insurable nor more thorough. Such auditing staffs were a predictable. Without limited liability, a firm mix of CPA-types and operating personnel. may encounter a "firmbusting" suit at any Many reported maintaining almost two sets of moment from which it won't survive. If firms books, the first for managerial purposes and are to survive such a death spiral, tort reform is the second for external reporting purposes. necessary! In the U.S., torts are presently a Some differences reported between the two 2.5% tax of the GNP; U.S. accounting firms were: LIFO inventory, deferred taxes, currently pay over 10% of their annual fees for capitalized interest, and R&D. this purpose. There are at least two other major implications of this legal litigation Session III—Public Accountants environment. First, the profession, due to the The public accounting panelists, a mixture threat of liability, cannot innovate new of current and historical figures, agreed that products (despite a possibly diminishing the greatest change in the profession over the utility of their conventional auditing and past quarter of a century has been the growth financial statement products). Yet, some in litigation which threatens the survival of evidence exists that managers do not manage even the largest firms. The U.S. has developed (as much as they reputably used to) and into a "no-fault" society. Unlike the rest of the investors do not invest (as much as they world, U.S. citizens have the habit of going to supposedly once did) via conventional financial court for grievances. By far, the most rapidly statements (because businesses, managing, and growing U.S. business is the practice of investing are infinitely more complex now). If lawyers. As the chairman of the U.S. Senate so, or even if not so, the firms always need to Judiciary Committee (himself a lawyer) said be developing new products. Second, within recently, "the plaintiff's bar engages in their environment, firms find it increasingly legalized ripoffs." The legal principle which difficult to recruit and to retain top talents. encourages this practice is the one of joint and Without these talents, firms will have general liability (rather than one of propor­ difficulty in maintaining the quality of their tional liability). Auditing firms are often sued products; certainly the increasing cost of for being present (during the period when litigation can mean the firms cannot possibly fraud was committed) rather than for the afford the salaries of such talent. quality of their work. The financial Other major changes during this period for implications of working in such a legal accounting firms were also identified. The

The Accounting Historians Notebook, Spring, 1993 25 Published by eGrove, 1993 25 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 change to a global economy (all businesses in the been the increasing specialization of the firms U.S. are global, although some don't know it (although universities could not provide the yet) means firms must grow large to continue specialization education to achieve the quality in this economy. If they don't do so, they that comparable firms' training can). Most must sharply cut back their service. The gender argued that although the business orientation diversity changes now mean women are of a firm has always been present, it seemed roughly 50% of firm hires and are now currently to be more prevalent. One panelist breaking through to be about the same observed that firms used to be perceived as percentage of new managers. Although professionals operating in a business climate, women are only 4-6% of firm partners, that whereas now it seemed more as if they were percentage can only continue to go up. Even perceived as businesses operating in a profes­ though competition among the firms has sional climate. Another major change cited increased extensively over this period (as the was much more regulation and government shortage of audit product disappeared) and supervision. And of course, the major firms are now much more consumer driven, developments in information technology are such competition is small when compared to other changes which have basically altered the that of the soft drink, airline, or soap way auditing and accounting are industries, for example. A major change has accomplished and how firms operate.

(l/r) Miller, Defliese, Cook, Mautz, Kullherg, Lauver, Elliott. COMMENTS FOR THE ACADEMY HALL OF FAME CONFERENCE: U.S. ACCOUNTING HISTORY (1965-1990) by Yuji Ijiri Carnegie Mellon University

I regret very much that I was not able to left Siena for Columbus, a trip which took participate in the discussion on Friday. 24 hours door to door, including a two-and- When I received an invitation to this a-half-hour pre-dawn drive from siena to conference from the organizer, Professor Rome, during which the driver drove at 90 Thomas Burns, I had already accepted an miles, 145 kilometers, an hour. I was invitation to present a paper at a conference frightened initially, but toward the end of in Siena, Italy, a place near Pacioli's home the drive I found myself enjoying this high town, commemorating the 500th speed ride. anniversary of his landmark publication on 1. The Increasing Professional Risk: In double-entry bookkeeping. After my presen­ the flight from Rome to Washington, I tation and a lovely closing banquet on started thinking about the U.S. accounting Thursday, which went beyond midnight, I development in 1965-90, the theme of this

26 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 26 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 conference, and began to wonder whether my in the professional orientation. We handled experience in the high speed ride might not market values and pension forecasts with no be comparable to the greater and greater risk training as assessors nor as actuaries. We had the accountant has taken or been forced to to borrow from other professional expertise, take over the past 25 years. I am particularly while not fully utilizing our own expertise in concerned with the recent resurgence of handling historical information. Nevertheless, market value under the notion of "Marking to we enjoyed the feeling that we were the Market," because I cannot believe this is providing more "relevant" information, what the public wants. Their indifference to discounting the significant professional risk market value data in financial statements was we were taking in the meantime. the cause of the discontinuation of such a 3. Widening the Gap: In the mid-1970s, disclosure in the mid-1980s in the U.S. as I had an occasion to present a short paper at a well as in the U.K. Besides, the market value public hearing of the Cohen Commission, of the firm itself is already best indicated in which was charged to find a way of bridging daily stock quotations. the gap between what the public expects and 2. Reflecting the Future Stock Price: what the accountant/auditor can deliver. What the public-including investors, mass Emphasizing the need to let the public know media, and jury members-expects is financial how the audit is done, I proposed to replace statements that reflect the stock price of the the blanket audit opinion with a concise firm not on the statement date but, say, six description of what the auditor did and months from the statement date! When their found, including the sample size. I believe expectation is not fulfilled, they hold the that something of this kind is needed to accountant responsible, and, with a 20-20 bridge the gap, especially by telling the hindsight, they easily find reasons to put a public exactly how small the sample size had blame on the accountant. At the beginning of to be in order to keep the audit cost in a the 1965-90 period, there was a shift in feasible range. By staying with the blanket emphasis from history-oriented information opinion, the gap has widened considerably to future-oriented information under the during the past 25 years. Although the same banner of decision "relevance." Unfortunately, wording is used, the meaning of "present unlike personal computers that exploded fairly" dramatically changed as more and during the same period on the basis of many more subjective judgments on the distant breakthroughs in the IC chip and miniatur- future entered into financial statements. izating technologies, there were no techno­ 4. Records, not Reports: More logical nor educational breakthroughs in fundamentally, the 1965-90 period was also a accounting that warranted such a drastic shift period in which an utmost emphasis was

(l/r) Davidson, Solomons, Moonitz, Bedford; (2) Horngren, Mautz, Miller, Anthony, Defliese.

The Accounting Historians Notebook, Spring, 1993 27 Published by eGrove, 1993 27 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 placed on financial statements, as if they were Procedures: continued from page 16 the only thing the accountant produced, neglecting the value of and the contributions rating it, reference should be had, of course, to made by accounting records (Foreign Corrupt the market rate, or what might be obtained in Practices Act being a notable exception ). We exchange were the property offered for sale. In articles of merchandise—and particularly staple must realize and let the public know that goods—this estimate is easily made, from accounting is built on comprehensive records quotations and general knowledge of sales; but of what happened in the past. The economy in special property, such as real estate and may suffer somewhat without financial things—on whatever basis made—must be, in a statements, but should there be a blackout on peculiar sense, arbitrary." accounting records, the whole economy will These accounts are also of interest because collapse in a matter of weeks, if not days, as of the type of transactions included in their no business can survive long without accurate balances. For example, the Merchandise accounting records. Lack of records will also account is credited for the sale of merchandise let irresponsible behavior proliferate, quickly as opposed to a revenue account. The Real destroying the fabric of the economy. Estate account is credited when rent is earned, Mismanagement and fraud would not have and debited when property taxes are paid. If dividends would have been earned on the New been discovered in the first place without York Central R.R. Stock, this account would accounting records. We should let the public have been credited in place of a revenue know that the fundamental contribution of account. accounting lies in records and not in reports. The treatment of the Expense account that 5. Speculation Fever, Again: The first appears on the Business Statement is explained Chief Accountant of the Securities and by Packard as follows: "..why not at once Exchange Commission, Carman Blough, charge the amount in the Merchandise stated that "the speculation fever had become account, which represents this business? There so great in 1929 that it is very questionable would be no real objection to this, except that whether any amount of information about the inasmuch as we have some other interests, a corporation would have affected the way the certain proportion of the expenses should be shared by these interests. What that general public would have bought and sold proportion is, it may be difficult to say' hence, its stock, yet many turned to the inadequacy for convenience sake we open this separate of the financial data as a scapegoat on which account, leaving what seems to be an absolute to blame their losses and to vent their angers loss here to be offset by an excessive gain in and frustrations." ("Early Development of the other accounts." Accounting Standards and Principles," in The accounting treatment illustrated above W.W. Cooper and Y. Ijiri, eds., Eric Louis is based on the philosophy developed by Kohler: Accounting's Man of Principles, Reston, Packard in Chapter Three, entitled Business. 1979). The same thing seems to be He believed that wealth was primarily happening in the recent litigation crisis acquired through the activities of labor, rent, arising out of the debacle of savings and loans and exchange (gift and circumstance were also considered). Four of the activities are institutions, only this time as a scapegoat for illustrated in the illustrative problem: the industry-wide catastrophic losses. 1. Labor: earning of commissions from purchasing and shipping goods to a Legislation limiting auditors' liabilities customer. seems to be the most important issue in the 2. Rent: earning of rent on real estate and interest on loans. short run, but for the long run, we must do a 3. Exchange: sale of merchandise. better job of getting the nature of accounting 4. Circumstance: appreciation or and auditing understood by the public. I depreciation of property in the firm's hope that at this conference held 25 years possession. from now, we will be able to speak with a As a result of this philosophy, the impact of more positive and constructive tone about the each activity is shown directly in the account future of accountants by building accounting affected. on the solid base of historical records. • If current GAAP were used to complete the illustrative problem (assuming all Office ••* Supplies were used, and the entry of April 20th

28 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 28 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 is treated as an early extinguishment of debt), & Stratton Counting-House Book-Keeping, the results of operations would have been a Net Ivison, Blakeman, Taylor & Co., New Income of $310.03, and total assets would have York and Chicago, 1878. been $23,085.03. Quinney, Valerie, Bryant College: the First 125 References Years, Bryant College, Smithfield, RI, Packard, S. S., and Bryant, H. B. The New Bryant 1988.

**• FOR YOUR INFORMATION invitation for accounting papers was issued, CONFERENCESSeveral events are scheduled durin, PERIODICALSg the year but unfortunately, AN, theD submissio THINGn date waSs of which you may have interest. Although The March 1, 1993. Accounting research papers in Notebook, may be of limited help because of the a wide range of topics, including accounting timing of publication and the event, items history, theory, auditing, taxation, not for presented herein are presented for your profit, governmental, international, financial, information. information systems, and others, are expected The Centre of Accounting Research and to be presented. For information, call James R. Education at the University of Waterloo will Evans, University of Cincinnati, (513) 556- host an audit symposium at the University in 7140. November, 1993. The Conference is sponsored by the Clarkson Gordon Foundation and co- INTERFACE sponsored by the Auditing Section of the INTERFACE will host its Eighteenth American Accounting Association. Information Annual Humanities and Technology about the details of the symposium may be conference in Atlanta, Georgia on October 21- obtained from Professor W. Morley Lemon or 23, 1993 at the Penta Hotel. Although a wide Professor Gordon D. Richardson, University of range of topics are accepted, "Technology & Waterloo, (519)885-1211. Multimedia" and "Multicultural & Intercultural Issues and Technology" are topics A CALL FOR PAPERS to be emphasized. INTERFACE brings The Chinese Accounting Review seeks together professionals from many fields such as manuscripts of quality research and engineering, technology, computer science, development on a variety of current topics in history, literature, and physics for purposes of accounting. The acceptable topics include discussing issues that cross traditional international accounting and accounting disciplinary boundaries. education. The Review is an annual publication which emphasizes quality theoretical and FSA PROCEEDINGS AVAILABLE applied research in accounting and related areas. The Federation of Schools of Accountancy Manuscripts may be in English or Chinese. held its sixteenth annual meeting in Three copies should be submitted, double- December, 1992, in New Orleans. Its theme spaced, one-sided, and follow the format of The was "Joining Forces: A Partnership to Educate Chinese Accounting Review. The author to whom Our Profession." Featured speakers included communications should be made should be Gerry Polansky, Dennis Beresford, and indicated on the cover or title page. Papers are William Shenkir. Sessions included discussion submitted to blind review. To submit a regarding roles of industry, accreditors, state manuscript or to obtain additional societies, and public accounting in accounting information, contact: Editor, The Chinese education. In addition, the place of liberal arts, Accounting Review, P.O. Box 1-444, Wenshan, technology, and general education in the Taipei, Taiwan, R.O.C. curriculum was examined. Proceedings of the Annual Meeting, 1992, sponsored by FSA DECISION SCIENCES INSTITUTE Supporting Associate, Price Waterhouse, will ANNUAL MEETING be available in the Spring, 1993, through the The Decision Sciences Institute will present FSA Administrative Office, DePaul its 24th Annual Meeting in Washington, University, 25 E. Jackson Blvd., Chicago, IL D.C., on November 21-23, 1993. An 60604.

The Accounting Historians Notebook, Spring, 1993 29 Published by eGrove, 1993 29 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 NEWMAN T. HALVORSON (1908-1992) A MEMORIAL A native of Wisconsin, Halvorson verifiability in financial reports. He was an graduated from the University of Wisconsin ardent advocate of historical cost, strongly in Madison in 1930. Thereupon he began opposed to "as-if" or "might-be" his career with Ernst & Ernst in Detroit. In accounting. 1954 he transferred to the national office of Halvorson preferred flexible accounting the firm in Cleveland and remained there standards or guidelines, allowing until he retired in 1972. Modest and self- accountants and auditors considerable deprecating, he was the firm's principal professional judgement in applying the technical partner, representing Ernst & standards. He placed emphasis on the Ernst on prominent professional accounting "professionalism" of accountants and and auditing committees. As a member of auditors. Disturbed by standards overload, the AICPA Committee on Accounting he desired fewer and looser standards. Procedure (1956-59), the Committee on Nevertheless, Halvorson did concede that in Auditing Procedure (1963-65), and the our contemporary business environment, Accounting Principles Board (1966-73), more standards are needed than used to be Halvorson had considerable influence on so in earlier, simpler circumstances. accounting policy. A loyal pragmatist, he Well aware of the significance of research espoused Ernst & Ernst's views on those in the standard-setting process, he appeared professional committees, which are clearly to view the conceptual framework as "too reflected in his dissents from, and qualified philosophical" to apply in establishing assents to, accounting opinions issued by pragmatic accounting standards. However, the Accounting Principles Board. he did recognize the importance of Halvorson experienced first-hand the considering "economic consequences" in significant changes in accounting and standard setting since accounting data auditing set in motion by the 1929 Stock affects business decision making. Market Crash with its revelations of the Some would say that Halvorson was an deficiencies in financial reporting. He arch-conservative, if not a reactionary. Yet, witnessed stock market losses stemming in in this time of standards overload, his part from shortcomings in accounting and perspective can be appreciated. auditing. As a consequence, Halvorson Robert Bloom stressed the importance of objectivity and John Carroll University

WANTED ENCOURAGE MANUSCRIPTS AND ITEMS OF INTEREST Anyone wishing to submit short article DOCTORAL STUDENTS manuscripts, notes, cartoons, shaggy dog stories, letters to the editor, or other items to TO JOIN THE ACADEMY THE ACCOUNTING HISTORIANS NOTEBOOK should send the material for AT THE SPECIAL RATE consideration to the editor, Elliott L. Slocum, School of Accountancy, Georgia State OF $7.50 PER YEAR University, University Plaza, Atlanta, GA 30303.

30 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 30 et al.: Accounting historians notebook, 1993, Vol. 16, no. 1 THE PROGRAM ON THE WRITING OF AN ACCOUNTING HISTORY OF SPAIN As mentioned in the last issue of the Comuns Diposits, instrituciones Notebook, a meeting was held September 24- municipales de banca catalano- 26, 1992 in Miraflores de la Sierra (Madrid) to aragonesas de finales de la Edad Media discuss the "Writing of an Accounting History y comienzos de la Edad Moderna," of Spain." During this meeting a new Josep Maria Passola. accounting history research commission, the "Panorama historico de las fuentes de la Comision de Estudio de Historia de la historia de la contabilidad en Espana, Contabilidad de la Asociacion Espanola de siglos XII (Espana cristiana) al XVIII," Contabilidad y Adminstracion de Empresas Jose Maria Gonzalez Ferrando. was presented. "Problemas de la contabilidad a partir de las The program included a wide variety of companias mercantiles de Indias, siglos papers devoted to accounting history in Spain, XVI-XVIII," Antonio Miguel Bernal, and a selected number of those papers and Universidad de Sevilla. authors are listed below for your information. "La contabilidad en la Administracion virreinal americana," Rafael Ramos "Historia de la Contabilidad: Un Inventario," Cervero, Universidad de Valladolid. Basil S. Yamey, London School of "La contabilidad en las instituciones civiles, Economics eclesiales y vinculadas, siglos XV y "Propuesta de elaboracion de una historia XVI," Fernando Martin Lamouroux, general de la contabilidad," Pierre Universidad de Salamanca. Jouanique, Groupe de Travail "Problemas de eficiencia y control en la d'Histoire de la Comptabilite de contabilidad espanola preindustrial," 1'Ordre des Experts-Comptables, Paris. Salvador Carmona, Universidad Carlos "Problematica general de una historia de la III de Madrid. contabilidad en Espana," Esteban "Problematica de una historia de la Hernandez Esteve, Banco de Espana. contabilidad espanola del siglo XX," "Problemas y puntos destacados de una Enrique Fernandez Pena, Escuela historia de las practicas contables de la Universitaria de Ciencias Empresariales banca privada barcelonesa en los siglos de Madird. XII, XIV, y XV," Rafael Conde y "Experiencias de un historiador economico en Delgado de Molina, Director del el manejo de las fuentes contables," Archivo de la Corona de Aragon. Filipe Ruiz Martin, Universidad "Los libros de cuentas de las Taules de Canvi i Autonoma de Madrid.

THOUGHTS FROM THE PAST! "History would be an excellent thing if only it were true." — Leo Tolstoy

"'History repeats itself and 'History never repeats itself are about equally true . . . We never know enough about the infinitely complex circumstances of any past event to prophesy the future by analogy." - George Macaulay

The Accounting Historians Notebook, Spring, 1993 31 Published by eGrove, 1993 31 Accounting Historians Notebook, Vol. 16 [1993], No. 1, Art. 19 Scrip: continued from page 7 system (Johnson 1952). was passed which absolutely prohibited company stores associated with mining Summary and manufacturing firms. This law was The company store system and scrip far from effective, however, as payment practices coexisted with the legal companies simply evaded the bill by monetary system in this country as late as incorporating the company stores as the mid-twentieth century. Scrip payment separate entities. In 1901, another effort practices served as alternative money to halt the abuses of company stores in systems on a local geographic scale. Due to Pennsylvania was made. The Store this system, large numbers of corporate Order Act of that year was an attempt employees suffered the indignities of to tax company stores out of existence restricted opportunity and paternalistic (Johnson 1952). control. As the National Recovery Legislation was enacted in other states Administration committee determined, which was aimed at correcting what paternalism as a practice was dubious in its many considered a blight on the merits and acceptability. Predictably, the country's industrial character. By 1933, abuses evidenced in company stores thirty-two states had passed legislation contributed to the demise of the company concerning company stores in an effort to town, and the paternalistic practices of the control, limit, or forbid such operations. nineteenth and early twentieth centuries. The results of such legislation were mixed at best (Johnson 1952). In 1934, the abusive practices of the REFERENCES company store system received Allen, James B. The Company Town in the organized national attention. On March American West. Norman, Oklahoma: 16, 1934, a special committee was University of Oklahoma Press, appointed by the National Recovery 1966. Administration specifically for the Chafee, Zechariah, Jr. "Company Towns in purpose of investigating abuses when the Soft Coal Fields." The wage payments were made in other than Independent. (September 15, 1923): lawful currency. The committee 102-104. determined that company scrip was "Committee Report on Scrip Payment of discounted by merchants and stores in Wages and Company Stores." the same area as the company at rates Monthly Labor Review. (December ranging from 10% to 30%. Further, 1934): 1353-1355. company stores charged from 2.1% to "Company Stores and the Scrip System." 10.4% more for merchandise than did Monthly Labor Review. (July 1935): competing stores (Committee 1934). 45-53. Although no national legislation was Creel, George. "The Feudal Towns of passed with respect to this committee Texas." Harper's Weekly. (January report, the national attention did appear 23, 1915): 76-78. to cause changes for the better with Johnson, Ole S. The Industrial Store. respect to some of the more abusive Atlanta: Foote & Davies, Inc., 1952. practices. Subsequent legislative and Rochester, Anna. Labor and Coal. New legal actions did eventually resolve the York: International Publishers Co., abusive practices of the company store Inc., 1931.

32 The Accounting Historians Notebook, Spring, 1993 https://egrove.olemiss.edu/aah_notebook/vol16/iss1/19 32