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Rise of the Accounting Profession, V. 1. from Technician to Professional, 1896-1936.; John L University of Mississippi eGrove American Institute of Certified Public Accountants Guides, Handbooks and Manuals (AICPA) Historical Collection 1969 Rise of the accounting profession, v. 1. From technician to professional, 1896-1936.; John L. (John Lansing) Carey (1904-1987) Follow this and additional works at: https://egrove.olemiss.edu/aicpa_guides Part of the Accounting Commons, and the Taxation Commons Recommended Citation Carey (1904-1987), John L. (John Lansing), "Rise of the accounting profession, v. 1. From technician to professional, 1896-1936.;" (1969). Guides, Handbooks and Manuals. 30. https://egrove.olemiss.edu/aicpa_guides/30 This Book is brought to you for free and open access by the American Institute of Certified Public Accountants (AICPA) Historical Collection at eGrove. It has been accepted for inclusion in Guides, Handbooks and Manuals by an authorized administrator of eGrove. For more information, please contact [email protected]. The Rise of the Accounting Profession From Technician to Professional 1896-1936 Jtehii L. Carey The Rise of the Accounting Profession The Rise of the Accounting Profession From Technician to Professional 1896-1936 By John L. Carey Former Administrative Vice President American Institute of Certified Public Accountants AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 666 FIFTH AVENUE NEW YORK, N.Y. 10019 Copyright 1969 by the American Institute of Certified Public Accountants, Inc. 666 Fifth Avenue, New York, N. Y. 10019 To ELIZABETH ARLISS NICHOLSON, whose contributions to the progress of the accounting profession can never be adequately acknowledged NOTICE TO READERS The author is solely responsible for the contents of this book. In publishing it the American Institute of Certified Public Accountants accepts no responsibility for the accuracy of factual statements or for the validity of interpretive comment. Table of Contents Preface to Volume I ............................................................ xv Chapter 1 Present, Past and Future...................................................... 1 The Present........................................................................... 1 A True Profession........................................................ 3 The Rapid Rise ............................................................ 4 The P ast................................................................................. 5 American Beginnings .................................................. 6 Problems Confronted .................................................. 7 Problems Ahead .......................................................... 8 The Future............................................................................. 8 A Description of Accounting Practice........................ 10 Chapter 2 How It All Began................................................................ 13 Double-Entry Bookkeeping.......................................... 14 Financial Statements .................................................. 14 The Corporation........................................................... 16 Independent Audits .................................................... 17 The Industrial Revolution.......................................... 18 Professional Organizations.......................................... 19 Export to America...................................................... 21 vii Chapter 3 Accounting Practice at the Turn of the Century .... 23 Nature of Accounting Practice......................................25 An Early Accounting Firm ..............................................26 The British Invasion........................................................27 Early American Firms.................................................. ....30 Out-of-Town W ork..........................................................32 Professional Pioneers.........................................................33 Chapter 4 The First “National" Association..........................................36 Legal Base Lacking......................... ........... ..................39 Adventure in Education.............................................. ....40 The First CPA L aw .......................................... 43 The Struggle for Identification .......................................45 Lack of Technical Standards..........................................47 The 1904 Congress..........................................................49 Chapter 5 The Impact of the Federal Government ............... 53 Panic and Regulation......................................................54 Pressure for Financial Disclosure....................................57 Government Accounting . ...............................................58 Trust-Busting ..... ...... .......... ... ... 59 Differences With Government.......................................60 The Federal Trade Commission ...................................62 The Corporation Excise Tax .......................... 64 The 1913 Income-Tax Law ............................................67 The Leaders Look to the Future .....................................71 Chapter 6 Emerging Professional Standards ............. ...... 74 Accounting Terminology ................................................76 Responsibilities of Auditors ............................................77 viii Responsibility and Legal Liability............................ 80 Qualified Certificates .................................................. 82 Disclosures .................................................................... 83 Professional Ethics ...................................................... 84 Audit Companies ........................................................ 87 B idding........................................................................... 87 Independence................................................................ 88 Advertising.................................................................... 88 A Broad View .............................................................. 90 Differences of Opinion................................................ 91 Time for a Change...................................................... 93 Chapter 7 Education and CPA Standards............................................ 95 Efforts to Improve Accounting Education................ 96 Professional Literature ................................................ 100 The CPA Movement .................................................. 102 Chapter 8 A Radical New Approach.............................................. 108 Pressure for a National CPA Association.................. 111 Beginning of a Headquarters Staff............................ 113 Montgomery Becomes President ................................ 115 A "Qualifying Body" Emerges.................................. 117 A New Institute Is Born .......................................... 119 The Annual Meeting Approves.................................. 122 Seeds of Dissension...................................................... 126 Chapter 9 New Challenges.................................................................... 129 The Famous Federal Reserve Bulletin...................... 132 A Library and Information Bureau.......................... 135 World War I ................................................................ 139 Increasing Visibility of Auditors................................ 144 Growth of Advisory Services .................................... 146 ix Practice Units.............................................................. ..149 The “Busy Season” ...................................................... ..149 Personnel ...................................................................... .151 Women in Accounting..................................................153 The Depression ..............................................................154 Chapter 10 The Drive for Better Financial Reporting........................ 156 Concern Among Accountants .................................... 157 Brokers’ Accounts ........................................................ 158 Earned Surplus ............................................................ 158 Revision of the Federal Reserve Bulletin.................. 159 Stock-Exchange Concern ............................................ 160 Public Criticism............................................................ 161 The Profession Responds............................................ 162 An Approach to the Stock Exchange........................ 163 The Crash .................................................................... 164 Piecemeal Efforts.......................................................... 166 The Pecora Investigation............................................ 167 Exchange Requires Audits.......................................... 169 More Pressure .............................................................. 170 The Profession's Dilemma .......................................... 171 Development of Accounting Principles...................... 172 The Stock-Exchange Correspondence........................ 174 Chapter 11 Government Intervention in Accounting.......................... 181 The Securities Act of 1933 ............................................182 The Audit Provision......................................................184 Administration of the A ct............................................193 The Securities Exchange A ct......................................193 The SEC and the Institute..........................................194
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